Are auctions the best solution for allocating a new TLD when there are several applicants? A study commissioned by ICANN and now made public says yes.
Since the new gTLD implementation program was okayed by the Board at the Paris meeting in June, ICANN staff have been working to iron out the details of what promises to be a complex process. These include what to do when more than one application is received for the same TLD.
At the Paris meeting, ICANN CEO Paul Twomey explained that ICANN was looking into auctions as a possible solution. Since then, auction specialist and ICANN consultant PowerAuctions has studied the potential benefits of auctions as a mechanism for allocating gTLDs.
No-one will be surprised to learn that the study's conclusions are very much in favor of the auction model. In particular, the study notes that:
Applicants whose true intentions or abilities are to serve many users would be able to justify higher bids than applicants who will serve few users;
Applicants capable of providing high-quality service at low cost would be able to justify higher bids than low-quality, high-cost applicants;
Applicants who intend to develop the gTLD immediately would be able to justify higher bids than applicants whose purpose is to hold the gTLD, unused, for speculative purposes.
Some people will undoubtedly feel these conclusions are so biased towards the auction system as to be suspect. However an alternative way of allocating gTLDs is not easy to find. If you have any ideas, ICANN has opened a public comment period on the auctions study. Email your thoughts and suggestions to them on auction-consultation @ icann.org by September 7th.
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