New Direct .UK Domains to Cost Businesses and Brands Hundreds of Millions of Pounds

New Direct .UK Domains to Cost Businesses and Brands Hundreds of Millions of Pounds

UK domainsNominet.org.uk, the non-profit organization responsible for managing the .uk namespace, has plans to release a new direct.uk product to UK businesses, which has the potential to cause more harm than good.

The new Direct.uk proposal, which is currently in its consultation stage, will allow businesses to register a new form of domain in the 2nd level UK namespace (e.g. yourbusiness.uk) as opposed to yourbusiness.co.uk.

The new direct.uk domain is shorter, catchier and includes a wide range of new security features (including UK address verification, daily malware monitoring and a digital signature) – all of which will make the UK namespace safer.  However, the issues surrounding the release of the new 2nd level domain could create a significant amount of confusion to consumers and cost online businesses hundreds of millions of pounds over the next few years.

How Does Direct.UK Fail to Protect Brands and Online Businesses in the UK?

The current proposal for the release of direct.uk domains gives preference to trade mark holders over businesses.  For example, the owners of the popular financial comparison site Money.co.uk would lose out on the Money.uk domain to an unknown trademark holder.

Several other cases have been pointed out by UK businessman Edwin Hayward, who has written a popular proposal against the introduction of .uk.  These include Barclays Bank, who own Bank.co.uk and News International, who own News.co.uk – both of these companies would lose the right to the .uk domain. Even the BBC.co.uk would lose the right to BBC.uk under the current release proposals.

The failure of Nominet to provide correct provisions for UK businesses to protect their brands above trademark owners will inevitably add confusion to the UK namespace, since in many cases there will be a different company on the .uk than on the .co.uk.

The New Direct.UK Service could cost Businesses up to £50 million

Online businesses make up 8.3% of the UK’s GDP, which is greater than any other country in Europe.  Furthermore, 93% of UK businesses use the. co.uk domain, which is the 2nd most popular ccTLD in Europe and is a widely recognized brand globally.

While the new Direct.UK service is being marketed to businesses and adds a greater amount of security to the UK namespace (which provides a welcoming boon to the UK economy), it will also cost UK businesses millions of pounds.

The added security products which come with the .uk will cost each £20 per year per domain – an 800% price increase compared to .co.uk.

The majority of the 3 million businesses and investors who current operate on .co.uk will be forced into buying the .uk in order to protect their brand, which will earn Nominet hundreds of millions of pounds over the next 3-4 years.

While Nominet has clearly stated that they intend the .uk release to complement and not replace their other UK products, the added security features for the new .uk service will consequentially make co.uk less popular and trustworthy overtime (DomainIndex.com has already downgraded .co.uk from AA to B).  In other words, UK businesses will be strong-armed into buying the .uk for the long-term future of their brand.

James Macfarlane, Director of Inbound Digital Marketing and Mum Network Ltd (which manages popular brands such as BabyNames.co.uk, Pregnancy.co.uk and Babies) stated:

“.UK will force businesses to either buy into it costing them an extra £20 per year or risk diluting their online brand identity if a competitor buys it up. The actual gain of buying these domains other than protecting their brand, in my opinion will be close to nothing.”

Which of Nominet’s Stakeholders does the Direct.uk Scheme Benefit?

Nominet is a non-profit organization, which manages the UK namespace and registrar.  In addition to their 2,800+ members, Nominet’s major stakeholders include the general public, Internet consumers, UK businesses, registrars, the government and the executive board.

While the added security benefits of the .uk domain service will enhance the security and global reputation of the UK namespace, it is unfair that the costs for these security features are being pinned solely on UK businesses.  Unfortunately, UK businesses not only have to foot the bill for a safer Internet economy but they will also lose out on brand protection as well as the cost of editing their range of marketing materials in preparation for the new domain release.

For consumers, while the new .uk domain is shorter and more memorable, it also has the potential to create confusion with the.co.uk. You could have three separate businesses operating on mybusiness.co.uk, mybusinessuk.co.uk and mybusiness.uk.  While the majority of UK consumers would be happy to see. co.uk upgrade to .uk, the presence of both domains operating against each other in the same market place will inevitably cause confusion.

Furthermore, one of the lynchpins of the .uk service includes UK address verification.  However, it is unclear whether Nominet can even guarantee these conditions under EU Law trade barrier restriction or get around various International trademark treaties that the IPO already has in place.  For example, a trademark holder in America would be given .uk domain preference over a UK company with the .co.uk equivalent domain.

The main winners for the Direct.uk scheme appear to be Nominet’s own 9-man board of Executive Directors and the UK registrars that they have a close partnership with.  At least 3 of Nominet’s current Board members have a privately held vested interest in the release of .uk domains (including Thomas Vollrath, the CEO of 123 Reg – the largest domain provider in the UK).  The commercial nature of Nominet’s board can also be seen by the £3 million that they raised for the sale of one and two word. co.uk domains less than one year ago, before their direct.uk consultation plans were released.