FairWinds Partners — April 10, 2012
A few weeks ago, we reported on the new batching process that ICANN had proposed that revolved around giving applications a “secondary time stamp.” As of last week, the ICANN Board has approved the system for new gTLD applicants.
You can read about the details of the process, which ICANN has likened to “digital archery” (although “digital whack-a-mole” might be a more apt analogy), in our post, or on ICANN’s New gTLD Program site. But rather than rehash the mechanics of the process, today we’d like to discuss some of its implications.
Anyone who has attempted to navigate the new gTLD application process can tell you that there is a long list of decisions that must be made from start to finish. And that list begins with the decision of whether or not to apply for a gTLD in the first place. As we have discussed, there are myriad internal factors that businesses must consider when making that decision – and many times, it is not a simple decision to make. But throughout this process, ICANN has done more than its share to complicate that decision even further. In our opinion, it has done so in ways that are ultimately unnecessary. To be fair, the staff at ICANN that has been coordinating the execution of the application period has also done many things to accommodate applicants, but more on that later.
To begin with, many applicants (both businesses and others) found that their decisions were shaped significantly by the fact that they had no idea when ICANN would be offering another application period. By our best estimates, it will likely not be for another five to seven years, but when it comes to ICANN processes, there is no real certainty. This lack of information pushed many applicants into applying in this first round, despite the fact that there were so many unknown factors and there was basically no market information for them to rely on. By withholding information about when there would be a second round – even if only an estimate – ICANN took away applicants’ ability to make a decision based on their own opportunity-risk assessment, and instead made the decision on about how to mitigate risk – and little more.
Similarly, by not publishing the list of gTLD applicants until after the application window closes, ICANN again forced applicants to make their decisions based on the anxiety of being left out or losing a competitive edge, rather than sound business factors. Corporations were left to essentially place a bet: either they could bet on their competitors not applying for their own new gTLDs and wait, or they could bet on their competitors applying and also apply. But ICANN removed the possibility of those corporations basing their decisions on the actions of the other players in their industry.
And now, when it comes to the batching of applications, ICANN has again distorted the decision-making process for applicants, this time by not informing them how quickly the subsequent batches will be processed after the first. Of course, many applicants will want to secure a spot in the first batch, especially those whose new gTLD business models depend on launching their new registries as soon as possible. And increasing numbers of businesses that have applied for their “dot brands” are becoming interested in having their gTLDs delegated in the first round because they would like to start extracting some benefit from their investments as soon as possible. But for certain companies that applied for their “dot brands” primarily for defensive purposes, being among the first batch of evaluated, and therefore delegated, gTLDs may not be as necessary. Unfortunately, without knowing how long after the first batch ICANN will begin processing the second batch, not even the most defensively-minded applicants can comfortably decide to opt out of trying for a spot in the first batch. It could turn out that their competitors earn a spot in the first batch and begin extracting an advantage from using their gTLDs, while they are still waiting for their applications to be evaluated.
Now, if ICANN would inform applicants of when it will begin processing the subsequent batches, then the applicants would be able to make their decisions based on facts. They could decide if one month, or three months, or however long ICANN says it will take, will be too long to wait, and therefore will be able to make informed decisions about whether or not to make additional investments in “gaming” the Target Time Variance procedure. But as it stands now, applicants don’t have this information, and once again have to make their decisions based on speculation. For the third time, ICANN has meaninglessly withheld useful information. And for the third time, applicants are left shooting arrows in the dark.