It’s Domaining 6.0 & It’s Is All About Branding

I promised I would be writing a few post this week about the new gTLD’s, the current state of the domain industry where its has been and where it’s going.

As far as I can see we are now in the age of Domaining 6.0

Before trying to figure out where we are going, lets do a quick recap of where we have been.

Domaining 1.0

This goes way back, before ICANN, before Google, back to the day when domain names were free.

It wasn’t until 1995 that Network Solutions was allowed to charge to register or renew a domain name and the charge was $100 for two years.

After a lawsuit, the fee was dropped to $70 for two years in 1997.

So until 1995 the entire universe of domains were available; Yes all ending in .com, and they didn’t cost a penny to register or renew.

There were just a handful of people who even knew what the internet was, even less what a domain name was , or even how to register one.

Those who knew what the internet was, what a domain name wand how to register one,  had a once in a generation opportunity to own the internet yet not many registered more than a few free domains.

There was no way to monetize any traffic to the extent the was any.

Domaining 2.0

The late 1990′s some people woke up to the fact that domain names were virtual estate.

In 1999 Network Solutions monopoly over domain internet registrations ended, other registrars came online and the domain world changed when our friends at Tucows lowered the price of a domain name registration/renewal to $10 only one year required,  in January 2000.

People saw how business were built using just a great vanity phone number like 1-800-flowers, and realized that a whole business success could hinge on a great domain.

The fact that an exact match domain could create a tremendous business opportunity fueled a growing number of domainers who sort to register and buy domain names for resale.

Monetization of domain names was very limited except for adult domains, which monetized like crazy.

Domaining 3.0

This was the period of the dot com crash of early 2001/ to mid 2003 in the domain world and in the financial world, the perceived value of the internet as a business model and therefore .com domain names as well greatly diminished by not only  domainers, but by investors, the stock market and the general public.

Company’s invested and lost hundreds of millions, billions of dollars in the .com bubble.

Although domain names could be had for $10 a year renewal fee the vast portion of domains especially the older domains were still at Network Solutions and still $70 for 2 years.

Domains started dropping like flies.

Some really smart domainers who had the guts to against the entire market, sweep in and bought everything they on drops and privately believing that the  trend would reverse and that domain name would not only be invaluable for a presence on the web.

Monetization of domain names was very limited except for adult domains

Domaining 4.0

The monetization era started with Goto.com and FindWhat.com.

Goto.com got acquired by Overture in 2001,  and then Overture got acquired by Yahoo in 2003

Google acquired Applied Semantics  in April 2003 shortly thereafter that is when the true era of monetization occurred and the subsequent boom in domains values and sales occurred.

For some 6 years, a fortune of money poured into the domainer channel from parking and sales.

Monetization of domains led to sales, not only for the great “bang on category killers” domains but for typo traffic domain as well.

Parking revenue drove domain sales and domain sales drove more domain purchases.

Live Domain Auctions were measured in the tens of millions, just millions.

Domaining 5.0

Monetization started to decline and then fell off the cliff.

We can dedicate a whole series of posts to the cause for the decline in Monetization but for sake of keeping it short lets cite a few factors including, Google’s Smart Pricing, Yahoo Quality Score combined with Google squeezing the domain channel getting the same traffic while reducing payouts to domainers, and Yahoo’s failure to stay competitive in market as well as the overall recession.

.Brands started enforcing their trademark rights and UDRP’s and lawsuit’s followed taking away a lot of the typo traffic market, which in turn took more money out of the sales channel.

Domainers and end users were still buying a lot of domains for six and seven figures.

SEO guys jumped in knowing that a keyword rich domain, even non-com’s could get you ranked in the search engines. The aftermarket for .net and .org’s rocked and we saw six figure sales for such domains in the aftermarket.

Domaining 6.0

So here we are in 2012 and things have changed again.

Google algorithms change like the wind leaving SEO guys trying to figure out how to game the system keyword rich domains are selling but at a much lower rate and non-.com’s at a much lower prices.

Sales are brisk but the average prices have come down.

Look at the DnJournal.com year to date sales chart.

I mean really go check it out now and come back.

I’ll wait.

So we are half way through the year and you will see just one domain selling for seven figures in 2012, and that was at $1,000,000 even.

Only one other domain name has sold for $500K – $1M and that one was at an even $500K.

Only 4 domains have sold between $200K-$499K

Now go look for 2011

3 sales of $1M or more.

9 of $500k or more.

18 were between $200K-$500K

Now look for 2010,

7 sales of $1M or more and two for over $5 Million.

There were 8 Sales between $500K-$825K.

12 between $300K- $450K

16 between $200K -$300K

You get the idea.

Its not that the resale market is dead.

So far in 2012,  there are over 25 sales between $100K- $325K

There are a lot of sales between $20k-$100K and actually it still takes $42,500 to make the top 100 list for 2012.

So stuff is selling and the  resale market is far from dead, but the top of the market has dried up to a large extent.

Look at the weekly Sedo.com report or the Afternic.com report in general, we publish it every week.

You will see a steady weekly $2.5 million in combined domain name sales but over 90% of the transactions priced $3,000 or under.

That’s what the state of the resale market is for the vast majority of domainers.

Lets look at Sedo figures for 2011:

“47% of traded domain names during 2011 were sold at prices at or under $500.”

Only 6% of sales were $10K or more.

So where do we go from here?

We know that we are facing a world with 500-1,500 new gTLD extensions in the next few years, from the 22 we currently have.

Choices for consumers are going to increase for some verticals exponentially, will all domain prices hold steady?

Will a New York Personal Injury Lawyer that might pay $10K for NewYorkPersonalInjuryLawyer.com in 2012, still pay that much when he could register for $50-$100 anyone of a number of new possibilities like NewYorkPersonalInjury.Law, NewYorkPersonalInjury.Lawyer,  NewYorkPersonalInjury.Attorney,  NewYorkPersonalInjury.Esq or NewYorkPersonalInjury.Legal or even PersonalinjuryLawyer.NYC?

We can and have argued for now a couple of years what the effect of these new gTLD’s will have on the value of existing domains and extensions.

The truth is as we have said from day one of the announcement that these new gTLD’s might be coming, is that NO ONE Knows what will happen when the market expands from 22 TLD’s to 522 or 1,022.

But there are some hints out there.

The biggest domainer of all applied for 54 new gTLD’s committing $60 million towards the process.

Google applied for over 100 new gTLD’s

What Happens if Google gives away domain name for free in 2014.

Yup just about 20 years to the date, we maybe back to where it all started, with free domains.

What happens to the $10K domain NewYorkPersonalInjuryLawyer.com when someone can register NewYorkPersonalInjuryLawyer.Web for free?

In the world of 1,000 new gTLD and what we have already started to see is for domainers is going to be all about branding.

It’s not about the domains or the extension but about brandable domains which would give an end user an memorable internet presence.

If you read Techcruch.com regularly you will see a lot of companies being funded by big VC firms in extensions like .Me, .Tv,  .Ly, .It .Es and among others.

As more and more brandable and intuitive extensions come on board, its going to be even more about brand potential.

Look at this week’s top sale on  Sedo.com

Connect.to

Last week’s ArtDeco.com

The week before, Cruise.me

All highly brandable intuitive domain names.

When 500, 1,000 1,500 or more new gTLD’s are on the market sometime in the next few years, the internet will become what was a one trick pony of .com to one of infinite choices and possibilities.

Highly brandable intuitive domains will continue to be in huge demand.

When seeing hundreds of new extensions all hitting the market, Internet users won’t just be confused, there heads will be spinning like Linda Blair in the Exorcist.

More the reason that end users will want and need a brandable, memorable domain.

The domain name space and the Internet is all about branding, standing out from the crowd, making a memorable mark regardless of extension.

On a personal note,  some have accused me of being biased towards the new gTLD’s because of my involvement in RightoftheDot.com which was founded in just 2011, although I own some 75,000 domain names, none of which end in a new gTLD.

I feel like I need to address this.

Personally I was perfectly happy if my domaining life continued like it did in 2004, 2005, 2006, etc when parking revenue was measured into the six figures every month, live domain name actions were measured in the tens of millions, not the one’s of millions.

I worked less and made more.

I could have done that forever and I would have been quite happy.

But the numbers are the numbers.

So you can either live in the past or try to make a proper assessment of what the future will hold.

Part of being a good businessman is being fluid; to assess news and developments, not only in the industry you’re are in, but in the economy and world in general and adjust your thoughts and plans as events warrant.

People change their positions based in change of facts and circumstances.

The world is consistently changing and blinding holding on to positions based on facts no  longer in existence is a fairytale.

Of course, many people will interpret the same facts differently and that is as they say that makes the horse race.

I remember when one of the hottest businesses in the US was pay telephones.

You paid to put a phone in a location or bought an existing location, and you would never have to worry because people would have to always make phone calls and a location that did $100 a day would always do $100 a day.

Well that didn’t exactly work out that way did it?

Throughout  the history of the world, those who have,  usually opposed change.

Its human nature to hold on to what we have, especially if what we have is valuable

However the only consistent in the history of the world is that the world keeps changing.

So now we are at the time where our  world of 22 TLD is about to expand to 522 or 1,022 or 2,022 in a few years.

It could be 2014 or 2015 or 2016 but it’s coming.

It’s not my decision.

I didn’t get a vote on it, but i saw it was coming in 2010 and decided I couldn’t afford to ignore the disruptive influence that the new gTLD could bring.

Although I had no idea how what my involvement would be in the new gTLD’s there was no doubt I was going to be involved.

Now as you see I wasn’t the only domainer checking out the new gTLD space.

Those domainers who are now trying to move into the registry business came to the same conclusion.

For them its an evolution rather an abandonment of being a domainer.

The biggest of new gTLD’s advocates wouldn’t suggest that .com’s will be replaced in total number of registrations by any new extension.

I have talked to almost every new gTLD applicant and I will tell you no one expects to see .com dethroned in their lifetime by a new gTLD, even all the new gTLD’s put together.

Yet that doesn’t have to happen for the domaining world to change.

However with 500, 1,000 or more new gTLD’s coming into the market backed by new companies, with new money, with different pricing options,  including possibly free domains, when you see people who used to be the biggest buyers of .com’s becoming registry operators, it’s just naive to expect business to continue as usual.

We have already gone through many versions of domaining as outline above and we will go through several more in just my lifetime and I’m an old-timer in this business.

It’s Domaining 6.0 and its all about branding; be it a .Com., .Me, .TV, .NYC, .Law, .Music, .Miami, .Poker, .Berlin. .Inc., or hundreds of other extensions.

If a domain is its intuitive and brandable it’s a winner, if not your running uphill against an avalanche of endless domain combinations.

Comments

  1. Name says

    Smart domainers made enough to cash out. Some call it “F u money.”

    Why would anyone want to make a “career” out of domaining? There are so many more interesting things to pursue in life… that could be funded by money made from domain names.

    Some smart domainers made enough to become even bigger speculators… they have more money than they can spend in a lifetime, so why not play the gtld game?

    I’d say because if you have the money, there are more interesting things to do in life than fiddling with domain names.

    The domain name system is a mess. BIND was written by a high school drop out. And the people propping up up DNS as a technical achievement alas have neither common sense nor an ethical bone in their body. They just don’t care. Do you think they care about UDRP? It’s just a small formality on the way to heaps of easy cash from domain name registries.

    The less one has to be associated with this, the better. Make your money and get out. The smartest domainers of all are the ones you’ve never heard of.

    Now the ICANN people want more cash. As if they haven’t made enough already. They are going to push this system to it breaking point. The public still hasn’t got a clue.

    New gtld’s are bringing out the worst domainers. They will slash and burn the namespace to make a buck. No mercy. The whole system is up for sale.
    Whatever happens, ICANN cashes out. That’s the plan. Isn’t it great?

    Of course Google wants it all. Why shouldn’t they? A study back in 2010 said something like 96% of people use search engines. 26% use “vertical websites”. A smaller percentage use online yellow pages. What percentage use type-in? Doubtful it’s more than 25%. With gtld’s, Google can get that last 25%.

    This is corporate ownership of the web. Will it fly? Who knows? Make your money and get out.

    Once you’ve made enough to retire from exploiting this system, why not just move on to something else? I guess some domainers have not made enough to retire. Or they actually enjoy the dirty business of domain names. Maybe they still have dreams of selling names for inflated prices to companies that need a domain name. Good luck with that.

    The guy who started on of the first PC businesses back in the 80′s quit computers and became a family doctor in rural Georgia. I doubt he ever regreted that move.

  2. says

    I’m quitting domain biz and moving into Internet sweepstakes cafes in Florida, Ohio, North Carolina…they are making much more money with NO work…it’s like parking domains…no work.
    They are legal casinos where the house always wins!!!

  3. BrianWick says

    “And it doesn’t matter how many lawyers pick up LLL.co’s and .law, .legal or .whatever….they’ll all WANT the .com”

    You are 100% correct – not 99.999% correct.

    But the point is these new registries will still make their sale – and lots of themm-mthey are in the business of selling hand registered domains – not any secondary market (which will be virtually nonexistant)

  4. Dean says

    @deans conscious,
    your points about .Co have fallen on deaf ears. Those trying to tout it as a universal brand, like .Com are sorely mistaken. Maybe as a secondary extension or as an alternative to another lesser extension it may work. Once the tide of new gTLD’s are unleashed, it will fall further into obscurity. Glad you have had some success with it though. P.S. I have no conscious.

  5. says

    I am glad to see domainers are starting to protect their market, because it is at risk.

    There are monopolies manipulating the market that we have no control over. As long as the money is in .com, they will protect it.

    There is however a real risk of happening to .coms, what happened to email accounts…

    As far as the .CO is concerned it is a damp squib! Google thinks it is a spanish language Columbian ccTLD!

    So as you can see, no matter what the registries or marketeers think, the monoploies have the last say….

    so are we happy for them to take .book, .search, .blog etc. etc?

  6. says

    Hello ALL Commentators!

    WE know that all of this talk is good because unrealized Challenges never get solved !

    By the way I have a hell of a time formatting the text comments on this Blog, not complaining just stating an observation.

    Back to point : The single MOST IMPOTANT POINT .We think should be looked at is this!

    Right now in our Nascent SECONDARY MARKET there are countless thousands of screaming values in the .COM Channel , and many of them will have future valuation multiples that will skyrocket.

    This is not hype it is the fact of how all Nascent marketplaces have rolled out in past history.
    Your odds in the .Com Channel Secondary Market Place are overwhelmpngly in your favor.

    Gratefully, Jeff Schneider (Contact Group) (Metal Tiger)

    P. S. Warren Buffet, The ORACLE OF OMAHA is active in the SECONDARY MARKET .COM CHANNEL !

    Gratefully, Jeff Schneider (Contact Group) (Metal Tiger)

  7. BrianWick says

    Leopold -
    “We are dipping back into another recession right now. ”

    When you neighbor loses his job it is a recession – when you lose your job it is a depression.
    The key is avoid both – cash is king – fortunes are made during recessions and depressions.

    Domain Investing for me is based on where I think the economy & stock market is going vs. chasing the latest hype like all the new non.com’s now coined as “Domaining 6.0″ – or whatever.

    That way all the politicians can just blow themselves :)

  8. Anon says

    I’m quitting domain biz and moving into Internet sweepstakes cafes in Florida, Ohio, North Carolina…they are making much more money with NO work…it’s like parking domains…no work.
    They are legal casinos where the house always wins!!!
    —-

    Yeah, that’s just how I want to spend my life.

    Being an ‘early adopter’ of deeply gray legal area where it’s ensured that I’ll have to slog it out in court at least a few times just to keep existing, then have the plug pulled all together once the laws catch up.

    Ask Ray Bitar how he feels about that exact same strategy.

  9. says

    Hello Commentators!

    A full blown Bull Market is confirmed ! Stock And our Secondary Market in .Com Channel !

    You will make far more money in Our secondary market than stock market though! The secondary Markets multiples are just getting off the ground.

    Still for a pretty fair return we have taken WWWW off watch list and put on Buy list, for those interested. I own no positions in WWWW.

    Follow Warren Buffet into our secondary market for superior ROIs 7/10/12

    Gratefully, Jeff Schneider (Contact Group) (Metal Tiger)

  10. BrianWick says

    Jeff Schneider –
    Warren Buffet’s better ones I like to quote:
    “You only know who is swimming naked when the tide goes out”

    Domining 6.0 – proceed with extreme caution

  11. says

    Hello MHB

    Domaining 6.o = “Dead Balls On”

    Congratulations you are setting an example for true Domainers and not Spammers to follow.

    Quite a few Spammers portraying themselves as Domainers here and other Blogs confusing Domainers.

    The Truthfull man always wins in the long run.

    Thank you for this gutsy post!

    Gratefully, Jeff Schneider (Contact Group) (Metal Tiger)

  12. .fail says

    It is kill’ me to hear you all waste your precious lives debating the feasability of the new gtlds.

    Allow me to make some forecasts for you so you can go get some sleep…

    Any student of tld history can tell you that any domain that tries to upsurge the .com tornedo is doomed to fail. The .com has gotten too big and it is now way too late. Every day that goes by, the task of dethroning .com gets more and more exponentially difficult. in 2014, when the new gtlds ultimately do come out, they may as well not even bother. Perhaps, the gtld scenario would have worked had Jon Postel initially realized the severe limitations of the foundation he was about to lay, but he did not. Anyhoo, many other tld’s have tried and failed. Some were cheap, some expensive, some highly sought after (ie, .travel) and some, not so much (.coop). Some were long (ie Museum) and some were short (ie, .cat). All died miserable deaths.

    The new ones will do the same. The only difference this time will be that a long line of investors will get burned in the process.

    I see no future in these silly, unwanted extensions. I see lots of bickering, squabbling and litigation ahead and only trademark lawyers, registrars and registries getting rich. Oh, and ICANN.

    I like the comment above about people willing to take other extensions, but really WANTING the .com. Reminder, any ol’ extension will work, but only .com will work well. To setle for anything less is just a losing proposition.

    The gtlds will surely fail. No brainer.

  13. says

    “The gtlds will surely fail. No brainer.”

    @ .fail

    When you consider all the major Cities around the World that might end up with their own gTLD and if you add to that all the big companies that might be interested in getting their own .brand , there might be thousands of New gTLDs coming out in the next 10 years aside from the generic keyword gTLDs that everyone seems to be after right now.

    Are you saying that all these gTLDs are going to fail,

    Even if you go with the laws of probability alone, there will surely be a small percentage of all these New gTLDs that are going to make it to the top. Even a 10% success rate can amount to a bunch of these New gTLDs becoming popular in the next 10 years.

    -

  14. says

    Ah the speculation! “Should I stay or should I go now…” I have a book on my desk entitled “Change or Die”. I put about as much trust in ICAN’T as I do in the Republicrats. We are living in an Obamanation and it is marvelous scary. Opportunity to become one of the 1% has never been greater. I’m putting my money on the .COMs and may Heaven have mercy upon my soul…

  15. says

    Hello MHB

    I think we all can agree,that in any Business proposition you need to lead with your strongest foot forward. In Todays “New World Marketing”it is absoulutely Key that you pull out all the stops and present a professional platform for your Business.

    We would like to make an IMPORTANT POINT that many online Businesses miss :
    ( It is absolutely Crucial that you have a Strong Brand on the Left side of the Dot and the Right side of the Dot ! )

    Gratefully Jeff Schneider (Contact Group) (Metal Tiger)

  16. says

    @TF AGREED!

    Which is why I keep repeating:

    Are we happy to let the likes of Google take ownership of public property?

    Yes, they can have .Google and .Brand BUT NOT .Book, .Search, .Blog etc. Those are public domain and should not be allowed to be registered as a TOP LEVEL DOMAIN!!

    If ICANN approves registreation of a generic public domain names like .search and .book, it is an open admission that their only interest is money and that they do not have the interestes of the wiser internet and it’s users at heart.

    Like I said before, when a 9 year surfs on to ###.book etc. she will asssume, and trust, that that is the authority on books, because you cannot get any higher than a TOP LEVEL DOMAIN!!

    That’s right – we are selling out our children!

    Wake up people, start sending in those objections even if it is only to selfishly protect the .com!

  17. says

    Well, folks, we’re honored to have the domain expert, B-Rad G from the ‘Bu, tell it like Embee really wants to tell it here. Welcome to the show, B-Rad!

    “Yo, funky looking poser — I jes show up to help Embee make it blow uuup, so here it be:

    “Yo fools, dares some hardcore drama goin’ down riaght abowt neeeow. We gots the boys in the gtld’s pushin’ on strong heeyah, you all betta be shakin’ in yer nike’s cuz they get theirs, yo.”

    “But we old school domain-aires still thinkin’ of da new opps teeuw. Them opps is plenty, and they be the bomb callt “da dotcom”. Alwayz have been, alwayz weel bee.

    “Ya can’t PUNK OUT no matta WHAT da Devil may bring. Think strongs, sistahs and broz. Hope dis helps. Yo, ahm out, shiznit.”

    Well, B-Rad, thank you for coming on and speaking the truth. (P.S. Work on your spelling, dude.)

  18. says

    Hello MHB

    Those who think the .com secondary market game is over are ill informed to say the least.

    The secondary market in .COM extension hasn’t even cleared away 10% of the smoke screen that Google , Ad Marketers and Registrars and Domainers loaded with other extensions and others with agendas to hide the real values of Virtual Business Foundations awesome Strategic Marketing capabilities.

    Those who have already sold have jumped the gun and will miss the most historic price multiple explosion of any asset class in history 7/22/12

    Gratefully, Jeff Schneider (Contact Group) (Metal Tiger)

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