new gtlds Day 1 of the implosion N.gTLDs. Stop renewing

[betthelot]

This will be seen as Day 1 of the implosion of new gTLDs. Fundamental shift of opinion and direction happened at Mind+Machines the owners of .London .Law and the not so good .Horse .Rodeo, 20 in total. Big player in this space.

If you are investing in new gTLDs, you really need to read this.
I started a thread headless.domainer in a topless.bar to show why the new gTLDs have not taken off and why they will not. There was little defense of the new gTLDs .

Fortunately the fired co founder of Mind+Machines the CEO, who arguably is a bigger new gTLD believer than Frank Shilling, gave a detail response why he got fired and his difference of opinion with the board (notably all the board members voted him out). His response I feel is the best defense of the new gTLDs, he's still a big believer, so Im going to break his response down to get an insight of what is happening in this space.

Minds + Machines, the company I founded in 2009, informed me last week that I was no longer wanted as CEO.
Now what? New gTLDs are barely birthed. The industry is very young. Twelve million new gTLD names have been sold in just about two years. That's nearly 5% of all domain names out there. What reasonable person doesn't expect that to rise to 20% or more within the next few years? There's a lot of opportunity in the field.

ICANN predicted originally 33 million new gTLD domain name registrations in 2015—a number it later revised to just 15 million. Didnt hit that, so by any measure the numbers are pitiful
Conveniently forgets even those numbers are inflated by 5million that were registered at $1 or less. A rise to 20% of nothing is nothing. Interestingly his last post blasted strings like .xyz for distorting registration numbers and giving new gLTDs a bad rep for spam and fraud.
Domianers have spent by far the most acquiring these names. We are holding up this whole ecosystem.

And yet there are some signs of desperation out there. (AGREE) Demand for new gTLDs hasn't been what anyone expected.(AGREE) Many single-TLD registries, though not all, are hurting.(AGREE) Many registrars still do not fully support new gTLDs that aren't plain-vanilla .com clones. Its because they dont sell, GoDaddy and others will only promote what the enduser want, its your job to create enduser demand.

ICANN continues to treat registries and registrars as unpleasant necessities despite the fact that its sky-rocketing budget is underwritten by domain name sales. No breakout awareness of new gTLDs has yet occurred and until it does marketing of the new gTLDs, many feel as useless as pushing a piece of string.

OH its ICANNs responsibility to promote the new gTLDs. YEP no marketing, no awareness, no sales, its Business 101 But I forgot the new gTLDs were special, there was going to be people banging down your door to reg them. Didn't happen, so its ICANNs fault, not that you completely over estimated demand. If you felt that the new gTLDs would fail without ICANN promoting them, shouldnt you have made sure they were going to do that before you sunk millions into new gTLDs.

Even so, the larger players in our industry continue to be very bullish: .shop went for more than $40M, the single biggest mistake in domain history, wrote a post about that as well.
.app went for $25M and a secondary market in new gTLDs is heating up fast. Really could of fooled us domainers. Existing registries, and companies outside the space, are on the prowl. Despite the perceived lack of demand, some people are clearly seeing a lot of value in new gTLDs. Yes and Mind + Machines are hoping to be brought out before they lose more money. Have not shown an operational profit since its inception in 2009.

Why the disconnect? It's a matter of perspective, and cash. Owning a registry, or even better a portfolio of them, is a fantastic long-term business. Those who can't think long term (no cash) or won't (no vision), will not be well served by what's to come. OK so you wanted to burn more cash to realize your long term vision and the board disagreed with your long term vision being profitable and wanted to call a halt to the cash spend.


What kind of registries are out there, and how will they fare? Below I've listed some of the major types of commercial models (non-brand) that exist today, and what their prospects are; there are also hybrids of these models.

• Registry as a domainer play: the registry is essentially an unlimited portfolio of names, and like a domainer you can price your inventory, park it, and wait for the right buyer to walk through the door. This model is concerned with understanding the value of each name and pricing it for maximum return. It also requires staying power and self-sufficiency; impatient investors are going to have a hard time with this model. This is the premium pricing and renewals model that the registries like so much. So the numbers look crap noone is buying them at the prices you set and investors are getting restless. Perhaps they are overpriced.
• Registry as supermarket. Sell it super-cheap or give it away and try to win on large volumes with low margins. Because low prices disproportionately attract fraudsters, this approach is problematic but in the short term at least it seems to be profitable. In terms of resale, however, it may be a poisoned well. (AGREE).
• Registry as small business. Make some nice signs, tell some friends, try to get good shelf space at the local store, take out some stands at trade shows, get some testimonials, keep the costs down, and build the business over time. This can work if there are no investors, or if they are angel investors looking for a nice ongoing income in the future. Having a single TLD instead of a portfolio is actually an advantage here. AGREE keep cost down, BUT 47% of the strings are not even profitable if you say there is only a $150,000 annual running cost.
• Registry as part of a bigger plan. Naming is part of a vaster ecosystem that includes the branding, positioning, marketing, selling and licensing of companies, goods, and services on the Internet. And, importantly, it includes Internet governance. It takes no great power of observation to see that being a big registry, essential to commerce and communication on the Internet, contributing substantial amounts to ICANN, gets you a privileged seat at ICANN, at the center of things when it comes to deciding what the Internet will look like in 10 years. That's actually worth a lot, but it's only available, or useful, to the biggest players. A dig at Verisign influence on ICANN. Again ICANNs fault. ICANN is the scape goat for the failing new gTLDs, I expect we will hear this more and more but they are not there to promote the registries names.

Existing portfolio registries have basically two ways to go. One option is to build up the TLDs in the existing portfolio, treating them as a collection of small businesses, and hope that they become self-sustaining and will fetch a decent multiple of profits in an eventual sale. A better option would be to treat today's highly fragmented ownership of new gTLDs as an opportunity to continue the portfolio-building that began with the first applications, acquiring good TLDs that are selling cheap now, keeping focused on the long-term value.
There selling cheap because they are not making any money and your board decided they never will.

One thing we agree on IS there will be consolidation as more of these new gTLDs fail.

Internet Identity that looks at security of the internet for businesses and governments said this recently about the new gTLDs, and remember they have no axe to grind, they are not invested one way or another.

IID anticipates an unprecedented series of domain registry failures as a result of the lack of gTLD popularity by 2017 in the form of bankruptcies and abandonment. “Most new gTLDs have failed to take off and many have already been riddled with so many fraudulent and junk registrations that they are being blocked wholesale,” said IID President and CTO Rod Rasmussen. “This will eventually cause ripple effects on the entire domain registration ecosystem, including consolidation and mass consumer confusion as unprofitable TLDs are dropped by their sponsoring registries.” WHEN THIS HAPPENS BAD PUBLICITY FOR ALL new gTLDs and LOSE OF TRUST. THIS WILL BE THE NAIL IN THE COFFIN.

I have been a domainer since late December 1999 and what I see today really worries me about domainers losing their shirt. Do your research and invest wisely guys. Dont listen to propaganda, look at the numbers, they dont lie.

 

[garptrader]

True if a registry already has the requisite infrastructure maybe they don't need another lawyer at $300/hour or another IT person at $100/hour or another accountant at $50/hour or additional office space. But I am pretty sure they will have to add some additional support personnel. How many full-time US professionals can you get for $6k/year?

 

[betthelot]

How many full-time US professionals can you get for $6k/year?

Illegal immigrant from Mexico, so I understand from Trump.

 

[SiteMachine]

Again, the $6k number is from the COI, it does not include support or any of those other costs.

Still, a failing gTLD would have very few domains and therefore VERY little support volume, probably not even enough work for one full-time US professional.

 

[betthelot]

Again, the $6k number is from the COI, it does not include support or any of those other costs.

Still, a failing gTLD would have very few domains and therefore VERY little support volume, probably not even enough work for one full-time US professional.

I spent ages to convince you that Casino.live can not have rights over casinolive.com if they both ran a live casino site. Spent ages to try and get you to understand TM law and you beat that to death.
Now operating costs! call it what you want, use any acronym, the bottom line is no string will survive with just 1200 names regged/renewed at $5 wholesale.

 

[SiteMachine]

OMG you're right every single new gTLD is doomed to fail like you said, you're so smart

 

[betthelot]

OMG you're right every single new gTLD is doomed to fail like you said, you're so smart

Where you get that from - I didnt say they will all fail - I have always maintained they are crap for domainers. I dont care about the registries, of course they wont all fail but they certainly have been less successful, all of them, than what was forecast by all the registries running them.
Thanks for the compliment

 

[SiteMachine]

Where you get that from

read the name of your thread.

 

[brindle123]

Um, did you guys even read the article you are quoting? I hope not because if so your reading comprehension is abysmal.

"He wants Rightside to sell off “or even abandon” some of its weaker gTLDs

I'm not sure what article you've been reading or if you need glasses, but this quote is from the article.
That sells "SELL or ABANDON". Can you comprehend what that means?
He means flush the crap down the toilet!

Now for some actual facts, the ICANN require 3 years of operating expenses (guidelines at icann.org/news/announcement-3-2011-12-23-en)

So what happens at the end of that 3yrs? No one is going to pick that turd up out of the toilet? That's a fact!

J Carlo Canell is frustrated at the focus of Rightside's funds on purchasing many new gTLDs when they have a user interface that "is untouched and acts like time capsule to what existed half a decade ago"

He is talking about a website of theirs with a bad interface, not the new gtlds. I do think you need to go back and re-read the article.

We are not the ones preaching all the doom and gloom. This is coming from 2 of the major investors!

They can smell the crap and so can I.

 

[SiteMachine]

Lol read the entire message he wrote, he glazes over the gTLDs and makes 6 hard suggestions to the rest of the shareholders none of which include dropping the gTLDs. You are quoting an article, I'm quoting the message the article quoted. I don't need to re-read it I remember it, I still don't think you read the whole thing once.

 

[brindle123]

read the name of your thread.

You do need glasses or better reading comprehension!

implosion N.gTLDs
"N" as in "IN" not all!

 

[SiteMachine]

"N" as in "IN" not all!

OH RIGHT, N, the universal word for IN

What was I thinking?

PS I Can haz big text too kthx

 

[betthelot]

read the name of your thread.

You are so pedantic. If I did the headline: The new gTLDs will not be as successful as first thought. I wouldn't get the readership
Ofcourse no one thinks that all new gTLDs are going to go dead. I just took that for granted

 

[SiteMachine]

Ofcourse no one thinks that all new gTLDs are going to go dead. I just took that for granted

Then why is the remainder of the title "stop renewing"?

Are you just trying to mislead people? That's sure what it seems like.

 

[SiteMachine]

It is inevitable that some of these strings will fail. You only need to account for 150,000USD a year running costs and 47% are running at a lose. The publicity from bankruptcies will tar all the new gTLDs. good and bad. If you get a few that fail and I believe you will, that will create a public mistrust issue for all the new gTLDs

oh... and this.

But you're right, I won't be pedantic you're just trying to get readers looking at a useless thread and I'm done helping you so I've unfollowed this and if you don't quote me anymore I won't even read the rest of the replies so you can go back to living in lala land.

 

[brindle123]

OH RIGHT, N, the universal word for IN

What was I thinking?

PS I Can haz big text too kthx

When you read the thread title that's what it means. Sorry you didn't comprehend that before you wrote your post about the thread title.

 

[SiteMachine]

I still don't and never will see a capital N and assume it was meant to be the word in.

 

[betthelot]

Then why is the remainder of the title "stop renewing"?

Are you just trying to mislead people? That's sure what it seems like.

Sure I may have mislead you if you think Im arguing all new gTLDs will fail, I just didnt think anyone would see it like that. On Stop Renewing I wanted domainers to think very carefully about continuing to invest in them, its the renewing costs that kill you, especially when you buying them at a $1 with renewals at $10.
Again thats the art of a headline. Try it start a thread and see how much attention it gets. You have limited characters and you need to make the most impact. Whats the point of me doing the detailed analysis of the Fired CEO if no one reads it

 

[brindle123]

That's what reading comprehension is all about!
It means you understand what is written.

 

[brindle123]

Everybody just keep buying the crap and renewing the crap no matter what the rates get raised to and then we can all just get along.

 

[carob]

No registry will pick up a gtld that has failed with a different registry. If a gtld fails and is put into the 3yr period, there will be tons of drops and no future reg's will/can happen.

I don't think ICANN will make them pick one up either.
That leaves the loss on the domain holder.

IMO the biggest - and most unprepared - loser will be the end-user person who built a site on the name. They don't just lose the domain, they lose all the link juice they had built up, all the branding, plus they have to somehow explain the change of name.

I would advise no one to build a serious site on one of these.

 

[betthelot]

IMO the biggest - and most unprepared - loser will be the end-user person who built a site on the name. They don't just lose the domain, they lose all the link juice they had built up, all the branding, plus they have to somehow explain the change of name.

I would advise no one to build a serious site on one of these.

That's the trust issue. Why would you put your online presence into an unknown untrusted and unestablished TLD. That becomes louder if one goes down. There will be some collateral damage of trust to all the new gTLDs. Especially if the public hear stories of someone losing his search rankings and therefore business because of loss of all links and search authority. You would not be able to simply redirect and keep some of that authority, if there is nothing to redirect from.

 

[garptrader]

We all get domain offers for inferior-quality domains from other domainers.

Today though I received an email from a domainer with a list of about 100 domains including many new TLDs. Yes there were many junk .COMs in there as well but from the Whois I can see this newbie has about 100 new TLDs in his portfolio of 300+ domains. His comment was he needed the money to pay his rent because he was in default. So my message to the registries who promote this crap to newbies as though it is the next coming of .COM is I have no issue if the registries promote to Miami realtors Miami.condos or if a registry launching .Shoes approaches Nike, Adidas, Asics, Reebok. The reality is they probably don't care but don't hype the new TLDs as a phenomenal INVESTMENT opportunity to newbies who do not realize what they are getting themselves into. IMO the FTC or SEC probably should intervene because I believe the statements which have been made by the promoters would not be allowed if these were stocks.

FTC policy statement on deceptive advertising... "...When consumers see or hear an advertisement, whether it’s on the Internet, radio or television, or anywhere else, federal law says that ad must be truthful, not misleading, and, when appropriate, backed by scientific evidence. The Federal Trade Commission enforces these truth-in-advertising laws, and it applies the same standards no matter where an ad appears – in newspapers and magazines, online, in the mail, or on billboards or buses. The FTC looks especially closely at advertising claims that can affect consumers’ health or their pocketbooks....When the FTC finds a case of fraud perpetrated on consumers, the agency files actions in federal district court for immediate and permanent orders to stop scams; prevent fraudsters from perpetrating scams in the future; freeze their assets; and get compensation for victims."

SEC statement on pump and dump schemes..."Pump-and-dump” schemes involve the touting of a company’s stock...through false and misleading statements to the marketplace. These false claims could be made on social media such as Facebook and Twitter, as well as on bulletin boards and chat rooms. Pump-and-dump schemes often occur on the Internet where it is common to see messages posted that urge readers to buy a stock quickly....In reality, they may be company insiders or paid promoters who stand to gain by selling their shares after the stock price is “pumped” up by the buying frenzy they create. Once these fraudsters “dump” their shares and stop hyping the stock, the price typically falls, and investors lose their money"

It would not surprise me to see a class action suit against the new TLD registries for the way these new TLD options have been presented as investment opportunities.

 

[brindle123]

We all get domain offers for inferior-quality domains from other domainers.

Today though I received an email from a domainer with a list of about 100 domains including many new TLDs. Yes there were many junk .COMs in there as well but from the Whois I can see this newbie has about 100 new TLDs in his portfolio of 300+ domains. His comment was he needed the money to pay his rent because he was in default. So my message to the registries who promote this crap to newbies as though it is the next coming of .COM is I have no issue if the registries promote to Miami realtors Miami.condos or if a registry launching .Shoes approaches Nike, Adidas, Asics, Reebok. The reality is they probably don't care but don't hype the new TLDs as a phenomenal INVESTMENT opportunity to newbies who do not realize what they are getting themselves into. IMO the FTC or SEC probably should intervene because I believe the statements which have been made by the promoters would not be allowed if these were stocks.

FTC policy statement on deceptive advertising... "...When consumers see or hear an advertisement, whether it’s on the Internet, radio or television, or anywhere else, federal law says that ad must be truthful, not misleading, and, when appropriate, backed by scientific evidence. The Federal Trade Commission enforces these truth-in-advertising laws, and it applies the same standards no matter where an ad appears – in newspapers and magazines, online, in the mail, or on billboards or buses. The FTC looks especially closely at advertising claims that can affect consumers’ health or their pocketbooks....When the FTC finds a case of fraud perpetrated on consumers, the agency files actions in federal district court for immediate and permanent orders to stop scams; prevent fraudsters from perpetrating scams in the future; freeze their assets; and get compensation for victims."

SEC statement on pump and dump schemes..."Pump-and-dump” schemes involve the touting of a company’s stock...through false and misleading statements to the marketplace. These false claims could be made on social media such as Facebook and Twitter, as well as on bulletin boards and chat rooms. Pump-and-dump schemes often occur on the Internet where it is common to see messages posted that urge readers to buy a stock quickly....In reality, they may be company insiders or paid promoters who stand to gain by selling their shares after the stock price is “pumped” up by the buying frenzy they create. Once these fraudsters “dump” their shares and stop hyping the stock, the price typically falls, and investors lose their money"

It would not surprise me to see a class action suit against the new TLD registries for the way these new TLD options have been presented as investment opportunities.

Great post!
The new guys in this business always seems to get hurt the most. I happened to me when I started. I bought a bunch of junk and spent more than I could afford. Renewals killed me and I dropped all the junk. It took my some time to figure out "Quality over Quantity".

I've dropped some stuff that I should have kept, and kept some stuff I should have dropped. I've learned the hard way which is almost always an expensive lesson. People on this forum have helped me and hurt me. The ones that helped were honest, the ones that hurt wanted to either get at my money or they wasted their money and wanted others in the same boat as them.

I think we've all been guilty of pumping up our domains we own, certain tld/gtld/cctlds or certain niches. We might not have done this intentionally. It could have been because we believed what were saying or told by other's hype.

There is a lot of talk/hype coming out of the registries, registrars, companies in the industry, other domainers, forums, domain news sites, and many others. There is money to be made and lost in this business, therefore the hype/pumping will continue until there is a legal entity that gets involved, or you learn the hard/expensive lessons.

ICANN is not going to protect us. They have the registries/registrars in their back pockets.
You are the only one who is going to protect your wallet.

I wish all domain owners would be sent an email similar to a stock proxy voting system. Any issue that comes up with ICANN would have a real voting body behind the vote.

I don't see this ever happening unfortunately anytime in the near future, so the only real vote that has any impact is the voting we do with our wallets!

 

[betthelot]

none of the 5 steps mention even dumping a single gTLD (he does want to fire 1 of every 5 employees though).

he does say in the letter and to quote
'I believe that we should sell or even abandon some of our worst extensions'.
cant ignore that even if its not in the 5 point plan

 

[JasmineJasmine]

I just have to say this about extensions..they are irrelevant to searches. I have kids in their 20’s and have asked them about .com, .info and so forth. You know what they stated? None of these kids in their generation and those that are in their early thirties care one iota about the extension. They look for the content related to what their search terms are. Then they bookmark the website to go back. What I keep seeing here are dinosaurs who fear change! Perhaps your content is thin. These young adults are different than you and I and ARE the buying power.. They care about content …period. Not that hard to figure out.