My Take on The gTLD Losers

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?


About The Author: Elliot Silver is an Internet entrepreneur and his company earns revenue from domain names. Elliot is President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Elliot is the publisher of DomainInvesting.com. Read this blog's disclaimer for information about the publisher, comment policy, disclosures, and conflicts.

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Comments (28)

    krishna

    Elliot, I think value and importance of .com may increase further due to this confusion. What is your opinion on the impact on country specific extensions beacuse of these new gtlds?

    July 2nd, 2012 at 1:50 pm

    rob sequin

    Agree with you on .net. It was always the prince to the .com king because it has been around as long and because there were few good alternatives. Now there will be a lot more alternatives so I would not want to be investing in .net domains. Very little reason to pay a lot of any .net in my opinion.

    .biz will always be .biz, a distant alternative to .com but okay for a small mom and pop. It does have the advantage of having “some” mindshare and age. Maybe we can call it an “existing” gTLD :-)

    I think Keyword-Keyword.com and eKeyword.com and KeywordOnliine.com domains will drop in value and desirability.

    If you have to say the dash or e this or some other descriptive feature in person or over the phone, people can just hand register one of the hundreds of new gTLDs coming and go with that.

    I recently started a small business on a .pro domain. I was able to hand register the exact keywords I wanted and am very happy. I don’t need the .com since it is mostly an offline venture and limited in size.

    I’m sure future registrants will consider getting their exact match keyword domain but with a .pro, .travel, .whatever extension is most relevant to their business.

    July 2nd, 2012 at 1:54 pm

    Ms Domainer

    *

    I still believe that the .brand owners will end up being the major winners.

    As I recall, businesses were slow to accept .com (the web in general), but once they discovered the power of advertising, they were totally on board; however, it took about 15 years.

    Right now, buying .brand may seem like a nuisance, but when large businesses discover that they will wield complete control over their .brand, you will see businesses building and selling trust and reassuring customers that going to a .verizon (just an example) website is safe and not a scam or spam site.

    I expect that .generics will end up in endless litigation.

    After everything shakes out, early speculators (insiders) will be winners and later ones losers.

    *

    July 2nd, 2012 at 2:26 pm

    Gene

    You’ve definitely covered most of the losers.

    Further thoughts:

    - Losers will also include all of the investors backing, and vendors servicing, the funds and new registries that are jumping into this very dangerous game. [The dangers have been spelled-out elsewhere, but include: trademark disputes, unexpected operational and marketing costs, and a generation of visitor confusion].

    - Early adopters: Just as is the case in the markets, there will be a major ‘flight to quality’ (i.e., to dot-com) – or perhaps ‘return to quality’ – the moment the first debacle occurs. The vast majority of major corporations will NOT apply for their own dot-brand — which will become its own story in 2013, and cause a number of gTLD applicants to abondon their efforts (because in most large companies people get fired for being early adopters, but rarely get fired for jumping on a proven bandwagen).

    July 2nd, 2012 at 2:35 pm

    Brad Mugford

    I disagree with your opinion about .NET.

    It is a member of the Big 3 (COM/NET/ORG).
    Those and ccTLD will have long term value.

    I think lumping .NET in with .BIZ and .MOBI is a bit ridiculous.

    The “domainer” market might not respect .NET, but it never has.

    When it comes to awareness and usage the end user market is strong for quality generics.

    1.) There are 14.7M+ .NET regs
    2.) .NET is the second most popular gTLD in the world.
    3.) There are 300,000+ new .NET registered every month with an average net gain of 75,00+ per month

    Brad

    July 2nd, 2012 at 3:23 pm

    BullS

    Instead of talking about losers, the winners will be

    my sites and the trademark attorneys.

    July 2nd, 2012 at 3:24 pm

    Elliot Silver

    @ Brad

    Do you think a clothing shop would choose .net over .shop, especially when it’s likely that the .net would have a much higher asking price?

    As an observer, .net seems dated like cyber. Just my opinion.

    I do think from the age POV, .net makes sense for SEO, but I also think Google has changes in store when gTLDs are used.

    July 2nd, 2012 at 3:27 pm

    July 2nd, 2012 at 3:27 pm

    Brad Mugford

    “As an observer, .net seems dated like cyber. Just my opinion.”

    Yet there is so much hype around an extension like .WEB.
    Is that not “dated”?

    Brad

    July 2nd, 2012 at 3:30 pm

    Elliot Silver

    @ Brad

    I think web is dated, too. I am talking more about descriptive terms like .Shop and even geos like .NYC. These may be more relevant than .net.

    The complicated thing is when someone owns a business that can be found on two different TLD… would I want Pizza.NYC or Pizza.Restaurant? I probably would prefer one of those over Pizza.net, but again, that’s me thinking as an end user buyer and not a domain investor.

    July 2nd, 2012 at 3:33 pm

    Brad Mugford

    “Do you think a clothing shop would choose .net over .shop, especially when it’s likely that the .net would have a much higher asking price?”

    If their budget is $20, they might hand register a .SHOP, but then they never were a premium domain buyer to start with.

    If they want a quality generic in .Shop it will not be available to hand register. It will be owned by an investor or reserved by the registry and come with a much higher price.

    In that case I think most people would rather spend their money on something that is established.

    Brad

    July 2nd, 2012 at 3:34 pm

    Elliot Silver

    @ Brad

    Have you had luck selling alternative extension names for good money?

    July 2nd, 2012 at 3:35 pm

    Brad Mugford

    “would I want Pizza.NYC or Pizza.Restaurant? I probably would prefer one of those over Pizza.net, but again, that’s me thinking as an end user buyer and not a domain investor.”

    They will both be premiums and come at premium prices. So the comparison is really apples to oranges.

    It is not like Pizza.net is $250K and Pizza.nyc will be available for $10.

    Regardless I would rather own NYCPizza.com than either as an end user.

    Brad

    July 2nd, 2012 at 3:37 pm

    Elliot Silver

    @ Brad

    I’d rather own the .com, too, but I would take Pizza.NYC if it was a better price. I’d also want to wait and see how Google treats gTLDs.

    If they treat geo TLDs very well, it might be better to own Pizza.NYC than NYCPizza.com.

    The biggest questions remain unanswered and that is how Google will treat them and how the public will react.

    As an investor, I am staying on the sidelines until I see the market emerge. I may lose some of the first gains, but it’s more stable that way.

    July 2nd, 2012 at 3:39 pm

    Brad Mugford

    “Have you had luck selling alternative extension names for good money?”

    Yes, but I am not sure it is really luck though. The same thing that applies to quality .COM applies to other extensions, but the bar for keyword is just higher.

    COM is always top seller. That really does not need to be said.

    But .NET/ORG/BIZ/INFO/US. I have sold many of those as well for amazing returns.

    There are always end users for top quality keywords in decent extensions.

    Brad

    July 2nd, 2012 at 3:41 pm

    Elliot Silver

    @ Brad

    I own practically zero non-com investments. I think they’re much more difficult to sell and more illiquid.

    The likely illiquidity of the new TLDs is also a reason I probably will remain on the sidelines as an investor.

    July 2nd, 2012 at 3:43 pm

    Brad Mugford

    “As an investor, I am staying on the sidelines until I see the market emerge. I may lose some of the first gains, but it’s more stable that way”

    Well, we agree there.

    The initial launch of extensions and landrush period are among the worst investments possible. If you look at landrush prices in extensions from .mobi, .co, .biz, .asia, etc. – the prices paid at landrush are generally the most a domain will ever sell for.

    Brad

    July 2nd, 2012 at 3:43 pm

    Brad Mugford

    “I own practically zero non-com investments. I think they’re much more difficult to sell and more illiquid.”

    Secondary extensions are without a doubt less liquid than .COM, but you also have to factor in the ROI and risk.

    I mainly buy .COM, but if you can pick up a keyword in .NET or .ORG for less than 1% of the keyword value in .COM you can normally do pretty well with end users.

    There is also a risk of paying too much for a .COM and basically sitting on dead money.

    Brad

    July 2nd, 2012 at 3:49 pm

    Joe

    Great post, but I agree with Brad on .NET. It’s always been the next best TLD after .com and always will. Personally, I would never compare Brand.NET with .Brand

    July 2nd, 2012 at 4:32 pm

    Johnnie

    “I think it’s going to get very confusing when brands start using .Brand and others begin promoting alternative extensions. ”

    Big brands won’t start using them. They already have their .coms.

    Mann put it best:

    “Know any Fortune 500 companies that promote an ALT domain URL instead of their exact .Com match? Most likely if they are Fortune500 and have billions of dollars they know something about branding and marketing.”

    It seems most domainers are pretty clueless when it comes to stuff like that, marketing, consumer behavior etc. Other extensions have been around for awhile now, big brands haven’t touched them.

    All these new extensions are alternative extensions, so the ones that will be affected are other alternative extensions. As just 1 example, a new alternative extension like .co is bound to take a tumble.

    July 2nd, 2012 at 7:06 pm

    Nadia

    .com and .brand seem redundant. The .com is the brand. I don’t see why they’re further complicating things.

    July 2nd, 2012 at 7:38 pm

    Brad Mugford

    ““Know any Fortune 500 companies that promote an ALT domain URL instead of their exact .Com match?”

    Nissan, but they have spent millions trying to obtain their exact match .COM

    Brad

    July 2nd, 2012 at 7:51 pm

    Coming Soon

    Yaaawn.

    .Whocares

    All of the gtlds will .fail anyways.

    July 3rd, 2012 at 12:42 am

    Snoopy

    “Do you think a clothing shop would choose .net over .shop, especially when it’s likely that the .net would have a much higher asking price?”

    /////////////

    Very few business would register a .shop regardless of price, it is unheard of.

    98% of the time they’ll go with a .com or cctld with a term they can afford.

    July 3rd, 2012 at 7:30 pm

    Elliot Silver

    ” it is unheard of. ”

    @ Snoopy

    Well, yeah, because .shop doesn’t exist and has never been marketed by anyone.

    July 3rd, 2012 at 7:32 pm

    Snoopy

    ” it is unheard of. ”

    @ Snoopy

    Well, yeah, because .shop doesn’t exist and has never been marketed by anyone.

    //////////////////

    Elliot, years down the track it will still be unknown by non domainers. Just like .co, .mobi, .us, .biz, .ws etc.

    July 3rd, 2012 at 7:34 pm

    Elliot Silver

    @ Snoopy

    .CO is a $20m +/- a year biz based on over 1 m. registrations (not sure the # or the cost for each).

    I also don’t believe .mobi, .us, .biz, .ws…etc have ever been actively (like .CO) marketed. From what I’ve been reading, many of the applicants have huge funding and I am sure much will go to marketing/awareness campaigns.

    I do think plenty of people aside from domain investors know about .CO. Maybe not a dent in active/well-known sites, but it is known in the startup community.

    I don’t want to debate because as far as I am concerned, there is almost complete uncertainty and lots of changes are in store. Everyone seems to know exactly how it will all play out, and only half of those people will be right. Time will tell.

    July 3rd, 2012 at 7:41 pm

    Snoopy

    “I also don’t believe .mobi, .us, .biz, .ws…etc have ever been actively (like .CO) marketed. ”

    /////////////

    People said the same thing about .mobi, nobody had ever marketed it as well or with as a big a budget. If a new extension came out, and it didn’t look at least “better” than what previously failed then domainers would not buy into it. So a lot of these extensions are going to look better on the face of it.

    Just like .co was better than .mobi, .mobi was better than .info, .info was better marketed than .ws, .ws was better than .to.

    It is the same story repeated over and over, the mantra is always, “Its different this time”. It never is. Domainers in the main get fooled…yet again. Small changes are made on the way to the same fundamental flaws with all of these extensions. Nobody knows them, and we don’t have a time machine. The standards were settled over a decade ago. .shop has no relevance, .blog doesn’t mean a thing. These are as good as any other new tld that came before them.

    July 4th, 2012 at 3:01 am

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