Masters of their domains

A new generation of web addresses is up for grabs. Will the big brands be tempted to splash out – and if so, will it just be to stop the labels falling into the wrong hands?

It was one of Blackstone's more eye-catching purchases.

To its portfolio of assets, which includes the Center Parcs chain and Hilton, the hotel group, the private equity giant last week added two internet addresses: blackstonesucks.com and schwarzmansucks.com.

The company, whose chief executive is Stephen Schwarzman, isn't expecting to make a huge return on its outlay. But the deal underscores how seriously firms are taking their image in cyberspace.

The subject is about to become a lot more serious. Coca-Cola's 1990s slogan "Can't beat the real thing" may need to be revived as the global drinks giant joins 2,000 other big brands in a fight to own their identity online.

Last Thursday, a vast array of new domain names was put up for grabs in the biggest change in the history of ther internet. Never mind dot.com and dot.co.uk – everything from dot.coke to dot.london will be available from November.

It presents companies with a quandary. Should they grab what they can, at great expense, or let cybersquatters do their worst? Topshop could bid for dot.topshop while Pepsi will try to buy dot.pepsi, but only the richest need apply. No wonder some of the world's biggest consumer brands aren't exactly delighted by the move.

The Internet Corporation for Assigned Names and Numbers (Icann), the body in charge of internet addresses, is releasing as many as 1,000 new "generic top-level domains" (gTLDs).

The California-based charity that governs the rules of internet will accept applications for new domains until April, and then will spend the summer deciding which it will allow.

The idea behind the move was to allow a number of non-English speaking countries – such as the growing number of Arabic and Chinese internet users – to benefit from new domains.

But America's Association of National Advertisers (ANA) has been vocal against Icann's plans, citing the major issues of the lack of benefit to the consumer, the huge cost and the risk of fraud.

"While we are constantly looking for innovative ways to engage with our consumers, we must weigh this against the potential impact any proposed changes in top-level domains would have on our ability to protect our trademarks, which are among our most valuable assets," a Coca-Cola spokeswoman said.

The plan to open up domains has been in the pipeline for more than five years but could still come unstuck if the European Commission, the United States Department of Commerce and ANA have their way.

In a letter sent to Icann last week, Larry Strickland, the assistant secretary for Communications and Information at the US Department of Commerce wrote: "We have learned that there is tremendous concern about the specifics of the program that may lead to a number of unintended and unforeseen consequences that might jeopardise its success."

Mr Strickland wants Icann to implement measures that will minimise the need for brands to make "defensive registrations" of names they do not want to pay for but may feel they are being forced to in order to protect their brands.

Nathan Williams, a senior strategist at the brand adviser Wolff Olins whose clients include Expedia, Skype and Oxfam, says: "My advice to companies would be if you have the money, you should invest just in case, but we really don't know how important it will be. Most big brands already buy up sites such as websites with the companies' name with ihate as a prefix. I am sure this defensive investment will continue for the big brands."

Canon, Deloitte and Hitachi are among just a handful of companies that have confirmed they will bid for one of the new domain names. Others are more secretive, fearing unwanted competition.

But will the general public even notice? Apple, for instance, doesn't own apple.co.uk but the people of the UK know when they have found the right Apple site.

Sukhbinder Singh Gill, the chief technologist at Hewlett-Packard in Europe, says: "The days of when the full internet address mattered to the average consumer are long gone. People now Google search names and search to find the right website rather than enter in the full address in their browsers.

"Whether something is a dot com, dot gov or dot anything matters very little now. The opening-up of the options of domain names may mean consumers will have to search more to find the right site but I would have thought most won't notice."

Hugo Dalrymple-Smith, the head of Sedo London, a trading platform for premium domain sales, says: "We see from history that new top-level domains can be introduced and be successful, but dot.com has always remained up front and centre. Will that change some day? It is possible, but there would have to be a major shift in user behaviour in the dot.com and associated areas before those were not the first domains that come to mind."

The prices paid for the current set of available websites is already huge – just this month Dudu.com was sold for $1m (£653,000) to Dubai-based social media network Dudu. One of the chief beneficiaries of the change will certainly be the countless advisers and lawyers that will spring up as experts in the field encouraging companies to part with cash for advice on how to navigate the technical and complicated route through the domain name highway.

Roland LaPlante, from advisory firm Afilias, urges: "While the applicants may apply for a dot brand by themselves, we recommend that interested parties consult an experienced technical domain services provider to help with the application and implementation process."

The costs of paying advisers will mean small and medium-sized companies won't even be able to consider contending.

Start-up online business sofa.com bought the sofa.com name for £200,000 in 2006 but founder Pat Reeves says investing the right amount is worth it. He explains: "The new suffixes are ridiculous. So many names are bought up speculatively and not even used, and the big brands will buy up the new names for purely defensive reasons.

"I am a great believer in investing reasonably to buy the right domain name but more than £100,000 is prohibitive for most."

It remains to be seen whether the biggest brands will follow Blackstone by reaching for their cheque books.

What is Icann? Net's policy policeman

Icann is a not-for-profit organisation, set up in 1998 in the US, to promote competition and develop policy for the internet globally. But it has no control over content on the internet.

In the UK, Nominet was established in 1996 as a private, non-profit company, and acts as one of the internet's domain registries, managing the dot.uk domain with more than 9 million domain names. It works with Icann alongside other internet organisations.

The US and Europe have sought to legislate to govern the internet but extra controls have been resisted amid fears it will lead to stagnation and limit creativity and growth.

Icann's workings are funded by the sale of domain names. Until now, the domain-name choice has been limited to 22 generic top-level domains – such as the .com and .org we all know and trust – and about 250 location-specific addresses, such as .uk.

The last change in the line up came last year when .xxx domain was released. It is estimated 60,000 brand owners registered .xxx domains to protect their brands even though they have no intention of using them.

Biggest selling domain names

Sex.com in 2010: $13m

Fund.com in 2009: $9.9m

Porn.com in 2007: $9.5m

Fb.com (Facebook) in 2010: $8.5m

Diamond.com in 2006: $7.5m