Many CEOs, CIOs and CFOs have recently stretched their minds and pockets to consider applying for top level domains, through the new gTLD Program.

Last year, the Internet Corporation for Assigned Names and Numbers (ICANN) launched the program. The goals are to enhance competition, consumer choice and enable innovation through new characters and internationalized domain name (IDN) top level domains. These new top level domains will include extensions in non-Latin scripts such as Arabic, Chinese or Cyrillic. For example, a top level domain name for your company would replace the “.com” suffix with “.yourbrand”.

The new gTLD Program will expand the domain name system (DNS) and change the internet forever. The question is should you apply for your own top level domain?

When you apply for a top level domain, you are applying to operate a registry business. You will be responsible for a critical and highly visible piece of the Internet, just like Verisign is responsible for all the domain names registered with .com domains.

Buying a second-level domain name is like leasing a house from the real owner – the one who holds the top level one. Owning your own top level domain is like owning a city and renting it to millions of people.

Who should apply for a top level domain?

Apply for a top level domain if your company is a B2C or B2B that strategically plans to change its business model to B2B2C. Otherwise, it is likely to be just an expensive branding exercise that will not yield any dividends. If you cannot monetize your top level domain through domain registry, it’s more likely you will lose money on the initial costs and annual fees.

A B2C business will enjoy an ongoing revenue stream through the sales and renewals of domain names. The company can also create new internet services that complement the domain names from traditional to cloud hosting.

If you own a top level domain you can charge as much as you want for domain names. The stronger your brand or unique services, the more you can charge. Also, the gTLD is an opportunity for a global company to establish a geographically based structure while bypassing the complicated country top level domains and country extensions. It is an opportunity to engage large communities and increase market reach by providing access to billions of people whose local languages use non-Latin characters.

Owning a top level domain also carries risks and responsibilities beyond the initial large application fee. Starting the operation does not guarantee that revenues will flow and profits will occur. You will need to comply with all the obligations of your registry agreement with ICANN for at least 3 years. Your company will have to employ highly skilled technical personnel or outsource to a trusted technical partner. You will encounter competition from other new and unexpected top level domain owners.

The new gTLD program is at the cutting edge of technological innovation in uncharted territory. It’s good for businesses that can leverage on offering domain registry services that have the financial strength to continue for 3 years even before reaching breakevn. Owning a top level domain through the new gTLD Program fits very well with a global B2C (or B2B3C) corporation with large communities of online users.