Donuts Chases New Crop of Internet Addresses with $100M

6/5/12Follow @curtwoodward

The rush for Internet real estate is on once again, and a new Seattle-area company says it’s raised more than $100 million in a bid for hundreds of new domain names.

Donuts Inc., a startup founded by veterans in the Internet domain industry, says it has applied for the rights to 307 top-level domains in the upcoming international auction of new Internet addresses.

Top-level domains are the words that come after the final “dot” in most Internet addresses—such as .com, .org, and .edu. The rights to these names are controlled by a nonprofit called the Internet Corporation for Assigned Names and Numbers, or ICANN.

For years, those top-level domains have remained pretty limited. But ICANN is preparing to vastly expand the number of domains that are available for businesses and consumers to use, including proper names of places, companies, and even run-of-the-mill words. So, for instance, a car dealer might someday have the ability to register a domain that ends in .cars.

That final category is known as “generic” top-level domains, and that’s the category Donuts is targeting (in multiple languages). The startup won’t say which names it has applied for, waiting for ICANN to reveal the full list on June 13. But Mason Cole, the company’s vice president of communications and industry relations, says Donuts went through thousands of potential domains before deciding on its list of 307 applications.

Cole said the company isn’t targeting any specific sector with its applications. “We didn’t take any of our own business biases into our process with us. We were just looking for the best terms,” he says.

And how do you determine the best? “At some level, it is going to be a judgment call. But we used a ton of data and a lot of analytics to do this,” Cole says. “There’s some art involved, but a lot of it is science, too.”

Donuts won’t get much more specific than that, so we’ll have to wait until ICANN comes out with its list of applicants to learn more. Some other entities entering the race, including big companies like Google, have said which domains they’re hoping to win. If an applicant is the only one to seek a given domain, and they meet all of ICANN’s requirements, then the domain could be theirs. If there’s more than one, the qualified applicants end up in an auction for the rights.

It’s an expensive business. As Bloomberg pointed out, each application costs some $185,000, which means Donuts will already need to pony up nearly $57 million. But like any chance to own a limited resource, it can also be quite lucrative.

Donuts will be a wholesaler of top-level domains, Cole says, supplying retail registrars such as GoDaddy or Network Solutions with access to domains that they can sell to others. It has partnered with a unit of Demand Media to build the technical infrastructure needed to maintain its top-level domains for the eventual users.

The company has eight people now, spread between Los Angeles, Washington, DC, and its headquarters in Bellevue, WA. Its CEO is Paul Stahura, a Bellevue entrepreneur who previously founded the domain-name retailer eNom. Donuts plans to have about 25 people on board in the next year or so, Cole says.

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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  • http://www.europeandomaincentre.com/ Christopher Hofman

    Will be interesting to see the official TLD list on June 13. The rumour list can be found here http://www.europeandomaincentre.com/pages/new-gtlds/which-are-the-new-tlds