Don’t look for flour, sugar and cooking oil in the Bellevue offices of Donuts Inc. You’re much more likely to find people taking advantage of major new changes in the internet rather than plotting the overthrow of Top Pot or Krispy Kreme.
Donuts is an internet registry founded by four men with a lot of experience in the intricacies of internet domain nomenclature. The firm recently raised more than $100 million in venture capital and has spent $57 million to buy rights to new internet suffixes.
That’s right. The world is just too small to be limited to “.com,” “.net,” “.org” and “.gov.” After all, if you’re a dentist, doesn’t it make sense that your branding efforts culminate in DrFeelGood.dentist as opposed to DrFeelGood.com?
The move toward increasing the range of generic Top Level Domain names, more commonly known as gTLDs—those are the internet suffixes to the right of the dot—has been surprisingly subtle given the billions of people it may affect. Subtlety, however, isn’t the modus operandi at Donuts, which has applied for more than 300 of these new suffixes.
“This is a brand new opportunity and it’s really exciting,” says Donuts cofounder and COO Richard Tindal. “The internet is about to go from black and white to color.”
That’s one man’s metaphor and it may be a stretch. But here is what’s happening: There are currently 22 approved suffixes, including “.com(merce),” “.gov(ernment),” “.edu(cation)” and “.org(anization),” as well as 250 two-letter country codes. Earlier this year, the Internet Corporation for Assigned Names and Numbers (ICANN), the private, nonprofit organization that runs the internet’s Domain Name System (DNS), announced an open application process for domain expansion to take “a significant step forward on the introduction of new generic top-level domains.”
From A (“.art”) to Z (“.zone), the suffixes Donuts has applied for suggest an eclectic mix of interests and/or opportunities (see box). Suffixes using nontraditional characters, such as Chinese letters, were also available. (Donuts has applied for characters representing “games,” “store,” “entertainment” and “enterprise.”) The application fee for each suffix was $185,000 to cover costs like program development and application processing. ICANN took in $350 million in fees from 1,930 proposals.
Big companies with familiar names are in on this domain land grab. Amazon, not surprisingly, wants “.book” (so does Donuts), along with “.cloud” and “.kindle.” Google applied for more than 100 suffixes, including “.google” and “.android.” Apple covets “.apple.” Microsoft wants “.bing,” “.docs,” “.hotmail” and about 20 others.
This is not an endeavor for the underfunded. Once a suffix gets ICANN’s approval, the registry must commit to a 10-year lease and pay ICANN at least $25,000 a year to maintain it. In cases where two or more parties have applied for the same suffix, they can try to work it out among themselves—with cash being the most common persuader. If that doesn’t work, ICANN will conduct an auction. Tindal says Donuts expects to spend millions of dollars in the auction phase.
So who benefits from this brave new, expanded internet?
Tindal suggests it will be the consumer. “We think new names are going to be more meaningful, shorter,” he says. “We’re giving to the market domain names that more easily and accurately reflect the identity of whatever a registrant is trying to convey.”
Others think that the big winners are ICANN, which used to be a United States government agency but is now privately run, and registries like Donuts. Mathew Ingram, a Canadian business/technology reporter, calls the new gTLD expansion a “train wreck.” Last June, he posted this comment on GigaOM, a technology blog: “The fact that no one seems to have been clamoring for these new top-level domains raises the question of why ICANN bothered to implement a new system at all. The agency—which has been criticized in the past for its secrecy and lack of accountability—says that it is designed to enhance competition, but others argue that the domain business has been pretty competitive for a long time.”
Donuts itself has raised some eyebrows for its apparent ties to Demand Media, the creator of online content linked to popular search terms. Last summer, a Boston lawyer complained to ICANN on behalf of an unidentified client that Demand Media is a known cybersquatter and that two of Donuts’ founders—Tindal and Paul Stahura—are former top execs with Demand. The lawyer, Jeffrey Stoler, says Demand and, by extension, Donuts, shouldn’t be trusted. According to The Washington Post, Demand shares rights to 107 of the domains for which Donuts has applied. Demand and Donuts also have an agreement that permits Demand to provide technical services to new domains that Donuts acquires. Donuts insists it is a separate entity “bringing variety and choice to internet naming.”
Ultimately, nothing is likely to dethrone “.com” as the king of top level domains. Researcher Thies Lindenthal, who runs IDNX, which tracks the relative value of domain names, says, “It’s pretty safe to claim that dot-com will remain a loyal domain space,” especially since other suffixes approved by ICANN in recent years—anyone remember “.aero,” “.museum” or “.travel”?—have not set hearts aflutter.
Nevertheless, Donuts is betting that someone out there or, more accurately, many someones out there, are willing to pay a lot of money for just the right suffixes to become masters of their domains.
Additional reporting by John Levesque