analysis Are TLDs Like Crypto? (They have cycles?)

[Jv1999]

I'm not sure if anyone else has noticed this -- but do you remember in 2016 when people said .xyz was trash, along with .CO?

They said .CO was only good in spanish words, and even then might not sell. They said "no end user would buy a .xyz... only Alphabet."

but now both are flourishing...

 

[NickB]

Just change the below words in the graph to fit TLD investing........seems to fit quite nicely...

 

[bmugford]

I'm not sure if anyone else has noticed this -- but do you remember in 2016 when people said .xyz was trash, along with .CO?

They said .CO was only good in spanish words, and even then might not sell. They said "no end user would buy a .xyz... only Alphabet."

but now both are flourishing...

I don't think so.

Domain investing is likely to always be a relatively niche field that is only relevant to a small percent of people.

The average person has no major use for domain names, never mind as investments.

Also, "flourishing" is rather generous IMO. A couple extensions are doing better than in the past, but they are not exactly taking over the world.

The field has subjective valuation and extremely low liquidity. It is not really like crypto at all IMO.

I anticipate domains staying a relatively niche field, but one people can still do well in.

Brad

 

[jmcc]

This is the life cycle for a TLD:

First Year (Launch)
Sunrise: Brand and trademark owners get to register their domain names.
Landrush: Anyone can register a domain name
Landrush + 6 months: TLD registration volume quitens down and begins to stabilise.

Second Year (Junk Dump)
The Junk Dump: This is where domain names that could not be flipped are dropped and generally occurs around the anniversary of the Landrush. The effect can be visible in the TLD's statistics for up to fifteen years after the initial landrush.

Third Year (Hold'em or Fold'em)
Registration patterns and volume begins to stablilise but if the TLD has not been widely adopted by end users (not domainers) then the Hold'em or Fold'em decision is made by registrants. They have to decide whether it is worth renewing the domain name which they may have only bought for brand protection purposes. This drop is not as large as the Junk Dump but it decides whether the TLD has long term potential.

Fifth Year (the big reveal)
The fifth year is generally when it is possible to see if a TLD is a success in terms of end user adoption. This is critical in that it is end users that build and develop websites on the TLD. Without them, a TLD is a dead zone.

The .CO had excellent marketing and managed to hit a niche market when there were only a few gTLDs in the market. It is a repurposed ccTLD but other ccTLDs have overtaken it and in country level market terms, the .CO is not a major player. With most countries, the main axis of the market is .ccTLD/.COM and it accounts over 80% of that country's domain name market. The rest of those markets is split over the other legacy gTLDs (.NET and .ORG being the largest), adjacent ccTLD market registrations (eg: someone in Holland registering the .BE of their .NL domain name) and new gTLDs.

The .XYZ registry played the market well and basically introduced the heavy discount model to the new gTLDs. That meant that it sacrificed renewal rates for visibility. Most of the heavily discounted domain names do not renew (approximately 5% renew) but it has found a niche market in countries that can't afford to buy a .COM version of their business name.

Domaining is a very important part of TLD operations but it is only a very small one. Approximately 9% of the .COM registrations are on sale. Some of the new gTLD registries have priced their regfees at a multiple of .COM in order to deter widespread speculation and it has been successful but it has kept their gTLDs small. The higher regfee also encourages strong renewals.

The majority of people speculating in crypto do not understand the crypto or its vulnerabilities. The similarity with domaining is that some get rich while most don't.

Regards...jmcc