Licensing of Brand-Sharing Domain Names
November 28, 2008
The essay outlines a market-driven and value-adding
solution to brand use in domain names. The solution relies heavily
on the Electronic Frontier Foundation's remedy
to music file sharing. I propose its adoption for new registrations
Brand sharing in domain names is here to stay;
desperate attempts to stop it through legal action are ineffective and will do nothing but destroy
value. However, brand owners seem to be more concerned about
protecting brands rather than maximizing brand value and shareholder
return. This may be because the lawyers advising corporate branding
departments steer them in the wrong direction, or it may be that
the departments arrived at their mistaken beliefs all on their own.
A viable solution to brand sharing must have
the following elements:
- Brand name and trademark holders must be fairly
compensated for the commercial use of their IP.
- Value must be created for at least one party,
either the domain or brand owner, without causing harm to the
- The market, not government intervention, must
be the driving force.
- Administering the solution must be easy and
- Voluntary participation by trademark owners
must underpin the system.
The solution concept:
- Brand holders form several "collective societies"
through domain name registrars, making it possible to have brand-sharing
domains (in exchange for a reasonable payment at the time of registration
- The only additional registration restriction,
besides the typical ISP restrictions—no hate promotion,
and no illegal activity—is a ban on e-commerce without a
mutually accepted affiliate relationship.
- Money gets distributed among rights-holders
based on the number of domain names registered. One potential
sticking point is that, although it is legal to have more than
one entity using the mark in the bricks-and-mortar environment,
only one legal owner can be assigned to an online trademark. Nevertheless,
one solution is for the legal ".com" owner of the mark to be the
sole voluntary participating recipient of registration payments.
Below are the sources of potential value creation
for the various stakeholders:
- For domain owners
a. Reduced uncertainty of potential litigation
by IP claimants.
b. The ability, because of brand sharing,
to focus on remixing brand-related content that goes beyond technologically driven
mash-ups of publicly available content. This will give domain
owners the ability to innovate and to capture some of the content's
c. Enhanced reputation among their peers.
Thus, companies should explicitly promote such reputations.
- For brand owners
a. By means of remixing, fresh content to
satisfy restless, attention-deficient visitors who seek customization/personalization,
leading to more fresh content, and recommendations from friends.
Who else besides independent entities can provide all this?
The old school of "control and command" structure and a "one
size fits all" approach to Web site design must change in favor
of creative remixing. Companies should realize that most of
the smart people are not working for them (see Lakhani,
et al). Thus, instead of stifling innovation they can benefit
from the innovation of others. Moreover, competition among domain
owners is good for brand owners.
b. Benefit from the display of their brand's
logo on brand-sharing sites.
c. Targeted traffic received from brand-sharing
Thus, brand owners are paid brand usage fees,
benefit from reduced value destruction as domain becomes more
efficient, save on legal fees, and strengthen branding by means
of active remixing and increased targeted traffic. Hence, the
more remixed brand-sharing registrations, the more money brand
- For the industry:
a. Enhanced industry reputation, with resulting
benefits for domain owners and Internet users.
b. Decreased value-destroying domain tasting,
thanks to the greater expense of domain registration and renewal.
- Internet users benefit from improved user experience
through a decrease in sterile parking pages and the value creation
Thus, collective licensing adds value to
all parties. However, this can only be achieved when brand owners
realize that their current IP protection strategy is value destroying
to their shareholders and that there is tremendous value in openness.
Nevertheless, any solution requires cooperation with domain name
owners, which requires a stimulus package from the domain name community,
such as from the Internet Commerce Association (ICA).