Navigation Nightmare by ps94506


									                                Navigation Nightmare:
          The Deadly Danger of Proprietary Platforms

                                                      By Tim Schumacher

Possessing a memorable domain name is still considered essential to any successful business, especially a success-
ful online business. Just do the “billboard test” almost anywhere around the world: look at a billboard or other
company advertisement. Most likely you will see the company’s or product’s domain name - either a .com, or a local
top-level-domain such as .de in Germany or in the United Kingdom.
In recent months, however, an interesting development has happened around the globe: very often, especially with
companies which consider themselves trendsetters, domain names are starting to disappear or move into the back-
ground. Instead, companies advertise Facebook or Twitter addresses, their iPhone applications, or even searches at
a search engines like Google. Furthermore, those advertisements aren’t limited to drawing new customers; instead,
existing web sites and communications are used to promote those new media channels.

                                                 I’ve caught myself encouraging that same behavior at my own com-
                                                 pany, Sedo – why shouldn’t we use those channels, since we consider
                                                 ourselves trendsetters in our industry? Besides promoting our web site
                                                 (the domain name, which we purchased for the great price
                                                 of $80,000 in 2003), we promote our Twitter account (
                                                 sedo) and our Facebook page ( We advertise
                                                 for the term “Sedo” on Google, Yahoo! and Bing, and our own iPhone
                                                 application is slated to arrive soon. So entrenched are we in those
                                                 efforts, that we, much like any company out there, have lost sight
                                                 of the extreme long-term danger looming on the horizon: the
                                                 “Navigation Nightmare.”

  Above: Crandon, WI, advertises their
  Chamber of Commerce’s Facebook
  page, rather than their website.
  Right: Facebook recently made it
  so that from your profile you can’t
  link institutions (universities, schools,
  companies) to external URLs any-
  more.You instead have to link them
  to the respective Facebook pages. In
  this way they’re trying to completely
  internalize the normal link/structure of
  the web.

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Here’s the problem: while it’s smart – and very “web 2.0” – to use all of the above channels as additional means
of advertising and customer interaction, it’s inherently wrong and dangerous to use them as means of navigation
and therefore as “providers.” It means lost control, potentially huge costs in the future (possibly wiping out all of
a company’s profits), and a giving up of one’s own fate. In all four examples – Facebook, Twitter, Google and the
iPhone - businesses put their fates into the hands of each of those providers. As a result, three things can happen:

  1. Providers can kick out any business or entire industry, with or without reason. Consider Apple’s adult
  ban – while the pros and cons of the act itself are debatable, it certainly shows how an entire industry is at the
  mercy of a giant.
  2. Providers can go out of business, and there is no regulative environment in place. Seems unlikely? Do
  you remember FortuneCity or Geocities, the much-hyped early predecessors of social communities combined
  with easy site hosting? If not, think Facebook without the “six degrees of separation” concept of linking
  people, but with much smaller Internet penetration. Nevertheless, Yahoo! recently terminated Geocities in
  2009, after having bought it for a whopping $2.87 billion in 1999.
  3. The biggest threat: Providers can and will maximize profits, once lock-in is sufficient, and profitability goals
  will follow growth goals. If your company has a million Facebook or Twitter followers, how good is your ne-
  gotiation position if the provider suddenly starts charging hefty fees? If you have tons of happy iPhone users
  on your app, how good is your negotiation position if Apple suddenly wants a slice of all your transactions? If
  you get all your business through Google’s ad network, how good is your negotiation position if suddenly you
  won’t be listed in organic search results anymore, but Google offers you the opportunity to appear on top of
  the results for a fee?

                                                                   All of the above threats are very real and still
                                                                   seem to be very much ignored in all the hype.
                                                                   The domain name system, on the other hand,
                                                                   can avoid all of these pitfalls, even with its
                                                                   problems with continued cyber-squatting and a
                                                                   somewhat cumbersome governing body called
                                                                   ICANN (though one must give ICANN credit
                                                                   for being, at least, the best possible example of
                                                                   a truly multi-national and somewhat democratic
                                                                   Internet organization). Pricing of new domains
                                                                   is regulated so that domain name Registries
Search term advertising is used in many Asian countries to make    cannot charge prices aimed at maximizing their
it possible to display Asian characters.                           own profits.
Turn these examples around, and imagine for one second how wrong it would seem if Facebook had to pay a $50
million yearly registration fee for its very own .com domain name ( They could certainly afford it, and
it would be the right business decision for them to spend that money as opposed to losing their key domain name.
Facebook has built its company through being innovative, so it would be wrong and would stifle future innovation if
a monopolistic Domain Registry could charge arbitrary amounts. For this reason – a good reason – they can’t. Indi-
vidual proponents for the openness of the Internet, and governments around the world alike, have ensured that this
won’t happen, making the domain name system safe for the future.
Comparatively, Facebook, Twitter, Google’s Ad Network, and iPhone apps are proprietary walled-garden approach-
es; they are not what the Internet needs, and they present a danger for any business relying on such channels over-
extensively as navigation and addressing mechanisms.

The open alternatives to walled-garden proprietary platforms:

                                                         open                                 proprietary
                  Navigation                            Domains                               Google / Search

                Communication                            Email                       Facebook / Social Platforms

                  Information                             RSS                                   Twitter

              Operating Platform             HTML (plus PHP and MySQL)                        iPhone Apps

Building an online business primarily on Facebook, Twitter, Google, or iPhone apps is like building a house on rent-
ed ground, with the landlord having complete control. You might one day hear, “Thanks for building that beautiful
villa, now your rent is increasing from $1 to $100,000 per year!” Don’t let this happen to you.
While Facebook and Twitter are excellent networking tools that can have a tremendously positive effects on your
business, they should not be the central hub of your communications efforts. In order to put the control back in your
hands and eliminate any potential threats to your business, your domain should be the one location to which all
other channels should link.

Tim Schumacher is the CEO of Sedo Holding AG – operating the world’s largest domain market place under
and Europe’s leading affiliate platform under – with a combined $200 million in revenue this year. Tim holds an
MBA from the University of Cologne, Germany, and a Major in Finance from the Stockholm School of Economics, Sweden.
In 2000, he wrote his master thesis on pricing mechanisms of Internet domain names, extensively studying the history and
future of addressing systems.

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