ANA's Bob Liodice Says New Web Domain Plan Could Cost Marketers Billions

Disagreement Between Trade Org and ICANN Heats Up

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The Association of National Advertisers leveled criticism at a plan to allow for an almost infinite array of new web addresses, called top-level domains, that could cost advertisers thousands of dollars.

At issue: In June the Internet Corp. for Assigned Names and Numbers (ICANN) agreed to allow for an almost infinite array of new domain endings for websites such as .phone, .coke., .advertising, .facebook, or just about anything. ICANN is the governing body that manages top-level domains such as .com and .org.

ANA head Bob Liodice sent a several-page letter to the head of ICANN, Rod Beckstrom, last week, criticizing the plan, the process and the argument for the move. Said Doug Wood, ANA outside legal counsel and partner with Reed Smith, in a statement: "We have found no consensus for support for the program among businesses, consumers, academics, researchers, agencies or government. The paucity of support suggests an overwhelming rejection of ICANN's assertions that there would be 'benefits' for business and industry at large."

Yesterday ICANN President-CEO Rod Beckstrom sent a letter back to the ANA, denying the ANA's assertions, saying they were "incorrect or problematic in several respects."

Mr. Becktrsom explained that ICANN's process for approving the program involved feedback from multiple parties, including feedback from the ANA.

"Significant actions have been taken to balance the concerns of all interested parties, provide protections for rightsholders, registrants and users, and to ensure that the security, stability, and resiliency of the Internet are not compromised," Mr. Beckstrom wrote in his reply letter, which also stated that the ANA's claims that the program represents unrestricted expansion of top-level domains "demonstrate a lack of understanding of Program details."

Today, the ANA fired back again, with Mr. Liodice issuing a statement expressing his disappointment at ICANN's response -- and calling for more studies as to the economic impact. "There is no question that this Program will increase brand owners' costs by billions of dollars. We should not be debating if 40 or 45 comment periods were held; instead, ICANN should be justifying its economic analysis regarding the Program against the staggering costs to brands."

The ANA said ICANN didn't adhere to its own rules when developing the program and that it didn't adequately consider the ANA's initial notes on the proposal. The cost to set up a new top-level domain is $185,000 with a $25,000 annual maintenance fee -- steep prices that are designed to dissuade cyber squatters who dominated domain names when the commercial internet took off a few decades ago. There will be a "sunrise" period for companies that own established trademarks where the approval process will be more efficient.

Some critics see two main initial beneficiaries: ICANN itself, which will collect huge fees for anyone applying to own a new top-level domain, as well as those disputing them, and trademark attorneys, which will be kept on alert as new domains open up thousands of new potentially-infringing registrations.

"The cost is huge and the potential distractions are large," said John Hines, a partner at Reed Smith. "The problem is they are out there available for the purchase. It is expensive but it is expected that entities will take advantage of the offering."

Should the program proceed unchallenged, the new top-level domains will begin populating in late 2012.

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