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BUSINESS
Entrepreneurs & Startups

Start-ups see gold mine in burst of Net domains

Laura Baverman
USA TODAY
Fadi Chehade, CEO of Internet Corporation for Assigned Names and Domain (ICANN), at the opening of the ICANN Singapore meeting on March 24, 2014.

Visit GoDaddy for a new Internet domain name and you'll be greeted with an advertisement for one of at least 16 new domain alternatives to .com, .gov or .edu, descriptive of whatever it is you're trying to do.

Are you an expert? There's .guru. Starting an organization? Try .club. Opening a restaurant in New York City? Consider .nyc. Running a daily news site? How about .today?

The new names, called generic top-level domains (gTLDs), might seem like they were created overnight. But seven years of international discussion and debate, and billions of dollars of investment are pushing these and hundreds of other new names into the market this year and next. And Internet enthusiasts and experts predict they'll cause the next online gold rush.

This will be true in particular for small businesses and start-ups, they say. Why? Because, just like in the bricks-and-mortar world, location matters. Businesses are only as good as a customer's ability to find them. And with 270 million Web addresses already claimed — 110 million of those .coms — it's getting harder to snap up a good one.

That opens up two major opportunities for start-ups: creating new registries around the new gTLDs, and registering domains (through registrars like GoDaddy) and building businesses around them.

Andy Churley is leading the charge for a Gibraltar, Spain start-up called Famous Four Media that raised $100 million in venture capital to create at least 60 new registries. So far, 15 have been approved by the domain name system's governing body, Internet Corporation for Assigned Names and Numbers (ICANN). They include .trade, .webcam, .science and .men.

The investment is a big one — $185,000 to apply for a single registry, additional legal fees to defend against objections allowed through ICANN's approval process and, now, marketing and operational costs associated with creating a registry, Churley says. And Famous Four still competes with other entities for the other 45 names.

More common are small companies snapping up new domains to serve certain industries, betting that more descriptive names will offer better exposure and help businesses save money on pay-per-click advertising and search engine optimization. For example, Mexico City start-up Punto 2012 on June 15 will release registries for .bar and .rest, marketing names to the restaurant and bar industry.

Luxury Partners of Beverly Hills, Calif., is targeting high-end boutiques, manufacturers, vehicles, consumers and retailers with .luxury. It hopes to be a central place for engagement around luxury brands and is charging a premium annual rate of $799.99 (and more) to get in early. Considering most names go for $10 or $20 a year, Luxury is betting big there will be interest in an elite domain community.

.CLUB Domains has raised $7 million to create the .CLUB registry, and so far has sold nearly 50,000 names to become the second most popular of the new domains (behind .guru with 56,000). Besides registering new names, the Florida start-up also offers tools to help start, grow and manage clubs and organizations, not typical offerings for a domain name registry.

But marketing is key for any registry or start-up entering the field, says Ben Anderson, product director for new gTLDs at NetNames, an established registry operator. Despite GoDaddy's ads, consumers are still generally unaware of the change to the domain name system. And Google, though it applied for nearly 100 of its own gTLDs, hasn't yet announced how it will rank the new domains in its search engine.

That's causing some hesitation among business owners and entrepreneurs to buy and promote the new domains. Fewer than 1 million names are taken so far, Anderson says.

"The word of caution (is) not many day-to-day Internet users understand that these TLDs exist," he says. "If you build up a business around one of them, will your consumers understand?"

But young companies like Churley's are bullish anyway. They believe it's only a matter of time — along with some education and promotion from the likes of GoDaddy — for the power of descriptive names to prevail.

"It's like a rebirth of the domain name system," Churley says. "There is the opportunity to grow at a phenomenal rate and redefine how the domain name system works in the future."

Laura Baverman is a Raleigh, N.C.-based business journalist covering start-ups and entrepreneurship for regional and national publications. She previously covered entrepreneurship for the Cincinnati Enquirer, a Gannett newspaper. Baverman can be reached via e-mail at lbaverman@gmail.comor Twitter @laurabaverman.

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