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The name game

RealNames thought it was on to a winner when, backed by Microsoft, it set out to make web-browsing easier. Now the deal's gone sour. Wendy Grossman asks what went wrong

Monday 10 June 2002 00:00 BST
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What's in a name? On the internet, everything and nothing. Because of that, the closure of RealNames – a company you might not have heard of – has significance. Otherwise, it would be just another dot.com failure that we could maybe blame on Microsoft. Ideally, if RealNames became pre-eminent, we could type any group of words into our browser's URL space and be taken to just the right page for those words – say "Ford Explorer" would take you to Ford's web page about its Explorer cars.

Yet at the same time, the idea that RealNames, backed by Microsoft, might control where you go – in return for cash paid by companies like Ford – worried a lot of people. And they're relieved that it's not going to happen. But what was Microsoft's real role?

RealNames was founded in 1996 by Keith Teare, who was already well-known in the British internet world. He was a co-founder of Cyberia, the first internet café, and also of the internet service provider Easynet. On 7 May of this year, Teare was informed by Microsoft – the company's major shareholder, customer and creditor – that its contract would not be renewed. RealNames's service will, therefore, close on 28 June.

Teare reacted by putting up a weblog (at http://www.teare.com) to document the closure. "The primary goal of the web site," he says "was to open a dialogue with Bill Gates and [Microsoft CEO] Steve Ballmer, because they were not involved in the decision, and I was pretty sure the team who had made the decision had a narrow world view." The good news: "The dialogue did happen." The bad: he doubts Microsoft will reconsider its decision.

RealNames was based on the idea that navigating the internet was (and is) too hard. While online, each of the internet's millions of connected computers is permanently or temporarily assigned an "IP number" such as 158.152.8.200. You could remember those if you had to, but you probably wouldn't want to learn very many of them, so for human use they are assigned memorable names under the domain name system set up in 1984. Thus in "independent.co.uk" the ".co" tells you that The Independent is a commercial enterprise, and the ".uk" tells you it's based in Britain, and "independent" is the site's name. Software on the net's routers than translates that into the site's address: for the web site.

In 1996, most netizens thought it was a pretty duff idea. We had names already. What we needed was search – and in the years since, outfits like Altavista, Inktomi, and Google have pioneered far better searching capabilities. Teare says what most people find difficult is URLs: the specific address they want may be buried many layers into a site. Keywords may be assigned to pages and material that is not accessible to search engines.

In 1996 and for several years afterwards, the big issue in internet naming was thought to be revamping the domain name system to create more names. The upshot of a series of vehement debates was the formation of a centralised administrative body, the Internet Corporation for Assigned Names and Numbers (Icann). Since its founding in 1998, Icann has expanded the available variety of domain names – though the dot.com bust means many have not been re-registered, and so become available again. Second, Icann introduced competition into the registration of domain names, now a much less profitable business.

RealNames appealed to potential resellers as "high-margin revenue". Prices for keywords ranged from $50 to $50,000 per country per year, depending on the level of service and exclusivity. By the first quarter of 2002, it had 51 resellers, had sold 1.1 million keywords, and was handling approximately 500 million translations of keyword to site per quarter.

The closure was obviously a shock. For Teare, it involved two big issues. The first was Microsoft's behaviour, which seems to have taken him by surprise. Microsoft isn't commenting on the situation, but it's quite easy to piece together a familiar story.

RealNames began as a browser plug-in. Like Acrobat Reader or Flash, it worked with a number of web browsers – Netscape, Opera – as well as Microsoft's Internet Explorer. It also had deals with a variety of search engines such as Google and Altavista to support its keywords. The search engine deals stopped, Teare says, because "they were costing too much money, and the bubble had burst".

The support for other browsers stopped in 2000, when Microsoft agreed to embed RealNames's keywords into Internet Explorer and took a 20 per cent equity stake in RealNames. RealNames got mass distribution; Microsoft got exclusivity and a guarantee of $40m over two years against 15 per cent of revenues from keyword sales. Of that, $25m was due in May 2002.

On 7 May, RealNames said it couldn't pay the $25m. Instead, it asked Microsoft to forgive the debt (plus interest) and offered instead a yearly guaranteed minimum of $5m for 2002 rising to $9m by 2006, plus a percentage of keyword revenues. Microsoft turned it down. Since $25m represented roughly double the company's claimed revenues for the previous full year, it could do nothing. That doesn't mean the end of naming. In fact, it's sprouting. A new company, Navicode, intends to offer something similar, though it says it will avoid the geographical division, high prices, and tie-in to a single browser manufacturer that characterised RealNames's business.

Even Teare admits that for English speakers, RealNames are not essential. But in countries where Latin script is not native, URLs can be impossible to type. Teare posted on his site a sample of e-mail messages from Asian resellers who will shortly lose native-language access to the internet. To be sure, the 40 per cent of the world's web pages that are not in English will still be there, but their URLs will be in Latin script. An answer in progress is the internationalised domain name system, intended to allow non-English users to register domains in their native languages by assigning those names an underlying unique Ascii string of characters that is hidden from the user.

But there are a number of problems with this idea. For one, it's not clear if the goal is to help international users, or to replicate the dot.com registration boom in other countries. Verisign, the biggest registrar of domain names, has now registered some 800,000 names. The kicker: the technology underlying the testbed is RealNames.

If RealNames's partner had been any other company than Microsoft, the logical response would be that it was foolish to rely so heavily on one deal and one customer.As Unicode, a post-Ascii system for displaying all types of characters and scripts, becomes widely adopted, John Chapman, lead search editor for Microsoft's MSN Search, says MSN Search, too, will head in that direction. At that point, Asian users should be able to search in their own native language. The URL may not matter.

We will see. Teare believes the company is trying to seize control of the internet's "operating system": next, he says, it will be embedding peer-to-peer file sharing into Windows. And then.... Teare concedes that RealNames may not have been the right answer to the net's naming and navigation problem. He concedes there's some justice in the Slashdot posting that said "if you lie down with a grizzly bear, you must expect to get mauled". Still, "I thought I could be their friend," he says wistfully.

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