After years of debating the topic of how successful the new gTLD program will be and what the effect of new gTLD’s will have on the value of existing extensions including .com.
Mostly every post has wound up with people arguing whether .com’s will win or the new gTLD’s will win.
Other including myself has voiced the opinion that many new gTLD’s can become quite profitable without any hugely negative effect on the value of existing domain extensions.
One possible outcome that I haven’t heard expressed anywhere before that everyone loses.
New gTLD operators, current registries like Verisign and domain investors could all wind up losing.
We know there will new gTLD’s that will not be profitable businesses.
What if virtually none of the new gTLD become highly profitable?
Many maybe come marginally profitable businesses but not home runs considering the years and dollars invested.
New gTLD’s are going to have to measure profitability in light of including all costs, from application fees, travel to ICANN meetings for many years, to startup costs, operational costs including employees and marketing and the cost of obtaining the best of the new gTLD’s in contention that will be settled in private or ICANN last resort auctions.
I’m sure there will be a few BIG winner but what if there are a lot of losers and most wind up just doing OK, including the big portfolio players?
The won’t be in danger of going out of business, but they might not make the kind of returns they promised their investors or projected for themselves.
There are 265 million domain names registered and if every new gTLD hit their projected mark the domain space would have to double in the next year.
Maybe more than double.
The adoption of lean startup methodologies and the constant focus on “disruptive” innovation by CEO’s will continue to place pressure on the value of premium generic .com domains. While branding will remain an important fundamental for businesses, how one goes about developing that brand will change when there is an abundance of choices. This is simple economics, and the ROI for large capital investments continuing to flow into the monopoly of the .com string is becoming harder than ever to justify. The plethora of new gTLD’s will create millions of new marketing combinations available to saavy marketers.
As a premium domain broker I speak with “c” level executives on a daily basis and this is a clear trend. Marketing executives are being forced to “quantify” their branding investments like never before. While .com’s are still the string of choice and will most likely remain the preferred extension for a number of years, they are beginning to price themselves out of the market in light of these upcoming changes. The long held historical assumption that a one word generic .com domain is “better” and “worth the price” is now being challenged. This is especially true in light of how Google has been beating up exact match domains over the last few years.
Average sales prices for reported premium .com domains today compared to 3 years ago are substantially lower, and I would argue that they will continue to drop in the future. At Outcome Brokerage, we see a large increase in overall sales volume coupled with a decrease in average sales prices. Business is healthy, but it’s becoming clear that the culture of digital business is changing. And with that change will come lots of criticism before mass adoption and acceptance. It’s an exciting time to be a domain broker, and you may see more specialists entering the industry to help service niche categories.”
So if he is right the new gTLD’s will create enough consumer choice that values of existing domains, including .com will fall.
If consumers choice a new gTLD over an existing TLD Verisign may see the numbers of .com registration start to fall.
However each new gTLD may not get enough of the market share to be wildly successful.
I just maybe the sheer number of new extension that as a group give consumers enough choice that existing domain owners will have to lower there prices to get sales.
Mediapost.com published a post today on “The Top Online Brand Protection Strategies For 2014” and the new gTLD took center stage:
“Whether new generic top-level domains (gTLDs) represent new prospects for your business or another front to defend, every brand needs a strategy to address them.
As hundreds of new gTLDs come onto the market, this is the time to decide whether to register, block or police your brands in the new registries. Work with your colleagues in legal and risk management, balancing risks, opportunities and budget constraints to develop your strategy.
With 600+ gTLDs expected to launch over the next three years, no company can afford to register every key brand term in every new extension.
Most companies will need to rethink their approach to brand protection, shifting from a strategy based upon traditional defensive domain registrations to one that monitors the expanded Internet namespace for brand abuse.””
SO what if MediaPost.com is right and the new gTLD’s become the tipping post for brand holders and they change from a defensive registration mode to a enforcement mode?
You might see a ton of typo’s and defensive registered .com drop.
Many new gTLD operators are planning on the brands coming to play but what if by in large they don’t show up?
Lack of defensive registration would be a huge loss of revenue that new gTLD operators were counting on.
It could cost existing extension the loss of millions of registrations if brands go from a defensive registration strategy to a enforcement strategy.
So it could be that the new gTLD program winds up with everyone in the space losing.
Except for the registrars.