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Rob Monster

Why new gTLDs are GOOD for domains

Why new gTLDs are GOOD for domains

The long anticipated  announcement by ICANN about opening up the namespace to new gTLDs has received a great deal of attention in the domain industry.  A number of people have asked for my assessment.  My bottom line is that more TLDs is fundamentally good news for domains.

 

Why more TLDs is good news for Domains
The real battle for domains is not about which TLD one navigates to, but rather I believe the long-term battle is about the addressing system itself.  In my assessment, ICANN is making a historic move that preserves the long-term viability of domains as an addressing system.  Yes, there will be winners and losers created by the act of increasing the available supply of registerable domains. However, ultimately, I think the bigger risk to domains as an addressing system is changing user behaviors, particularly around the broad adoption of low cost mobile devices and the emergence of closed ecosystems on the web.

 

The Contenders that can challenge Domains
What are some other emerging addressing systems beyond domain names?

  • QR Codes and machine-readable codes:  QR codes are increasingly visible in daily life.   It has not reached mainstream status in the US, but is gaining traction in Asia, notably Japan where most mobile phones are equipped with a QR code reader.  No need to type in a URL. Simply scan the QR code. In the current practice, this will typically route the user to a web address where the content they are seeking is rendered in a web page. However, that does not necessarily have to be the case which is why QR codes are a risk factor.

  • Mobile Apps: Mobile Apps have moved beyond entertainment. An eCommerce store can replicate the traditional catalog shopping experience using page-turn technology. The experience is highly intuitive and simulates leafing through a printed catalog.  In most examples that I have seen, the ordering process still takes you to a web page to clear a transaction.  That said, payment system integration on mobile devices is maturing quickly and so once again, a redirect to a web page would become optional.

  • Closed Ecosystems: The average web user is spending more time on fewer sites.    They are developing brand attachment to services like Facebook.  These are increasingly closed ecosystems that have near-zero operating dependence on external domains.  If you link out to from Facebook, it will be through a redirect URL.

 

  • Decision Engines: Search engines are increasingly becoming decision engines.  Rather than take the user to Weather.com, they will simply give you the answer in the search result.

  • Reputation-centric Networks: Twitter is fundamentally a reputation-centric network.   The @whoever addressing system could ultimately compete with email addresses as a primary identity on the web.   Payment services like PayPal are built around email addresses, which in turn are built around domain names.  So far, application services like TwitPay have gone nowhere. I would expect that to change soon when Twitter starts  more aggressively acquiring enabling technologies that builds on their addressing system.  Epik’s own development of Identity.net as a network-wide addressing system is partially a response to the need for domain-friendly addressing systems built around single-sign-on and portable reputation.

 

Addressing Systems tend not to go away quickly
In the history of addressing systems, very few have actually ever gone away completely.  The Telex was replaced by the Telefax, which is increasingly being replaced by scanned attachments.  However, street addresses have not been replaced by GPS coordinates, and phone numbers are not meaningfully different from the 1940′s when Bell Labs introduced the concept of telephone area codes or the 1960′s, the country codes we use today became an international standard. As such, for the simple fact of inertia and entrenched behavior, I expect domains and email addresses will be with us for a very long time to come.

 

Marketing Budgets are usually a zero-sum game
The primary target for new gTLD are corporate sponsors. So, as a domainer, which would you rather see happen?  Would you rather have Coca Cola spend $5 million on acquiring and deploying a .COKE TLD, or would you rather see Coca Cola allocate that same budget to rolling out a QR code or mobile application?  At the end of the day, more money that is directed at acquiring and maintaining more domain names increases the pool of stakeholders that care about the long-term viability of an addressing system that also happens to offer a level playing field for new publishers to become producers of content using established publicly available TLDs like .COM and .NET.

 

Bottom Line:  The real competition is not other domains
Long-time holders of super-premium .COM domains are probably the most impacted by ICANN’s latest move.  For example, it is cheaper to buy .RETIRE than to buy Retirement.com.  This means the holders of undeveloped premium .COM names have a finite remaining window to turn their undeveloped .COM domains into recognized brands. For the moment, the search engines and social networks are willing partners in this matter. After all, they send free traffic to your site.  My personal outlook is that this pattern will not continue into perpetuity as new addressing systems emerge and as web properties become increasingly effective at keeping traffic on those web properties and not directing users elsewhere.  All that said, domain investors who are proactive and adaptable should do great in a period of rapid change.

 

 

 


Comments (9)

  • Gene

    June 23, 2011, 5:54 pm

    Excellent analysis – best, and most comprehensive, one that I’ve seen, thus far.

    My comment on Morgan’s blog yesterday was similar to your “Bottom Line”…

    “The net effect of this will be that the average price paid for quality dot-coms may double in the next 12 months (theory being that the SMEs can’t afford 185K, but can afford 10K. Conversely, some of the high(est)-end names may come down in value a bit (theory being that if you’re BIG Company, and you have the funds to purchase Big.com for $750K or dot-big for 185K, you’ll probably opt for the latter simply because your CMO thinks that dot-big will better-solidify your brand.”

    ** RWM ** The next 2 years will be a pretty interesting period to watch whether .ANYTHING-YOU-WANT takes off.

    Reply
  • owen frager

    June 24, 2011, 2:12 am

    You need names for products, signs, badges, pay checks, packaging and first and foremost you are investing in a brand. Shorter, easy to remember, expresses what you do or do for the customer or even better a word that differentiates you from others (i am working on just this for a client now that launch with very bad naming after I couldn’t convince them what buying the million dollar name out of the chute could do. So now we do it over.;

    The new TLDs are great addresses but weak brands. You wouldn’t use your phone # as a brand imagine Macy’s going with 212-600-Macy’s. Regarding the icons and apps, those create an even bigger challenge that I went through first hand. Your logo should scale to a 180×161 space in FB and all the other feeds. FF didn’t express Frager Factor. And with Waikiki.me we made a beautiful logo only to load it into the Facebook fan page and see it fail. Communicating in a small space where a word can be expressed as image so everyone in any language can begin seeing it around, trust it ad explore it.

    All companies will need brand names. Those which fit the needs above are now instantly more valuable. The .com is not even needed because any brand that’s judged worthy will be expected to be on .com.

    Also when designing logos and graphics consider how the name can be animated in multi-media or used in games. This makes a strong value add to the sales pitch.

    Finally, you are right. If every New York business was a sub-domain on NY.com that’s just better impression. .nyc makes it look like a government agency.

    There may be some application for those tlds as advertising taglines. But closing a spot with Aetna.retire would never be as effective as retire richer or retire sooner which offer a benefit to the reader to explore.

    There is no downside risk to getting Good domains dressed up and more attractive to buyers. Not with the development scale and features for the small price you pay.

    Sit on name jet all day investing millions in new names when a fraction of that investment can turbo-charge your existing names. Along with this would be a clear exit strategy and an analysis of who would buy this domain and why. If your target is Zappos, add a personal touch that makes it show as if it were made for their needs and opportunities. Have a plan.

    One last thing. Epik domains would instantly be more valuable i they had a real company behind them. The about us a story even if marketing invented how your wife could never find the flavor she had on vacation, so not only did I buy the ice cream maker, I opened this store. Notice on Elliot’s sites, Kevin’s sites, Frank’s sites, Castello Sites they have a corporate signature will legalease, privacy policy and link to their site. On their site is press releases, speaking engagements etc Not only will Google rank you better, but these little branding touches express that smart successful people have taken their know-how and we can acquire all that and have it working tomorrow. Image, perception is everything. .com is where leaders are.

    ** RWM ** Thanks Owen. The last paragraph has a really good insight. The best brands (and websites) tell a compelling story. This is somewhat hard to at scale. In the case of the Epik network of stores, there is a cohesive story taking shape around a global shopping cart — a virtual mall where you can shop in any store and check out all at once. At scale, e.g. thousands of sites, I think the personal touches have to come primarily from user engagement. That said, Epik will be experimenting with the concept of store managers at the store level who then become part of that store’s persona.

    Reply
  • Steve

    June 24, 2011, 2:27 am

    “if you’re BIG Company, and you have the funds to purchase Big.com for $750K or dot-big for 185K, you’ll probably opt for the latter simply because your CMO thinks that dot-big will better-solidify your brand.”

    My bet is most of the traffic will go to Big.com not to .big.

    Nothing to date has replaced an easy to remember domain name. The .com extension gets the most traffic by default and the business owner that wants to spend money on billboards, tv ads, etc should spend the money on an easy to remember dot .com for those ads.

    It is pretty difficult and dangerous to get your cell phone to scan a billboard with a QR code at 60 miles per hour while driving on the freeway.

    Also relying on other peoples networks leaves you at the mercy of their networks, etc. With domain names, YOU own them. When twitter, facebook, etc. is sold or shut down all of the work you put into building your presence on that system is gone, poof. imho

    Cheers.

    ** RWM ** Right on. If you have to buy just one domain for your startup, buy a decent .COM. For the foreseeable future, that is still the safe bet.

    Reply
  • Joe

    June 24, 2011, 3:15 am

    After much thought and numerous rounds of mental chess with my Mensan friends, here’s my take…

    In 2014 (or later!), the new gTLD’s will be rolled out.

    They will be a huge failure — as were .Aero, .Travel, .Museum, .Jobs, .Mobi, .Biz and .Coop. Hey, did you know that the extension .CAT has been available since 2005? Who knew? Go ahead and Google it. I’ll wait. As such, can someone perhaps explain to me why it’s not popular with feline lovers? Knowing this, do you really believe that .DOG or .PET will do any better? Highly unlikely, my friends.

    I truly believe that those who are foolish enough to invest in gTLD’s will lose their cybershirts.

    As it becomes obvious that the gTLD concept is flawed, the laws of supply and demand will kick in and the value of a properly-spelled, generic .COM will absolutely need to skyrocket — even beyond what they are today. Mortgages on a premium piece of oceanfront domain will be common. Why would they not?

    Just as landlords now rent out commercial bays in shopping plazas, so too shall domainers rent out their precious domain names to entities who want to monetize the traffic and benefit from the .COM prestige and credibility — something the in cohesive gTLDs will always lack.

    There you have it, my predictions. Take ‘em or leave em, but it seems pretty obvious to me.

    Allow me to succinctly summarize everything for you: keep renewing those .COM’s. If you let them drop, you probably won’t be able to afford to buy them back in a few years.

    * * RWM ** Good vision. I think you may be right about how this plays out! One thing that I believe folks greatly underestimate about new TLDs is that the marketing costs to legitimize a new TLD will far exceed the ICANN costs. Large corporates can play here. That is where it gets interesting. The average undercapitalized entrepreneur will be fighting an uphill battle to launch a new TLD. On this we can agree.

    Reply
  • Owen frager

    June 24, 2011, 10:22 am

    1. .com is like a 212 area code — a new York address an ad agency on Madison ave is always going to be the phd while one in brewer pa is the med student
    2. Opening a store in NYC will take a year and cost a half million dollars that price won’t put you in high traffic area s you’ll have to advertise to get known. Plus you’d need at least another half million for stock, staff, fees, utilities, insurance, security, signs and after all that you have to build a website that would cost 30k with you taking pictures and paying someone to change them never knowing you could have had product feeds that update automatically
    3. Add Epik to your new York address and you get the opportunity to generate sales, same or more then is possible in 2 right from the gitgo day one
    4. You’ve opened a store which can impact your tax bill even if you don’t make a dime. When I worked in corporate and opened a real site, I got a 6000 refund due to eligible deductions

    Excuse typos iPad not letting me scan
    5. If you specialize in a product chances are you have many prospects you could sell the business to. For example there probably isn’t a product portal on Epiks platform that Amazon is not paying to bring traffic to that page within their site. If you are selling dishwashers, simply go to GEs website and find a prospect list of thousands of local distributors who could gain an edge and advertising benefit with a dedicated site. It’s even possible that they’d qualify for coop advertising funds from ge that would pay for the whole acquisition. Because your site conveys value that a domain name alone won’t.
    6. When you apply for a loan or affiliate program and they ask what’s your business — show them this Epik site and they don’t see a seedy cybersquatter across the table, they wonder how you ever scored a name like dishwasher. Net you must have paid a kings ransom. They don’t see a 495 template they assume that you dropped 30k into that build because that’s the amount the loan officer typically lends local businesses to build theirs. And you carry name brand products? What kind of inventory investment is needed to get you hooked up with GE?

    I’m trying to show you how an end user values your site versus the domainer who only sees value they get to no1 on google as how much more they can make than ppc.

    Not all sites are created equal. If you tell an end user you can import products directly and have a turnkey warehouse,service and call center to handle it all and putting your logo on the box…what’s that worth? A little effort to create Facebook and twitter pages with thousands of followers and matching branding or build a mail list and you can begin to see how little return you can realize on domain speculation and how much more you can build wealth by shifting your focus to developed web businesses instead. Check out epics drop catch page and 1999 special with all of the new enlightenment in mind. In three months I’d love to compare the guy bought 7 drops reccomended on blogs with the guy who invested the money in Epik

    Reply
  • Owen frager

    June 24, 2011, 10:36 am

    Ps. When development started the benefit emphasized was for names with little traffic and little hope, these exact match names would rise to the top of google and the money would come rolling in. With the lawsuit on google you can realize that’s going to be contested and unreliable. But my experience is that most people don’t search for dishwashers. They search for 7 year old dishwasher 300 repair or replace diswashers on sale dishwashers floor models what is safe to put in the dishwasher. Rinse plates in sink first or put in. Dishwasher to match black kitchen
    Dishwasher electric bill comparison if you write articles on these topics which can often be based on Mfr FAQ you’ll get more traffic then if you had the number one spot with less competitive options for the surfer.seeking answers to these questions your domain will stand out as the authority

    Remember faqs give you fully researched tips to what people search for

    Reply
  • Owen frager

    June 24, 2011, 11:10 am

    And finally in speculation it’s not the extension or the pricer being first on google thats key– it’s the platform versus the eyeball. With the drop domain you can park or list thats it. Consider that there are 10 million domains listed at a certain broker. Last week they sold a dozen of them and everyone musts knows if it’s on the list, yours will be next. But a million in reported sales generates $100k for the agent before sales commissions and referral fees. Since the overhead of that company is a million a week or more it’s not about closing sales but about the 10000 listed that never sell. Even each domain averages only $5 a year that’s a 50 million dollar return someone else gets on your collective 100 million investment in hope

    That’s sick.

    With the platform you get the ability to transform your asset into whatever you want it to be. You get new developments and capabilities they day they are released. You are the master of your future. And to millions of people unemployed or stuck in dead end jobs thinking their only way out is to borrow50k and open a quiznos that’s pretty attractive.

    Count your blessings. Others in the business have exploited your get rich quick without any work gene to enrich themselves at your expense.

    Rob is giving you a real opportunity the other way around– he invests his money to help you make yours

    Reply
  • Vishal
    Twitter:

    June 28, 2011, 2:57 pm

    Rob,

    Another super analysis. Based on my little experiance in the domain field and various comments on this page, I think gTLD’s will not have any damaging impact on TLD’s such as .com, .net, .co.uk or .de and few others. I personally think it will increase the value of some of the existing TLD’s. So it would be foolish to let your domains slip.

    If you have the time and the knowldege than build your own sites or work with industry leaders such as EPIK. Just don’t park them or else you will never realise their true value.

    Reply
  • Mira
    Twitter:

    September 1, 2013, 10:19 am

    “For example, it is cheaper to buy .RETIRE than to buy Retirement.com”
    Yes, that’s why I did not sometimes understand how is possible someone is paying around a million for the super-premium names, instead of utilizing a opportunity to have own gTLD.

    On the other hand – operating a TLD is far much less easy than buying a .com domain. It’s not just paying the $185k.
    Firstly, you must not have missed the gTLD application window, which is now closed for more than a year. Then, you must prepare to wait. Even if you have successfully applied within the window, you aren’t always the only applicant. You have to have your own infrastructure and other expenses, etc…

    **RWM ** Yes, good comment. When new gTLDs come online in volume, it will put an implicit cap on keyword .COM names that have never been developed. Why own Keyword.com when you can own .KEYWORD and have 50,000 versions of .KEYWORD with absolutely zero ongoing costs — the ICANN fee is waived for the first 50,000 names.
    Despite of all I mentioned, IMHO, for big companies, all this is still definitely worth them to have their own gTLD.

    Reply

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