What If New gTLDs Are Wildly Successful?
If I could poll every domain investor right now asking them to predict the outcome of the new gTLD extensions, I think the majority would say that a majority of new TLDs will fail. This is my unsubstantiated opinion based on what I’ve read on a number of websites and forums, including this one. I can’t speak on behalf of all domain investors, but it seems that the majority of people think .com domain names will always be the extension of choice for people who buy domain names.
What if this isn’t true? What happens in ten or twenty years if businesses decide that they don’t need to spend 4, 5, 6, or 7 figures on a .com domain name when they can hand register something else for less than $100? Perhaps Google will treat .shop or .coupons the same as it would treat a similar website on .com. Perhaps there will be another search engine or type of search tool besides Google that will impact the relevance of .com.
If this happens, and it’s obviously a very big “if,” the business of domain investing would change dramatically. The value of .com domain names could drop significantly. People might be far less inclined to spend considerable amounts of money on a new gTLD domain name because there will be lots of alternatives. For instance, if a pizza shop in New York City can’t buy Patsys.Pizza, they might register PatsysPizza.NYC or PatsysPizza.Restaurant. Who knows what other extension options there will be in ten or twenty years. Should this happen, it would be tough for people to acquire a great portfolio of domain names with higher registration fees and lower resale potential.
If this happens, type-in traffic to .com domain names would also drop significantly. Internet traffic would be spread out among many other extensions, perhaps numbering in the thousands. With a higher registration cost and less traffic, the monetization business would also change dramatically. For instance, a guy who makes $10/year on a parked .com domain name covers his registration fee and makes a profit. If he had to pay $40/year for a .whatever, the economics makes monetization more difficult.
The reality is that new gTLDs face an uphill battle to become mainstream. New gTLD domain extensions will likely confuse consumers and lead them back to .com. My bet is that most new gTLD domain registries are looking at these extensions over the very long term, and there is at least the potential for a massive shift in consumer behavior over a long period of time.
I am not saying that this is going to happen nor would I predict the demise of this business. I do think domain investors should consider this possibility when making long term plans and it should certainly be considered a business risk. Not thinking about it is a mistake if you are banking on domain investments as long term investments.
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