What Happens To A Brand With A .BRAND When They Change Their Company Name Asks Afnic’s Loïc Damilaville

What happens when a Brand changes its company name, which has a .brand new gTLD, such as through a takeover, merger or just a name change? There’s currently no quick process in place to allow them to obtain a new gTLD to reflect the change. This is one of the many issues raised by Loïc Damilaville, Market Research Manager at Afnic who manages the French ccTLD as well as 17 new gTLDs, in today’s Q&A looking at the year just gone and the year ahead.

Damilaville delves
into many issues facing the industry including growth, or lack of growth, rates
for top-level domains, the financial issues forcing some gTLD operators to sell
their gTLDS, the vulnerability of some TLDs to Chinese domainers, future rounds
of new gTLD applications, challenges faced by smaller TLDs, particularly new
gTLDs. Here he’s concerned about how to get registrars to carry them and
without a presence on platforms, Damilaville is also concerned about how the
industry is flourishing for many
of the
established players, but quite hostile to newcomers and real innovations.

There’s a lot more in Damilaville’s Q&A, so please read on!

Domain Pulse: What were the highlights, lowlights and challenges of 2019 in the domain name industry, both for you and/or the industry in general?

Loïc Damilaville: In terms of trends, 2019 has seen the continuing decline of Legacy TLDs, apart from .COM which is enjoying an enviable – even if surprising – growth rate. Surprising because with its nearly 150 million domains it still grows by 5% a year. Is this single TLD “aspirating” the market? What is driving this growth?

“Penny
TLDs”, that is to say TLDs whose domain names are “given” or sold at a very low
price, have increased their volumes, but we doubt that these millions of domain
names are actually used. They shall be considered as highly volatile and not
relevant to assess the good or bad health of the market.

The
market
remains vulnerable to the domaining effect: in 2019, lots of Chinese domainers have
transferred their investments from new gTLDs
to .TW and this one has literally exploded in a few months. At the present
time, we see the reverse effect with a .TW affected by
deletions and a .ICU boosted, quite at the same time, by new creations.
It may mean that these domaining waves are done by a relatively small number of
coordinated big investors.

This
phenomenon affects the stability
of the market. For instance one
may consider
that new gTLDs have boomed at the end
of 2019 but this boom is almost 100%
caused by the
.ICU effect, with most of the other new
gTLDs experiencing a decrease in their new
registrations. A global improvement in volumes doesn’t mean that most of the
players are doing well.

This
situation drives some registries faced with financial difficulties to sell their TLDs to
big players which are also fighting increasingly on the back-end registry
market. What is interesting as regards to these back-end activities is
that they are researched not only by registries of small TLDs unable to get
some costly technologies and infrastructures by themselves, but also by
registries of very big TLDs, maybe for the same reasons, with a difference of
scale. This is the sign of a kind of professionalisation
of the market, but also of a concentration
process, with a handful of
players on the worldwide level. On the local or regional level, lots of
middle-sized players are managing some geoTLDs and/or .BRAND TLDs.

The
concentration
continues at the registry
and registrar levels, some back-ends being both of them. This phenomenon
requires (and is allowed by) the growing presence of investment funds in the
capital of these players. Although made with dubious methods, the .ORG takeover
by Ethos Capital is just one example of this structural evolution of the
market.

The
Second Round
is a topic, but more an icy one
than a hot one. We should wait for Winter to leave ;-).

Among
the very hot topics of 2019 we have noticed security issues,
fights against all kind of DNS abuses, the painful
consequences of GDPR for the IP community, and the emergence of services
combining data, monitoring and qualification of domain names in terms of
notoriety, risks etc.

Referring
to our “7As” model (*) we
shall consider that 2019 has not seen great improvements in Awareness,
Amplitude, Advantages, Access, Adoption, Activity nor Affect. The domain name
market may be a little too self-oriented and that could explain some of the
difficulties met by new TLDs to
“meet their market”.

We have developed a key success factors for Internet extensions  evaluation grid which you can see here: htttps://www.afnic.fr/en/resources/blog/key-success-factors-for-internet-extensions-an-evaluation-grid-1.html

DP: What are you looking forward to in 2020?

LD: The main trends of the market should remain the same: decline in Legacy gTLDs, and maybe a 4 percent growth for .COM due to their forecast price increase.

ccTLDs
will be affected by the .TW and .UK deletes, but apart from this phenomenon the
growth should not be above 3-4%.

New gTLDs will still be split between high volumes
generic
TLDs and the others. Geos seem to be
stronger than Communities and little Generics but the average volume remains
low. Brands will continue to progress slowly but surely. They are the most
promising segment of this market.

Security,
monitoring and data issues
will have more and more audience in relation with the DNS Abuse efforts. Tools
designed to manage the GDPR limitations will enjoy a strong interest since the needs for identifying and tracking
“abusers” have not vanished, those “abusers” feeling encouraged by the anonymity guaranteed by GDPR
and the failure of ICANN to provide any reliable, quick and low-cost solution
to rights owners.

DP: What challenges and opportunities do you see for the year ahead?

LD: The big challenge for domain names is to exist by themselves, that is to say, to be actually perceived by users as added-value components of their internet presence and not just something technical, necessary to be reached on the internet, whether it is a .COM, .FR or .ANYTHING.

Another
big challenge is for
the registrars to find their way into a more diversified domain name world. One
of the main burdens
for new gTLDs is to reach their
potential customers, a task they can’t do if they are not referenced by the
registrars which actually reach these customers.
But registrars seem to lack enthusiasm to sell new gTLDs
which are not at first sought
by their customers, and a vicious circle is in force: big registrars proposes
to their customers the TLDs they already know (and buy), and the new gTLDs
are kept in the shadows and not bought as the
customers don’t know them very well and do not trust them.

We
may also mention the “Next Round” as a challenge for the ICANN
Community, but – in relation with what precedes – also for the market players
in general. In the current organisation of the market, more
generic TLDs will create only more confusion without being able to reach their customers. The
situation of .BRANDs and .GEOs are very different because in both cases the
“market” already exists: big companies will become used
to consider that having their own TLD is a “must have”. And GeoTLDs
are appealing to the
feelings of proximity and local pride of their “natural” customers.

This
leads to another big challenge. Apart
from the high-volume oriented ones, the new or future TLDs will be more and
more focused on niches, whether they
be geographical or sectorial. This means
that we will see a lot of TLDs with very low volumes compared to those we are
used to see. In order to allow them to be financially viable, there MUST be a
deep thought about the global financial organisation
of the market.

At
the ICANN level,
the $25,000
flat fee is a burden that strangles many little TLDs and obliges them to sell
their domain names at uncompetitive prices compared to .COM and big ccTLDs.

At
the back-end level, things are more difficult to analyse but we should see in the future the emergence of some low-cost
solutions targeting little TLDs and some
value-added solutions targeting big TLDs
or TLDs wanting to propose very specific services
to their registrants. The homogeneous market as we know it nowadays is probably
condemned but the transition to new
models will take a long time. The growing influence of financial people in the
management of TLDs should be an
opportunity by providing some new
means, but it
can also be a threat because
innovations may imperil the forecasted
Return on Investment rates. When you buy a cash cow, you do not want it to
become a risky bet.

DP: What progress do you see on a new round of applications for new gTLDs in 2020?

LD: There will be progress but it would be hazardous to say that everything should be settled at the end of the year. One main question – that is not addressed by the focus on process – is to ask what kind of «new round» we really want, and basically if we want a «round» or a continuous process.

It
seems very logical and strategically important to allow the .BRANDs to benefit from
a special, expedited and
permanent process as
soon as the candidates are eligible to certain rules avoiding «optimization» by some «smart»
guys. There are lots of reasons
in favour of this special
process: these TLDs are for
internal use only, and since the big companies are often changing their names,
creating some new trademarks, etc., they should be able to change their
.BRANDs when they need to do so. For the time
being, having a .BRAND is a strategic strength if you intend to keep the same
name for the next decades, but it can also become a trap if you are obliged to
change your company’s name because of a merger or any other event.

The
Geo-TLDs should also be allowed fast procedures if they are requested by
legitimate authorities.

The
fact that ICANN is only able to provide a «round» every ten years is not a proof of its
efficiency. That said, we are aware that it depends strongly on its own
Community and should not be considered the only responsible of
these delays.

DP: What one thing would you like to see addressed or changed in the domain name industry?

LD: Lots of the points we could address have already been talked about. The main issue is that some problems or deficiencies, or even some threats to some players, are benefitting others, and reciprocally. The situation of the domain name industry results mostly from compromises built through power relations between its members and their «external» partners such as governments, right owners, customers etc.

These
compromises are not fully optimal and many of them are so weak that they are
constantly challenged by the dissatisfied parties. One may remark that it is the story of
life: but the
parties involved should make an effort to reach a long-term win-win deal more than
seeking for deals which only protect their own interests
in the short term.

The global situation for this market – still flourishing for the established players, but quite hostile to newcomers and real innovations – would be improved by a new approach of the challenges it faces. It is still waiting for its «New Deal» and will probably still wait for a long time, not for the better.

Previous Q&As in this series were with:

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