Sunday, February 17, 2013

Scarcity by design, not by definition

As we have seen in the previous post of this series, there has never been a real scarcity of domain name extensions, but a carefully planned creation of new ones to feed the market throughout the years, with the exception of the country code TLDs and their international character set support. Beside the mere cost of a domain name, whether it is a regular one, an internationalized domain, or one of the nearly 2,000 soon-to-be launched over-priced extensions, there are still hidden costs to be aware of, most of them being external ones.

A positional good

A domain name value is mostly a function of its ranking. That ranking can be expressed by its desirability factor: a brand values its name, consumers value the brand name and the image it conveys. It can also be expressed as a search engine optimization factor: if you want to appear in the top positions for search engine queries, your domain name is part of the equation. Furthermore, if your domain is a bit low in the SERPs (Search Engine Results Pages), the users will ultimately recognize it and click on its link as they will know it beforehand.
The economics concept of positionality takes here a new meaning.

External costs of too many extensions

In a world where about two thousand domain name extensions will coexist, how are we, as users, going to remember a specific one, and how are we going to discriminate between them?
What is the difference between, say,, and The extension should give us a way to understand its content, so the .book and .movie should be meaningful, but what is the content host and who's behind it? Maybe it will be a single seller like Amazon or Barnes & Nobles, maybe it will be the editor's, or the author's web site. Is there still enough space for fan sites?
So what about or What face value do these domain names convey?

And we are only focusing here on brands rich enough to be about everywhere. What if .books finally belongs to Google and .movie to Webdeus Inc. (aka Radix, or Directi)?
Let's say .books belongs to the XYZ company. That company is in charge of the main extension and can sell any domain name under it to whoever it wants to. Does it mean they will endorse a specific guaranty about the web sites contents?

The only way for users to find information will be by using search engines and/or social search. Nothing really new for that matters.
But they will be overwhelmed by all those sites, and the value we give to specific extensions (.com versus .ca or will be lost among a thousand others.

The cognitive overload of that choice is one of the external costs users will have to pay, as well as search engines, and there seems to be no external benefit in the end.

External costs of internationalized domain names

The mere fact of enabling internationalized domain names (IDNs) created its own drawback too. As all current internet users have been taught to forget about any diacritic within the domain names they type in, there is no real need for an accentuated domain name matching the unaccentuated one. However, to prevent cybersquatting, accentuated brands need to buy their accentuated domain name.

The most important advantage of IDNs comes for non-Latin alphabets. Up to now, brands were used to transliterate their name for global awareness, even on their local market, and thus they got the habit of using a transliterated domain name.

For instance, Uniqlo, a Japanese clothing brand, use the domain name (hence written in rōmaji), and even its Japanese version,, redirects to, while their fully internationalized domain ユニクロ.日本 does not even exist.

On the other hand, Beeline, a Russian telecommunications brand, is both accessible through and Билайн.рф, its cyrillic version.

So the integration of fully internationalized domain names is still an in-progress process, and we should see more and more localized domains, for which the new generations of users will be more used to than ours.

Scarcity or not

There is no question of the artificial scarcity of domain names. We have been living through a period of time when the internet needed to be limited in its space, as the network had to reach a certain level of acknowledgment to drive its growth, hence a limited number of domain names extensions and of alphabets support. We can think that period was useless, too long, or that the freedom of naming had to be canalized differently (a quantum leap of all alphabets and all extensions available at the same time, with all the possible litigations to address, being an extreme case of liberalization). The solution implemented by the ICANN, however, limits the access to a certain number of extensions by the price entities are willing to pay, and permits them to apply for generic extensions not linked to brand claims.
Like it or not, one thing is certain: the future of domain names is upon us.

Photography: Faucet Fountain, by D.H. Parks (CC BY 2.0)

Une rareté par choix, pas par définition (in French)
Uma escassez por escolha, não por definição (in Portuguese)
Una escasez por elección, no por definición (in Spanish)

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