The New gTLD Domain Name Value Issue

7

In a tweet a little over a week ago, Christopher Hofman Laursen  of the European Domain Centre said, “Domainers don’t understand new gTLDs. Demand for .com relies on scarcity. No one can control the supply of #newgtlds.” He linked to an article he published on LinkedIn, and I think it’s worth a read when you have a moment.

 

For me, I haven’t bought many new gTLD domain names, but it’s not because I don’t understand them. My primary issue is that I don’t see how I can invest in them adequately to get a large enough expected return on my investment. At this point in time, I believe I am better off spending $1,000 or $10,000 on a .com domain name than I would be hand registering the equivalent amount of new gTLD domain names.

With the new gTLD domain names, there is plenty of supply, and there likely will always be adequate supply. I believe that this tremendous supply of domain names tempers the potential value, and it limits my potential return. I do think that there is some money to be made from the domain investor side, but I am still not convinced that I can operate a business that relies on the resale of these new domain names.

I think Andrew Allemann summed up the issue I see in his blog post yesterday. In his article, he discussed a scenario in which the new TLDs are a “home run.”  I also discussed the success scenario in November of 2013. Here’s what Andrew had to say yesterday:

“In this scenario, early investors don’t do as well as under the mediocre scenario. There’s simply too much supply of new TLDs. Yes, some of the better TLDs came out in the first round, but there are so many “synonym” domains applied for later (not to mention singulars/plurals) that it’s impossible to command much of a premium for a domain.”

My opinion is that if the new gTLDs fail, I don’t want them. If the new gTLDs are accepted modestly, I will still have success with my .com investments. If the new gTLDs are a huge success, I would need to change my business plan completely and accept that lower returns are inevitable.

7 COMMENTS

  1. The new GTLD drop market could be rather interesting three to five years from now IF they can be backordered like current .COM, .Net, etc domains at Namejet, Snapnames, etc. Or will they be taken back by the registry like some expiring LL domains have been? By waiting a few years one can see if end user aftermarket demand develops for these extensions, which TLDs are in demand and at what price point. It is also possible that as more TLDs are launched some of the pricier renewals are lowered so that registries can compete. While there are probably some unique opportunities in this space, I view most new TLDs as beyond my risk tolerance and thus I remain on the sidelines.

  2. As of right now I only have 2 gTLDs and don’t know if I want anymore. The one thing I do like about these extensions is that there can be only one in each extension.

    For example if someone wanted BostonRealEstate.com they can also get the .net, .org, .co, .me and on and on but there can only be one Boston.RealEstate so in my mind the top two domains would be either the gold standard BostonRealEstate.com or the one version Boston.RealEstate

    Obviously the .com right now is the top domain but will this be true in a few years once the masses understand what the dot between the two words actually means. Once they understand the dot I would much rather have the shorter more attractive Boston.RealEstate

  3. I have so many comapanies, and registries calling me, emailing me to let me know, and try to sell me their gtld’s I know that there is just to much man made supply to fit the demand. My money is better invested elsewhere than paying premium renewals. You have singular, plural of the same keywords coming down the pipeline, you really have to study every extension being released, as a better keyword, could greatly devalue your investment in 6 months. Then dealing with carrying costs on premium renewals.

    I think many registries have been saved by domainer dollars in the first 4 months, those funds are now starting to cease, and they are coming to grips with sub 1000 releases.

  4. I read what he had to say when somebody else posted it about a week ago. It’s irrelevant since it comes from a domain registrar. Their target audience are newbie domainers hoping this is another gold rush.

    • And that’s why Frank Shilling is the smartest guy in this industry.
      You may not like what he did by holding some of the new extensions out but he had it planned to start uniregistry right when the new gTLD’s came out.
      He started his own domain casino..lol.
      Frank knew that most of the new extensions would be gobbled up by domainers looking to strike it rich and we all know the house always wins.
      I saw a interview with Dennis Kozlowski, the past CEO of tyco industries.
      He said back in the days of the gold rush, it wasn’t really the miners making the money, but it was the guys that were selling the picks and shovels.

    • Jonathan, I write as I see it, but do let me know what part of the post you disagree with.

      Thanks for sharing, Elliott. I went to a marketing conference a couple of weeks ago. Plenty of smart people in the room. Some domain registrar offered a .guru domain to
      the fastest 50. They thought .guru had real value. Needless to say the marketing guys din’t see it that way. That’s when it dawned upon me to do this post.

Leave a Reply