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.

 

[Silentptnr]

True, but companies that care about their online image do brand themselves with quality domain names. They are the ones that buy the domains we sell, not the kids. I get what you're saying about content being king, but domain names themselves have inherent value. Also, there are reasons that .com domain names command higher prices. I will assume you know those reasons.

 

[Silentptnr]

I will also say that many sites with great content have failed because their domain name just wasn't right.

 

[betthelot]

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.

that's the same argument that was made after the 2001.com crash. I believed that statement somewhat as most people did and this was the time in 2002 and 2003 that frank Schilling made his billions because of all the drops. Of course content is important but companies will pay good money for good branded domains and for shorteners.

 

[Kate]

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!

It's true only to a certain extent. The same point was already being made 20 years ago, that domain names would become irrelevant because of search engines. That isn't true because branding remains a critical aspect of doing business online.
You would think twice before you pick a domain for your business, especially if you are going to advertise it or put it on your business cards.
Anyway, it's not the domainers who are at fault if new TLDs are not taking off. Ask yourself why consumers shun them.

 

[dordomai]

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.

I am this generation and while i don't care what extension content is under I can say that i expect a website under .com. Short single word .com have authority that other extensions don't have. They look far more professional and are fairly easy to remember. I grew up with .com but I always knew about extensions like .cc and .info. Despite that I don't consider them to be equal.

Surfers would never care about the extension as long as they got what they wanted. This is nothing new.

I don't care if the website is professionally designed or not if i can get what I am looking for.

When it comes to e-commerce and making transactions it does matter to me.

If i have a choice to shop on a website with a .com vs a .ws I think that, both websites and keywords being equal i would use .com because it looks far more professional and trustworthy.

Real buying power is 40+ IMO

 

[garptrader]

Which would you feel more comfortable giving your credit card info to to buy electronics or books or running shoes from...

Amazon.com
Patagonia.xyz
Amazonia.club
Magdalena.ws
Santiago.biz
Mendoza.link
Cucuta.top

 

[SiteMachine]

Which would you feel more comfortable giving your credit card info to to buy electronics or books or running shoes from...

Amazon.com
Patagonia.xyz
Amazonia.club

Ignoring the fact that Amazon is a well known mega-brand and assuming they are all new websites I would say I'd feel equally comfortable entering my credit card info in any one of them with a "green" SSL icon. I actually asked my parents about this (older generation resistant to change) and my younger cousins (younger than millenials "Gen-Z") several months back and they all said that icon was the only thing they look at before they pull out a credit card, It's 2016.

Ask yourself why consumers shun them.

That is absolutely something I would want to ask myself had anyone posted evidence of it. Instead you have grumblings on a few domain investment blogs and anecdotal evidence from people on here who ironically own very few domains within the new gTLDs.

 

[Fancy.domains]

I decided to start listing the +$1000 ngTLD sales each month. This is the February list:

https://www.namepros.com/threads/new-gtld-sales-february-2016-minimum-1000.926474/

Will the ongoing (?) implosion decrease sales, or not? The statistics will teach us.

 

[betthelot]

thanks for the list

 

[jbjbjbjbjbjb]

/\ thanks for the list, interesting results.

Consumers shun bad content, bad design, poor process and implementations. You will have more authority in the eyes of end users with a .com but it doesn't automatically make you a viable business. A well designed, marketed, established and successful gtld based business could well pull the same level of authority as a .com and be an entirely viable option to the end user.

In terms of where you'd use your credit card given the above examples, it really depends what exactly you're looking for, how much support the site owners have (social media, reviews, testimonials) and the all important traffic stats with good (viable) backlinks. SSL and good user account/payment systems are a big deal too. I've shopped at a whole range of sites without issue.

Lastly, most existing successful sites have been long established as .coms and built up to their current highs, which is why they are perceived as more 'established' and more 'reputable'. Because they actually are. Most of the gtld's are trying to break ground now with new business and have a long way to go, including to overcome the '.com or gtfo' mindset (right or wrong). If you asked a successful .com to change their entire brand to a GTLD, they'd think you were crazy, and rightly so. If you asked a successful gtld site to change their brand to a .com, would they?

 

[betthelot]

'established

that's a good point. If you had a short .com subconsciously the public think your establish and successful. A new extension you have never heard of before brings to mind those pishing mails that often use fake email addresses in the display name.
Its a tough sell. I can see start ups and small compaines using them, all with small budgets. I think this is coming through as time goes on.

 

[jbjbjbjbjbjb]

that's a good point. If you had a short .com subconsciously the public think your establish and successful

Relevance/Brand is key. If your brand is oracle, then oracle.com would obviously have much more significance than ora.com (which out of interest, redirects to oreilly media online learning at oreilly.com). Short isn't good if it's off-brand.

one thing that is overlooked too is assuming you build a business in any tld/gtld/cctld, you would ultimately, at some stage of growth want to stake out the .com, whether you used it or not. Myob did that with the .com (at least here in au, the .com redirects to the myob.com.au site). It does depend on the country/market too, here in au .com.au is much more relevant locally than .com (but .com is fine). I assume .co.uk is similar for the uk.

 

[dordomai]

if you asked a successful gtld site to change their brand to a .com, would they?

Instagr.am?

Usually a startup on a gtld will get the .com as soon as they can afford it and get big enough.

This tells us all we need to know. We had the reverse when overstock.com switched to o.co but that was such a massive failure that it didn't last long.

 

[betthelot]

oracle.com would obviously have much more significance than ora.com

Sure that is correct but I was making the more general point that both Oracle.com and ORA.com would hold authority in the public mind whereas ORA.xyz you think WTF.
Yes .co.uk is king here. Huge difference in the click through rate on search engines compared to .com

 

[SiteMachine]

Betthelot, what email provider do you use? I'm just curious because I've never got a spam or phishing email from a new gTLD to my actual inbox. I think end users are even less likely to be examining their spam folders and checking the extension of the email addresses.

What I think is a tough sell is this idea that consumers shun extensions other than .com with no data to support it.

Here is an interesting article from an over a year and a half ago with actual data showing that end users may not be quite as afraid of new gTLDs as you say:
searchenginewatch.com/sew/study/2367669/how-new-gtlds-fare-in-search-marketing-research

Then I read to the end and linked to the study itself and they had an update! 8 months later (and still a whole year ago) and look at the clearly increased statistcs showing the same results with 1/2 the advertising budget for the new gTLD.

The first testing was done in May 2014. The 2nd testing was done in January 2015.

January 2015 Results:
Average CPC
3Carat.Diamonds: $.69 (vs. $.77 in May 2014)
3CaratDiamonds.com: $.82 (vs. $.81 in May 2014)

Conclusions:
31.76% Conversion Rate on .COM, 29.11% on .Diamonds
Previously: 52% Conversion Rate on .COM, 36% on .Diamonds
New gTLD converting just as well now as the .COM
Effective CPM: Still costs 2x as much to advertise a .COM

So, which would you rather use for a Google AdWords campaign? A .COM domain name that costs more, or use a New gTLD domain name that costs less to use, and converts just as well as a .COM domain name?

Don’t just take our word for it. We’ve updated all of the test results, and, like in our previous white paper, we want to be totally transparent: we’ve published all of the results and included the data we gathered from the updated Google AdWords campaign in a new, updated white paper.

from globerunner.com/com-vs-new-gtld-domain-names-8-months-later/

I vote to rename the thread "Day 1 of the explosion in gTLDs, renew 10yrs now" (You know, since you want to keep it sensational)

 

[HotKey]

Just another n. gTLD hater post. Unreal. It's disappointing when people say stuff like "just look at the numbers, just look at the numbers. Hey, how about instead of looking, go out and MAKE those numbers.

Of course it is inevitable many of the new extensions will collapse. What did you think, hundreds and hundred released within a span of just a few years and the entire world would jump aboard? I don't think so. Just as it happened with the classic extensions (net, com, org, biz etc) it's going to be survival of the fittest, baby, and with most of the world already rooted online in some way or other, these registrars were fooling themselves thinking there was some immediate void to be filled.

Use common sense, renew the names you think have long-term merit. Believe your head, not the numbers. Numbers are for a flock of sheep, not the shepherds.

 

[SiteMachine]

Of course it is inevitable many of the new extensions will collapse.

I'm even more optimistic than you are, it is not technically expensive and I have said earlier I theorize not very support intensive either to pick up a failing gTLD. Check out this great article:
domainincite.com/18898-afilias-wants-to-buy-your-failed-gtld

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'll quote the article above for you

Afilias would be happy to take these contracts off their current owners’ hands, for the right price.

“Frankly, we’re not going to be paying huge prices for them,” LaPlante.

“We’ve run into a number of folks who still have fairly inflated opinions of what their string is worth,” he said. “Some of these strings are attractive, but they’re going to need a lot more time to mature.”

Afilias believes that the economies of scale it already has in place would enable it to turn a profit at a much lower registration volume, perhaps under 50,000 names, and that it has the patience and financial strength to wait for its acquisitions to hit those volumes.

“We’re very conservative in our volume estimates,” LaPlante said.
...
The company is basically looking for acquisitions where the seller’s looming alternative might be the Emergency Back-End Registry Operator, and where the fees associated with an auction might be a bit too rich.

So there is someone willing to buy those "sinking turds" (as someone called them on one of these anti ngtld threads) before they even get to auction. They would have to be not interested, then there would have to be a failed auction (that will likely start at $0) before domain owners got left holding the bag.

Anyone investing heavily into a ngtld with less than 50k domains registered I'm willing to bet is aware of the risk they are taking. Also, depending on your idea of a large investment, anyone investing that much in a new gtld will probably either help them get close to that 50k themselves or they are buying a bunch of premiums that they really see value in, all things I don't really see a problem with in a free market.

 

[brindle123]

I'll quote the article above for you

"Afilias would be happy to take these contracts off their current owners’ hands, for the right price."

I quoted the same article! "For the right price!"

I'm a buyer of all LLLL.com, for the right price too.

Has Afilias bought any failed tld yet? They are not stupid, they wouldn't buy a turd for a nickle.

Here is an example from the same article you quoted!

"Afilias was not interested in .hiv, which failed to sell at auction recently, for example — and would be skeptical about registries that have given away large numbers of free domains."

So it's a turd with .HIV

There will be, and currently are gtlds that no one wants or will buy for any price!

I'm not trashing all gtlds, just the crappy ones that shouldn't exist in the first place.

 

[garptrader]

We now have 15 million new TLDs and extensions such as XYZ now have some 2.5 million registrations. So I would say three years from now there will still be new TLDs with registrations and it appears XYZ will be one of the leaders in registration volume. As difficult as it is to sell anything other than .COM I see no reason to jump on the new TLD bandwagon. Of course there are registry sales and with million of regs there will be some lottery winners. But with 15 million registrations, even with no further registration volume you have 75 million renewals that have to be paid for over the next five years. Assume premium renewals don't bump the average over $10 each (which is probably NOT the case as my .TV renewals bump my average renewal cost over $10). You are looking at $750 million in renewals over five years. How do you fund that? Is there that much speculative money sitting on the sidelines?

 

[betthelot]

So it's a turd with .HIV

Ha ha - just about as bad as it can get.
Also they tried to raise £100million from investors at the back end of 2014 on the London Stock exchange for small stocks and failed. They put it down to market conditions, and would not elaborate.

 

[betthelot]

You are looking at $750 million in renewals over five years. How do you fund that? Is there that much speculative money sitting on the sidelines?

and domainers must be funding 90% of that - its just crazy better off buying lottery tickets

 

[SiteMachine]

"Afilias would be happy to take these contracts off their current owners’ hands, for the right price."

I quoted the same article! "For the right price!"

I'm a buyer of all LLLL.com, for the right price too.

Has Afilias bought any failed tld yet? They are not stupid, they wouldn't buy a turd for a nickle.

Here is an example from the same article you quoted!

"Afilias was not interested in .hiv, which failed to sell at auction recently, for example — and would be skeptical about registries that have given away large numbers of free domains."

So it's a turd with .HIV

There will be, and currently are gtlds that no one wants or will buy for any price!

I'm not trashing all gtlds, just the crappy ones that shouldn't exist in the first place.

Yes, thank you for pointing out that I don't selectively pick and choose parts of paragraphs like you just did, had you quoted the whole paragraph it reads like this

gTLDs with a lot of restrictions or monitoring would be treated with much more caution — Afilias was not interested in .hiv, which failed to sell at auction recently, for example — and would be skeptical about registries that have given away large numbers of free domains.

That might prompt someone to do some research as to what was going on which would be prudent when investing in any new gtld which would benefit people who read the thread as opposed to throwing gasoline on the implosion theory.

Here was the deal on .hiv

The ‘.hiv’ registry is operated by dotHIV gemeinnuetziger eV, a German registered charity. Built into its registry agreement with ICANN is the following public interest commitment:
"Registry operator commits to implementing and performing the following protections for the TLD: registry operator, as a social enterprise, is driven by its sole mission to support the global HIV response. Therefore, registry operator will reinvest all excess profits in projects serving this mission."

Unsurprising that most for-profit companies were not interested.

So it's a turd with .HIV

Ha ha - just about as bad as it can get.

I'm starting to think maybe you guys don't know what happened with .hiv but I'm glad you brought it up as an example. It is a terrible gTLD with an insane stipulation attached to it yet when it failed to auction (because of a $200k reserve), it still got picked up by someone else (uniregistry) instead of going into the EBERO.
domainpulse.com/2015/09/28/uniregistry-takeover-hiv-gtld/

 

[betthelot]

it still got picked up by someone else (uniregistry) instead of going into the EBERO.

Thanks for that I wasnt aware of that - interesting

 

[SiteMachine]

I'm just trying to say I don't ever think any of the gTLDs will get to the point where end users who pay the requested (although maybe very inflated) renewal fees will lose their domains.

 

[brindle123]

Now Uniregistry has .HIV, sorry to hear about that.

Ok back to the serious stuff.
I'm not an expert on EBERO, but just looking it over for about 5 minutes, I found the following:

https://www.icann.org/en/system/files/files/nominet-ebero-14feb14-en.pdf
2.6
No Support for End Customers
.
EBERO Service Provider shall have no obligation to interface with or be responsible for providing customer service,billing or technical support for “End Customers.” “End Customers” shall mean any person or entity who has requested the registration or renewal of a domain name in the Failed
TLD whether directly or indirectly through a registrar or any registry.

To me that sounds like you can lose your domain if you can't renew it.
I need to read more, there is about 77 pages to read through.