Tuesday, July 26, 2011

Do Free Markets Make It Worse? The Case of New TLDs...

A big thanks to my friend Jon for sharing with me this great blog post by "A Smart Bear".

That famous institution of Internet governance, ICANN, is at it again. They recently announced that they will start selling new Top-Level Domains (TLDs) for $185,000 each. This means that in the near future not only will there be websites ending with .COM, .NET, .EDU, .ORG, etc., but also basically anything else that can be dreamed up. For example, instead of http://www.robdomanski.com, I can register the domain name http://www.rob.domanski.

Of course I can only do so if I'm willing to pony up that hefty $185,000 fee, in contrast to the usual $35/year.

Jason from "A Smart Bear" argues that this is the "dark side of free market capitalism". He's absolutely right in pointing out that ICANN's statement about how these new TLDs will somehow spur innovation is completely bogus, and it's one which I've never understood. As he so glibly puts it, "There is zero innovation in making the URLs be dumbass.canon instead of dumbass.canon.com.

However, he seems to take a great leap in suggesting that it's actually harmful. He first makes the charge that ICANN is more interested in making money than innovation - which would be reasonable except that ICANN is a not-for-profit institution (an awfully inconvenient fact that leaves me scratching my head).

He also says that the new TLDs are harmful because "Today when you want to tell someone a domain you say "asmartbear.com," and people understand they're supposed to key that into the little field at the top of a browser window. But if my TLD is just "asmartbear," what do I say?

I agree that that's problematic, but it's only a problem for those companies dumb enough to purchase one of these new TLDs in the first place. What harm is there to the rest of us? People will still understand that "asmartbear.com" refers to a website just as they do now.

Finally, he goes on to describe how free markets make things worse...

Here's where the free-market folks pipe up to argue this is the way it should be. Because: Even if you admit that it’s a useless product, preying on the ignorance and fear of big brands, if ICANN can legally do it, and if those brands want to spend that money, then that’s exactly what they should do... If it's a poor product at an unreasonable price, the market will correct. The market is efficient and wise.

I guess I'm one of those "free-market folks" he's referring to because, even though I happen to think the new TLDs are pretty dumb and useless, I see no harm in them either. If people and businesses have more options to choose from, how is that a bad thing? And really, who am I to decide?

His comment describing the free-market folks' argument actually nails it on the head. I would only take issue with how he says "the market is efficient and wise". It's not. Free markets are a mess and are filled with lousy decisions, and that's what makes them work. If a business wants to spend $185,000 on a confusing TLD for their domain name branding, let them. It should be their mistake to make - so long as there are no new mandatory rules or regulations being applied to the rest of us.

Any item is worth what it's purchaser will pay for it.


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