Because Sedo is a sales platform that serves as a venue for domain names of all extensions, and because of the breadth of its sales, I think company CEO (and co-founder) Tim Schumacher is well positioned to opine on the impact gTLDs may have on the value of domain names.
So does Tim think gTLDs are going to change or devalue the price of existing domain names? According to Schumacher, “the answer here is simple: No. The addition of a new gTLD will not affect prices in the secondary domain market.” Schumacher continued, “for example, the introduction of a number of new gTLDs in 2001 (.aero, .biz, .coop, .info, .museum, .name, and .pro) highlight how some extensions flourish, while other do not. I’d imagine many of people would not have even realized that some of these TLDs were launched. The inconvenient truth for any new gTLD is that, in 2001, you needed a .com to start a business (or a country-specific equivalent) and that rule still applies ten years later.”
I’ve been hearing quite a bit of buzz about .XXX domain names, and Schumacher commented on that extension as well. Said Schumacher, “while the .xxx extension is receiving much media attention of late, without a mandate to force adult content to the extension, it’s simply another new extension that brands should be aware of.”
One thing that will be interesting is to see whether Sedo has any restrictions on selling .XXX domain names. Sedo has an adult domain name section, and I am curious about whether they will push all .XXX domain names there since they currently look to the left of the dot for cues.
Hey Elliot – I would like to comment on Tim’s assessment of market values in the world of 500 – 1500 new TLDs. I have the highest respect for Tim and for Sedo. As you know, when I founded and ran Moniker, we had a very healthy, friendly, competitive and cooperative relationship with Sedo for many years.
In 2001 ( The year of 9-11) the domain industry and the internet industry as a whole was completely different than it is today. Problems processing credit cards, spam, phising, the dot com boom then bust, then economic recession and recovery were all major factors for folks registering domains, monetizing them, and using them as their business sites. In addition, 4 of the new domain extension examples above were restricted sTLDs and not available to the general public (.aero, museum, pro, and coop) as is the current case with .XXX, so not a good comparison of what is about to come with the introduction of 500 – 1500 (mostly non restricted) new key word, Geo, corporate brand, specific industry targeted “Right Of The Dot” domain extensions with meaning. Also in 2001, we had far more supply than industry demand which created that scenario of lack of interest in other extensions…. and social media was not even a valuable domain in itself.
What’s going to be different in the next 5 years? Just to name a few things – Internet users will double, internet traffic will quadruple, ages of internet users will be both younger and older and in third world countries that never had access to the web before. Smartphone and tablet use will also double making accessing the web even more available, challenging but in some ways easier for the new generation of internet users. Social media will probably be even more on fire and prevalent.
Although many feel that their .com names are protected through all this, I feel there will be huge new and existing markets for some of these new extensions. So much so, Mike Berkens and I started a new business around this movement. So I am not just blowing smoke when I say that when there will be an increase of supply of 500 – 1500 new extension choices with millions of new name combinations for individuals, investors, companies, industries, brands, social media groups, clubs, gender, age, race, sexual preference based domain extensions, etc……there WILL be pressure on existing and future domain values. Someone or some company looking for a domain for the first time will very much consider a premium name in a new extension that better meets their market segment rather than paying up in the aftermarket for a dot com name. Its just going to happen with the new generation of domain registrants. There will be downward pressure on dot com domain values when all these new choices and new business models flood the market. Its unlike anything that has ever hit our industry and it will be chaotic, confusing and crazy, but its going to happen.
We feel that in the long run, the top key word dot com domains will hold their values better than others and eventually I think some of the winners in the other extensions will want to go after their dot com version to corner the market, but when you have that much supply hitting our market all at once, you will have domain values affected mostly in a negative way. Some may increase in value but not many.
And…I think most will be surprised to see just how well .XXX does over time even as a restricted and very segmented sTLD.
Of course, this is just my opinion of what is yet to come 😉
Tim is spot on.
I believe that the .com and country code extensions are a cesspool of half-built, and mostly half effort sites….YET it is the best we have been able to do as a collective whole as humans.
The Achille’s Heel of the new extensions is the real threat that if they are not developed with the same zeal that .coms are then they will be second-rate extensions.
If a lower development zeal occurs, and surfers have roughly 15 positive experiences out of 50 site visits, for example, in the cesspool of .com that most of the energy and dollars have already gone to, but only have a four positive site experiences in 50 .whatever visits, then that new extension fails by default of the surfer reverting back to using .com as the selection of choice for the most positive experiences.
It’s really an uphill battle for these new extensions. Let’s not even begin to talk about “extension confusion” causing folks to revert back to .com due to frustration and as the “good ol’ standby” where I might find a real site, potentially with good info.
I’d be afraid to put my millions promoting Ford.car then Ford.com. What if it did not work and then you have to rebrand back to .com? That would be miserable.
Or let’s take a small site like Mountain.hiking. Put $100,000 in to it with real developers helping you along, only to always have that burr in your saddle bugging you because so much traffic leakage is going to MountainHiking.com, making the other owner, and potential competitor some real money/market share. You’d be fundamentally building your competitors site with your dollars. Ouch!!!
It’s common sense that the market won’t be affected. The .com, .net, and .org are ingrained in the world lexicon. As for Sedo, their image is tarnished by most posts in fb and twitter. The brokers are assigned to you but if your domain is not worth 100k or more, your a non person.
“if your domain is not worth 100k or more, your a non person.”
It probably doesn’t pay to devote time to lower value domain names. You figure a large % of the high dollar names they have under contract (and take time trying to sell) don’t sell, so even though they make 15% on those that do sell, figuring all the other names they spend time on, it’s not a ton of money. The other thing is that most people seem to think their names are worth far more than reality would dictate.
‘…Its just going to happen with the new generation of domain registrants. There will be downward pressure on dot com domain values when all these new choices and new business models flood the market. Its unlike anything that has ever hit our industry and it will be chaotic, confusing and crazy, but its going to happen…”
It’s like tsunami wave flooding and crashing on prime waterfront properties of .com…all go down value like pigeon shits…
Actually it all depends on the price points from what I can see. Startups of the type using .me / .so / .to to ‘brand’ their app or site typically pay between $2,500 – $25,000 for a domain.
This is the price segment most likely to be affected with the new extensions, domains valued above that now will continue to be but with the additional price pressures as pointed out by Monte.
Just thought I’d add – the sub $2,500 priced domains are already tough to sell, the new extensions will just make it tougher, except for .com or relevant cctlds, at least for a while – probably a lot more than 5 years.
More like 10 years for tipping point (20%?) penetration in the end user mindset. But yeah, it will happen for sure, people are still surprised by the inroads cctlds have made.
What I’m surprised by is the immense capacity the primary market has for domain names, which seems to be outpacing development with a 8%+ growth year on year. And this will be the biggest revenue opportunity in the whole new TLD ecosystem.