June 24, 15
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.