Nominet, the UK’s (non-profit) governing body for domain names, announced proposals last month for a .uk extension for domain names. 

Nominet claims this will ‘support the economic growth of the UK internet’, but this view isn’t shared by many digital professionals, who see it as more of a shakedown which could cost UK business £50m per year.

As 93% of all UK domain names use .co.uk, this has significant implications for the UK’s digital economy. 

Nominet’s proposal

Nominet says: 

To further support the economic growth of the UK internet, we are holding a three month consultation about the potential introduction of a new service known as direct.uk, which would be specifically designed for businesses that are or want to get online, with a new shorter domain name of internet.uk rather than internet.co.uk.

Much is made of the extra security which will verify that every applicant for a domain is from the UK, will monitor the new domains for malicious software on a daily basis, and will add a digital signature to prevent names being hijacked. 

These security measures would be supported by a trustmark to give consumers a clear sign that it was a verified domain name. 

Arguments for .uk

Here are a few pros from Edwin Hayward’s site

  • Simple and logical, easy to remember.
  • Gives a stronger sense of national identity
  • Puts the UK on a par with other countries.
  • Makes more domain names available.
  • Allows people to register desirable names that they missed out on previously.

As mentioned above, Nominet has been talking up the advantages of the new domains in terms of security, quoting the figure of £27bn, which is what it says cybercrime costs the UK each year.

However, as E-commerce consultant Dan Barker points out: 

If you read the report that £27bn figure comes from, you see the vast bulk of that money is actually from espionage and intellectual property theft (specifically pharmaceutical, chemical, electronic, and software IP theft). ie. it’s unlikely their security features would graze that £27 billion figure, let alone put any sort of dent in it.

According to independent marketing consultant Paul Gailey: 

Nominet claims the action is about offering UK business greater choice for shorter domain names and a technically more secure setup whilst bringing the domain inline with other international standards.

Brevity in branding is a conceivable advantage by adopting .uk and I note talk of the advantages of an accompanying official trustmark being lauded but I am sceptical of the exercise achieving an overall net positive impact on internet users as claimed.

Historically the proliferation of TLD’s has followed similar patterns of business resistance to greater costs and maintenance of domain registration, branding and trademark uncertainty and ultimately consumer indifference to a new domain suffix. Even with global consortium backed initiatives to support .mobi for example, the domain has not become a cultural norm. And therein lies the folly of this sales-led project. Old habits die hard.

The real uncertainty for UK business is the risk of inaction if this change comes into force and drawing the line on obtaining all variants of available domains and usernames. Let the debate ensue.

Problems with the proposal

The cost for UK businesses

As a business with an established .co.uk domain, you simply can’t afford not to acquire the .uk equivalent. If not, you run the risk of your existing domain being diluted by the shiny new .uk versions, or being exploited by competitors and others wanting to divert some of your brand traffic. 

According to Edwin Hayward, the changes will cost UK businesses £50m. This figure doesn’t take into account additional expenses which will be incurred. 

These extra expenses include changing all of the stationery, brand costs, PPC changes costs, possible SEO implications, technical costs, and renewals of “.co.uk” and “.uk” domain names each year.

As Dan Barker points out, ‘it’s quite sad to think of the amount of money it would cost UK business, with no real upside’. He has has come up with some ‘back of the envelope’ figures on the potential costs for UK businesses in employee time. 

To illustrate that point, here is a ‘back of an envelope’ look at the amount this will cost UK business in employee time alone. Dan has ‘lowballed’ this at every step.

  • At the start of 2012 there were 4.8 million businesses in the UK.
  • Let’s say that 20% of those own a domain name. (that’s 960,000. Again, we’ll pretend they only have one domain name each).
  • And let’s lowball again and say that an hour of time in one of those businesses at a ‘decision maker’ level costs £25.

Let’s look at what each of those 960,000 businesses would have to go through in order to understand and buy one of these domain names:

  • Research what the whole “.uk” thing is all about. (30 mins)
  • Decide whether it’s worth it. (30 mins)
  • Write up a proposal to buy it. (90 mins)
  • Understand the process for buying it. (60 mins).
  • Go through the process of trying to purchase it. (60 mins)
  • That’s 4.5 hours in total.

Based on our lowball estimate of £25 for an hour of ‘decision maker’ time, that’s: £108,000,000. 

That’s a lot of expense for no real gain. Also, as Dan points out, this doesn’t include the domain registration fee, or the cost of acquiring it at auction, as well as the amount of money those employees could have made doing other things.

The tricky task of acquiring your brand’s .uk domain

This is the really odd part. You might think, since a retailer or brand has an already established .co.uk domain, they should get first dibs on the .uk version. But no, this isn’t what Nominet are proposing. 

According to Edwin at mydomainnames.co.uk: 

Existing domain owners will have to prove that they are entitled to the matching .uk domain name, or buy it at auction (if it hasn’t already been taken by a trademark holder).

Here’s a list of generic domain name holders who stand to lose out from the proposals, including Barclays and Kellogs. 

Price rises

In addition to the other costs outlined above, a .uk domain will cost £20 per year, a big rise on the £2.50 per year for a .co.uk.

If you just have one domain, this extra cost, though unwelcome, may not make much of a dent in your finances. However, if companies (and many do) have multiple domains registered, these costs will escalate. 

The effects on .co.uk domains

Dan Barker: 

I like Nominet, I am a customer of theirs, and I think they do lots and lots of good. But I’m not keen on this. There are lots of obvious risks around “.co.uk” domains suddenly becoming less valuable or less trusted, around people setting up things like “.tv.uk” or perhaps “.vc.uk” for voucher codes, and then reusing [yourbrand].vc.uk, etc.

Who benefits from this? 

For businesses, it seems that they will potentially occur a lot of extra costs for very little benefit. So why, if Nominet wants to support the growth of the UK internet, is it doing this? 

Edwin Hayward has a few theories of why Nominet has proposed the .uk domain: 

For money and power, and because it’s the last chance they have before new GTLD come in. This will make £50m+ per year in extra registration fees, and potentially hundreds of millions in auction revenues. 

The winners from this are Nominet, registrars, and trademark holders, while the losers are existing .co.uk registrants, UK businesses, the credibility of .co.uk namespace, and trust in .co.uk. 

In fact, a similar proposal was put forward in 2005 (quietly to the Policy Advisory Board, not to the public) and was voted down 11-0. This PAB board was abolished in 2010, and now Nominet ‘oversight’ is from Nominet Members, who are mainly registrars. Of course they love .uk, a new, premium product to sell to their customer base. It’s like farmers voting for Xmas without asking the turkeys. 

Nick Patemen echoes this view on business2community.com:

Of the 9 decision makers for this proposal, 4 of them come from backgrounds with a vested interest in the outcome.

What can you do about it? 

We are still in a consultation period, so there is a chance that the proposals could be rejected. Nominet has a (very long) feedback form which enables you to give your opinions on the proposal.

As Edwin says, it can take a good 90 minutes to complete, but if you feel strongly about the proposals, it’s worth spending the time. 

In summary

While I can see the possible benefits of shorter domain names, the security argument doesn’t hold much water to me. As Dan Barker points out, the extra measures proposed for .uk domains will barely make a dent in the £27bn costs of online crime.

In addition, if security is such an issue for Nominet, why not add these extra security measures for existing .co.uk domains? 

For the UK’s online businesses, it seems they are open to millions in extra costs with no conceivable advantage. They will be forced to grab the .uk equivalents of their domains, just to guard against the threat from third parties picking them up. 

There is the £50m estimate, there are further costs in staff time, acquiring .uk domains via auctions, changing stationary, possible SEO issues and more. At a time of economic uncertainty, this is more than unwelcome. 

The only clear beneficiaries of the new .uk domains are the domain registration and related companies, who stand to profit from selling the new domains. 

It seems that the UK’s online businesses are being asked to fork out £50m+ for no real gain. 

What are your views on Nominet’s proposals? Please let us know below, and vote in our Twtpoll.