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Wednesday, November 23, 2011

Web Suffix Debate

Story first appeared in Bloomberg News.

A program to let companies acquire their own Web suffixes is failing to win over U.S. brand owners such as Procter & Gamble Co. and Hewlett- Packard Co. that don’t see a need to expand beyond .com.

P&G, the world’s largest consumer products company with more than 50 brands including Tide detergent, Pampers diapers and Crest toothpaste, won’t apply for new suffixes, said Paul Fox, a spokesman. HP, the biggest computer maker, considers the program costly and has no plans to take part, said Gary Elliott, vice president of global marketing.

The Internet Corporation for Assigned Names and Numbers, the nonprofit group managing the Web’s global address system under a U.S. Commerce Department contract, is preparing to consider almost any word in any language as a Web suffix, including company and brand names or terms such as .shopping or .nyc. The group will accept applications from Jan. 12 through April 12, 2012, for as many as 1,000 new suffixes a year. The application fee is $185,000 for each domain name.

Not one of 21 companies in the Standard & Poor’s 500 that Bloomberg informally surveyed in the past month said they plan to apply. Other responses ranged from still researching options to not commenting.

Six-Year Deliberation

Rod Beckstrom, the group’s chief executive officer, said the program isn’t for all companies when he told a meeting of the organization on Oct. 24 that “anyone who might be interested needs to do their own homework, develop a solid understanding of the program and then determine” whether a new name is worthwhile. “The clock is ticking,” he said.

The naming group, overseer of the Internet’s address system since 1998, currently manages 22 so-called generic top-level domains, including the commonly used .com, .org and .net. After six years of deliberation, the Marina del Ray, California-based group’s board voted June 20 to expand the number of those domains as a way to spur online innovation.

The expansion may foster competition in the domain sector, support new business models online and provide consumers with new ways to find products, according to an analysis prepared for the oversight group in June 2010.

The Commerce Department should delay the domain-name expansion to give businesses more time to assess the program, including brand and legal issues, the National Retail Federation wrote in an Oct. 21 letter to the agency.

‘Uncertainty Reigns’

 Mallory Duncan, general counsel of the Washington-based retailers group, said in an interview that with the application date just months away, there’s not time to think all this through.

The Commerce Department is reviewing the letter and plans to respond in a timely manner, Moira Vahey, a spokeswoman for the agency’s National Telecommunications and Information Administration, said in an e-mail.

The Association of National Advertisers, a Washington-based organization where HP’s Elliott serves as chairman, criticized the domain-name expansion as increasing costs for businesses and sowing confusion among consumers.

The association represents more than 400 companies including Bloomberg LP, the parent of Bloomberg News.

Canon Inc. and Hitachi Ltd. are among the few large companies that have expressed public interest in the new domains.

Watching Competitors

General Motors Co., the largest U.S. automaker, has “thoroughly evaluated” the domain-name program and is weighing its options, Tom Henderson, a spokesman, said in an e-mail. Wal- Mart Stores Inc., the world’s biggest retailer, is assessing the program, Ravi Jariwala, a spokesman, said in an interview.

Adobe Systems Inc., the largest maker of graphic-design software, is opposed to the “unnecessary, wholesale expansion of generic top-level domains and is very concerned it will cause confusion for consumers and increase the potential for online and consumer fraud,” John Travis, the company’s vice president of brand marketing, said in an e- mail. Even so, Travis said the company is still evaluating whether to apply for domains.

Companies may ultimately apply for domain names because they don’t know what their competitors are doing and the next application round hasn’t been announced, said Josh Bourne, managing partner at FairWinds Partners LLC, a domain-name consulting firm in Washington.

Competitive Risk

Brands are looking at the risk of being left behind. If all of your competitors are using their .brand or .keyword in marketing campaigns and you don’t have one, it may make you look out of touch, out of date.

Bourne is president of the Coalition Against Domain Name Abuse, a nonprofit group that has criticized the structure of the expansion, including the lack of a timeline for a second application round. The group’s members include Eli Lilly & Co., Morgan Stanley and Nike Inc.

Hewlett-Packard will use its website rather than “fracture our dollars” on new domains, Elliott said. He estimated the cost of operating a Web suffix may eventually reach $1.5 million, including legal and consulting fees, Web development and other costs for the Palo Alto, California-based company.

Procter & Gamble, based in Cincinnati, will “focus on our existing .com sites and other ways to connect with consumers,” Tonia Elrod, a spokeswoman, said in an e-mail.

The program requires resources that they would prefer to focus on building relationships with customers. P&G already operates a range of .com brand sites, including for razors and for toilet paper.

Contract Scrutinized

The U.S. companies join corporations in Europe such as Porsche AG, Vodafone Group Plc and Puma SE that have said they aren’t attracted to new suffixes.

The name oversight group is operating under a Commerce Department contract that expires in March. The agency is reviewing public comments on whether the terms should be amended and plans to open the contract for bidding this year.

The Commerce Department should include ethics and conflict- of- interest rules in a future contract to manage the domain-name system, Senator Ron Wyden, an Oregon Democrat, wrote in a September letter to the agency.

Two Washington-based government watchdogs, the Center for Responsive Politics and Public Citizen, have raised concerns about the departure of the naming group’s former chairman, Peter Dengate Thrush.

Dengate Thrush left the organization four days after the vote on domain-name expansion and within a month joined a London company called Top Level Domain Holdings Ltd., which intends to acquire Web suffixes created by the new plan and offer Internet registry services.