In its second-largest acquisition, Amazon buys the company for $970 million.
ICANN, the organization that oversees Internet addresses, is moving toward allowing organizations to create new top-level domains, which could potentially include .WalMart, .store or .IPod. Many retailers are against the idea.
There are currently about 21 top-level Internet domains in use worldwide. Most online retailers use .com, but there are also general domains such as .net and .biz and geographical addresses such as .uk for the United Kingdom and .cn for China. There is a proposal to create many more, which, if it overcomes significant opposition, would pose important questions for online retailers.
ICANN, which oversees the Internet’s address structure, is moving toward enabling companies and organizations to create their own top-level domains. There is considerable interest from cities in creating domains such as .Paris and .NYC, and among communities of interest in domains like .sport and .eco, says Paul Levins, executive officer and vice president of corporate affairs at ICANN, the Internet Corporation for Assigned Names and Numbers.
Are retailers interested in creating their own domains, such as .Amazon and .Walmart? So far there has been little interest, Levins says.
Perhaps it’s the price tag-$185,000 for a new top-level domain. Levins says that ICANN, a nonprofit organization, set it high to ensure that domains are only purchased by organizations capable of managing them. “We want people who have proven technology skills and business acumen,” he says.
Levins says companies have expressed concern about their brand names being abused, such as by an unrelated organization purchasing the domain .Amazon. But Levins says trademarked names will be protected, and says most of the trademark issues that could arise already have come up in regards to secondary domains, such as Amazon.net or Amazon.cn. Domain operators generally respond to complaints of abuse from trademark holders, although there is widespread abuse involving variants of familiar brand names, such as so-called cybersquatters creating web sites at domains such as www.walmartsale.com or www.contacttarget.com, then finding new variants as those are shut down.
While no final decisions have been made, Levins says the new top-level domain name structure may lead to a procedure in which companies can protect their brand names across all domains. “We’re not going to operate this system until we’ve addressed these concerns,” Levins says of the trademark issues.
ICANN expects to open up the application process for the new top-level domains in the first quarter of 2010, and close it after accepting 500 applications. A second round will be opened later, perhaps by the end of 2010, he says. “We expect we’ll get a lot more applications in the second round,” he says, “once people see how it can be used.”
But all that assumes ICANN can push through the proposal over significant opposition from retailers and manufacturers that have trademarked valuable brand names. “Many trademark holders are becoming aware of this, and when they do it’s quite alarming the impact it could have,” says Scott Silverman, executive director of Shop.org, the online retailing arm of the National Retail Federation, a major trade association for U.S. merchants.
Trademark holders are concerned about the cost of securing the top-level domain names for their brands, private-label brands and variants of those brands, Silverman says. A retailer like Wal-Mart might have to acquire not only .Walmart, but also .shopWalmart, .Walmartstores, etc. “We’re talking millions of dollars per retailer, potentially,” Silverman says.
There’s also greater potential for consumer confusion and for fraud if criminals are able to secure top-level domain names that seem similar to the brand names of well-known companies, he says.
Silverman is encouraged that a House subcommittee plans to hold hearings this week on the ICANN proposal. ICANN operates under a contract with the U.S. Commerce Department, and the U.S. government presumably could put pressure on ICANN to modify or abandon its proposal. Silverman also noted that President Obama recently had appointed a new head of the National Telecommunications and Information Administration, which oversees Internet-related issues.