How to Turn a Closed Generic gTLD Into a Restricted One

Molly Burke —  June 24, 2014 — Leave a comment

ClosedSignAs the New gTLD Program has rolled out over the course of the past few years, the Internet Corporation for Assigned Names and Numbers (ICANN) has made a number of program changes along the way. One of these changes disallows closed, generic gTLD applications, such as Amazon’s application for .BOOK.

Now, applicants for closed generics must decide how to proceed: whether to open their generic strings to the public, limit registrations to a defined portion of the public, withdraw the application, or sell it.

While some applicants for closed generics are already considering selling their strings to operators more experienced in running open registries, others are weighing the costs of revising their original business plans and operating restricted registries.

Despite the added work involved, this middle ground can provide as valuable a platform for innovation as closed and open registries.

The Internet Corporation for Assigned Names and Numbers (ICANN), which oversees the New gTLD Program, announced the prohibition against closed generic gTLDs last October. Earlier in the year, ICANN’s Governmental Advisory Committee (GAC) had identified over 100 generic strings that it said were contrary to the public interest. The ICANN board endorsed the GAC advice but noted it would not apply if an applicant could demonstrate the closed registry would serve the public interest.

A restricted gTLD won’t be the same as one populated by a single-registrant, speaking with one voice. But nor will it dilute the registry operator’s central message, purpose, or intention, the way an open generic might.

The traditional gTLD space is filled with successful restricted registries — .GOV and .EDU are the most prominent examples — so ICANN’s decision doesn’t have to be the death knell for applicants of closed generics. Those applicants can still build an intuitive and meaningful restricted namespace.

The most obvious benefit of operating a restricted registry, as is the case with an open registry, is the potential for profit, though registries will have to carefully weigh potential profits against the cost of running the registry. Of course, determining the potential profitability of a registry is exceedingly difficult, as the market changes constantly. But applicants can take a number of steps to increase their chances of financial success.

Restricted registries can take advantage of options available to all applicants to strengthen their exclusivity. They may, for example, reserve up to 100 names for promotional purposes before going live. They also may reserve any number of second-level domains as “premium names,” which can be sold at higher prices, adding to the proprietary nature of the string.

Operators of restricted registries also must work closely with their registrars to enforce the restrictions they impose. Without enforcement, the restrictions will be meaningless. And the registry operator must understand that a restricted gTLD may not discriminate against otherwise eligible registrants, such as competitors.

The Registry Agreement and Registry-Registrar Agreement are the primary places a registry must clarify its new policies as an open or restricted registry. Clarifications must also be made to the Acceptable Use and Takedown policies.

A registry that makes the necessary adjustments to run a restricted generic may reap the benefits, despite having had to abandon its original plan and adopt a new one. As with other types of gTLDs, association with a successful new string can open new avenues for extending a brand, supporting new business models, and creating unique marketing opportunities.

If a new gTLD is well maintained and provides high-quality, relevant content, the operator of that space may be viewed as a trusted, reliable, and useful source of information, which in turn creates demand, and thus profit.

 

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