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.

 

[betthelot]

I think that means if you are the EBERO you are not responsible for the customer service support for names registered or renewed through other third party registrars or registry.
I suppose that's the continuing responsibility of the registrar to give support to the end user. Can't be no customer support at all to the end user, even ICANN knows the political damage that would cause, it's just stating were the responsibilities lie. I'm sure once the end users know of the TLD going into failure mode there will be a lot of people asking for customer support and that's not the responsibility of the EBERO
That's how I read it.

 

[Kate]

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?

So even if we disagree on the merits of new extensions, we can at least agree on one thing: the whole program is designed to produce failures.
I have a real problem with that, because I think the DNS needs stability and shouldn't be a playground for marketing experiments.

When that happens, this will send shock waves across the Internet and all new extensions will suffer from a credibility problem as a result. Don't you think so ? It's hard for the average registrant to figure out which TLDs are viable and which are not, unless you look at the numbers and the financials.

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

But didn't they buy .mobi ? And .pro too. Not at a time when these TLDs were in good shape.

 

[hugegrowth]

Most of the population still doesn't know there are new gtlds. There will be successes and failures, I don't think there will be any shock waves across the internet from this because most people don't care enough about it. Extensions will be created and die off before most people even know they existed. Domainers and internet techies are the only ones closely watching as this goes on. Extensions that succeed will do fine, the failures will quietly die off or be put on life support.

 

[Kate]

I think that means if you are the EBERO you are not responsible for the customer service support for names registered or renewed through other third party registrars or registry.

Ebero is simply an emergency procedure to ensure that names continue to resolve normally until a new caretaker is found.
Which normally should take a few weeks at least.

In the past, Icann have revoked a few registrars, when that happens they ask the other registrars if they are interested in a 'bulk transfer': they get the whole domain portfolio and take over customer service from the previous registrar.

Taking over an extension is a similar exercise, but requires more in-depth analysis: you have to look at the viability of the model, current demand etc, define a new business model if necessary.
Generally speaking, a TLD that goes in Ebero status must be fubar.
Or it could be a registry meltdown registerfly-style due to mismanagement or personal differences, or sabotage.

 

[betthelot]

Ebero is simply an emergency procedure to ensure that names continue to resolve normally until a new caretaker is found.
Which normally should take a few weeks at least.

In the past, Icann have revoked a few registrars, when that happens they ask the other registrars if they are interested in a 'bulk transfer': they get the whole domain portfolio and take over customer service from the previous registrar.

Taking over an extension is a similar exercise, but requires more in-depth analysis: you have to look at the viability of the model, current demand etc, define a new business model if necessary.
Generally speaking, a TLD that goes in Ebero status must be fubar.
Or it could be a registry meltdown registerfly-style due to mismanagement or personal differences, or sabotage.

As I understand; responding to Brindle 123 about no customer support. The clause he refers to, it's just stating the EBRO service provider, in this case it was nominet, doesn't have to provide end user customer support during the EBERO status that is still the responsibility of the registrant.
Trouble is its 78 pages long and even I with a lot of time on my hands, recovering from a bike accident can't be bothered to try and wade through the jargon.
Just re read my other post and I can see I didnt make it clear because of the tardy terminology I used.

 

[brindle123]

I might read the EBRO if I get bored out of my skull or just to prove a point.

That part I quoted, just jumped out at me.

I don't think ICANN can "force" another registry to take on the failed tld can they? I think they offer it to them or ask them to take it on. Maybe someone on here knows for sure.

Just doesn't make any sense to me that they would take on something that has failed. Why would uniregistry take on .hiv. Maybe they are promised something in return from ICANN!

I don't think there will be tons of failures, but there has to be many more coming in the near future.

Some of the gtlds are pretty good actually. I think .online has about the most going for it. Unfortunately there are more bad gtlds than good ones.

 

[betthelot]

I don't think ICANN can "force" another registry to take on the failed tld can they? I think they offer it to them or ask them to take it on. Maybe someone on here knows for sure.

As I understand, I have to prefix everything I say about EBRO with that, The EBRO service provider is already set up and has been audited, so that in an emergency of a new gTLD going down for what ever reason. They are already set up to take over (ICANN pays them a yearly fee just to have it operationally ready even if its not being used) so that they can step in and provide both the backend support and the registry function within 48 hours, all transferred and in operation. They then run it for upto 3 years. For which they get paid directly by ICANN as per the terms of the agreement, its on a scaling rate depending on the number of names. This now gives ICANN 3 years to put the critical ill TLD out to tender for bidders.
What I was saying way back in this thread That 1. there will be failures, bankruptcy (which at the time was met with derision but now seems that the majority believes this will happen with a 1000 strings) 2. there is a possibility no one will bid for the string if it has less than 5,000 names registered, as its commercially uneconomical. But in ICANNs policy there is nothing about what happens in this instance. I think they never thought it could happen that no one bids for a failing string, We may for the first time have a generic string not ccTLD that the lights go out on.
You still awake Brindle didnt put you to sleep. I know us domainers have very short attention spans.

 

[garptrader]

How many nTLD enthusiasts remember HAlvarez? How about the Latona newsletter?

 

[betthelot]

How many nTLD enthusiasts remember HAlvarez? How about the Latona newsletter?

Sure snapnames paid me some money back because of Halvarez and Latona news letter he was a big seller of names in 2007 and 2008.
Good distinction between the enthusiasts and the realists.

 

[betthelot]

It does feel like deja vous with these new GLDs, lots of hope, lots of hype at the beginning then all fizzles out and a lot of hobbyist domainers leave the industry. Not good for the entire industry. Wish they would invest in names that are known to sell, just so speculative and domainers are at a handicap with the registry's premium pricing.

 

[SiteMachine]

But in ICANNs policy there is nothing about what happens in this instance. I think they never thought it could happen that no one bids for a failing string

I think the key here is something I'm not sure of and that is the reserve or starting prices of the auctions and why they are so high and who that money is going to. If the first auction is to be the only chance for the gtld to be auctioned then I would be surprised that ICANN allows reserves or high starting bids. The only 2 gtld auctions I know of were .reise and .hiv, .reise had a starting bid of $400k and was purchased by Donuts and .hiv had a reserve of 200k and didn't sell (idk if it got any bids or not) but then was picked up by uniregistry philanthropically. It doesn't make sense that they would enter the moonlight phase and shut down a tld just because someone wouldn't pay 200k to the company who chose a failing business model.

 

[betthelot]

ould enter the moonlight phase and shut down a tld just because someone wouldn't pay 200k to the company who chose a failing business model.

no they would not - not an exisiting gTLD - they know it would have to sell it at a heavy discount

 

[betthelot]

Mind + Machines new CEO moving away from selling direct to endusers, high profit margins to selling through registrants, higher sales but lower margins. And a focus on China, very low margins.
Speaks of .fishing .law by marketing to their associations and funneling the sales through the registrants.
Pure marketing guy, no experience in the domain industry, going for high turnover.

reminds me of the business proverb Turnover vanity Profit sanity
Not much profit in China but lots of turnover. I can only see this failing, putting so much of their strategy on China. Late in the game. Im going to keep a close eye on them as they are a prue new GTLD player
http://www.proactiveinvestors.co.uk...s-is-evolving-as-a-business-new-ceo-4727.html
http://www.proactiveinvestors.co.uk...s-is-evolving-as-a-business-new-ceo-4727.html

 

[HotKey]

@Kate I agree the DNS needs stability and shouldn't be a playground. But I guess someone figured it could handle it. I think many systems are designed to produce failures. It's how you flush out the bugs in new code..or how the winner is determined in a race..or how the tasty gets separated from the bland in a crop of new chef dishes..etc etc. In this case with the gTLD's it's no different.

The ones that do are going to fail because no one wanted the extension- it wasn't economical, it wasn't relevent, or it just plain sucked. Value is created by having something you or someone else desires. But if people choose not to register or renew domains simply because of it's feasibilty on a chart, than they may be selling themselves short of filling that value, and a great opportunity to boot.

For sure it's a confusing mess for the enduser right now. Thank goodness it's not them keeping the boat afloat atm. Everytime I talk to business owners about the new names, they always kind of do this head tilt thing and say "huh?". I find it mildly frustrating domainers seem to be the only ones out there raising public awareness on this.

Seriously, alls it would take is a few cool skits on the Ellen show, or Saturday Night Live or something, and viola! The masses are enlightened. Or at least informed. Certainly wouldn't want to see the new gTLD's end up as a piece on the History Channel, ten years down the road!

 

[betthelot]

If there is breakout public awareness for the new gTLDS maybe its for spam. Got a good chance as they hold the top 10 positions this month by percentage of names active. .Download what a way to go over 70% used for spam and even .faith is nearly 50%.
They say all publicity is good publicity, we may just see that proven wrong

https://www.spamhaus.org/statistics/tlds/

 

[Kate]

The IT magazines don't talk a lot about new extensions, but when they do it is in less than flattering terms:
Abuse runs rampant on new generic top level domains

Any publicity is good publicity right

 

[DomainGist]

Domianers have spent by far the most acquiring these names. We are holding up this whole ecosystem.

The biggest risk is that when one or two gTLD's simply fail as businesses.... that is going to have a huge knock on effect in terms of both domainer confidence in other gTLD's and in the confidence of end users to trust them enough to build their businesses on them. They've approved far too many, far too quickly, with not enough consideration of the effects of a chain reaction should one get some bad press. It reminds me a little bit of all the alt coin scams which emerged when Bitcoin first hit $1000.

It is perfectly possible that at some stage the sh*t could hit the fan and the whole lot could collapse like a chain of dominoes, with only a few perhaps surviving and thriving.

Its easy to hype up gTLD's as a great investment opportunity and its easy to spread doom and gloom about them, but anybody who is all in on gTLD's is taking a huge risk. I think they all need to be treated as a high risk speculative investment, which is precisely what they are.

 

[betthelot]

This quote sums it up from a SPAM expert with no invested interest
A few registrars knowingly sell high volumes of domains to professional spammers for profit, or do not do enough to stop or limit spammers' access to this endless supply of domains. These registrars end up basing their entire business model on network abuse.

The narrative is certainly changing, with Frank Shilling interview with DNW today where they talk of new gTLDs using words such as propaganda and Evangelists (preacher of beliefs, based on faith). Words are very powerful and when they become associated with a business, damn hard to shift and damaging, they become part of the brand that the business has no control over.
When we start to hear of fools gold and failing TLDs, the end of the hype is nigh.

 

[betthelot]

I think they all need to be treated as a high risk speculative investment, which is precisely what they are.

Exactly and I would maintain you can take a lower risk position with a higher return in other domain sectors. Opportunity costs is hardly spoken about when it comes to investing in new gTLDs but needs to be part of your domaining strategy. I own Pugs.co.uk that my daughter runs a website on. PugDomains.rocks

 

[DomainGist]

I own Pugs.co.uk that my daughter runs a website on. PugDomains.rocks

Sweet!

Pug.com sold last year for a great price, I was very jealous.

You don't own PugTube.com by any chance?

 

[betthelot]

Pug.com sold last year for a great price, I was very jealous.

You don't own PugTube.com by any chance?

I saw that Pug.com but I prefer the plural, great domain brand though. No not mine PugTube.com

 

[DomainGist]

I saw that Pug.com but I prefer the plural, great domain brand though. No not mine PugTube.com

Pug.com is perfect for a brand name, whereas the plural best for a site about Pugs.

 

[betthelot]

Pug.com is perfect for a brand name, whereas the plural best for a site about Pugs.

A man who knows his domains a rare creature round these parts.

 

[garptrader]

While I do not currently hold any new TLDs, I do not necessarily want to see a repeat of other failed strings from the past times 500. Registration volume is only one statistic. What drives cash flow for a domainer is not how many investor-held domains are registered but personal sales and renewal costs. Domainer to domainer sales provide some liquidity but the best ROI is always from that elusive end user. A rising tide lifts all boats. So even though I would not benefit directly from an explosion in end user demand for new TLDs, I believe if that were to occur, end users would also be buying domains in other extensions as well - .COM, .Net, .CO, .TV, .Info, etc.

I believe the biggest challenge we face as domain investors is getting end users to value domains as tools to promote their businesses. Generally speaking, the general public still views domains as an $XX cost needed for a website. If I go to the movie theater with my wife I expect to pay low $XX to see a movie, not $XXXX. Until end user mentality changes, I see no reason to invest in new TLDs and will continue to prune my portfolio even in .COM to focus on my best long-term holdings.

 

[betthelot]

Did you see Mike Berkins post today
Radix Has Record Month With Over 760K Domain Registrations

The VP of Radix saying
“While it’s nice to lead sales charts, our continued focus remains on cultivating high visibility uses cases and acquisition of quality end-users.”

Don’t you think there is a little hypocrisy here. Given that .online and .site by far their largest gTLDs by registration, are being sold for less than a dollar. How is that focusing on High Visibility usage and quality end-users.