Tucows 2013 Annual Report Download - page 15

the legal standards relating to the validity, enforceability and scope of protection of intellectual property rights in Internet-
related industries are uncertain and still evolving.
We may not be able to realize the intended and anticipated benefits from our acquisitions of expiring domain names,
which could affect the value of these acquisitions to our business and our ability to meet our financial obligations and
targets.
We may not be able to realize the intended and anticipated benefits that we currently expect from our acquisition of
expiring domain names. These intended and anticipated benefits include increasing our cash flow from operations,
broadening our Internet service offerings and delivering services that strengthen our reseller relationships.
Factors that could affect our ability to achieve these benefits include:
•
A significant amount of revenue attributed to our domain name assets comes from the provision of personalized email
services and the generation of revenue from third party advertisements on parked pages. Some of our existing
resellers who provide similar services may perceive this as a competitive threat and therefore may decide to terminate
their agreements with us because of our acquisitions of a substantial number of expiring domain names.
•
We will need to continue to acquire commercially valuable expiring domain names to grow our presence in the field
of direct navigation. We will need to continuously improve our technologies to acquire valuable expiring domain
names as competition in the marketplace for appropriate expiring domain names intensifies. Our domain name
acquisition efforts are subject to rules and guidelines established by registries which maintain Internet domain name
registrations and other registrars who process and facilitate Internet domain name registrations. The registries and
registrars may change the rules and guidelines for acquiring expiring domains in ways that may prove detrimental to
our domain name acquisition efforts.
12
•
The business of direct navigation is dependent on current technologies and user practices. If browser or search
technologies were to change significantly, the practice of direct navigation may be altered to our disadvantage.
If the acquired assets are not integrated into our business as we anticipate, we may not be able to achieve the
benefits of these acquired assets or realize the value paid for the asset acquisitions, which could materially harm our business,
financial condition and results of operations.
We do not control the means by which end users access our web sites and material changes to current navigation
practices or technologies or marketing practices could result in a material adverse effect on our business.
The success of our parked pages business depends in large part upon the current end user tendency to type desired
destinations directly into the web browser. End users employ this practice of direct navigation to access our web sites
primarily through the following methods: directly accessing our web sites by typing descriptive keywords or keyword strings
into the uniform resource locator, or URL, address box of an Internet browser, accessing our web sites by clicking on
bookmarked web sites and accessing our web sites indirectly through search engines and directories.
Each of these methods requires the use of a third party product or service, such as an Internet browser or search
engine or directory. Internet browsers may provide alternatives to the URL address box to locate web sites, and search
engines may from time to time change and establish rules regarding the indexing and optimization of web sites. Product
developments and market practices for these means of access to our web sites are not within our control. We may experience
a decline in traffic to our web sites if third party browser technologies or search engine methodologies and rules, including
those affecting marketing efforts, are changed to our disadvantage.
If the practice of direct navigation becomes less popular either as a result of evolving technologies or user practices, our
ability to generate revenue from the practice of click through advertising may suffer.
A significant amount of revenue generated from the commercialization of domain names owned by the Company is
dependent on our agreements with third party providers. The monetization of these domain names is currently largely
dependent on the paid listings allocated by these providers to the websites associated with our domain names. This allocation
may depend on each provider’s advertiser base, internal policies and other factors and determinations that may or may not be
controlled by or known to us.