As you may already know, Nominet plans to introduce the .UK extension to the UK market some time next year. If you are completely unfamiliar with what I am talking about, Nick wrote a fantastic post detailing the basics of the .UK extension earlier in the week.
In this post, I want to shed some light on why the .UK proposal is possibly the greediest thing that Nominet have ever put forward; and also why Nominet, as a governing body, is easily corruptible.
“My firm impression is that some other directors would like to eliminate the membership’s control of the organisation and are not committed to the company’s not-for-profit objectives.”
Let’s kick things off by briefly looking at the corporate structure behind Nominet. The government does not run Nominet – it is set up as a private, not for profit organisation and is run by stakeholders as well as a small board of 9 members. The stakeholders are essentially members of Nominet that pay £500 per year for membership – Nominet members own their own domain registration tag. For instance, a company that I run has its own domain registration tag; this means that we can register domain names directly from Nominet rather than going through a domain registrar such as 123-reg.co.uk. Currently Nominet claims that they have over 2800 members that pay this yearly fee. The idea is that when Nominet look to introduce new rules/regulations the members get to have their say in what should and should not be happening. While it might seem like a very democratic system, the reality is that the board members have a majority rule. More information about Nominet’s structure here.
In 2008 Angus Hanton, a director of Nominet resigned with the following statement: “The company [Nominet] is meant to be controlled by, and answerable to, its membership as well as having duties to the wider community. My firm impression is that some other directors would like to eliminate the membership’s control of the organisation and are not committed to the company’s not-for-profit objectives.”
(Source: http://www.theregister.co.uk/2008/11/13/nominet_director_resigns/)
Immediately this rings alarm bells… it implies that the board may have started to operate in their own best interest, rather than in the best interests of the members and the wider community.
.UK: Who Wins?
So now you have a bit of background about Nominet and its corporate structure; so lets take a look at who wins when .UK gets introduced.
Quite obviously, Nominet stands to make a huge amount of money if the .UK gets released with an expected price point of £20 per year. With over 7 million domains registered with UK extensions, you can bet that most companies that operate on a .co.uk or similar will most be forced into buying the .UK version of their name. This means that in the first few weeks of release there is going to be a huge rush to register millions of .UKs and that money will be going directly into Nominet’s pocket.
The second group to gain will be the domain registrars and the hosting and auction services. Services such as 123-Reg will see a massive increase in registrations during this period followed by a sharp increase in yearly renewals as well. Hosting companies will also enjoy an increase in custom, simply because there are new domains available; and auction sites such as Sedo will see a rise in commission while everyone tries to buy and sell the new .UK premium names.
So why do we care about these companies gaining? Well what if I told you that out of Nominet’s 9 board members, 4 of them have or have-had a vested interest in companies that are involved in the services just mentioned. So who are they?
- Dickie Armour – General Manager of Fibranet Services Ltd (Domain Registrar Service)
- Nora Nanayakkara – Previously Worked at Sedo.
- Thomas Vollrath – CEO of 123 Reg, Domainmonster and Heart Internet.
- Sebastien Lahtinen – Director of Hosting Company NetConnex.
While it’s not fair to accuse these people of acting in their own interest based on their job titles alone, my question is… should a small group of 9 people with separate vested business interests be able to strongly influence and change a market that almost every business in the UK has an interest in? Especially with what a previous director said before resigning – I’m not a cynic, but it certainly makes you wonder.
The final winners of the .UK proposal are trademark squatters. With the way that Nominet proposes to release .UK domain names, trademark owners get first dibs on their marked name. Companies that run on a .co.uk domain but do not own the trademark to that domain will lose the right to apply for them before anyone else.
Some big ones are: Barclays who own bank.co.uk will lose Bank.UK, Tickets.co.uk will lose Tickets.UK, News international will lose News.uk and Money.co.uk will lose Money.UK. These companies will lose their right to the .UK regardless of the fact that they operate large, respected and legitimate websites on their existing .co.uk name. And all of this because of one trademark squatter who registered 30+ premium Trademarks in 2008. You can see all the trademark he owns here.
Most of the trademark claims he made were very unique, such as trademarking the word ‘money’ as a class of sewing or ‘tickets’ as a type of scented candle. This squatter will be made a millionaire overnight if trademark holders get priority to the .UK domain.
.UK: Who Loses?
The main losers from .UK being released are the smaller companies that already run their business off a domain name. If I build a brand on pregnancy.co.uk and I don’t own pregnancy.uk, I will lose a certain proportion of type-in traffic to confused consumers looking for my site. If a competitor buys the .UK version, it is then very confusing to my visitors and dilutes my brand; which effectively forces me to buy the .UK version at a cost of £20/year per website. This is simply an added cost that I have to pay for in order to protect my online property.
A Final Thought…
The immediate winners from introducing .UK will be a select few of already very rich individuals. The real losers will be millions of small businesses having to fork out more each year to protect their web presence and amending marketing material.
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