Nominet's plans to launch the .uk domain – good or bad for UK business?

Nominet, the non-profit organisation responsible for managing the UK namespace, recently launched a three-month consultation on a direct.uk domain name service, which means you'll soon be able to register UK names at the second level – in the forma yourbusiness.uk – in 2013.

The new .uk domain service will provide a shorter string for UK businesses and has plans to include a number of security benefits to promote a secure UK namespace, which includes UK address verification, daily malware monitoring and a digital signature.

However, the current proposal for the new direct.uk domains and the release structure has caused significant backlash from Nominet's main stakeholders – especially registrars, UK businesses and the domain community.

Why has Nominet's direct.UK consultation received so much negative feedback?

Unfortunately, the proposal for the release of .uk domains provides no guaranteed rights to the new .uk domain for the three million businesses using .co.uk, nor the thousands of charities and individuals using .org.uk and .me.uk.

Instead, the new domains will be released as a separate product, which gives trademark-holders priority over third-level domain holders (such as .co.uk, .org.uk and .me.uk) and the general public.

In principle, this means that businesses and organisations that have spent millions of pounds developing and marketing their brands over the last 10 years, including money.co.uk, news.co.uk (owned by News International), bank.co.uk (owned by Barclays), bbc.co.uk and even guardian.co.uk, will not receive any registered rights to the new .uk domain. Instead, an unknown trademark squatter such as this company would receive first rights to some of the domains listed above.

How does this affect UK businesses?

When you consider that the UK has the largest internet-based major economy in the world (8.3% of GDP) and .co.uk is the second most popular country code top-level domain (ccTLD) in Europe, you can appreciate how big a change this will be for the UK namespace.

The proposed price for .uk domains will be £20 per year – an 800% price increase when compared to .co.uk domains.

The direct cost to UK businesses is estimated to be at least £50m, and associated costs could run into billions. This figure takes into account many of the three million businesses that will be forced into unnecessarily purchasing their corresponding .uk domain at auction, migrating to the new .uk domain service, as well as the costs associated with rebranding marketing materials.

Finally, in a recent consultation with its registrars and partners, many of them argued that the planned security features would be largely irrelevant and an unnecessary cost pinned on UK businesses.

Is Nominet just offering the same product twice?

Many registrars and businesses have argued that in releasing direct.uk, Nominet is essentially selling the same product twice. The .uk domain has now been marketed as the premier domain for UK businesses – despite the fact that Nominet has been promoting .co.uk as the home of British businesses for more than 10 years.

As a UK business owner, this means you'd need to bid on the .uk domain in auction purely to protect your existing online brand from being usurped by a competitor on the new, shorter domain suffix. This could lead to traffic loss and brand dilution.

For example, imagine running a business operating on londonplumbers.co.uk and then your competition launches on londonplumbers.uk. Would that not hurt your business and confuse your customers in the long run? This is one of the many reasons why stakeholders and registrars are arguing for the .uk domain to be given directly to the original .co.uk owner.

Which of Nominet's stakeholders does the new direct.uk service benefit?

Nominet is a non-profit organisation that is accountable to a number of stakeholders, including the UK public, businesses, the government and policymakers, and domain registrar partners and their 2,800 members.

It can be argued that the proposal fails to benefit UK consumers and businesses at large because it creates a separate, confusing product that businesses will have to pay for themselves.

It would add vast confusion to the UK namespace and lower the value and reputation of the .co.uk domain as a global brand. Immediately after the direct.uk consultation was announced, DomainIndex.com lowered the rating of the .co.uk domain from AA to BB..

The majority of Nominet's 2,800 members are against the current proposal and in fact already have enough numbers backing an Emergency General Meeting (EGM) in January if the proposal goes ahead.

The main beneficiaries will be Nominet themselves, who stand to raise hundreds of millions of pounds from the new service. In addition, UK domain registrars stand to benefit – these include 123Reg.co.uk (who's CEO sits on Nominet's Board), 1&1.co.uk and DomainMonster.com amongst others.

Questions have been raised about Nominet's financial motives after raising more than £3 million on the sale of one- and two-letter .co.uk domains last year. The value of these domains has already halved since the new .uk consultation was announced, leading to a lot of anger in the domain investor community.

Have your say on the Direct.uk proposal

If you'd like to read the direct.uk Nominet proposal in full and submit your feedback, you can do it here until 7 January 2013.

Adam Grunwerg the Director of ARG Media.

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