Why Gamble on New gTLD Domains Today? | DomainInvesting.com
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Why Gamble on New gTLD Domains Today?

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The new gTLD domain names have been on the market for over a year now. There have been some publicly reported aftermarket sales, but I think it is a very small percentage of the weekly sales (by volume and value). I am still mostly on the sidelines when it comes to investing in new gTLD domain names.

I didn’t invest .com domain names in the 1990s. I didn’t even buy great .com domains until the mid to late 2000s. Despite this late entry, my business has still grown and flourished. There are plenty of other examples of people who have done well after entering the business “late.” In addition, there are many people who started out investing in domain names in the 1990s and grew their tremendously after the .com bubble burst.

I don’t see the need to invest in new gTLD domain names today. I believe the risk still outweighs the reward, especially with some registries keeping the better keyword domain names to themselves while asking very high prices for them. I would do the same as them if I were in their shoes, but for my business, it doesn’t make sense for me to gamble on these domain names today, especially at premium pricing.

In the future, if I feel see these domain names being used and being highly sought after, I can jump in and start buying these domain names in the aftermarket. Sure, I will probably pay a premium when compared to today’s pricing, but I am also likely saving significant amounts of money by not having to pay renewals until that point of time. I also don’t have to guess which extensions are going to be popular and which are aren’t going to be favored. Instead, I can wait and see, and if I choose to invest, I will have enough data to make smart decisions.

My business was built on buying great domain names that have value today. I would rather pay $5,000 or $10,000 for a domain name in 5 or 10 years knowing that it has aftermarket value than spend that much on what I would consider a gamble today.

I don’t begrudge people who invest in the new gTLD domain names, but it doesn’t fit my business model right now. Maybe I am missing the boat on this, but I got a late start to buying .com domain names and things have worked out alright. I simply don’t see much benefit to investing much in the new gTLD domain names today.


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (39)

    Mark

    Totally agree.

    Well said.

    July 6th, 2015 at 10:17 am

    Aaron

    I agree. Lots of opportunity down the road if they end up being a viable option.

    Just like with gambling I set an amount I am willing to play with and would be okay losing. That amount happened to be enough to buy one or two hand registration non registry premium gTLDs. So about $50, other than that I would rather invest in .coms.

    July 6th, 2015 at 10:31 am

    BullS

    You buy the new gtlds is to make your buddies rich and happy and they will give you a big hug when they see you at Domain Conferences.

    Oh, not to offend your gtld advertisers!!

    It is like buying something you don’t need and you know it is junk but to show your support to your gtld buddies.

    July 6th, 2015 at 11:08 am

    Acro

    A gamble involves a roll of the ‘dice’ with or without familiarity with the odds. Investments weigh the potential benefits vs. cost, typically long term. Unlike gambling, a plan is needed.

    There’s a very simple answer to why or why not: availability of the keywords, often at a reasonable price, now vs. later on.

    The beauty of the new Internet name space is its diversity and application across a variety of industries.

    Investing involves selecting one or more genres/industries and diversifying your domain portfolio.

    Then again, it’s a personal choice to do something, vs. something else.

    July 6th, 2015 at 11:12 am

      Elliot Silver

      I have not done exhaustive research, but I am finding most of the meaningful keywords across a variety of new gTLD extensions are registry reserved (possibly available at a premium), owned already, or have high registration and renewal costs.

      I think these are a gamble because they are unproven in the aftermarket.

      When I buy a .com domain name, I am quite sure I can re-sell it for at least what I paid. Under a bad scenario, my losses would be quite limited. With the new gTLDs, I might never be able to sell it. That is a gamble.

      At least when playing table games at a casino, I know the odds. With the new gTLD domain names, I don’t have any idea what the odds of selling them profitably would be because there isn’t much history or data points.

      In reply to Acro | July 6th, 2015 at 11:18 am

      Acro

      As part of any investment, due diligence involves studying the market before, during and after investing.

      Example: three years ago investing in the Chinese stock market was a secret, then the boom arrived. Currently, the bubble is exploding fast. One needs to treat every investment as a linear representation of opportunity, growth and a selling point and keep abreast of developments.

      Regarding reserved names, many great names have been released and continue being released at tiered pricing. Those that consider them expensive because they aren’t $10 a pop can continue registering three word .coms in hope of capturing a buyer in an overly saturated market.

      In reply to Elliot Silver | July 6th, 2015 at 12:31 pm

      Elliot Silver

      What is your investment timeline for your new gTLD domain name investments?

      When do you think you could make a living off of them based on monetization and/or sales?

      In reply to Acro | July 6th, 2015 at 12:34 pm

      Dev

      Well said, Elliot. For the vast majority of investors, the data is much too limited to make any risky decisions/investments in the gtld space. Combine that fact with the continued rapid fire release of hundreds of extensions, I personally feel that the gtld space will be rather diluted for a bit, until the useless and underused extensions fade into obscurity. Just like with the history of investing in great dot com’s there is an equivalent sweet spot that awaits for gtld’s, which is simply knowing which extensions are desired and being used. (on a large scale) Which, at that point, there will still be plenty of time to invest in gtlds for a healthy profit. It may be a solid 10 years before this risk vs. reward ratio becomes more palatable, however I feel that slow wins the race here. As for the hype and appeal of “owning your keyword domain and/or brand/business without having to say “dot com”. Well, personally, phonetically speaking, saying the word “dot” in between major keywords isn’t as intuitive as saying the keyword(s) followed by the dot com. Yes, perhaps that is something will change in time, however, most consumers and end-users would agree that new gtlds are the awkward cousin to the dot com. Also, the registries that are holding virtually every decent keyword gtld for $1000+ a year will also be forced to shift with the market as it changes.

      In reply to Elliot Silver | July 6th, 2015 at 12:49 pm

      Acro

      I have fewer than 120 domains across several gTLDs, so my carefully placed investment was made with long term goals in mind.

      Monetization via parking is an option that truly devalues their potential, however it’s the obvious quick/short term solution. A better option would be development as gateways/portals to existing content.

      Long term, full development will enhance the brands’ value and their SEO visibility. Google makes no discrimination, let’s keep that in mind.

      These investments represent less than 10% of my existing portfolio, and like any investment it’s self-rewarding and intended to pay its own costs and renewal fees.

      If you needed an absolute number in years, I would say 7-10 years which is the average timespan I’ve held domains before selling them.

      In reply to Elliot Silver | July 6th, 2015 at 3:19 pm

      Potential.Domains

      @Acro — well said. Your comments across all domaining blogs/sites are always informative, thoughtful, objective, and most times; well articulated than the original post being commented on. Your efforts are appreciated.

      Now, about this post …

      I see no logic why anyone in the domaining space, will regard domain investing as a ‘gamble’. If a non-domainer says or thinks such, that is understandable since they lack knowledge of the industry. But not for a domainer.

      Actually, this post and the title — makes no sense, and it’s apparent Elliot wrote this piece based on his displeasure with reserved and premium newgtld domains; without factoring in unreserved and available newgtld domains available at registration prices. Many of which continues to be successfully traded in the aftermarket.

      In reply to Acro | July 6th, 2015 at 3:39 pm

      Elliot Silver

      “Elliot wrote this piece based on his displeasure with reserved and premium newgtld domains; ”

      That is only a small part of it. There are plenty of decent strings that don’t have all sorts of reserved names.

      The primary issue is that I can buy a $20,000 .com domain name I am 90% confident I can sell for at least $20k and likely $30-60k+ very quickly. If I spend $20k on new gTLD domain names, I am not confident I could even get close to my money back let alone a great ROI as I expect from my .com investments.

      I turned down a free keyword new gTLD domain name from someone last week that I think is worth mid $xx,xxx in .com. I don’t see a whole lot of investment value today and I can make more in .com investments rather than buying something that may be worth something some day.

      July 6th, 2015 at 3:48 pm

      todd

      @Acro

      “Monetization via parking is an option that truly devalues their potential, however it’s the obvious quick/short term solution.”

      How is parking a quick/short term solution when gTLDs get zero traffic. Even the best ones get zero traffic and if they do get any it’s from other domainers who don’t click on anything.

      In reply to Elliot Silver | July 6th, 2015 at 4:05 pm

      Potential.Domains

      @Elliot — understood. Many domainers, myself included, are displeased with the rate at which registries are reserving or setting a premium price and renewal for certain domains.

      The most annoying part of this new capitalistic scheme, is the “premium renewals”, which means such domains are doomed for premium renewals for life. A one-time premium registration fee for highly sort after names, by registries, would’ve been fairly acceptable, but definitely not premium renewals.

      You probably would’ve felt the same way with .com — had Verisign slapped premium registrations and renewals on certain names — for life.

      Anyway, may be the title of this post should have been: “Why Gamble on Premium (or, Reserved) New gTLD Domains Today?”

      My initial response came as a reaction to the continuous illogical bashing of new gtlds by certain domainers whose investment goals are stuck in the .com namespace; refusing to accept or adapt to changes in technology.

      Where many see disaster, I see and seek Potentials.

      In reply to Elliot Silver | July 6th, 2015 at 5:31 pm

      Acro

      Not sure which ones you’re using to gauge that. Mine get traffic and inquiries. I don’t treat gTLDs like other TLDs, keyword+gTLD has to form a meaningful pair.

      In reply to todd | July 6th, 2015 at 5:40 pm

      todd

      “These investments represent less than 10% of my existing portfolio, and like any investment it’s self-rewarding and intended to pay its own costs and renewal fees.”

      Ok, so they get some traffic but not meaningful traffic and definitely not enough to pay for themselves.

      Curious, what is your average renewal rate when you add up all your gTLDs? I would figure at least close to 50 bucks average if not more.

      In reply to Acro | July 6th, 2015 at 7:03 pm

      Acro

      Exactly why I said parking is only a short term solution; when combined with a link to sell (DNS) it’s slightly better.

      There’s no point in averaging costs as I’ve also acquired domains in certain categories without planning to sell. I think it’d be more interesting to average such data per gTLD. As gTLDs have higher renewal cost than com/net/org for the most part, they are perceived by many as a lesser option. Well, that’s an argument that would never produce 6+ million gTLD registrations if it were true.

      The bottom line is, noone is forcing domainers to appreciate or invest in new gTLDs, ccTLDs, IDNs, or anything beyond .com for that matter. But I’d rather have options, than no options.

      In reply to todd | July 6th, 2015 at 7:18 pm

      todd

      When these things first started rolling out you were gung ho buying these things and the fire seems to have tapered off. Did you have a set amount you planned on spending or did something else trigger you to stop buying so many.

      In reply to Acro | July 6th, 2015 at 7:50 pm

      Acro

      Maybe you misinterpreted my enthusiasm or missed some episodes? I’ve covered most of my ongoing ‘mantra’ on gTLDs during the past 18 months at my blog.

      Currently investing in specific gTLDs that were made available once the collision lists were lifted.

      Unlike others, I don’t feel that I must openly share what exact domains I invest in, however, when I feel that there is something of importance to share, I do so. Also, keep in mind there are several closed communities discussing strategies outside of blogging; the latter acts as both a sharing mechanism and a method to output creativity.

      In reply to todd | July 6th, 2015 at 10:35 pm

    todd

    If the renewal fees were not so high I think everyone would have a few. There are a lot of people on the fence that would be invested in them right now if it wasn’t for the high carrying costs to keep them. This conversation would be totally different if you could register a name and only pay 10 bucks a year to keep it. There would be ten times the amount of registered names if they were cheap to hold.

    July 6th, 2015 at 11:27 am

    Ron

    They are a gamble, when plural, and similar meanings can be co created, and released, and dilute your own asset.

    I see domainers paying $100-500 per year to register these extensions, they do not realize the overall discount that will occur when stating some an annual expense in a sale, against a $10 .com.

    .com ends with a statement, and is automatic, gtlds with a DOT in the middle do not close out the term.

    There are many who have their hands in the cookie jar as registries, consultants, sponsors etc… who will tell you otherwise, and you may hear of an eventual sale, but those are mainly names that were bought for 4 figures in EAP, and carry 3-4 figure renewals, and are one off like many dudu.com type sales.

    Look up the term “bag holder”

    July 6th, 2015 at 12:25 pm

    Jeff Ding

    This post renewed my fading-confidence in this blog. Finally some objectivity and calling it like it is. Thank you Elliot.

    July 6th, 2015 at 2:18 pm

    Tauseef

    Well said. I remember reading a similar viewpoint from Mark Harshiser.

    July 6th, 2015 at 4:03 pm

    Pro.company

    Hi there,

    You must read this: blog.europeandomaincentre.com/why-50-websites-dumped-com-for-new-tld/

    July 6th, 2015 at 6:54 pm

      Elliot Silver

      I think that there are use cases for the new gTLD domain names. I am simply not buying many as investments.

      July 6th, 2015 at 7:17 pm

    Robert

    Here’s how I look at it…60% of the world does NOT have Internet access, but that is changing at a growth rate of about eight-to-ten percent per year. Legacy gTLDs cannot handle the exponential growth of Internet users from a volume perspective, and on top of that new gTLDs are intuitive and meaningful in ways that .COM and .NET are not. Verisign themselves even recently admitted it’s hard to find a desirable .COM name that’s still available.

    At one point investing in mobile wireless technologies seemed like a “gamble” because the wireline monopoly was still thriving. Don’t miss your opportunity to invest in this overdue name expansion because meaningless extensions like .COM and .NET were once seen as the norm.

    July 6th, 2015 at 8:22 pm

      Elliot Silver

      If I see investment value in the future I will invest.

      Just because .com domain names may have peaked (or maybe not), it doesn’t mean I am not making money off of recent investments.

      I’d rather stay fully invested in .com than take money off that table and hope that these things pan out as an investment while continuing to pay for renewals. If it takes 10 years for these new TLD domain names to be trading regularly on the aftermarket, I will have 10 years of .com investment compounding.

      July 6th, 2015 at 8:28 pm

    Jonathan

    So let’s see. ICANN first forecast 33 million, got around 6. Low reg numbers.

    Recent blog post pointed out less than 1% of startups using a new gtld.

    Sales? The big ones, not many at that, usually by the Registry themselves.

    These have been under perfoming by all accounts. Only .club is getting some sales on a regular basis, out of a few hundred.

    July 6th, 2015 at 8:31 pm

      Acro

      The problem with this logic is that you’re inside looking out, not outside looking in.

      Is your performance gauge the 115 million .com domains over the course of 25 years, or some other metric?

      Keep in mind each gTLD is a unit of its own, to be reckoned separately.

      Here are some usage examples, out of the 6 million registrations.
      http://inthewild.domains

      In reply to Jonathan | July 6th, 2015 at 10:39 pm

    Mansour

    All good new gtlds domains is kept by the registry to sell at a prime

    Do what the Chinese are doing invest in 3 characters domains 2 years ago I could not sell a domain for more than $400-$500, Now I am selling between $5,000 to $7,500 The good news is you can find an owner willing to sell his domain $1000 to $1500 and the Chinese buying them by the dozens.Here is the number of domains in each category of three Characters.
    LNN.COM 2600
    LLN.COM 6760
    LNL.COM 6760
    NNL.COM 2600
    NLN.COM 2600
    NLL.com 6760

    July 7th, 2015 at 4:40 am

    NameFit

    Could not agree more – with Elliott’s comments and other readers comments on the post – unproven market. Some people are talking the risk and they are benefiting. We have to keep in mind, some of these new gTLDs are sold where there is only one buyer, if that buyer does not buy, then they are no good – autism.rocks, fox.today are perfect examples. Lots of companies have cash to burn and they are just buying it because they do not understand the domain industry well and they do not know if they would need it in future.

    July 7th, 2015 at 7:00 am

    DNSelect

    Wasn’t the main purpose of the new gTLDs to give small businesses a shot at some good domains? So why are the registries hogging up all the good domains in their extension?

    The truth comes out..

    July 7th, 2015 at 1:03 pm

      Elliot Silver

      Probably to make sure the better domain names get into the hands of businesses and people who will develop them.

      In reply to DNSelect | July 7th, 2015 at 1:05 pm

      todd

      Come on Elliot, do you really believe that?

      In reply to Elliot Silver | July 7th, 2015 at 2:21 pm

      Elliot Silver

      Yes, I think it is a big reason.

      My bet is that a registry would gladly give a valuable reserved domain name to a large brand that intends to use it than sell it.

      Usage is key in terms of awareness, and there aren’t many opportunities to buy this type of awareness.

      Also, I think registries would rather give up short term revenue that comes from selling domain names to domain investors that will be parked or otherwise unused and hold out for either a buyer with big pockets or a company that will use and promote the domain name. That is the whole point of “Founder’s” programs and other programs like that.

      In reply to todd | July 7th, 2015 at 2:25 pm

      todd

      “Also, I think registries would rather give up short term revenue that comes from selling domain names to domain investors that will be parked or otherwise unused and hold out for either a buyer with big pockets or a company that will use and promote the domain name.”

      Buyer with Big Pockets is the real answer.

      In reply to Elliot Silver | July 7th, 2015 at 2:43 pm

      Elliot Silver

      I respectfully disagree :)

      In reply to todd | July 7th, 2015 at 2:44 pm

      todd

      How do respectfully disagree when you just said the exact same thing? I’m not trying to pick a fight just trying to clarify.

      “hold out for either a buyer with big pockets”

      In reply to Elliot Silver | July 7th, 2015 at 2:53 pm

      Elliot Silver

      Sorry, I thought you were saying that is the only reason (while disagreeing with my thought that they would rather give them for free to large brands who would use/promote).

      I was disagreeing with the idea that it is only about the $$.

      Sorry for the confusion!

      In reply to todd | July 7th, 2015 at 2:56 pm

    Lew

    These are all very informative points of view. I don’t think there is a right or wrong answer to the question of whether to invest in new TLDs. Yet, I tend to think that we will see a shift in perspectives, favoring new TLDs, after big businesses that are purchasing their brand TLD’s start using them. At that point the public will become more acclimated to names to the right of the dot in mainstream commerce.

    October 14th, 2015 at 1:50 am

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