VentureBeat

You may be used to typing in top-level domains (TLDs) like .com, .net or .edu when heading to websites, but the Internet Corporation for Assigned Names and Numbers (ICANN) hopes to change that with a decision to open new TLDs for registration, according to today’s Wall Street Journal.

Under the new rule, ICANN would let anyone with $50,000 to $100,000 register any TLD they want, so for example, our web address could become venture.beat, rather than venturebeat.com.

The WSJ has more on what the decision may mean for regular consumers and businesses, but there are also a couple ways it could change the Internet landscape for startups — most notably, domain speculators like Demand Media and Marchex (NASDAQ: MCHX).

Those companies, and other speculators, have plowed billions of dollars into millions of hot domain names, sometimes backed by high-profile investors like Oak Investment Partners or, for Marchex, public shareholders. The idea is generally to buy up lots of obvious domain names, like business.com, which held an early sales record at $350 $7.5 million. Most good names that are auctioned get less, but still routinely receive six figures.

Those domains are worth so much because of a kind of traffic called type-in traffic, which is distinct from search traffic from Google or linked traffic. Right now, if a web surfer — especially an unsavvy one — wants to find, say, exchange rates, they might type exchangerates.com in hopes of finding an exchange calculator (they’d be disappointed).

Although the strategies of the two companies are different (Marchex, notably, wants to build out a locality-based content business), they both rely on one crucial assumption: that the dominant TLDs, primarily .com, continue to be the first thing people type in when they’re looking for something, whether it’s exchange rates or Disney.com. So what happens if ICANN manages to reeducate Internet users, and popularize sales of new TLDs?

The simple answer is that a lot of speculators will lose a lot of their own, and their investors’ money. While Demand and Marchex might be able to build up viable content portals around sites like chicagodoctors.com, the money they plowed into those names will be meaningless — as well spent on chicago.docs or chicago.dr, or any other name you can imagine. The game will become even more about search, type-ins traffic will wither.

There’s a strong counter-argument to ICANN’s action having any real affect on .com, though. There are already dozens of top-level domains, but they are thinly used, even purposed ones like .mobi (for mobile phones). The introduction of more TLDs over the years has not seen sales of hot domains diminish, which by extension probably means speculators are making as much as ever. In a recent post on his blog, legendary domainer Frank Schilling said he’s confident in .com:

“[T]his will do little to quell the desire for meaningful .com, net and CC TLD names. Corporate IT departments overwhelmed by the task of managing existing .com typos simply won’t be up to the challenge of managing a corporate GTLD such as .COKE or .IBM. … The failure of former would-be contenders such as .travel, .biz and .pro to satiate demand for coveted names, shows us that adding more skim milk to the mix will not stop the cream from rising, and that cream is .com.” (Schilling’s emphasis.)

That may hold true, or it may be that ICANN has finally found a way to shift attention from .com, with the possibility for new TLDs that are actually meaningful or logical.

And a final argument is that it does seem unreasonable that 10 or 15 years from now, we’ll still be typing .com in for every major website. The Internet is a place of rapid change, and at some point, .com will start seeming archaic and unnecessary. But any real change would require a massive re-engineering of the web’s user-interface, at the very least, so it’s hard to imagine what those changes might be from here.

By the way, if you’re interested in a good read about the domain name speculation industry, check out WSJ reporter David Kesmodel’s brand-new book on the subject, The Domain Game. He opens with a look at Schilling, and goes from there. Kesmodel’s a good reporter.

Demand Media, the 18 month old company founded by former MySpace chairman Richard Rosenblatt, has gulped another $100 million chunk of venture funding for its domain name purchases.

The latest funding, led by Goldman Sachs, is the company’s third. The previous two, for $120 million and $100 million respectively, bring the total to a whopping $320 million.

Companies like Demand buy up lists of Web site names that users are likely to accidentally type into their browsers. People looking for the popular photo site Flickr, for example, may instead type in Flicker.com.

These faux sites are then plastered with ads and information vaguely relevant to whatever the hapless surfer might have been searching for. Once the surfer lands on a site, Demand Media serves an ad from Google or some other ad network, allowing it to collect money. That  strategy made millionaires out of domain-grab pioneers like Frank Schilling and Yun Ye.

Prices for domain names have inflated vastly over the years, which is one reason why Demand needs so much money. The name Business.com sold earlier this year for $360 million, making Demand Media’s assets look like peanuts.

Although Demand could be buying more domains in hopes of eventually selling itself for a premium or passively collecting revenue, it’s more likely the company is developing its web properties into more full-fleshed destinations. Last year, Demand acquired HillClimb Media, which produces web sites.

Competitor Marchex, which owns more than 100,000 domain names, has also revealed more of its business plans. It wants to develop each page into a local, vertical portal with real information related to the domain name, many of them involving city names (for instance, a site might feature “New York” and “plumbers”).

Besides Goldman Sachs, investors in the latest round include 3i Group, Generation Partners, Oak Investment Partners and Spectrum Equity Investors. Sources that talked with PEHub, which broke the story, said that the recent funding would probably be the company’s last.

For our previous coverage on Demand fundings, look here.

Here’s the latest (updated) action:

The solar-powered motorbike from SunRed in Spain — Read the little story about how the company hopes to make a prototype soon, and needs venture capital to do so.

Marchex launches huge Web site — The public company said it has launched more than 100,000 local and vertical Web sites, publishing more than one billion pages of content for hoping to bait people surfing online. These are third-rate sites, originally filled with advertising, but now hosting more than 15 million business listings in sundry categories. Marchex also scrapes the Web for reviews and other content to place in these sites. The sites include www.cuisine.com, www.locksmiths.com, www.remodeling.com, and www.bayareahotels.com. Marchex paid Yun Ye of Name Development $164 million for 100,000 sites. Marchex says 30 million unique visitors monthly land on its sites by typing in domain names, willingly or unwittingly. This is very similar to the strategy of Demand Media, another opportunist land-grab company we’ve covered. (More at the NYT).

Venture Capitalist blasts buyout industry — Dixon Doll (left), the co-founder of venture capital firm DCM, next chairman of the National Venture Capital Association, said his group is working hard to fend of a new tax that could affect the VC industry. He blamed the buyout industry for the recent proposal in Congress for such a tax, saying it is “plain and simply because of the unbelievable egos of the guys running the PE firms like Blackstone and KKR,” he said. “They put big targets on their back … calling attention to themselves in a nonflattering way.” (We’ve reported on the lavish parties and $300 stone crab eaten by the Blackstone crowd.) They also don’t create jobs, he said: “It’s ‘Barbarians at the Gate’ all over again,” he said. (Via VentureWire.)

The slow video joint venture between News Corp. and NBC Universal — We’ve reported on this joint effort to answer YouTube. Today (Thursday), they appointed a high-level Amazon.com executive, Jason Kilar, to be chief executive of the venture. He led Amazon’s efforts in video and DVD. It is supposed to launch later this year. However, we were on the conference call today, and the date of launch seems uncertain. This is a very slow project. And each week that goes by, YouTube gets bigger. And strangely, News Corp.’s own MySpace launched MySpace TV today, which will serve to confuse. The venture has 30 employees, Kilar said. The venture — which still has no name — is reportedly trying to raise $100 million on a valuation of $1 billion (Paid Content).

Hollywood veterans launch Film Department — Mark Gill, formerly president of Warner Independent Pictures, and Neil Sacker, a former executive vice president at Miramax, said they’ve formed an independent film company with $200 million in financing from a group of unnamed private investors. (Update: We’ve been told Gill got money from Deutsche Bank). It will be called Film Department (no site yet). It will produce six films a year with budgets between $10 million and $35 million. Sounds almost retro, at a time when there’s so much Web novelty. (Details here.)

Google Gadget Ventures — Google announced a pilot project to support third-party developers of gadgets, the cornucopia of items you can choose for your Google home page. It is offering (1) grants of $5,000 to developers who’ve built gadgets in for Google’s directory that already receive at least 250,000 weekly page views, and (2) seed investments of $100,000 to previous Google Gadget Ventures grant recipients who’d like to build a business around the Google Gadgets platform. More details here. This is a smart way for Google to build an active community around its platform

The exodus continues from Google — Indeed, Google may need to nurture those smart developers sooner than they think. Here’s a good summary in the WSJ about the growing stream of people leaving Google. The Silicon Valley mentality: There’s no point working for a public company, especially if it looks like the stock has hit highs for a while, and when you can go roll the dice at another start-up. By being up in Redmond, Microsoft doesn’t suffer the same walk-across-the-street problem. This will be interesting to watch.

Google Docs & Spreadsheets supports folders — Folders, that’s right. Gmail doesn’t give you folders, but Google Docs does. This, and other updates (details here).

Feedster launches disorienting “Version 2.0″ — We’re having difficulty understanding what this well-funded company does that is different. Odd. We’ll look into it.

Pageflakes turns your home page into a social network — Pageflakes is one of dozens of companies offering you a home page where you can put widgets of information such as email, news, weather and sports. Next month, it launches Blizzard, which lets people subscribe to their friends’ widgets of information, or “pagecasts” as Pageflakes calls them. (Erick Schonfeld has the details).

Webwag, which is similar to Pageflakes, lets you synchronize your widgets with your phone — Details here. We first wrote about this company here.