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My Take on The gTLD Losers

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A couple of weeks ago, I posted an article about who I think will do well financially with the new gTLDs. That came on the heels of my gTLD prediction article. Today, I want to discuss who I think will be the losers when gTLDs are introduced and go to market.

Trademark and Brand Owners – No matter what is done by ICANN and domain registries to assist trademark owners, cybersquatting on new gTLDs is going to be a big problem, especially if/when consumer adoption takes hold. Brand owners will have a choice of spending money to secure their brand domain names or taking a risk that someone else will purchase them. I do realize that many don’t own their TM in ccTLDs, so the concern may be a bit overblown.

gTLD Registries – Some of the gTLD extensions don’t make any sense to me. Others make sense but the market is very limited. After spending $200k for the application, having hundreds of thousands of dollars locked in escrow, and spending much more money on operations, there are going to be some big failures.

Domain Speculators – If an extension makes public registrations available and there aren’t limits to how many a single entity can own, domain speculators will buy many keyword domain names. There will always be people buying worthless domain names, and there is going to be a lot of money spent buying names that won’t be worth anything. For instance, purchasing Insurance.Green doesn’t really make sense to me.

Non-.com Domain Investors – There are going to be hundreds of new choices when it comes to buying domain names, and I think it will be more difficult to sell alternative extensions like .net, .biz, .mobi, and others. Right now, many people buy them simply because the .com is unavailable and it’s the next best alternative. If there are more relevant keywords, there is less reason to buy those domain names, especially at premium prices.

Non-.com Domain Registries – Similar to the reason above, it’s likely that domain registries will see a drop off on registrations as domain investors and small businesses spend their money on more  relevant  gTLD extensions.

General Public – I think it’s going to get very confusing when brands start using .Brand and others begin promoting alternative extensions. People tend to flock to what they know when there is confusion, and I think there will be plenty of confusion at first.

Who else do you think will lose when it comes to new gTLDs?

Enom: Build Your gTLD Watch List

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Enom is getting customers ready for the deluge of new domain extensions that will most likely be available at some point in the near (possibly) future. The company currently has a small pop up just after the log in screen, and there’s a “New TLDs” link in the top menu when logged in to an account.

When you click on the “Watchlist” link in the drop down menu, there’s a space to enter domain names, and customers are encouraged to “Enter a list of new TLDs or domains to watch. We’ll send you instant alerts every time the status of a Watchlist item changes, so you can place your order first. Get started now!

Beneath the space to enter domain names, there is a list of 332 gTLD extensions. One thing I noticed is that a considerable amount of Donuts’ gTLD application extensions are on the list. This isn’t a surprise because Donuts Co-Founder and CEO Paul Stahura is the founder of eNom.

Making consumers and small businesses aware of the new extensions will be a key to adoption. Having a prominent presence at domain registrars will be critical in growing a registrant base. It’s smart that eNom is already preparing its customers for the new gTLDs, and strong registry / registrar relationships is going to benefit companies like Donuts.

Have you noticed other domain registrars preparing customers for new TLDs?

My Take on The gTLD Winners

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Last week, I shared my gTLD  predictions, and today I want to discuss who I think will come out ahead when it comes to new gTLDs and why I believe they are going to do well. Ultimately, this is about who will benefit financially from the introduction and sale of gTLD domain names.

ICANN – At $185,000 per application plus fees from auctions, ICANN will certainly make a whole lot of money from the introduction of gTLDs. ICANN has also been mentioned in just about every tech and mainstream article about the new domain extensions, and that publicity probably helps the organization that is looked at as the “governing body of the Internet.”

Domain Registrars – Domain registrars such as Go Daddy, Name.com, NameCheap, and others are going to sell a lot of gTLD domain names. Domain registries are going to rely on consumer facing domain registrars for “shelf space” on the registration and checkout pages, and registrars will probably be given solid commissions for sales. I am sure the registrar executives will also receive perks from the registries to ensure good placement.

Domain Registries – The companies that sell gTLDs are arguably taking on most of the risk when it comes to the new TLDs. They have put up the most capital, and they have the most to lose. While I am quite sure there will be a number of registries that lose money, there are going to be plenty that make a mint. I also imagine there will be registry sales to larger companies once revenue streams are established. This is going to be a profitable endeavor for many.

gTLD Consultants – There’s an adage that during the gold rush, the people who made the most money were those selling picks and shovels to gold miners. There are a number of highly experienced domain consultants working with registries and auction houses on new TLDs. Because this market is so specialized, there aren’t that many qualified people to assist with applications, sales, and auctions. Therefore, these specialized gTLD consultants can charge premium consulting fees for their expertise.

Small Business Owners – Assuming Google will rank local business that use gTLDs in its search results, and I think it’s a safe assumption given Google’s own gTLD applications, small businesses will gain from having the opportunity to register better keyword (and possibly more memorable) domain names.

IP Lawyers – There will be lots of lawsuits I would imagine, and the lawyers will be paid win or lose. Lawyers with intellectual property experience who represent brands and trademark owners will be tasked to litigate, and they will make a fortune.

Sales Venues and Auction Providers – A strong aftermarket will help fuel gTLD sales, and registries will need the assistance of aftermarket sales venues and auction houses to hold special auctions.The market is going to get crowded with hundreds of new gTLDs, so these venues should be able to make out very well by brokering sales and holding auctions.

Domain Investors  – As I said in my predictions, I think there is likely going to be confusion and  convertible  error traffic. I also think some gTLD users will want to buy the matching .com domain names and will have to pay domain investor prices. I also believe that gTLD registries will need to have domain investors participate in the launch, and there will be deals to be had and flips to be made as a result. With all of the attention being paid to domain names, I think it will bring new money into the fold, although I think caution needs to be heeded with respect to new investors.

My gTLD Predictions

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I’ve been investing in domain names for almost ten years, and I don’t believe we’ve yet seen anything that is going to have as big of an impact on our business as gTLDs. Hundreds of millions of dollars will be spent on these new domain extensions, and we are going to see our industry change as a result.

I want to share several predictions for the new gTLDs from a domain investor’s perspective.

  • Although the US had more applicants than other regions, gTLDs will be more widely used and popular abroad than in the US. ccTLDs are very popular outside the US, and as a result, people are more apt to look to the right of the dot outside US borders.
  • Domain investors will not embrace gTLDs as much as applicants may be modeling, and there will be some TLD registry failures as a result of the projections being inaccurate.
  • Owners of the keyword string .com names are going to be very happy. Some registries will feel the need to buy the corresponding .com names and pay a lot of money for them. In addition, there will likely be a ton of error traffic that pays well.
  • There will be  anomalous  sales in most of the “good” keyword TLDs that are similar to the $450,000 sale of Meet.ME. The key factor to these sales will be relevance to the keyword. For instance, Insurance.Gay might not be a great domain name, but Dating.Gay would be valuable.
  • Within 5-10 years, companies like Affilias and Verisign will benefit from failed registries because they will be able to acquire the user base and recurring revenue streams from “failing” registries. They likely have the ability to manage these TLDs better, and as a result, they can make key acquisitions when the opportunities present themselves.
  • A domain registrar is going to patent technology to be able to suggest a TLD for when someone goes to register a domain name. For instance, when someone tries to register CurtainsAndDraperies.com, the registrar will suggest CurtainsAndDraperies.Shop along with premium registry held names like Curtains.Shop.
  • Popular registrars are going to make a lot of money with new TLDs. There will be massive competition amongst registries for “shelf space” on the search page, and that will lead to strong margins for registrars on newly registered domain names and premium domain names.
  • There will be many deals made before registries go to auction, and there will be very few auctions. I can see some companies making millions of dollars by dropping out of the running instead of gambling with an auction.
  • Although there were many, many brand applications, I don’t think we will see many brand .TLDs used in marketing for a long time. I believe many brands sought their TLDs for defensive measures instead of for marketing purposes.
  • Companies with domain industry ties, like Donuts, Radix, TLDH, STRAAT, and Uniregistry (among others), are going to do very well with their TLDs. They know the business of selling domain names, and they should be able to translate that experience into gTLD sales.
  • Companies are going to spend hundreds of millions of dollars marketing their new TLDs, and that will lead to more awareness of domain names and domain investing. It will also bring new money into the fold, and there will be a lot more inexperienced people who think they can get rich quickly by buying and re-selling domain names.
  • There will be lots of litigation.

Please share your predictions if you’d like.

Watch Live: ICANN gTLD Reveal Day

Watch ICANN’s “Reveal Day” live from London. Hear from ICANN CEO Rod Beckstrom and others from ICANN as they reveal the list of gTLD applications. There will be a press conference followed by a break followed by questions from reporters and members of the audience.

Here is the PDF of gTLD applications and applicants.

Speaking and answering questions at today’s press conference from ICANN:

  • Rod Beckstrom, President and Chief Executive Officer
  • Kurt Pritz, Senior VP of Stakeholder Relations
  • John Jeffrey, General Counsel
  • Brad White, Director of Global Media Affairs

Juan Diego Calle’s STRAAT Investments Reveals gTLD Applications

Earlier this morning, Paul Sloan published an article on CNET about the new gTLDs, and he mentioned that Juan Diego Calle, founder of the .CO Registry, “is going after 13 new TLDs through the investment company that backed .co Internet.” I just received a press release from Calle’s STRAAT Investments detailing the company’s newest investment in gTLDs.

STRAAT Investments is applying for 13 domain extensions, and they will also be assisting one other applicant with a 14th TLD which will be revealed publicly tomorrow. The 13 TLDs are:

  • .APP
  • .BOOK
  • .CORP
  • .DESIGN
  • .GMBH
  • .GROUP
  • .INC
  • .LAW
  • .LLC
  • .LTD
  • .MOVIE
  • .TECH
  • .WEB

Straat will be leveraging its existing infrastructure and the assets of .CO to efficiently launch their new TLDs, but the .CO team will stay focused on growing the .CO space. Each TLD under management will have its own brand team, although I am quite sure they will also leverage its learnings from the past few years marketing .CO domain names.

One big question is how potentially hundreds of new TLDs will impact .CO, and the company acknowledges that there will be an impact. According to Jose Rasco, Managing Director of STRAAT, “New TLDs will definitely add some competitive pressures to .CO when they are launched. But in the long run, they will help us in transmitting the message to the general public that there is much more to the namespace than .com, that there are credible alternatives as evidenced by our successful launch, and that there is an unmet demand for new products.”

One thing that is apparent is the corporate TLD applications. One reason many .CO are buying .CO domain names is because .CO can stand for “Company.” STRAAT likely has seen this with its clients, and they are applying for TLDs like .LLC, .LTD, .INC, and .GMBH to sell to companies using these various business abbreviations.

ICANN’s “Reveal Day” is scheduled for June 13, 2012. All gTLD applicants and extensions will be announced during a press conference.

STRAAT Press Release follows:

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