FairWinds Partners — February 9, 2012
The process of thinking through, applying for, acquiring, and launching a new gTLD, in a lot of ways, is not so different from a roller coaster. In this case, we’re not referring to the fear or excitement it can induce, or its potential ability to make you want to puke. Instead, we’re talking about speed.
The best roller coasters vary their speeds, creeping up the initial hill to build anticipation and whooshing through dips and loops to give riders that rush they know and love. Similarly, certain parts of the new gTLD application process, like the evaluation, move very slowly, while others, like the application period, pass very quickly.
For the most part, like riders on a roller coaster, applicants don’t have much control over the speed of the various portions of the new gTLD process. But there is one area where they can call the shots on the timing – the delegation of their new gTLD into the root.
The default transition to delegation laid out in ICANN’s New gTLD Applicant Guidebook takes about two months. However, there are slower paths available. The first is in the execution of the registry agreement with ICANN. ICANN expects approved applicants to execute this agreement within nine months of when they are notified of the approval. However, applicants can extend that period for an additional nine months if they can prove they are “working diligently and in good faith toward successfully completing the steps necessary for entry into the registry agreement.”
After executing the registry agreement, applicants have 12 months to get their new gTLDs delegated into the root zone. However, they can ask ICANN to delay this process for an additional 12 months – even if they delayed the execution of their registry agreement as well. Together, these two options give applicants an additional 21 months of time before their new gTLDs go live.
What advantage can businesses gain by delaying this long, beyond just buying themselves extra time to get everything together? Delaying the delegation of a new gTLD also delays the onslaught of fees businesses have to pay to ICANN and vendors. Each new gTLD registry operator has to pay ICANN a fixed fee of $6,250 per calendar quarter, or $25,000 per year. Delaying the agreement execution can save businesses $18,750 per new gTLD, and going for the full 21-month delay can save them over $30,000 over the course of those months.
Beyond just the ICANN fees, companies that own new gTLDs can also delay having to pay the fees they have to pay to registry and registrar partners, and for data escrow services. In the case of a closed-registry .BRAND gTLD with around 500 second-level domain names, these costs could total around $50,000 per gTLD per year. Even without also factoring in any associated costs like marketing and personnel, companies can initially save well over $85,000 by delaying the launch of their new gTLD for 21 months. For businesses that plan to apply for their .BRAND gTLD primarily as a defensive measure, to reserve it as an asset for future use, and aren’t in any particular rush to launch, this could be a great option for deferring significant costs.
Besides, think about all the roller coaster rides you could buy with that money.