John Palmer

["Leo Smith" <barter@ntplx.net>]

I AGREE 100% with John Palmer's premise that a  registry needs ownership
to ensure that the investment is worth the risk. There exists a fear on the
part of some IAHC members that Exclusivity and Abusive Excesses are
synonymous. Under a Exclusive Licensing setup, where the exclusive licensee
must sublicense the rights to market the gTLD to all other CORE members,
the Abusive Excesses are held in check, while at the same time providing a
sound business basis for capital investment involved in financing a
registry.

Some rationale for a sublicensing setup with exclusive licenses follows:

The primary objective in expanding registries and gTLD names is to benefit
the Internet. That objective is realized if the structure created fosters
continuing success for the registries, while at the same time benefitting
the Internet. Any system that inhibits success for the registries will not
work well in the long term, and the benefits to the Internet will be offset
with new problems of how to deal with failed registries.
The assumption made by IAHC is that a completely SHARED registry system
will work well to improve benefits to the Internet. To do so, the SHARED
model must also offer an environment that encourages success and competion
among registries.

Examine some of the long term ramifications of a completely SHARED system,
where no exclusive license exists for a gTLD. Let's say that 20 new
registries are created on April 1, 1997, with each registry owning no
exclusive rights to any of the 7 new gTLDs, and competing among themselves
for the share of the market. From a business perspective, the first item on
the agenda is to define the market. The market for the new gTLDs depends on
their "value", which, in turn, depends on the letters. For example, if IAHC
issues 7 new gTLDs of .law, .music, .medic, .sex, .toys, .soda and .medic,
then marketability  might be tremendously greater than if the new gTLDs
were .pqa, .fza, .err, .swlm, .ttdv, .mox and .krka. 

At this point, without knowing what 7 gTLDs will be selected for use, it is
impossible to define the market size for them. Without being able to define
market size first, a fundamental factor is now missing from the formula
used to determine whether the $20,000 investment represents a good business
decision.

Once the market size were estimated, the 20 to 30 registries would take the
even more important second step of developing a business strategy for
capturing a sufficiently large segment of the market to justify the
investment needed to create the registry. Without an exclusive right to a
particular gTLD, and with all registries sharing the same bank of available
gTLDs, market share will be determined by expensive and aggressive
advertising and promotion. Of the 20-30 new registries, no all will be
bankrolled equally. More deep pocketed companies may engage in costly
marketing campaigns, for the same reasons that AOL recently spent over
$150,000,000 in advertising to capture 330,000 new subscribers. Registries
not able to financially afford the aggressive marketing campaign will face
a steep climb in their effort to gain marketshare. The likelihood of
registry failure in the SHARED environment is greater than it is in an
EXCLUSIVE one.

Under an EXCLUSIVE license, the registry at least owns the exclusive rights
to market one gTLD name. The question of the market value of the gTLD still
needs to be answered, but at least the exclusive license offers a
counterweight to the 4 or 5 financially deep pocketed registries that would
otherwise capture 80% of the new market. (In marketing, the standard rule
is that 20% of the customers represent 80% of the business...the same is
likely to hold true among registries, where 20% of the registries will
capture 80% of the business). With an exclusive license that is then
sublicensed to all other CORE members, the registry makes money even when
the sale is made by a deep pocketed CORE member.

What works best for Internet ultimately must be a balance that fosters a
win/win environment...a win for Internet with improved levels of service,
and by financial success to businesses that bring these improvements to
fruition.----------