FNet
Established Member
- Impact
- 177
Hello,
I want to apologize in advance for the log post. Also, I am not a native speaker, so please be don't judge me for any mistakes. Finally, I am a newbie, so don't take everything I say as granted
I have noticed that there are two groups of people here that are on the debate. The so called "notcom haters" and the enthusiasts of the new gTLDs. In the extreme, the first believe that the new gTLDS hurt the industry, confuse the users, anything outside the .com is a waste of time and money and some even believe that the entry of the new extensions make the .com to shine more because of the new "junks". So the .com prices will get higer demand than before and therefore they will be more sales and higher prices. The day is near when all the new extensions will get disappear from the map because the companies that own the new registries will bankrupt soon. On the other hand, the entusiastics believe that there are great opportunties out there, .com isn't that important as an extension, I mean if the domain fits with the extension then it may even be better from a dot com (because it is shorter, more elegant or meaningful etc). So with not much money and some clever handregs they will have huge % profits in the near future.
For me is obvious that the emotions somehow block many of us to think clealy. The old wolfs have portfolios with many .com domains and they wish to sell it with today's prices, while the new domainers want to believe that it is not to late to join the party.
I 'm not saying of course that all people here are belonging to a group. I ,for example, don't belong to any of these two groups. Because business is business, we must analyze the situation as clearly as possible. And we must put aside our emotions and feelings, or else we may sustain big loses in the end.
First, let's look verticaly at the domain name product indutry, I mean at all parts of the chain. We have
- ICANN
- the registries , meaning the companies who owns them
- the registrars
- the resellers, aka domainers (us)
- the "end users", meaning the companies or people or (very often) developers, who will buy the domain for using it (building a site or app or a service)
- the real users.I don't use the term "end users" here because there will be confusion. We, the domainers, with this term mean the person who buys the domain. The real users are the users of the product, that is, the visitors of the site or users of the email or app or whatever.
Now, lets see what's happening.
- ICANN sold over one thousand strings (TLDs) for $185k each. They also sold .web for a vast amount of money. Not only that, they have also cut any threat of any alternative root DNS. So ICANN is a big winner, this is a no brainer.
- Things are much more complicated for the companies who have the registries. Companies have to cover the string cost, plus the ICANN fees for every quarter of the year, plus their operation costs. This is an economy of scale business. The success is depending on many factors: marketing, right pricing policy, managment of many TLDs for economies of scale benefits (share of operational costs), and of course, the quality of the extension. For example .horse, .lol and similar crap are doomed to fail in my opinion. A good example of a quality string is .bank. They can sell it very expensive and the domain will drop only when a bank gets bankrupted. Meaning not many drops. In the long run it must be profitable if the company has more (not rubbish) strings. So in the end, in my opinion, very few companies will survive and they will get a large number from registries. It is not an impossibility that many TLDs will cease operation, so ICANN will move the already registered domains to another company, with the term that it will not accept more registrants on the ceased TLS. Maybe you buy a domain on .lol and after some years it has value as antique!
- The registrars have now more developing costs to integrate the new extensions in their sites. But they will have more sales. Also, they are getting a really fat comission selling the "premium" names for the registries. Plus some income from goodies(whois shield for example). They are on the right side here.
- For us, the domainers, I 'm going to analyze the situation later because it is the most interesting (and complicated) part.
- The companies, hobbists and developers have much more options now. The can get the keyword(s) of their dreams with a very low price or, probably, even reg fee (I m not talking about ultra premium names like poker.online or sex.zone etc). It is a simple law of economics that we all know. If the supply is very high then the prices can hit the bottom. The dotcomers here will say that the product is inferior because of the nocom extension, that they will damage their company etc. I will come back later on that,too.
- About the real users, we can say that the new situation is beneficial for them also. Because of the almost zero cost of the domain names the IT cost is lower. This, because of the competiotion, will have an effect of transfering the lower cost in the final products.I m talking for small e-shops here, where the company will not spend a small fortune for aquiring a domain name on the king (.com) extension. But the difference will be slight, if any.
So ICANN, registrars and end users are the winners here. What about us, the domainers?
I'm afraid that my opinion isn't going to make happy anyone. First, lets the the arguments of each group.
.comers:
- With .com you can have better ranking results. Just look how many .coms are listed first at SERPS.
Wrong. The TLD doen't play any role for ranking .com higher against others, for example against .xyz. Google is very clear abou this. The other engines (bing,yandex,baidu) also follow this rule. There is a simple explanation, much more sites are developed on .com than any other extention, so they prevail to all results pages, not only at the first one.
- with .newgTLD site will be traffic leakage. Because some users can understand only .com extention.
Wrong. Most people use a search engine to reach the site. Then they click at the first result. The majority of them don't even look at the domain name. For the people who type directly at the browser, if the name doesn't resolve the browser redirects them automaticaly to a search engine. If they get dericted to a wrong page (for example landing page with ads) then they 'll use a search engine to find the site. For the "returning leakage" theory, the same applies. Also, even if they don't use bookmarks and try to type the name on the address bar, then the histoty of the browser will autocomplete the correct address.
- .com is shorter (three letters) than most gTLDs. That makes it more valuable.
Wrong. .net,.org, .xxx also have the same length but they don't have the same value. With the same logic .io or .tk (they are consided gTLDs by google) should have more value than .com, which is not the case.
- .com is the extention that fits with any domain. Other extentions create confusion and look spammy. All people know what .com means. Many people can not even understand that what.ever is a domain name.
Wrong. Why people do not understand that best.wine is going to be a site about wine ? How .com fits better with bestwine? Where is the confusion or spam? People are not so stupid, maybe at first they will look at best.wine and don't figure it out but with time they will. Also, people use search engines or bookmarks to reach sites, they don t directly type anything (see above). And most non native spekers who do not belong to the tech field people don't know what .com means. Even some native spekares don't know or they believe that it standns for "company" or it is an abbreviation or something. Applying the same logicm .net is far superior because it is a whole word, has a clear meaning and is related to the interet. Off cource .net is much inferior than .com
- .com is a general extension, so it fits with everything. Thats why .com has more value.
Wrong. Because .gdn is even more general. But it has no value, not today at least.
- Large corporations bought extenstions not for using them but to protect their brand. They don't really plan to use them.
Wrong. Maybe medium size corporations bought a string for them mostly for prestige. But large corporations have intention to use their TLD. I don't believe that anoyne thought that microsoft afraid that someone would go to ICANN and ask the .microsoft string. Who will dare to do that? And how ICANN would approve it? And is there any jury in the world that will not hand this to his rightful owner (MS) plus applying heavy panalties for the infragmation? Microsoft wants to deveop it in the future. Maybe hotmail.microsoft, skype.microsoft, visualstudio.microsoft been set to redirect to .com or vice versa, the decision is theirs. They maybe hand second level domains to their representatives at each country or area, for example partnername.microsoft, which automaticaly gives them authority and leverage their patener's brands.
- Only registries and registrars can sale nGTDs domains. So they are useless for domainers.
Wrong. This is happening only because these extensions are so new. Anyone can sell them. Even some namePros members have reported some sales.
- End-users don't like nGTLDs. For this reason it is stupid to invest on them, it is obvious that you must invest on .com or other old TLDs (.net,.org)
While it is true that end users prefer .com, there is a fallacy in this: it does not consider the price of .com domains. Buying a mediocre .com domain has the same cost as buying one hundered nGTLs (or even one thousand if they are on promotion) with better keywords! .com will be sold more easily of course, but we have one shoot against one hunderd. I am not saying that the nGTD strategic is better because of the high renewal costs and the high risk. We don't know which nGTLDs will survive (if any) and the sales are non existant or very sporadic. What I am sayng is that there is no "obvious" strategy from my point of view.
Why did a mention all this? To prove that .com isn't the strongest extention? No, that would be silly. The .com is the king and it will continue to be. I just wanted to debunk some myths to clarify the situation in the industry today. As a last example, I will say this: If before thirty something years the first TLD was not .com but .hourse, the the .horsers today would evangelize about .horse. They would say of how .horse fits perfectly to any keyword and how the new gTLD .com looks unaturely short and spammy, creates confusion and can not fit with anything...
There is only one reason of why .com is the king today. The historical reason. .com gained a critical mass and has a very strong brand. People, and mostly people in the domain industry believe that is the most valuable because the other people believe in this. And the other people believe it because the other believe it etc infinitum. This is a game of common expectations, which keep the .com on top of all TLDs. And will keep it forever, in my opinion.
Now let' see the arguments of the ngTLDs enthusiasts:
- Technology advances, things change, new generation of people isn't attached strongly to old ideas and customs, or they are not used to .com and old LTDs much. So, one day .com will be nearly equally worth as other TLDs. It will take time but it will happen. So investing today to other new TLDs is a good idea.
Wrong. People are attached more to .com. Also, .com domains signal wealth and status. For this reason, many companies and startups will choose it. And because of this .com continues to attract the people (real users). And the circle starts again, it is a chicken and egg situation. This infinite loopback is so strong that can make a brand or product to be a leader forever. A very good example of this is Microsoft OS. MS didn't have the perfect operating system but is the leader until today. All software houses build their applications on windows first (and many only for windows) because it has by far the most users. And almost all users install windows because of this. And because of this the software houses... you get the picture.
- Big corporations bought an extension for their own. So they trust nGTLDs. They know better, they have experts. That is good news.
Wrong. They bought them for their own reasons. That does not mean that other new TLDs will be adopted anytime soon from the masses. Their acquisition of their private TLDs does not increase the demand for domain names. Of course, it does not increase the supply also, as far as they use the TLD for them only. They do not affect the industry. I agree that they singal to some end users something good for nGTLDs, but this signal is weak, it is not enough to cause a shift to the preference of end users.
- nGTLDs are allredy being adopted. Look at the numbers of the domains already registered. The wind of change is already blowing!
Wrong. You can not count domains that registered for pennies (less than a dollar or two). .xyz and . top is a good example for this. We must wait two years at least to see how many domains will be renewed. The normal price will come and laws of economy will show the naked truth. Just check this: How many .tk are registered and what is the brand value of .tk today?
- You can buy very good keywords.extentionthatfitswell with reg fees. So it is a good investment.
You can. But I don't know if it is a good investment or not. There is no demand for this domain names yet. There are some exceptions, but will you be so lucky? The probability of selling them is equal of that of selling a crappy .com today that you have bought with the same money(reg fee). You know, something like g4mble-n0w--0nl1n3.com Also, you must consider the fact that a buyer who has no problem to buy a gTLD can find it at reg fee because he has many options. You can not cover all combination on all extentions. There is a oversupply of domain names today. You can buy many domain names at promotion prices to have a chance. But after a year it will come the time for renewing them. You can be the early bidder and buy almost perfect names at regfee prices now. But you must keep them very long time. This is very risky because no one can predict the trends of the industry.
Having these in mind we can analyze the situation better. The demand for domain names is growing, but with a low pace. So the oversupply (nGTLDs) can only drive the prices down. More than two billion dollars have already been paid to ICANN from companies that run the registries. They expect to take that money plus operational costs and some profit from the end users. There are simply not so many end users today. And they will not be in the near future. So this money must be covered as loses from the registries or the domainers. How they will be covered from domainers? Let's not forget that the rate of selling is lower than 2% on .com domains. Try guessing the rate for the other gTLDs! So this is our little secret, which very often forget oureslves: for the vast majority of bought domain names the end users are the domainers. With the sales of nGTLDs many domainers will buy so to get good names with low prices (regfee). Being the early bidders and waiting will be their strategy. But most will get disapointed because the demand can not cover them. Also, holders of .com will suffer loses. Many profits will just never get place and prices will lower for making the sales a possibility. Already many .coms are dropping (the junk ones), because some domainers are realising now how hard or impossible it is to sell them. The leakage could be seen already seen before the nGTLDs, when many startups partly adopted the .io and .co ccTLDs (which in fact are gTLDs). Of course the quality names will always sell. But not as easily or not for the same prices. The early buyers of good .coms will still have profits, but lower than if the nGTLDs were never released to the public. Which is a loss from a point of view.
The bottom line is that .com will always be the king of TLDs because of historical reasons. Some (not many) gTLDs will survive. And their registries will be run from very few companies because of the nature of the industry (economies of scale - sharing costs on infrastructure and operational costs). The profitability of the domaining will drop. The cause is the oversupply against the weak increase of the demand.
And to answer to another thread. No, the future (unfortunately) will not be good.
Don't take heavily what I have stated above. I am a newbie and I may be wrong at many points. Just share you thoughts. And thank you for reading all this.
I want to apologize in advance for the log post. Also, I am not a native speaker, so please be don't judge me for any mistakes. Finally, I am a newbie, so don't take everything I say as granted
I have noticed that there are two groups of people here that are on the debate. The so called "notcom haters" and the enthusiasts of the new gTLDs. In the extreme, the first believe that the new gTLDS hurt the industry, confuse the users, anything outside the .com is a waste of time and money and some even believe that the entry of the new extensions make the .com to shine more because of the new "junks". So the .com prices will get higer demand than before and therefore they will be more sales and higher prices. The day is near when all the new extensions will get disappear from the map because the companies that own the new registries will bankrupt soon. On the other hand, the entusiastics believe that there are great opportunties out there, .com isn't that important as an extension, I mean if the domain fits with the extension then it may even be better from a dot com (because it is shorter, more elegant or meaningful etc). So with not much money and some clever handregs they will have huge % profits in the near future.
For me is obvious that the emotions somehow block many of us to think clealy. The old wolfs have portfolios with many .com domains and they wish to sell it with today's prices, while the new domainers want to believe that it is not to late to join the party.
I 'm not saying of course that all people here are belonging to a group. I ,for example, don't belong to any of these two groups. Because business is business, we must analyze the situation as clearly as possible. And we must put aside our emotions and feelings, or else we may sustain big loses in the end.
First, let's look verticaly at the domain name product indutry, I mean at all parts of the chain. We have
- ICANN
- the registries , meaning the companies who owns them
- the registrars
- the resellers, aka domainers (us)
- the "end users", meaning the companies or people or (very often) developers, who will buy the domain for using it (building a site or app or a service)
- the real users.I don't use the term "end users" here because there will be confusion. We, the domainers, with this term mean the person who buys the domain. The real users are the users of the product, that is, the visitors of the site or users of the email or app or whatever.
Now, lets see what's happening.
- ICANN sold over one thousand strings (TLDs) for $185k each. They also sold .web for a vast amount of money. Not only that, they have also cut any threat of any alternative root DNS. So ICANN is a big winner, this is a no brainer.
- Things are much more complicated for the companies who have the registries. Companies have to cover the string cost, plus the ICANN fees for every quarter of the year, plus their operation costs. This is an economy of scale business. The success is depending on many factors: marketing, right pricing policy, managment of many TLDs for economies of scale benefits (share of operational costs), and of course, the quality of the extension. For example .horse, .lol and similar crap are doomed to fail in my opinion. A good example of a quality string is .bank. They can sell it very expensive and the domain will drop only when a bank gets bankrupted. Meaning not many drops. In the long run it must be profitable if the company has more (not rubbish) strings. So in the end, in my opinion, very few companies will survive and they will get a large number from registries. It is not an impossibility that many TLDs will cease operation, so ICANN will move the already registered domains to another company, with the term that it will not accept more registrants on the ceased TLS. Maybe you buy a domain on .lol and after some years it has value as antique!
- The registrars have now more developing costs to integrate the new extensions in their sites. But they will have more sales. Also, they are getting a really fat comission selling the "premium" names for the registries. Plus some income from goodies(whois shield for example). They are on the right side here.
- For us, the domainers, I 'm going to analyze the situation later because it is the most interesting (and complicated) part.
- The companies, hobbists and developers have much more options now. The can get the keyword(s) of their dreams with a very low price or, probably, even reg fee (I m not talking about ultra premium names like poker.online or sex.zone etc). It is a simple law of economics that we all know. If the supply is very high then the prices can hit the bottom. The dotcomers here will say that the product is inferior because of the nocom extension, that they will damage their company etc. I will come back later on that,too.
- About the real users, we can say that the new situation is beneficial for them also. Because of the almost zero cost of the domain names the IT cost is lower. This, because of the competiotion, will have an effect of transfering the lower cost in the final products.I m talking for small e-shops here, where the company will not spend a small fortune for aquiring a domain name on the king (.com) extension. But the difference will be slight, if any.
So ICANN, registrars and end users are the winners here. What about us, the domainers?
I'm afraid that my opinion isn't going to make happy anyone. First, lets the the arguments of each group.
.comers:
- With .com you can have better ranking results. Just look how many .coms are listed first at SERPS.
Wrong. The TLD doen't play any role for ranking .com higher against others, for example against .xyz. Google is very clear abou this. The other engines (bing,yandex,baidu) also follow this rule. There is a simple explanation, much more sites are developed on .com than any other extention, so they prevail to all results pages, not only at the first one.
- with .newgTLD site will be traffic leakage. Because some users can understand only .com extention.
Wrong. Most people use a search engine to reach the site. Then they click at the first result. The majority of them don't even look at the domain name. For the people who type directly at the browser, if the name doesn't resolve the browser redirects them automaticaly to a search engine. If they get dericted to a wrong page (for example landing page with ads) then they 'll use a search engine to find the site. For the "returning leakage" theory, the same applies. Also, even if they don't use bookmarks and try to type the name on the address bar, then the histoty of the browser will autocomplete the correct address.
- .com is shorter (three letters) than most gTLDs. That makes it more valuable.
Wrong. .net,.org, .xxx also have the same length but they don't have the same value. With the same logic .io or .tk (they are consided gTLDs by google) should have more value than .com, which is not the case.
- .com is the extention that fits with any domain. Other extentions create confusion and look spammy. All people know what .com means. Many people can not even understand that what.ever is a domain name.
Wrong. Why people do not understand that best.wine is going to be a site about wine ? How .com fits better with bestwine? Where is the confusion or spam? People are not so stupid, maybe at first they will look at best.wine and don't figure it out but with time they will. Also, people use search engines or bookmarks to reach sites, they don t directly type anything (see above). And most non native spekers who do not belong to the tech field people don't know what .com means. Even some native spekares don't know or they believe that it standns for "company" or it is an abbreviation or something. Applying the same logicm .net is far superior because it is a whole word, has a clear meaning and is related to the interet. Off cource .net is much inferior than .com
- .com is a general extension, so it fits with everything. Thats why .com has more value.
Wrong. Because .gdn is even more general. But it has no value, not today at least.
- Large corporations bought extenstions not for using them but to protect their brand. They don't really plan to use them.
Wrong. Maybe medium size corporations bought a string for them mostly for prestige. But large corporations have intention to use their TLD. I don't believe that anoyne thought that microsoft afraid that someone would go to ICANN and ask the .microsoft string. Who will dare to do that? And how ICANN would approve it? And is there any jury in the world that will not hand this to his rightful owner (MS) plus applying heavy panalties for the infragmation? Microsoft wants to deveop it in the future. Maybe hotmail.microsoft, skype.microsoft, visualstudio.microsoft been set to redirect to .com or vice versa, the decision is theirs. They maybe hand second level domains to their representatives at each country or area, for example partnername.microsoft, which automaticaly gives them authority and leverage their patener's brands.
- Only registries and registrars can sale nGTDs domains. So they are useless for domainers.
Wrong. This is happening only because these extensions are so new. Anyone can sell them. Even some namePros members have reported some sales.
- End-users don't like nGTLDs. For this reason it is stupid to invest on them, it is obvious that you must invest on .com or other old TLDs (.net,.org)
While it is true that end users prefer .com, there is a fallacy in this: it does not consider the price of .com domains. Buying a mediocre .com domain has the same cost as buying one hundered nGTLs (or even one thousand if they are on promotion) with better keywords! .com will be sold more easily of course, but we have one shoot against one hunderd. I am not saying that the nGTD strategic is better because of the high renewal costs and the high risk. We don't know which nGTLDs will survive (if any) and the sales are non existant or very sporadic. What I am sayng is that there is no "obvious" strategy from my point of view.
Why did a mention all this? To prove that .com isn't the strongest extention? No, that would be silly. The .com is the king and it will continue to be. I just wanted to debunk some myths to clarify the situation in the industry today. As a last example, I will say this: If before thirty something years the first TLD was not .com but .hourse, the the .horsers today would evangelize about .horse. They would say of how .horse fits perfectly to any keyword and how the new gTLD .com looks unaturely short and spammy, creates confusion and can not fit with anything...
There is only one reason of why .com is the king today. The historical reason. .com gained a critical mass and has a very strong brand. People, and mostly people in the domain industry believe that is the most valuable because the other people believe in this. And the other people believe it because the other believe it etc infinitum. This is a game of common expectations, which keep the .com on top of all TLDs. And will keep it forever, in my opinion.
Now let' see the arguments of the ngTLDs enthusiasts:
- Technology advances, things change, new generation of people isn't attached strongly to old ideas and customs, or they are not used to .com and old LTDs much. So, one day .com will be nearly equally worth as other TLDs. It will take time but it will happen. So investing today to other new TLDs is a good idea.
Wrong. People are attached more to .com. Also, .com domains signal wealth and status. For this reason, many companies and startups will choose it. And because of this .com continues to attract the people (real users). And the circle starts again, it is a chicken and egg situation. This infinite loopback is so strong that can make a brand or product to be a leader forever. A very good example of this is Microsoft OS. MS didn't have the perfect operating system but is the leader until today. All software houses build their applications on windows first (and many only for windows) because it has by far the most users. And almost all users install windows because of this. And because of this the software houses... you get the picture.
- Big corporations bought an extension for their own. So they trust nGTLDs. They know better, they have experts. That is good news.
Wrong. They bought them for their own reasons. That does not mean that other new TLDs will be adopted anytime soon from the masses. Their acquisition of their private TLDs does not increase the demand for domain names. Of course, it does not increase the supply also, as far as they use the TLD for them only. They do not affect the industry. I agree that they singal to some end users something good for nGTLDs, but this signal is weak, it is not enough to cause a shift to the preference of end users.
- nGTLDs are allredy being adopted. Look at the numbers of the domains already registered. The wind of change is already blowing!
Wrong. You can not count domains that registered for pennies (less than a dollar or two). .xyz and . top is a good example for this. We must wait two years at least to see how many domains will be renewed. The normal price will come and laws of economy will show the naked truth. Just check this: How many .tk are registered and what is the brand value of .tk today?
- You can buy very good keywords.extentionthatfitswell with reg fees. So it is a good investment.
You can. But I don't know if it is a good investment or not. There is no demand for this domain names yet. There are some exceptions, but will you be so lucky? The probability of selling them is equal of that of selling a crappy .com today that you have bought with the same money(reg fee). You know, something like g4mble-n0w--0nl1n3.com Also, you must consider the fact that a buyer who has no problem to buy a gTLD can find it at reg fee because he has many options. You can not cover all combination on all extentions. There is a oversupply of domain names today. You can buy many domain names at promotion prices to have a chance. But after a year it will come the time for renewing them. You can be the early bidder and buy almost perfect names at regfee prices now. But you must keep them very long time. This is very risky because no one can predict the trends of the industry.
Having these in mind we can analyze the situation better. The demand for domain names is growing, but with a low pace. So the oversupply (nGTLDs) can only drive the prices down. More than two billion dollars have already been paid to ICANN from companies that run the registries. They expect to take that money plus operational costs and some profit from the end users. There are simply not so many end users today. And they will not be in the near future. So this money must be covered as loses from the registries or the domainers. How they will be covered from domainers? Let's not forget that the rate of selling is lower than 2% on .com domains. Try guessing the rate for the other gTLDs! So this is our little secret, which very often forget oureslves: for the vast majority of bought domain names the end users are the domainers. With the sales of nGTLDs many domainers will buy so to get good names with low prices (regfee). Being the early bidders and waiting will be their strategy. But most will get disapointed because the demand can not cover them. Also, holders of .com will suffer loses. Many profits will just never get place and prices will lower for making the sales a possibility. Already many .coms are dropping (the junk ones), because some domainers are realising now how hard or impossible it is to sell them. The leakage could be seen already seen before the nGTLDs, when many startups partly adopted the .io and .co ccTLDs (which in fact are gTLDs). Of course the quality names will always sell. But not as easily or not for the same prices. The early buyers of good .coms will still have profits, but lower than if the nGTLDs were never released to the public. Which is a loss from a point of view.
The bottom line is that .com will always be the king of TLDs because of historical reasons. Some (not many) gTLDs will survive. And their registries will be run from very few companies because of the nature of the industry (economies of scale - sharing costs on infrastructure and operational costs). The profitability of the domaining will drop. The cause is the oversupply against the weak increase of the demand.
And to answer to another thread. No, the future (unfortunately) will not be good.
Don't take heavily what I have stated above. I am a newbie and I may be wrong at many points. Just share you thoughts. And thank you for reading all this.
