RIGHT OF THE DOT.com, My Take On The New gTLD’s: The Next 25 Years & How You Can Profit
As many as you have heard, Monte Cahn the founder of Moniker.com and most recently an Exec with Oversee.net, has joining myself, in a new venture called RIGHT OF THE DOT.
RIGHT OF THE DOT can be broadly defined as a consulting company which advises registries on how best to roll out their extensions, including marketing and selling of domains; increase the number of registration of domains; identifying and positioning their premium inventory into the market through various channels, getting new registries shelve space on the retail channel otherwise known as registrars.
Basically we will help to make a registry much more successful and profitable and that at the end of the day what business is about, maximizing profits.
While the new gTLD’s process is getting ironed out we expect to help some existing registries position there existing extensions in the market to take advantage of the time until the new gTLD’s actually launch.
We also plan on advising some other companies and players in the domain space that aren’t registrars or registries, by doing some board advisements. We look forward to working with other non-domain high tech companies that want to built and protect their online brand.
Why RIGHT OF THE DOT?
Because since the first .com was registered some 25 years ago, domains have pretty much been about the keyword(s) to the left of the dot.
With of hundreds and eventually thousands of new gTLD’s on the horizon a lot of attention will now be focused on everything on the Right Of The Dot.
Monte was of course one of the founders of Moniker.com which he built out of his home into a top 10 registrar.
Through that process, Monte knows all the players in the registry/registrar space.
Monte also has sold over the year hundreds of millions of dollars in domains, probably more than anyone on earth.
Monte through Moniker.com pretty much created the live domain auction space a concept that did not exist before the live TRAFFIC Moniker auctions.
I have been in the business of domaining since 1999 when I founded MostWantedDomains.com and have lived and breathed in the domain business since then as a full time domainer. As a frequent reader you probably know that we own around 75,000 domains and sell annually into the seven figures worth of our own domains.
I do think its a different dynamic when you sell your own inventory and broker someone else’s. One is not better or worse than the other, its just different.
In the process of full time domaining you look at tens of millions of domains in your life and whether you realize it as you’re looking at domain lists your doing an immediate appraisal of each domain.
Moreover I have been involved in over tens of thousands of online domain auctions over the years.
So I think we think we bring a unique combination together, Monte from the registry, registrar, and brokerage side and myself from the domainer side, which can be extremely beneficial to anyone wanting to start their own new extension (gTLD) or want to increase the presence of current extensions.
So enough for the commercial, lets chat about new gTLD’s and the domain business.
The fact show that since the 25 years have past since the 1st .Com was registered, there is a total of 21 TLD (Top Level Domains).
You know some of them quite well.
.Com; .Net; .Org; .info; .Biz to name a few.
Some others as domains you may know but regard them as failures like .tel, .mobi and .travel.
I’ll get this out of the way first:
There will be never be a new gTLD or extension that will surpass .com.
Let me say it again.
Now new gTLD or ccTLD will displace .com in our (or at least my lifetime).
End of story.
.Com is king and will be king for a very long time, probably forever, although forever is a VERY long time.
No one is trying to be the new .Com, replace or beat .Com
They don’t have to.
A registry is a different business model from domainers.
A registrar is a different business model from domainers and from operating a registry.
Although both domainers, registrars and registries all are involved in the business of domains, they are quite different.
As domainers we have a certain way of looking at a domain and extensions.
Domainers are look at a domain and an extension from the investment point of view.
If a domainer invests in a domain and thereby an extension, the main concern is whether that domain will be worth more, next week, next year or in five years (depending on each domainers time frame for resale) than it is today.
Many domainers will be concerned with how the extension get ranked by the search engines for SEO purposes and will value domains accordingly.
So basically a domainer perception of a domain extension is based on resale value, traffic value and SEO value.
Domainers want to invest in domains and extension that will grow in value and/or will make money while those domains are held.
If there is a lot of activity in the aftermarket and we see domains selling consistently for higher prices we think the extension is successful.
If domainers see low sales activity on an extension or flat or falling prices they consider the extension a failure.
However, operating a registry a different business model from domaining.
So operating a registry can be extremely profitable at the registry level even though domainers considers the domain extension a failure.
Because once again at the end of the day they are different businesses and different net profit models.
These two an exist together, a profitable registry and a failed extension by domainer standards.
Take .Travel for example.
Most domainers probably don’t own a .travel domain, and most would regard the domain to be a failure.
However the .Travel registry is profitable.
The .Pro registry is profitable with over 100,000 registrations but most domainers do not own a .pro and wouldn’t even consider investing in one.
The .biz registry has over 2,000,000 domains registered and is profitable although on the domainer resale market .biz domain have not in large part been a good investment.
So while most domainers do not regard these extensions as successful from the domainer side, from the registry side they are making plenty of money.
Once you get get your head onto the other side of the business, then its an entirely different perspective and that’s the point of the post.
And he is right.
Domainers are always looking for that next extension to invest in especially if they missed the .com boom.
Domainers are looking for something they can invest small dollars in that will be worth big money in the future.
All new gTLD’s registries are also looking for “the second coming” but in their case they are not looking for the second coming of .com, they are all looking for the second coming of .Co
Because the .Co registry, as Juan Calle recently stated, has already grossed $20 Million dollars and expects to gross $30 Million in its first year.
Think about that for a second.
Zero revenue to $30 Million in one year, during what still is a horrible recession for most of people all around the world.
How many businesses can go from $0 to $30 Million in one year?
So that’s the attraction of the new gTLD’s.
So for new gTLD’s operators that’s what they are going to try emulate, that is there second coming.
Let’s face it.
It doesn’t take a huge investment to operate a registry.
You hire a company to operates the back end of the registry (something that almost all new registries will do) to Neustar, Afilias, Verisign, Tucows, openregistry, or one of the other many competitors that will provide this service.
All of these back end providers charge a per domain fee for the registry services.
So besides the application fees , lawyer fees, consulting fees, the only other major cost to operating a registry is marketing.
That is in large part why ICANN is estimating 500 new extension application in the 1st round alone. (its in ICANN budget).
So 500 application at $185K is $100 Million.
If you talk those in the new gTLD space they will tell you that you will need at least $500K to get an uncontested, no nonsense application thought ICANN and added to the root, before marketing
Now we are up to $250 Million.
Figure at least $500K for marketing and your at $1M for an extension or $500 Million coming into the space.
But every generic extension is going to have competition.
That means there will be mulitple applications for extensions such as .law, .insurance, .health, .eco., music, .sports just to name a few.
There maybe hundreds of domain strings that will be highly contested and once there are muliple applications for the same extension the winner is determined by auction.
Prices for some of the most valuable gTLD’s may very well go into the millions or even tens of millions.
I can tell you this:
At the .Nxt show in San Francisco I met with people who are ready, willing and able to write checks for millions, even tens of millions to control a generic extension.
You may think they are crazy but I can tell you with 100% certainly these guys are there, checkbook in hand waiting for the green light from ICANN.
By in large the players are very smart, successful people so while you may want to immediately think they are all wrong and crazy for investing that kind of money into a new gTLD and are throwing their money away, remember they have been Right in the past so discount their opinion so quickly.
As I see it there is over $1 Billion dollars coming into the new gTLD space and that is just in the 1st round of many rounds to come.
But lets get real.
I expect that a majority of the new gTLDs will fail.
Probably 80%-90% of all new gTLD will fail.
I think Juan Calle said it best at the .Nxt show in San Francisco a few weeks ago when he said about new gTLD’s:
“There will be some spectacular successes and some spectacular failures”.”
I would go further and say there will be many more speculator failures than speculator successes but again in what other business can you gross $20-$30 Million dollars in your first year out of thin air?
And after all why should operating a new TLD be any different than any other business which according to the the Small Business Administration, one-third of new businesses fail withing 2 years and 56% fail within 4 years.
So if you thinking of opening up any new business, there is a 56% chance it will fail within first 4 years.
However how many business have the potential to gross $30 Million in the 1st year?
Now I know many of you do not have the $185K application fee or the $1M it will take to realistically launch an uncontested new extension with proper marketing and framework around it.
So if you see the amount of money coming into the space like I do and want to get a financial interest in the new gTLD’s, there are several ways of getting a share.
One way to have an interest in the new gTLD’s is to invest in some of the public companies that are involved in the new gTLD space like Top Level Holdings, otherwise known as Minds + Machines which is publicly traded over in London or in some of the back end companies like Neustar, Verisign, Tucows which will make $$ for each domain registered.
There are other companies like Demand Media which have at least indicated they might go after some extensions.
A registry is like a money printing machine.
Of course you can play if from the domainer side as new extensions get released, you can grab some either through registering domains or the land rushes or the reserved domains auctions that will surely come.
Or you can choose to ignore the whole thing and concentrate on existing extensions.
There are many ways to be involved in the domain industry.
As Internet usage grows and more and more business shift to the Internet, the number of domain registrations will have to grow along with.
There is no one right way.
Keep your eyes opened and look for opportunity where you find it.
There is change coming and no matter how smart you are, and no matter how long you have been in the domain business, there is no one on earth that really knows (including me) what the economic consequences will be when 21 TLD expands to 521 TLD’s in one year and maybe into the thousands of TLD’s in the future.
Just for argument, let’s say that someone applies for .insurance knowing that Quinstreet bought Insurance.com, carinsurance.com and insured.com, in a 12 month period for over $110 Million dollars.
So lets say a company applies for .insurance, not to make money selling domains off the extension, but wants to keep all of the domains for themselves (perfectly legal under the rules).
They create domains like car.insurance; health.insurance; life.insurance; newyork.insurance and so on and so on, puts up sites to get lead generation.
Who can say they won’t get ranked by Google and Bing and ranked ahead of insurance.com?
NO ONE KNOWS
We can all opine on whether that will happen but lets assume for a minute it does happen.
What would .insurance be worth if its was ranked on SEO ahead of all insurance .com domains?
Probably not $100 Million
Probably in hundreds of millions.
Just one example of how the new gTLD’s can be a not only a disruptive force in the Internet industry but a game changer.
Yet the new gTLD’s may not rank at all.
Risk Vs. Reward.
Understand the business models and you can make an intelligent decision on how to play in the game.
Ignore the whole new gTLD process and you may do so at your peril.
(disclaimer this post premature published unfinished for a short time a couple of weeks ago, sorry if you caught the unfinished version)