An Economic Framework for the Analysis of theExpansion of Generic Top-Level Domain Names
prepared for ICANNMichael L. KatzGregory L. RosstonTheresa SullivanJune 2010
i
CONTENTS
I.
INTRODUCTION AND OVERVIEW ............................................................................1
II.
BACKGROUND ................................................................................................................4
A.
M
ANAGEMENT OF THE
DNS
P
RIOR TO
2000 .............................................................4
B.
P
REVIOUS G
TLD
E
XPANSIONS
..................................................................................7
C.
T
HE
P
ROPOSAL TO
I
NTRODUCE
N
EW G
TLD
S
............................................................9
III.
THEORETICAL FRAMEWORK .................................................................................13
A.
P
RIVATE VERSUS
S
OCIAL
I
NCENTIVES TO
I
NTRODUCE
N
EW G
TLD
S
.......................14
B.
B
ENEFITS OF
N
EW G
TLD
S
......................................................................................18
1.
New gTLDs might provide competition to existing gTLDs resultingin lower quality-adjusted prices.................................................................18
2.
New gTLDs may support new business models .........................................20
3.
New gTLDs might relieve scarcity in domain names .................................22
4.
New gTLDs might reduce search costs ......................................................23
C.
C
OSTS OF
N
EW G
TLD
S
...........................................................................................24
1.
Costs of obtaining and running a gTLD ....................................................24
2.
Costs to competing registries .....................................................................25
3.
Increased search costs ...............................................................................25
4.
Trademark infringement ............................................................................27
5.
Adverse investment effects of potential free riding ....................................29
D.
T
HE
D
EPARTMENT OF
J
USTICE
’
S
F
RAMEWORK FOR
A
NALYZING
N
EWG
TLD
S
....................................................................................................................30
III.
SURVEY OF EXISTING STUDIES ..............................................................................33
A.
B
ROAD
S
TUDIES OF THE
C
OSTS AND
B
ENEFITS OF
N
EW G
TLD
S
.............................33
B.
S
TUDIES OF THE
I
NCIDENCE AND
C
OST OF
C
YBERSQUATTING AND
T
YPOSQUATTING
.....................................................................................................37
C.
S
URVEYS OF
D
EFENSIVE
R
EGISTRATIONS
...............................................................42
IV.
POTENTIAL PROJECTS ..............................................................................................45
A.
P
ROJECTED
B
ENEFITS OF
N
EW G
TLD
S
...................................................................45
1.
Analysis of domain name registration volumes .........................................46
ii
2.
Analysis of domain name resale prices ......................................................49
3.
Switching costs and behavior.....................................................................54
B.
P
ROJECTED
E
XTERNAL
C
OSTS OF
N
EW G
TLD
S
......................................................55
1.
Costs of increased registration, monitoring, and enforcement of trademarks across multiple gTLDs ............................................................56
2.
Costs to consumers from increased confusion or fragmentation of the Internet .................................................................................................59
C.
C
ASE
S
TUDIES TO
H
ELP
P
ROJECT
E
XPECTED
N
ET
B
ENEFITS FROM
N
EWG
TLD
S
....................................................................................................................61
D.
U
SING THE
I
NTRODUCTION OF
N
EW G
TLD
S TO
G
ENERATE
A
DDITIONAL
I
NFORMATION
.........................................................................................................63
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Economic Analysis of New Gtlds 16jun10 En
economimc analysis of top level domains
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