Divesting a Dot Brand: Good for a Company’s Brand?

In 2012, Guardian News and Media Limited (GNM) applied for registry operator rights to the .Observer Top Level Domain (TLD). The .Observer TLD was to be a safe, secure, and globally recognized online space for high quality, open journalism1. As the world’s oldest Sunday newspaper, The Observer was always at the forefront—the first newspaper to release podcasts as well as the first to launch its own blog documenting internal decisions. Having rights to the .Observer domain would also be unprecedented, given that the Internet Corporation for Assigned Names and Numbers (ICANN) had permitted business entities to own their very own piece of the internet for the very first time in 20122. The .Observer TLD would have been The Observer’s independent representation, a vital piece of online real estate, as it does not own observer.com3.

GNM’s business philosophy is to produce passionate and truthful journalism. This philosophy starts at the top—with its parent company, the Scott Trust—trickling down to the board of directors at GNM. Scott Trust protects the financial and editorial independence of the Observer by funding its journalism with a portfolio of investments4. And since the summer of 2016, the Guardian Media Group has also sought financial support from its readers. Starting at $6.99 a month, readers could support quality, independent journalism4.

Divesting TLDGNM has to be creative, even disruptive, in its business models and strategies to uphold its business philosophy5 while fending off threats facing the media industry as a whole. But in July 20166, GNM sold its rights to the .Observer TLD to Top Level Spectrum (TLS) for just under $1 million USD. From that point, the .Observer TLD became a generic TLD in which registration was open to anyone, no longer exclusive to GNM’s The Observer7.

Registry operators such as TLS are known as portfolio gTLD players. This means that TLS owns more than a few TLDs and relies on mostly unrestricted domain registrations within them to generate revenue. TLS quickly identified news organizations as primary prospective registrants for .Observer with the objective to leverage the hundreds of years of built-up brand equity behind the “observer” reputation8.

As part of the deal with GNM, TLS commands that domain registrants must agree “not to use the domain to be obscene, offensive, libelous, slanderous, or otherwise defamatory towards Guardian News and Media Limited.” Domain registrants are further not permitted to register any of these names9—all of them except one can easily be associated with a core activity at The Observer.

• guardian.observer
• news.observer
• sunday.observer
• daily.observer
• sports.observer
• the.observer (confusingly similar to the Observer and Observer.com)
• foodmonthly.observer
• thenewreview.observer

When GNM sold their rights to the .Observer TLD, they gave up all control over the space. Outside the scope of the .Observer Registration Policy under TLS, GNM is helpless when questionable domain names are registered—more than 5% of .Observer domain names containing typically offensive words were registered within a year since the sale. The bulk of them resolve to parked pages for the time being and are not “used in obscene, offensive, libelous, slanderous and defamatory ways” towards GNM. The problem is, the domain names themselves are shocking, literally and figuratively. These names are also very visible and highly accessible to any member of the public.

We don’t know the details of the deal between GNM and TLS, but we are certain that GNM would have tried to retain its dignity in the .Observer space. Yet TLS, being a for-profit portfolio operator, is inclined to keep this space freely available. It’s been just over a year since GNM divested the .Observer TLD and since then, 448 domains have been registered10. The registration revenue from 448 domains priced at $12.00 USD each is a fraction of the TLD’s fixed costs. Whether or not this revenue model is a viable one remains to be seen. There may be further changes to come in the .Observer space. Worst case scenario is, GNM may regret its divestiture decision.

Lesson learned: .brands should understand that they themselves hold the true value of their TLDs. Selling a .brand TLD is unlikely to help cover costs, and could be a detrimental decision overall.

To find out how you can get the most value from your .brand TLD without having to divest it, we’re ready to talk. Request for a .brand strategic analysis.


10As of 23 Aug 2017