New York City will receive millions from domain name sales at no risk to tax-payers, according to a spokesperson for NYC Digital.

The city has reportedly signed a contract with a Virginia company to sell websites ending in “.nyc” to people who find “.com” and “.org” sites a little too, well, New Jersey.

The company says it will share at least $3.6 million of the revenue it collects from selling the domain names according to city spokesman Nicholas Sbordone.

New York City is clamoring to be among the first cities in the world to offer its own domain name.

But the city does not yet have a plan in place to protect New York businesses from cyber-squatters who buy domain names and hold them for ransom.

This epidemic of cyber-squatting has resulted in major US companies launching the Coalition for Responsible Internet Domain Oversight to stop the issuance of more domain names. Companies have likened to process to blackmail or a hold-up.

To businesses, which only need one website address, new domain names are often a tax they must pay to protect their brand. It’s as if someone printed an alternate copy of the White Pages and asked companies to buy a listing before it was sold to someone else.

In this case, a New York City company like Bloomberg would have to buy Bloomberg.nyc or face having to buy it back at a higher price. Other iconic New York City brands will likely watch nervously to see what becomes names like of “gossipgirl.nyc” or “magnoliabakery.nyc”

Sbordone says the city plans to require owners of a “.nyc” website to have ties to New York City. But the legal costs of enforcing such rules against squatters is often more expensive than simply paying a ransom to reclaim a brand.

A website called NYCDomain.org is already taking orders to reserve .NYC names.

[HT - Mike, PaidContent.org]

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