NB: This is a guest article by Tim Schumacher, CEO and co-founder at Sedo.
As someone who has worked in the domain industry for over a decade, I have recently been asked if the new global Top Level Domains will change or devalue the prices of existing domain names?
My answer is always the same: a clear and resounding “no”.
While many travel businesses may see this as a fresh opportunity to purchase some of the keyword domains they missed out on last time round, the fact is that new TLDs ultimately won’t have an effect on the price structure of the secondary domain market at all.
Before explaining why, let me start with an apt analogy which Thies Lindenthal, creator of the IDNX domain index and a domain pricing specialist at Sedo, recently put forward in his Scientific American article:
“On April 22nd, 1889, large areas of what is now Oklahoma were officially opened up for homestead settlement. At high noon, thousands of pioneers raced from the territory’s borders into pristine land, claiming lots on a first come, first serve basis.
“Within hours, first cities emerged around railroad stations or at other well-connected spots, quickly establishing local governments, basic infrastructure and property rights. Despite opposing laws, land claims were directly sold off in secondary markets.
“But even then, Manhattan had already been settled much earlier, and land prices in Manhattan were, and still are today, more than hundredfold the prices of Oklahoma’s rural areas.”
For example, the introduction of a number of new gTLDs in 2001 (.aero, .biz, .coop, .info, .museum, .name, and .pro) highlights how some extensions flourish, while others do not. I would imagine many people in the travel industry didn’t even realise that TLDs like .aero and .museum had launched in the first place.
In fact, even the better known domain extensions such as .info and .biz have less than 10% of the market compared to .com names, and the value of a .info is on average only 13% of the value of the respective .com domain (as shown at IDNX.com).
They are also less frequently used than the primary domain extensions, and many registrations are simply as a protection against other companies registering those names. The inconvenient truth for new gTLD enthusiasts is that, in 2001, you needed a .com to start a business (or a country-specific equivalent such as .co.uk or .fr), and that this still applies ten years later.
In the case of 2011’s potential new gTLDs, another hurdle for companies to overcome is the substantial cost and infrastructure required to apply. If your company manages multiple brands, has a presence in multiple markets, or sees a significant threat of cybersquatting, you may want to consider your own gTLD, but otherwise, the costs may be prohibitive and not a wise investment at this early stage.
In the last ten years, our market studies have supported this trend. Any new domain names have only bolstered the dominance and strength of existing gTLDs (such as .com) and ccTLDs (.co.uk or .fr, for example). These are the domain extensions that mean something to most internet users: .com has remained king, while businesses provide language-specific content via the relevant ccTLD. I’m happy to be proven wrong, but I believe that any company advertising in five years time will still feature the company or product name with a .com, or a local top-level-domain like .co.uk or .fr behind it.
There are, however, storms brewing on the horizon for domain names.
Although new gTLDs are certainly exciting, this is not the first instance of online innovation affecting the domain name landscape. When social media began to influence online business, I was often asked whether domain values would decrease as more internet users navigated via social media platforms and mobile apps.
One trend we are beginning to see in recent months is that, particularly among companies who consider themselves trendsetters, domain names are starting to disappear or move into the background. Instead, companies are advertising their Facebook or Twitter addresses, their iPhone applications, or even searches at search engines like Google. Furthermore, these advertisements aren’t limited to drawing new customers; instead, existing websites and communications are used to promote these new media channels.
However, many businesses have become so focused on their social or mobile efforts that they lose sight of the extreme long-term danger looming on the horizon: the “Navigation Nightmare”.
Essentially, here’s the problem: while it’s smart – and very web 2.0 – to use all the channels available as additional means of advertising and customer interaction, it’s inherently wrong and even dangerous to rely on social media or web apps as means of navigation. By fully switching their advertising and internet presence to 2.0 giants like Facebook, Twitter, Google or the iPhone, businesses put their fate in the hands of those providers. As a result, three things can happen:
Providers can kick out any business, or an entire industry, with or without reason.
Providers can go out of business, and there is no regulative environment in place. If that seems unlikely, consider how popular FortuneCity or Geocities were. Think of those of us who migrated from Friendster to Facebook, and who may migrate in the future to Google+.
Finally, and possibly most significantly, providers can and will maximise profits, once lock-in is sufficient, and profitability goals will follow growth goals. If your company has a million Facebook or Twitter followers, how good will your negotiation position be if the provider suddenly starts charging hefty fees?
Domain names, on the other hand, can avoid all of these pitfalls, even with the continued problems with cybersquatting and a somewhat cumbersome governing body in the form of ICANN. Pricing of new domains is regulated so that domain name registries – even those eventually offering new gTLD registrations – cannot charge prices aimed solely at maximising their own profits.
Turn these examples around, and imagine for one second how wrong it would seem if Facebook.com had to pay an annual $50 million registration fee for its very own .com domain name. They could certainly afford it, and it would be the right business decision for them to spend that money rather than lose their key domain name.
However, Facebook has built its company by being innovative, so it would be wrong and would stifle future innovation if a monopolistic organisation such as a registry could charge arbitrary amounts. And so, for good reason, they can’t. Individual proponents for Internet and government openness around the world have ensured that this won’t happen, making the domain name system a safe harbour for the future.
Comparatively, Facebook, Twitter, Google’s Ad Network, and iPhone apps are proprietary, walled-garden approaches. Therefore, they are not what the Internet needs and present a danger for any business relying on such channels as navigation and addressing mechanisms.
In regards to every business’s strategy: Building an online business primarily on Facebook, Twitter, Google, or iPhone Apps, is like building a house on rented ground, with the landlord completely in control.
The reliance on outside platforms and providers is easily circumvented with wise domain name investment and, although some companies will be investing in new gTLDs, most will, and should, stick to their trusted and true domain extensions: .com and local ccTLDs.
NB: This is a guest article by Tim Schumacher, CEO and co-founder at Sedo.
Related posts:
About Special Nodes
Couldn’t agree more. I actually wrote a post last week on the same subject – why twitter handles are more important then domain names: http://blog.citybot.com/2011/10/how-we-got-citybot-and-why-twitter.html
Most of what Shumacher says is quite right of course but he talks about the travel industry and,incredibly,fails to mention the .travel TLD “…I would imagine many people in the travel industry didn’t even realise that TLDs like .aero and .museum had launched in the first place.”
Maybe this underlines his point of TLD success or failure.If an industry specific TLD was to flourish anyone might think .travel was the one to do so but it’s been an almost complete flop.
It seems the litmus test of a gTLD’s success is not whether or not people want to build on it but do they want speculate on it.
Innovation and Playing the Top Level Domain (TLD) Game for Free – ie: without spending $185,000 non-refundable deposits, plus $500,000 for “integration” plus potentially unlimited annual expenses.
Anyone can now create their own set of TLDs at zero cost, simply by registering new Dashcom (instead of Dotcom) Domains. Dashcoms are highly memorable and relevant web addresses such as “business-com”, “jazz-music” and “happy-birthday”. Totally outside ICANN’s control and with users in over 90 countries worldwide, resolution is via an APP; although new ISP links are coming online to make that unnecessary.
Dashcoms are now available at sites like Dashworlds.com. It’s only a matter of time before other new options surface, and none of them will have anything to with ICANN.
It’s completely dishonest to try and portray this nonsense as some sort of realistic alternative to Top Level Domains.You spam every discussion you can on new gTLDs with this drivel – and we’ve already had new.net et al try and rip everybody off with this twaddle.
Mr Mosstrooper
With all due respect, if you had an understanding of Top Level Domains, you would know that:
a) Dashcoms are True Top Level Domains
b) New.Net have nothing to do with Top Level Domains. New.New provide Third Level Domains under the New.Net domain name (eg: shop.new.net).
It’s indeed fortunate that during the development of the Internet, the opinions of the blinkered restricted and narrow-minded were dismissed/ignored otherwise there would be no World Wide Web. You can hear them now…….”Surely a retailer….ANY retailer, (eg: a certain bookstore) would be mad to waste time, money and resources trying to sell anything over the Inter-What? After all why would millions of consumers in their right mind consider spending thousands of dollars each on a vastly expensive computers, on installing/renting extra phone lines, on buying modems (what’s a modem?), on buying the OS (what’s an OS?), only then to spend weeks learning how to use it all?….Just so they could buy a book??…..Don’t be ridiculous!….Think about it…. All the Mr Mosstroopers of this world need to do is pick up a phone….The Internet is drivel – and we’ve already had J.C.R. Licklider, Lawrence Roberts, Vint Cerf et al trying to rip everybody off with this twaddle”
Yes, it is only a matter of time before other new options join the Dashcoms, and none of them will have anything to with ICANN.
Dashworlds,
With all due respect ,there’s nothing new or revolutionary or innovative about Dashworlds – if anything you’re a lame copycat.
I know a real fully functioning TLD when I see one and I’ve followed,engaged in and commented on your type of “alt root TLDs” for almost as long as ICANN’s existence.The very fact that you come here – and everywhere else to tell us to visit http://www.Dashworlds.com rather than http://www.Dash-worlds should explain everything to everyone at first glance.Your “TLD” and all the other chumps you’ve convinced to register under you do not resolve to the wider internet!
Why?
Because you ARE like http://www.new.net,http://www.name-space.com,http://www.unifiedroot.com,http://www.cesidianroot.net, the old Pacific Root and others – your users have to install a plug-in or use a compliant ISP to SEE your “TLDs” – so only a tiny,tiny little tiny fraction of internet users can see a http://complete-balderdash domain name resolve.
And what about email@complete-balderdash?Sorry,no workee.
And http://complete-balderdash Search Engine Optimization – forget it!
At least an alternative like Name.Space tried to include itself in the ICANN process and open up the right of the dot domain naming and registration for everyone.Whereas Dashworlds brings nothing to the table sneaking about under plug-ins.
Mr Mosstooper
The arguments you present still mirror the brave and intrepid pioneers who believed the Internet was only ever going to be a useless waste of space. Do remember that in the early days of the Web, those who didn’t have a computer (or knew what one was) plus those who couldn’t connect to the Web (or knew what that was) effectively totalled the population of the Earth. Indeed, it was but a few years ago that only a tiny, tiny fraction of the entire world had the ability to resolve the very first website http://info.cern.ch/hypertext/WWW/TheProject.html ….and even today, around 5 billion people have zero access to http://google.com. Universal? Who are you kidding?
It is so easy for those who lack spirit to play the dismissive game. Every car produced after Henry Ford is a lame copycat. Aircraft manufacturers are just sad Wright brothers mimics.
There are already over 215 million ICANN domain names registered with numbers growing daily. How many websites can people actually recall these days. The chances are maybe 5 or 10 (and that will include the likes of Google, Yahoo, Facebook and Twitter). Things have to change to bring the Web back to a more level playing field. Internet users need the opportunity to compete on reasonably equal terms with the minority of Corporations/Multi-Nationals that seem to hold all the cards.
Clearly, for the average Internet user who simply wants to order a pizza on-line, it’s not about knowing he/she can access these 200+ million websites (visiting each one for just a few seconds would take several decades…without a pizza break). Ownership of an ICANN Internet address does not in any way imply that anyone will remember it, let alone be interested in it (perhaps one reason why the domain http://mosstrooper.com is now for sale).
Re: Dashcom Email…or as you so eloquently (and incorrectly) put it “Sorry,no workee”…
We would like to take this opportunity to address Dashcom email which you “mentioned” in your last response. In fact, Dashcom email does exist having been already been tested by a number of our users. Once re-released, people will be able to create their choice of address from any Dashcom domain name via their own Control Panel. So, for example, from a domain name like “of-imagination”, you will be able to create the email address: lack@of-imagination.
….and Importantly
1) Dashcom email is the world’s first REAL spam free email that CANNOT be reached by bulk mailers (even if they know the exact address or addresses to attack)
2) Dashcom email does NOT require an APP
Oh yes, and as for SEO, yes there is a solution in the pipeline for that too.
It is only a matter of time before other new options join the Dashcoms, and none of them will have anything to with ICANN
I have a question on this topic for the experts here. If I have a company called BGT, but the .com domain is taken, is it foolish to buy BGT.tv and gamble on that strategy, or would a better idea be to get something like BGTnews.com or even B-G-T.com ?
Would really appreciate some advice (and yes, I just used BGT as an example, my site names similar but different).
Chris,
There are exceptions but the general rule is to stick to a .com domain name and/or the country code Top Level Domain (ccTLD) of the country/countries you do business in.Some ccTLDs like the UK’s dot .co.uk or Germany’s dot .de are very strong whereas a dot .us for the USA is a far weaker address than a dot .com.
Dot .tv works very well for video and tv focused sites but should also be backed by a .com address like “BGTTV.com” using your example to point to the .tv site because if you are or do become popular people will still automatically search or type-in the .com version.
The post makes perfect, practical sense. Although, I too was puzzled not to see any reference to .Travel.
But more entertainingly, really enjoying the comment thread.
If I we’re scoring the debate thus far, based on boxing or the UFC’s “Ten Point Must System”, I’d have to give the decision to @mosstrooper 30-26 (10-8 in the #3rd round).
In fact, it appears @DashWorlds might have just “tapped out” or “thrown in the towel” due to too many heavy verbal blows!
Nice work @mosstrooper. You’re a formidable adversary – maybe even a championship contender. You should include a “no bull-shit” nickname to your handle – as in, @moss”no-bull-shit”trooper.
I’d like to be be your promoter – we could go far.
Round #4 anyone…?
Please see above. Thank you.
@Dashworlds,
Surprised you’re up off the canvas.
I did see above and still think your arguments are futile. What you’re proposing is akin to Camus’ pushing a boulder up a mountain metaphor in “The Myth of Sisyphus” – good luck with that.
The obvious difficulties you have is that the approximately 2 billion global Internet users are already fully conditioned to, and depend upon, the existing “dot” whatever system. Asking users to download a plug-in from a completely unknown source is also a non-starter – you have ZERO credibility. Changing that reality and achieving critical mass, in your lifetime, is about as likely as you becoming the heavyweight champion of the world.
On the other hand, we understand the motivation of your message; you have a commercial, vested interest to solve this, so called, problem. Unfortunately, the problem doesn’t exist, accept in the minds (and bank balances) of you and your tribe. Therefore, being an advocate, evangelist or snake-oil salesman for something that is irrelevant in the minds of nearly 100% of Internet users is like Sisyphus rolling a boulder up the mountain.
But tell you what, I’m willing to keep an open mind IF (and that’s a big IF) you can get Tim Berners-Lee and all of the browsers to endorse your Dash-world fantasy. Maybe if you offer them a 99.999% cut of the post “free” registration revenues they’ll join the scam. I wouldn’t hold your breath…
NOTE: For evidence of Mr @Dashworlds true objectives, lack of transparency and financial motivations, please refer to the sites Terms & Conditions http://dashworlds.com/src/terms_conditions.php?P=terms_conditions and be sure to make note of Sections 5 (Payment), Section 6 (Renewals) and, of course, Section 11 (Data Protection). This should clear up any controversy for those still on the fence about Dash Com.
Bottom line: ICANN exists and is regulated for a reason; to ensure the safety and consumer protection of the masses.
In my opinion, Mr Dashworlds is a cowboy looking to take the naive for a ride. Don’t believe his hype.
Down and out for the count!
Whoops, I meant “except”.
Mr Pope
”Down and out for the count”? Oh dear…another self-appointed wannabe judge, jury, executioner, filing cabinet and stapling machine. Such smug and self congratulatory opinion is no substitute for precision and accuracy….and why on Earth would you be surprised at anyone responding to ill-informed postings?
Doubtless you’d be in your element in 1985 when there were IN TOTAL only six (yes, that’s 6) dotcoms registered on the entire World Wide Web alongside who knows how many millions/billions of telephone (and telephone box) users. Bravo!….A “Down and Out” for you? The Internet could never compete with that market.
Fast forward to 1990, and again you would be a hero (at least to yourself), arrogantly proclaiming proof of your position as, having kept track of dotcom registrations over the past 5 years, you’d seen the number of dotcoms ”soar” to two hundred and thirty three (Yes, 233). A rise of 227 domain names in 5 years. OMG…that’s less than 50 registrations a year. Hooray!…. Another “Down and Out” for you?….. Errrr Yes…..Except that 21 years later there are almost 100 million dotcoms to be found running around.
By all means pretend evolution does not exist. Keep your head in the sand if it makes you feel better…it’s probably a lot less demanding than the effort required to put together absurd comparisons from Greek Mythology.
Have a nice weekend.
PS: Dashworlds terms and conditions are just like those of others. There is of course no lack of transparency. Unlike those contained in your preposterous, obscure and offensive inferences.
I love magritte
Tim, I think you bring up a very good point at the end of the article about basing a web strategy on web 2.0 sites like Facebook or Twitter, who have a strong profit-maximizing incentive if / once they win the competitive race to become the network of scale used by the mass populace. It seems the market dynamics of networks inherently lead to a monopolistic situation, unless the monopoly becomes so greedy that users are driven away. But I think the current social networks are very keyed into this concept, and would likely push profit-maximizing to the brink without letting it get to the point where users are actively driven away from the network because of their greed.
I read an interesting article today about China’s Ministry of Commerce stepping up regulation on China’s leading e-commerce website, Taobao. Taobao, with 80% share of the Chinese online shopping industry, announced it was hiking agency fees 10x–from a monthly average of $940 to over $9400. Small retailers retaliated by flooding the marketplace with fraudulent transactions aimed at sabotaging Taobao in protest. After this spat, the Ministry of Commerce announced it will begin heavier regulation of the online shopping marketplace, particularly what actions are allowed by the market makers.
I think this experience illustrates a microcosm of the potential development of the networks. Whichever network becomes “the” dominant player in the future, should they be allowed to follow simple profit maximizing behavior, or is it in greater society’s interest to put forth simple, but stringent, principles about how they are allowed to operate?
John Pope and Dashworlds: Stick to the issues and lose the personal attacks or you’ll lose your comment privileges.
Dear Mr Schaal
Please accept our apologies if we have caused you or your readers any offence. We really appreciate the opportunity to post on tnooz.
Perhaps we took this article’s heading “Other Storms Brewing on the Horizon” a little too seriously
Thank you
Dashworlds
Dashworlds: Thanks.
It seems the litmus test of a gTLD’s success is not whether or not people want to build on it but do they want speculate on it