43. Top-Level Domains

Summary

The Economics of Everyday Things – Episode 43: "Top-Level Domains"

Host: Zachary Crockett
Date: May 28, 2026

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Overview

In this episode, Zachary Crockett explores the fascinating world of top-level domains (TLDs)—those two-letter (sometimes more) suffixes at the end of website URLs, like .com, .ai, or .tv. The story unfolds from their technical origins to their enormous economic and political implications, focusing especially on how small island nations like Anguilla have found themselves at the center of a digital gold rush, sometimes with surprising consequences for both their economies and local communities.

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Key Discussion Points & Insights

1. What Are Top-Level Domains?

• TLDs are the suffixes on internet addresses that categorize domains (e.g., .com, .org, .edu).
• According to Kim Davies, head of IANA, “A top level domain is a way of sort of categorizing a domain name into a certain subject area…” (02:44).
• Some TLDs are strictly regulated (.mil for military, .gov for government), while others are whimsical (.ninja, .museum).
  • Kim Davies: “What our team does is maintain the official records of which identifiers have been assigned and make sure that they're used in a standard way on the Internet.” (03:26)

2. The Emergence of Country-Code TLDs (ccTLDs)

• As the Internet went global, each country was assigned a unique two-letter ccTLD (e.g., .us for the United States, .uk for the United Kingdom).
• John Postel, an early internet pioneer, assigned ccTLDs using ISO standards and handed off administration to the first qualifying group or even individuals—sometimes with little oversight.
  • Kim Davies: “Technical people are not particularly well-versed in matters of international diplomacy and therefore he made a rule that IANA shouldn’t be in the business of deciding what is or is not a country.” (04:52)

3. The Anguilla .ai Success Story

• Vince Kate became the technical contact for the .ai domain after moving to Anguilla to escape income taxes and pursue business interests.
  • “I wanted some country that didn't have income taxes...I could live in the Caribbean.” (06:06)
• Initially, Kate managed .ai registrations informally, offering free domains locally but excluding outsiders.
  • “The first few years I was letting anybody in Anguilla [who] wanted to register a name for free, but I wasn’t letting anybody outside…” (06:56)
• With the tech boom—and especially the rise of artificial intelligence—the .ai domain exploded in value.
  • “When we first started it was around 4 or $5,000 a month. And now this month will be around 4 million...over half the government budget within a year.” (01:48)
• Major spike post-ChatGPT: “In November 2022, ChatGPT came out and it just took off...Then it got so big, we couldn't even generate the PDF file anymore.” (08:25)
• Domains now fetch high prices at auction (Vision.ai: $100,000).
  • “We've made around a quarter million dollars a month for the last couple of months just selling domains that people stop paying for.” (09:22)

4. Boom and Bust, Winners and Losers of ccTLDs Globally

• Not every country benefits equally. Many smaller nations lack infrastructure and have to partner with outside firms—sometimes on exploitative terms.
  • Vince Kate: “Some company would come in and say, oh, we’ll give you a million dollars a year for the next 50 years and then they're stuck with that company.” (14:02)
• Tuvalu’s .tv: Outsourced to firms like VeriSign and GoDaddy; brings in $10M/year (almost 20% of GDP), but that’s only a fraction of potential earnings.
• Niue’s .nu: Control handed to a foreign company, which transferred it to a Swedish nonprofit. Revenue benefited outsiders more than locals, sparking a $30M legal claim.
  • Tianyu Feng: “Being a country in the Southern Pacific, you probably don’t have a lot of access to legal resources in Sweden. So in many ways it’s a rigged game, right?” (16:48)
• Other notable domains:
  • .vc (Saint Vincent and the Grenadines) popular with venture capitalists
  • .tm (Turkmenistan) and .dj (Djibouti) have creative uses
  • .co (Colombia) as a .com alternative
• Problem cases:
  • Tokelau’s .tk: Given away for free, became popular with spammers and cybercriminals.
  • .io (Indian Ocean Territory): Profits go to foreign domain companies, not to displaced native Chagossians.
    • Zhongyu Feng: “These profits are not going to the people who live in places underrepresented on the international stage. They’re going to serve the pockets of corporations in the United States and in Europe.” (15:33)

5. Political and Geopolitical Issues

• IANA’s Neutrality: IANA does not resolve political disputes; expects countries to sort out their own administrative issues.
  • Kim Davies: “The basic principle is disputes over how a top level domain operates in a country should be resolved in the country.” (18:21)
• Taliban and .af (Afghanistan): The Taliban now controls the country’s domain.
• When Countries Disappear: Domains are eventually retired (e.g., .yu for Yugoslavia). Successor states get new designations (.rs for Serbia, .me for Montenegro).
  • “The death of one domain led to the birth of others…” (19:13)

6. The Uncertain Future for Digital Domain Windfalls

• Domains are a windfall, but rely on global trends (e.g., AI). These booms may not last.
  • Tianyu Feng: “These industries are not exactly stable. The trends do die… the possibility of something going wrong in Silicon Valley changing the economy of an island nation is a pretty staggering image.” (20:36)
• Anguilla’s response has been fiscally cautious—eliminating property taxes, paying down debt, and eyeing the possibility of becoming tax-free.
  • Vince Kate: “It's very possible that Anguilla wouldn't need any taxes at all, which could make it the perfect place if you wanted to live someplace where you don't pay taxes. I think the future looks really good for Anguilla.” (21:05)

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Most Memorable Quotes & Moments

• Kim Davies on IANA’s role: “What our team does is maintain the official records of which identifiers have been assigned and make sure that they're used in a standard way on the Internet.” (03:26)
• Vince Kate on the rise of .ai: “When we first started it was around 4 or $5,000 a month. And now this month will be around 4 million...over half the government budget within a year.” (01:48)
• Tianyu Feng on digital colonialism: “These profits are not going to the people who live in places underrepresented on the international stage. They're going to serve the pockets of corporations in the United States and in Europe.” (15:33)
• Vince Kate on Anguilla’s windfall: “It's very possible that Anguilla wouldn't need any taxes at all, which could make it the perfect place if you wanted to live someplace where you don't pay taxes. I think the future looks really good for Anguilla.” (21:05)

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Important Timestamps

• [01:48] Vince Kate details massive revenue jump for Anguilla from .ai
• [02:44] Kim Davies explains the function of TLDs
• [06:06] Vince Kate recounts how he ended up managing .ai
• [08:25] Vince Kate describes spike in AI domain registration post-ChatGPT
• [09:22] Domain auctions: how .ai names are fetching tens of thousands
• [14:02] Long-term contracts trapping small countries in bad deals
• [15:33] Tianyu Feng criticizes how most ccTLD profits go abroad
• [17:31] .io domain, tech popularity, and the displaced Chagossians
• [18:21] Kim Davies on IANA’s approach to domain disputes
• [20:36] Tianyu Feng on vulnerability of small nations to tech trends
• [21:05] How Anguilla is using its domain riches to reduce taxes

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Tone & Style

The episode balances curiosity and clarity with a slightly whimsical, investigative tone. Zachary Crockett asks big questions about the economics and politics hiding behind everyday internet addresses, while inviting the audience to see how small, overlooked nations have sometimes struck it rich—or gotten left behind—in the digital revolution.

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Takeaway

Top-level domains are much more than a technicality—they’re a global market, a tool for branding, and a source of income and controversy for countries big and small. Anguilla’s .ai is a rare windfall; for many, the story behind ccTLDs is also about missed opportunities, power imbalances, and the unpredictable consequences of new technology.

Transcript

[Zachary Crockett]

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[Zachary Crockett]

The island of Anguilla is rich with natural beauty. If you venture to this tiny oasis in the eastern Caribbean, you'll find turquoise waters, palm trees, coral reefs, and some of the most picturesque white sand beaches in the world. It's the kind of place you go to when you want to escape modernity and bathe in the wonders of the physical world. For many years, Anguilla's economy rested on that beauty. The island made its money from tourism and lobster fishing. But in more recent times, Anguilla has struck gold with a digital asset. Two little letters at the end of website addresses.

[Vince Kate]

When we first started it was around 4 or $5,000 a month. And now this month will be around 4 million that we're seeing from AI. We'll be over half the government budget within a year

[Zachary Crockett]

for the Freakonomics Radio Network. This is the economics of everyday things. I'm Zachary Crockett. Today, top level domains on the Internet websites are identified by an address known as a Uniform resource locator, or URL. When we talk about websites, we usually refer to URLs by two parts. There's the second level domain, which identifies the particular website, say Google. And then there's the top level domain, which might be Com. The parts of a URL are separated by dots, so we usually call the top level domain.com.

[Kim Davies]

a top level domain is a way of sort of categorizing a domain name into a certain subject area, if you will.

[Zachary Crockett]

Kim Davies is the head of the Internet Assigned Numbers Authority, or IANA for short. It's the organization responsible for keeping a record of all the domain name identifiers on the Internet. All in all, There are nearly 1,500 of them and each one serves its own purpose. EDU is for educational institutions.mil is for the military and.gov is for government. Some are serious, others can get a little sillier.info.

[Kim Davies]

museum ninja. What our team does is maintain the official records of which identifiers have been assigned and and make sure that they're used in a standard way on the Internet.

[Zachary Crockett]

When the system for organizing domains was being developed in the early 1980s, the newborn Internet was dominated by researchers in the United States. As the rest of the world began to connect to the network, there was a recognition that each country should have its own domain too.

[Kim Davies]

There was different research networks popping up in different countries and they were contacting the researchers in the US to work out how to connect to this growing network. There needed to be a sense of agency for each country to sort of own and control their part of the network.

[Zachary Crockett]

The result was something called country code top level domains or cctlds. Each country got its own two letter top level domain us, ca, uk. The idea was that these domains would be reserved for businesses and institutions in the associated country. If you were a construction firm in Colombia, your domain name would end in co and if you were a bike shop in Italy, your website would end in.it the task of assigning all these domains to countries was overseen by a man named John Postel.

[Kim Davies]

John Postel was one of the original researchers on the team that invented what we know of today as the Internet. Postel had a knack for being a record keeper for all sorts of things. Technical people are not particularly well versed in matters of international diplomacy and therefore he made a rule that IANA shouldn't be in the business of deciding what is or is not a country.

[Zachary Crockett]

To avoid international disputes, Postel used a list of country codes published by the International Organization for Standardization. But he also had to find someone in each country to manage the domain. And that process was a little less rigorous. By most accounts, the power to manage domains was delegated to the first person in any given country that requested it. In some cases that was a government body, a research institution or a non profit. But in others, it was just a random guy who asked for it before anyone else.

[Vince Kate]

I'm the technical contact for the AI domain in Anguilla.

[Zachary Crockett]

Vince Kate moved to Anguilla in 1994 after getting an advanced degree in computer science from Carnegie Mellon University.

[Vince Kate]

I wanted some country that didn't have income taxes and so I read some books about tax havens and then I went down and checked out a few islands and decided that I could live in the Caribbean.

[Zachary Crockett]

At the time, Anguilla didn't have Internet or email. Kate would connect to a computer in the US using a telephone modem. He was interested in registering a website for a company he was starting. So he contacted John Postel. To his surprise, Postel said that he needed someone to oversee the AI domain that had been assigned to Anguilla.

[Vince Kate]

He said, nobody's managing that yet. Did I want to manage it? I'm like, okay.

[Zachary Crockett]

As the domain administrator for Anguilla, Kate had the power to decide which websites got to use AI. At first, there wasn't much interest on the island.

[Vince Kate]

The first few years I was letting anybody in Anguilla wanted to register a name for free, but I wasn't letting anybody outside of Anguilla.

[Zachary Crockett]

By the late 1990s, millions of ordinary people were using the Internet. We websites were displaying ads and offering things for sale, which meant that a catchy domain name was like an attractive storefront. And as new technologies emerged, certain top level domains like AI took on a new meaning. Kate realized that companies all over the world wanted to be associated with artificial intelligence, and they were willing to pay money to register a website ending in AI. They started to trickle in. Around 2015, an AI cloud platform registered H2O AI and an AI tool for developers registered API AI. Kate could feel that a wave was coming, and he wanted to make sure Anguilla would benefit from it.

[Vince Kate]

Somewhere along the line, a few years in, I decided it really shouldn't be in my name. Like the whole thing was in my name, right? I was the admin contact and the technical contact. And so I changed the admin contact to the government of Anguilla.

[Zachary Crockett]

Anguilla opened up the AI domain to entities outside of the island and began charging a registration fee for its use. Throughout Most of the 2000s, those registration fees brought in a small but steady trickle of business. And then artificial intelligence became hot.

[Vince Kate]

In November 2022, ChatGPT came out and it just took off. I was printing off a page of domains and bringing it to the government every month. These are the domains that we sold this month. Then after ChatGPT, we stopped printing them out. We just gave them a spreadsheet and a PDF file. Then it got so big, we couldn't even generate the PDF file anymore.

[Zachary Crockett]

Revenue for AI domains created grew from 7.4 million in 2021 to around 30 million in 2023. This year, Kate says that figure could be north of $50 million, more than 40% of the country's annual revenue. Most of that is from registration fees, which now cost $140 for a two year contract. But some of it comes from auctions.

[Vince Kate]

If somebody stops paying for a domain name, then what we do is we auction it off. And some of the ones that we auction off might sell for $30,000 or $20,000 or something. And so we've made around a quarter million dollars a month for the last couple of months just selling domains that people stop paying for.

[Zachary Crockett]

Recently the address Vision AI sold for $100,000, Task AI commanded $79,000 and Dog AI fetched $47,000. That's serious cash for an island that only has 16,000 inhabitants and 35 square miles of land. But not every country with a desirable domain has had a success story like Anguilla. Some CCTLDs have become geopolitical and commercial battlegrounds. That's coming up.

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[Zachary Crockett]

Today nearly 250 countries, sovereign states and dependent territories have been assigned a top level domain. Kim Davies of Vienna says that in many cases, a country's designated domain has become a hot commodity.

[Kim Davies]

Each country has been sort of gifted two letters, and the two letters, you know, nominally relate to the name of their country. But sometimes there is some kind of alternate value in what those two letters stand for.

[Zachary Crockett]

Saint Vincent and the Grenadines, for instance, has vc, which has become a desirable domain for venture capital firms. Turkmenistan has the lawyer friendly tm, Djibouti's DJ is popular with musicians, and Columbia has co, which many companies around the world now use as an alternative when the dot com version of the name they want is taken. But many smaller nations who have a potentially lucrative domain name lack the digital infrastructure to take advantage of it. They they have to seek out a marketing partner in a more developed country. Vince Kate says these arrangements are often a raw deal.

[Vince Kate]

Some of the other countries that didn't know how to run their own domain, some company would come in and say, oh, we'll give you a million dollars a year for the next 50 years and then they're stuck with that company. And some of them spent years and years and years trying to break those contracts because the company's making all the money.

[Zachary Crockett]

This is what played out in Tuvalu, an island in the South Pacific. The nation was assigned the TV domain, which became lucrative with the rise of online media. It decided to outsource the management of its domain to private companies, and eventually it inked a deal with the American tech firm VeriSign. VeriSign paid Tuvalu a flat sum of around $5 million a year from the revenue it made in 2021. Tuvalu signed a new deal with the domain registry GoDaddy, also based in the U.S. the island now receives $10 million a year, which accounts for nearly 20% of its GDP. The money from these deals has been a windfall for Tuvalu, which has used it to build roads and expand access to electricity. But it's only a fraction of what they'd earn if they set up their own technical infrastructure like Anguilla.

[Vince Kate]

That's going to look stupid again in another 10 years, right? The money is becoming worth less and less all the time. And any fixed amount, after a while it's going to look ridiculous. So I don't think they really learned their lesson.

[Zachary Crockett]

This imbalance is a common story in the world of cctlds.

[Tianyu Feng]

These profits are not going to the people who live in places underrepresented on the international stage. They're going to serve the pockets of corporations in the United States and in Europe.

[Zachary Crockett]

Tianyu Feng is a contributing editor at the tech publication Reboot, where he's written about the politics of top level domains. He says that other places have fared far worse than Tuvalu, like Niue, a small island nation in the South Pacific Ocean. In the early years of delegation, it was assigned nu. An American businessman convinced Niue officials to let him control the domain in exchange for connecting the island to the Internet. This businessman later transferred the ownership of NU to a nonprofit in Sweden. In the past two decades, that company has made millions of dollars selling domains ending in nu, which means now in Swedish.

[Tianyu Feng]

The New Way government was never able to claim it back to get it redelegated with the iana.

[Zachary Crockett]

Niuei has been trying to get NU back for several decades. The nation has an ongoing case in the Swedish Supreme Court and is seeking around $30 million in damages.

[Tianyu Feng]

Being a country in the Southern Pacific, you probably don't have a lot of access to legal resources in Sweden. So in many ways it's a rigged game, right? You don't have the level playing field with a jurisdiction that basically sets laws.

[Zachary Crockett]

A similar story played out on the Pacific island of Tokelau. It delegated the management of its TK domain to a New Zealand entrepreneur who ended up giving out registrations for free. TK became the top level domain of choice for spammers and cybercriminals who wanted to create burner websites. Other top level domains like IO are embroiled in the politics of colonialism.

[Tianyu Feng]

The IO domain is extremely popular with tech companies in the Silicon Valley, mostly because I.O. stands for input output. So you see a lot of programmers and startups using it as their domain

[Zachary Crockett]

name.IO was assigned to the British Indian Ocean territory. It fell into the hands of a British entrepreneur who profited from it for 20 years. He then sold his domain management firm for $70 million to an American domain registry company. Today it's under the ownership of a private equity firm. But the native Chagossian people who were forcibly removed from the territory in the 1970s believe that they are the rightful beneficiaries of IO. Kim Davies says that IANA generally stays out of such affairs.

[Kim Davies]

The basic principle is disputes over how a top level domain operates in a country should be resolved in the country.

[Zachary Crockett]

This has led to some tricky situations. In Afghanistan, for instance, the AF domain is now under the control of the Taliban, and repeated calls for redelegation of the domain have gone unanswered. But some situations do require intervention. In the event that a country disappears. Ayana's policy is that the domain will go down with the ship, the letters will be retired, and all the websites that use them will become unreachable. That was the case with Yugoslavia.

[Tianyu Feng]

Yugoslavia was assigned a YU cctod and as we know, the country dissolved. All the websites that used to be on the YU domain have simply disappeared.

[Zachary Crockett]

The death of one domain led to the birth of others. In the years following Yugoslavia's dissolution, Serbia and Montenegro became independent nations, and each was assigned a new cctld, Serbia RS for Republica Serbia and Montenegro got me.

[Tianyu Feng]

Montenegro started to heavily advertise that domain name because it stands for me. In the late 2000s, we were seeing all these personal websites that were ending with me. That was only made possible by this complex politics that was going on in the region.

[Zachary Crockett]

TV might meet the same fate as Yugoslavia's YU climate scientists say the island of Tuvalu could be completely underwater within the next century due to rising sea levels.

[Tianyu Feng]

The creation and the disappearance of domain names are associated with warfare, with diplomacy, with sovereignty, and with, you know, in the future, climate change.

[Zachary Crockett]

In Anguilla, which continues to rake in around $4 million a month from the AI domain, there are fears that the gold rush won't last forever. If the AI boom recedes, so will the demand for domain names registered in Anguilla.

[Tianyu Feng]

These industries are not exactly stable. The trends do die right, And I think the possibility of something going wrong in Silicon Valley changing the economy of an island nation is a pretty staggering image.

[Zachary Crockett]

But Vince Kate says Anguilla has been cautious about getting too accustomed to the high life. In the meantime, the tropical island is focused on becoming even more of a paradise.

[Vince Kate]

They have paid down some debt and they've eliminated property taxes on residences. It's very possible that Anguilla wouldn't need any taxes at all, which could make it the perfect place if you wanted to live someplace where you don't pay taxes. I think the future looks really good for Anguilla.

[Zachary Crockett]

For the economics of everyday things. I'm Zachary Crockett. This episode was produced by me and Sleep Sarah Lilly and mixed by Jeremy Johnston. We had help from Daniel Moritz Rapson. Are you a hero on the island now?

[Vince Kate]

There's a few people that know who I am now.

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