Idealab! Sees Millions Tuning into China dotTV's

By JONAH GREENBERG

(Pasadena, May 5) Pinning their hopes on the Internet industry's trend toward multimedia entertainment and the growing use of streaming video formats, dotTV is offering Internet startups an alternative to the dot-com identity: a Web address ending in ".tv."

The Pasadena-based company has opened the door to a whole new realm of Web real estate, and will likely find a willing market in China, where the convergence of the Internet and cable television services is seen as inevitable by industry experts and Web entrepreneurs alike.

DotTV, one of the newest startups to emerge from Bill Gross' Internet incubator idealab!, auctions off Web addresses with the ".tv" top-level domain (the suffix at the end of a Web address). It acquired the exclusive registration rights to the domain for US$50 million, to be paid over 10 years, from the government of Tuvalu, the Pacific island nation to whom the Internet Assigned Numbers Authority (IANA) first assigned it in 1996.

Executives at dotTV identified China as a big potential market because heavy sales are already coming from Chinese Internet companies. More than half of dotTV's revenues have come from outside the U.S., said Craig Frances, a dotTV spokesman and a managing director of idealab!.

$100,000 Name

"We will spend aggressively to attract Chinese business," Frances said at his office in idealab!'s Pasadena headquarters. Before spending marketing dollars, however, dotTV will conduct marketing tests online and offline and will design Chinese language marketing messages on their Web site, www.tv, Frances said.

After dotTV's official launch on May 15, the company will begin a concerted press campaign and will announce companies already on board with the concept. The company is currently live on the World Wide Web and has been successfully carrying out auctions and sales since April. By May 1, dotTV had already auctioned off nearly 1,000 domain names. The minimum bid for a dotTV domain name is US$1,000.

ChinaGo.com Ltd., a Beijing-based holding company that builds mainland China-focused Web sites, has already spent US$47,000 on dotTV domain names, and has bid another US$422,000. One of ChinaGo.com's current bids, China.tv, is one of dotTV's hottest auctions, and the domain name is going for US$100,000.

ChinaGo.com, which already owns over 4,000 domain names with the ".cn" suffix (China's assigned top-level domain), has also placed bids for or purchased other ".tv" Web addresses, including "chinago," "mychina," "greatwall," and "asia."

Make-or-Break?

David Tom, a New York representative of ChinaGo.com, said the company did not intend to turn around and sell the domain names for a profit. ChinaGo.com is investing in the domain name because "it plays up well to the fact that the future of the Internet will be tied to cable and broadband Internet access," Tom said.

"Whether or not convergence between the Internet and TV happens in the next year is not our concern, because it's going to happen eventually," said Tom, who spoke on behalf of the company's chairman, Jerry Zhao.

Among the company's mainland-based Web sites are email.com.cn, fashion.com.cn, vcd.com.cn, and news content Web site easy.com.cn. However, the ChinaGo.com Web site itself is still under construction.

While Jerry Zhao is ready to spend nearly a half million dollars on securing the new kind of Web address, Peter Chu, managing director of Palo Alto, Calif.-based venture capital group AsiaTech Ventures Ltd., doesn't subscribe to the make-or-break role of a startup's domain name. Instead, he believes that an enterprise's resources should be reserved for other purposes, such as technology and marketing.

Branding Boost

"If companies start putting big, big money into a domain name rather than into building a great company, I tell them they're getting off track," said Chu, whose venture capital group invested in major China Internet players like Eachnet.com, Click2Asia, AsiaContent.com, and renren.com.

While he recognizes it is a fresh and new way to achieve a branding boost, Chu sees the dotTV concept as a passing fancy that stands the risk of becoming one of a number of marginal top-level domain suffixes that bear a witty resemblance to something other than the country they were intended for.

"Who knows what other suffixes people will come up with from other islands in the Pacific?" Chu asked rhetorically.

Another Pacific island nation, the Commonwealth of the Northern Mariana Islands, saw the potential value of its Web real estate, and has branded its ".mp" top-level domain as "market place." MarketPlace Domain is an Internet startup established by Saipan Datacom Inc. (the company that originally brought the Internet to the islands), and currently sells "dotMP" domain name registration packages starting at US$375.

Top-Level Domains

New and inventive suffixes that will be designed to indicate a certain sector or industry rather than a certain country are in the pipeline, but new top-level domains can only be introduced to the World Wide Web through the offices of the Internet Corporation for Assigned Names and Numbers (ICANN), a non-profit organization with global authority over the allocation of IP addresses and top-level domains.

ICANN has suggested that it will introduce new suffixes like ".biz," ".info," ".firm," or ".store." But the project will not go into motion until after the global group meets in Yokohama, Japan this July.

"It's unlikely that you'll see them before the end of the year," said Pam Brewster, a spokesperson for ICANN. "There are a lot of regulatory steps" one must go through before people can begin registering Web addresses in these top-level domains, she said.

Frances is not fazed by the idea of ICANN bringing in a new crop of readily marketable domain name suffixes. Whereas the proposed, custom top-level domains are mostly English words, the dotTV concept has a more international appeal, he said.

Two Famous Letters

"There are a lot of entrepreneurs around the world who are concerned about having geographically constrained Internet addresses," said Frances, explaining that by shedding the ".cn" suffix Chinese Web startups could make themselves appear more global.

Indeed, one of dotTV's marketing credos is that "TV" is the most easily recognizable two letter pair in the world, and the company's CEO Lou Kerner has been quoted saying this in numerous publications.

Xing Fan, an international communications scholar at the Center for Strategic and International Studies (CSIS), believes that most Chinese people -- especially in the urban areas where the Internet is most popular -- will recognize the letters "TV." "Most people in the cities would know what it means if you write it down for them," said Fan, who is originally from mainland China.

The Internet industry in China remains in a very early phase of development compared to the U.S., but many feel that this lack of infrastructure will give China the opportunity to leapfrog other nations by investing heavily in newer kinds of telecommunications and networking infrastructure.

Couch Potatoes

For example, cellular telephones have become extremely popular in China, although land-line telephone systems never penetrated the country. For this reason, Chinese Web developers are banking heavily on the use of mobile devices to access the Internet in the coming years.

"The infrastructure itself needs a lot of work, but China has learned a lot from what the U.S. has done," said Tom. In China, he added, most people don't own a computer. However, TV's are much more pervasive, even in the countryside.

"We might use dotTV as a marketing mechanism to push consumers to go online, to bring those couch potatoes from the TV over to the Internet," Tom said.

To reach Jonah Greenberg email: jgreenberg@virtualchina.com