Web hosting The Economics of Domain Names

In practice, for most domain name owners, the part between the "www" and the top level domain is their brand, or their name. It is something they need to protect. This means that in practice, a serious organization to avoid confusion has to own its domain in every non-geographical top level domain. For a large company, the cost of this may be insignificant. For a small enterprise, a non-profit organization or a family, the cost becomes very significant.

The chief effect of the introduction of the .biz and .info domains appears to have been a cash influx for the domain name registries. Example Inc. as mentioned above owns example.com, org and .net. Does it also have to buy .biz, .info, and .name to avoid confusion and the misappropriation of my name by others? Will I have to also rent "example.mobi" in case it want to make information available for people who use wireless equipment?

The market for second-level domains is a market for a limited resource. After an unstable period when the first come first served system was in play and greedy squatters grabbed domains simply for speculation, it has now settled down. Introducing new TLDs has two effects.

The first effect is a little like printing more money. The value of one's original registration drops. At the same time, the cost of protecting one's brand goes up (from the cost of three domains to four, five, ...).

The value of each domain name such as example.com also drops because of brand dilution and public confusion. Even though most people largely ignore the last segment of the name, when it is actually used to distinguish between different owners, this increases the mental effort required to remember which company has which top level domain. This makes the whole name space less usable.

Is it fair to reduce the value of these domains which have been acquired at great cost by their owners?

The second effect is that instability is brought on. There is a flurry of activity to reserve domain names, a rush one cannot afford to miss in order to protect one's brand. There is a rash of attempts to steal well-known or valuable domains. The whole process involves a lot of administration, a lot of cost per month, a lot of business for those involved in the domain name business itself, and a negative value to the community..