As new gTLDs (generic Top-Level Domains) continue to be added to the Internet, the auction process for extensions with multiple applications is ongoing. ICANN’s new gTLD program, launched in 2012, continues to significantly transform the industry.
Google made a substantial investment last week, paying $25 million for the .app extension in an auction, marking the highest payment for an extension to date. Previously, Google had competed with Dot Tech LLC for the .tech extension, but Dot Tech won the auction with a bid of $6.7 million.
Looking at other significant auction prices, Amazon paid $5 million for .buy and $2.2 million for .spot.
The Amortization of a $25 Million Auction Investment is 1 Million Years!
These substantial investments demonstrate the promising future of new extensions. To break even on the $25 million investment, 1 million domain names would need to be registered annually, assuming an average annual domain fee of around $20. For these generic extensions, the commercial prospects for domain name companies appear bright.
Status of Brand TLDs
The situation with brand TLDs (Top-Level Domains) differs. While there is competition for extensions like .app, brand TLDs present a different scenario. From a trademark protection standpoint, it’s common for a domain name to be registered under various extensions. However, ICANN’s application procedures prevent trademarks from being acquired by unauthorized entities.
So, why have many global companies, from IBM to Samsung, Yandex to BMW, acquired their own brand extensions? If these extensions are not intended for immediate use, why did they invest millions of dollars?
Furthermore, companies like Google have applied for extensions associated with their sub-services, making it inevitable for a large company to apply for numerous extensions.
These domain names will soon be widely used on the internet. If it’s currently unusual for a company to use extensions other than .com or .com.tr, soon it will be odd for organizations not to have their own extensions. We are still in the early stages of this process.
At the Beginning of New TLDs
Consider this: In 1986, when the domain name business was in its infancy, nearly all domain names worth millions today were available for registration. The IT pioneers of that era were just starting to register domain names. Companies that registered .COM domain names in 1986 now have their own extensions. For example, the whois registration date of IBM.COM is March 19, 1986, and the IBM extension was allocated in the last quarter of 2014. The official page of the IBM extension can be found at http://www.nic.ibm/.
The new gTLD program is reminiscent of the early days of the domain name industry. What happened in the late 1980s with .COM is now occurring with new gTLDs. In the next application period, planned for 2016-2017, we will see a repeat of the 1990s. Therefore, it is crucial to prepare thoroughly for ICANN’s second application period to seize this opportunity.