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opinion WARNING: The ngTLD and ccTLD Fallacy and Trap

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Ategy

Arif M, NameCult.com TheDomainSocial.comTop Member
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Original article at: http://namecult.com/warning-the-ngtld-and-cctld-fallacy-and-trap/

I’m writing this as the .VC tld is about to try to get their domain extension on the .CO and .IO bandwagon with a deep discount sale. While these are technically ccTLDs (Country Code Top-Level Domains) and not actual ngTLDs (New Generic Top-Level Domains), they, along with others like .TV, .ME, .GG, .AI and the afore mentioned .CO and .IO. have been repurposed into more generic non-geo-specific domain extensions (although some have been repurposed into very narrow specific niches not much wider than their original geo-specific intent).

Over the last year or so we’re seeing an increased number of particularly .CO, .IO and .AI domains start to sell into the 5-figures. Some even high 5-figures. A couple of weeks ago a domainer sold two .VC domains within a day at about $5,000 each and created a fairly big buzz (the likely reason the .VC registry is trying to take advantage of the publicity by doing a big discount promotion).

Whether coincidence or exploitation, this fact the .VC registry is about to start a discounted sale on new registrations of their domains in turn leads me to write this very strong warning to all domain investors not just about .VC domains, but about most of these “repurposed” ccTLDs and even ngTLDs in general …

The big problem with these extensions is that when one of their domains do sell in the 4 and 5-figure range, it becomes big news. But deceptively does not make “the news”, is the fact that it’s almost only exclusively the very strongest one-word domains that sell at these levels and frequencies.

YES .. before anyone jumps in with some examples of rare exceptions, as with all things domain related, there are indeed are exceptions, and there will continue to be. More importantly, there are some TLDs that are stronger than others in certain categories. .CO for example is more of a broad ranging domain extension, and as such it appeals to a wider range of potential buyers, which in turn means that a wider range of domains have the potential to sell at relatively decent multiples. Including compound words and even the very best of two word domains (although very rarely in the 5-figures).

What is important to note however, is the unseen reality. Which is that the vast super majority of domains in these supposedly “hot” domain extensions actually do not sell, and very likely will never sell .. and even less likely to ever sell at a multiple that would make them a worthwhile investment to domain investors. In fact, the reality is that compared to .COM, these TLDs are NOT “hot” at all .. they are simply hotter than others, as most are simply uninvestable at just about any price.

What does increasingly sell at higher prices and higher frequencies, are the very top-tier one word domains of these “hotter” extensions. Not only are the domains selling the very best, but portion of the domain left-of-the-dot (SLD) also needs to be related to the TLD and/or a great generic brand name.

For example, the .GG extension is hot for video game related websites because “GG” is a term gamers often say to each other after playing each other to mean “Good Game”. So if you have a strong single word or very strong term related to gaming, that indeed would make for a good domain to invest in *IF* you get it at the right price.

The domainer fallacy, and big problem with these extensions, is that newer domain investors think the range and scope of sellable investment-grade domains is similar to that of .COM where hundreds of longer two and three word domains sell every day into the 4+ figures (GreenRoads.com and GreenStreet.com sold for $160,000 and $100,000 in the last year). Basically Adjective+Noun type combinations like AmazingTravel.com, GreenMountain.com and CarWashPros.com indeed can often be wise investments in .COM depending on the acquisition price.

The big warning to all potential domain investors, is that these type of multi-word domains do not sell in extensions other than .COM and ccTLDs that serve countries with strong economies and large populations (like .DE, .CO.UK, .CA., etc). There certainly are exceptions, but nowhere near enough to make multi-word Adjective + Noun domains a good investment in .GG, .AI, .IO and particularly not now with .VC.

Whether domains are investable or not really depends on their potential price-markup factored with their probability of sale, compared to the acquisition price paid by the investor. As the cost goes down, the potential sales multiple goes up. So when .XYZ ran their $0.01 promotion and even when .CO ran their $1 sale (before adding premium restrictions), it actually did make sense to slightly widen the range of potential domains to buy in those extensions. Although even then we saw domain investors buy domains that simply would never have any chance of selling at any price … otherwise known as burning your money.

Even within these niche “repurposed” TLDs, there is a wide range of optimal investment strategies. But as a basic general rule, it’s best to find single words or terms that match the purpose of the TLD itself. Meaning gaming related for .GG, tech related for .AI and .IO, media related for .TV, and finance related for .VC. VC stands for Venture Capital for the people and companies buying .VC domains at the highest prices, even if technically the .VC extension is the ccTLD for Saint Vincent and the Grenadines.

The best thing to do as a potential investor in these extensions is to check to see what previously sold. For example, in the last 5 years the only .IO in the top 50 highest reported sales that was not either a one-word domain or a two-letter acronym was CoinPay.io at $22,500. Otherwise it’s VERY strong single-word domains like Swipe.io, Lucky.io Tank.io, Jackpot.io, Matrix.io, Wiz.io, Home.io, Voice.io, Studio.io, Gate.io, etc

For .VC the only reported 5-figure sale in the last 5 years was VS.vc at $10,000 exactly. Then it drops to Bond.vc at $6120, and then a bunch in the $3000 to 5000 range like Basic.vc, Apollo.vc, Fuse.vs, 12.vc, Cash.vc, Launch.vc, OI.vc, Scale.vc, TM.vc, YY.vc.

The reality is that while most of these domains actually cost more than a .COM domain, they actually sell significantly less. Most importantly, the types of domains that do sell in these extensions are extremely limited in scope.

It’s best NOT to invest in anything not very short and not specific to the niche of the TLD. Most definitely do not acquire any random Adjective + Noun domains that would usually be a good investment in .COM. Same story for one-off brandable domains with deliberate misspells like removing a vowel or replacing an “S” with a “Z”.

I will end this by agreeing that there most certainly are exceptions to the guidelines I’ve mentioned. But until you’ve researched and learned what those likely and probable exceptions are, then avoid them at all costs. In fact, while I’ve singled out some of the more popular alternate domain extensions in this article, the same theory should be applied to just about ALL repurposed ccTLDs and ngTLDs … it’s the main reason why new domainers are warned to focus on .COM domains more than anything else when they start, because while even the vast majority of .COM domains acquired by domain investors are surprisingly actually bad investments (a warning for another day), domains outside of .COM are far worse.

So buyer beware of promotional sales of various TLDs .. at the end of the day, if a domain is virtually unsellable, then you should never invest in it regardless of price!


NOTE: Domain Data for this article was obtained from NameBio.com

Original article at: http://namecult.com/warning-the-ngtld-and-cctld-fallacy-and-trap/
 
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The views expressed on this page by users and staff are their own, not those of NamePros.
@Ategy I 100% agree

In short:

download (2).jpeg
 
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your concern has been noted...
 
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I just wanted to add that despite what I said above, I picked up a couple .VC to test the waters. Of course mst of the best were taken (some a month or so ago) but I'm trying to keep an open mind. May we all increase our investment by 100 fold!
 
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While .COM has more aftermarket sales than any other individual extension, if a specific end user for some reason is willing to pay a premium price for a domain in an alternative extension held by an investor, that investor could benefit if they don't get greedy.
 
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Don't waste your money on new ideas, stick to what is already proven to work.

and

Don't miss out on a new opportunity to get a few good domains as long as the risk to reward ratios are in your advantage!

The thing is both of these statements are true at the same time. You just have to learn the ropes and even then have enough discipline not to get yourself in a situation that can put a drain on you financially or emotionally.

Disclaimer: I don't own any .VC domains.

IMO
 
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Thank you @Ategy

and you are right when you said this " it’s the main reason why new domainers are warned to focus on .COM domains more than anything else"

a timely article to help investors understanding such extensions.
 
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My thoughts on why I'm passing on .VC, and please correct me if I'm wrong:
1) There aren't that many VC companies in the world
2) Most of the existing VC companies already have a .com
3) Companies won't prefer to switch over from .com to .VC
4) There won't be a rapid growth in new VC companies
5) In one or two years, most of these domains will be dropped
Regarding ngTLD:
1) Yes, companies can raise prices independently of ICANN
2) 3x+ renewal fees make investment unsustainable without high turnover or moonshot sales
3) I'd rather buy .com and get 3x the domains or get 3x the years for the same price
4) The ngTLD I haven't dropped I mostly keep for potential personal use / brand protection​
 
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Its pretty pathetic IMO... how are you going to represent another country with their a CCtld if you're a USA company or a different country company...
 
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Newbie domain investors have a tendency to migrate toward alternative extensions because it is easier and less expensive to acquire decent keywords in those extensions. However, with any business two critical factors cannot be overlooked - revenue and expense. Alternative extension domains are more difficult to sell because potential users could choose one of dozens of other extensions rather than pay a premium price for your domain. As well, renewals in alternative extensions are oftentimes higher so the breakeven sales ration becomes more challenging.
 
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What kind of offices do VC Companies have?

What kind of cars do they drive?

What kind of suits do they wear?

What kind of salaries?

What kind of domains do they want?
 
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What kind of offices do VC Companies have?

What kind of cars do they drive?

What kind of suits do they wear?

The capital of Saint Vincent and the Grenadines is Kingstown, Saint Vincent. The main island of Saint Vincent measures 26 km (16 mi) long, 15 km (9.3 mi) in width and 344 km2 (133 sq mi) in area

:

kingstown-capital-saint-vincent.webp
 
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Ask any financial advisor or investment guru and they will all tell you "Past performance is not necessarily an indication of future returns"...simple put things change over time. I don't know about vc particularly, but personally I do see both co and io as good purchase opportunities. The fact is that even though they aren't selling today for great prices if you are willing to play the long game I believe there is an opportunity. The problem is it is harder to have the strong hands to hold onto one of these for the next 10-20 years when you are paying $25-$35 per year for each name. But com used to be in that position, costing $35 per year with people saying those early investors were crazy but they held on and cashed out big.

I think co and io have that potential, and the internet grows more and more good com's are taken and either unavailable to buy or very highly priced. As a result I believe it will create an opening for a strong alt tld that can be had for xx,xxx to low xxx,xxx where the .com would go for mid-high xxx,xxx or more. So yes those strong one word domains are the best option. Now there is a risk, well lets face it there always is in investing. There is a risk a strong alt tld will not come out, or if it does it may not be co or io, though IMO those are the front runners today. But with great risk comes great reward if you are right. If you can pickup a good 1 word name today in 10, 15, 20 years from now it may prove to be as valuable as its .com counterpart is today (or maybe not, maybe more so, maybe less) there is no real way to know, I wouldn't want all or even a sizable part of my portfolio to be in it, but I feel part of any portfolio (in anything: stocks, real estate, domains, ect) should be speculative, high risk but high reward. co and io are good choices for that part of a portfolio IMO.

Also, I think there is also an option today (if you can get a good promo) for a 1 year turn and burn approach in the xxx for a decent name in these tld's, but really imo the best opportunity is the riskier hold the best names you get get and wait...but only time will tell if that will pay off or not.

Disclaimer...blah blah legal stuff, I am not a financial advisor and this is not financial or investment advice. Whatever you do is at your own risk.
 
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.co = a wholly owned subsidiary of Neustar (open road*)
.vc = backed by Afilias (Registry operator) / (ex Tucows) (both tried/trying to do something... w .vc)
.io = backed by ICB UK (Registry operator) / Dispacher - Registrar powered by 101Domains Ireland (open road*)

(*) ccTLD Gov < contract / deal > Registry operator / Dispacher

Regards
 
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The capital of Saint Vincent and the Grenadines is Kingstown, Saint Vincent. The main island of Saint Vincent measures 26 km (16 mi) long, 15 km (9.3 mi) in width and 344 km2 (133 sq mi) in area

Show attachment 164478

Not really my point but great info all the same.

I mean the avg VC Firm will want the best, even domains and that means money no object .coms.
 
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Thanks for the post, although I certainly hope everyone who purchased a .vc sells to an end user, the one lesson I am learning is “carrying cost” and a stronger appreciation for the power of data.
My best example is .us, which has a low renewal, but (speaking from experience) when you register hundreds at a low rate, around the same time, they all come up for renewal at the same time. Despite some minor success in that market selling “towel” for $1400, “broom” at $500 and many other in the $x to $xxx range, the reality is I could have just bought towel, broom and other 1 word key terms, though the 2 words may have had great search volume & cpc, I have way too many and the opportunity cost of spending that money on a hundred good 2 word US versus a few quality .coms is high. That being said, I am still a sucker for first year deals but those actions I consider speculation versus investment.
I considered .vc as the low first year rate was tempting, but have really started to focus on the opportunity cost, the reality of carrying costs, and the desires of the market. I decided to abstain and proud of myself for thinking it through...
 
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So riddle-me-this...

If the VC's themselves overwhelmingly recommend to their startup clients that they acquire dot-coms for their new businesses, why in the heck would they want to use a dot-VC for their own ventures?

(Sadly, IMHO, the .VC extension appears to be another cynical attempt to "milk the noobs" for their hard-earned dollars - I hope the VC investors prove me wrong, but past history tells me I'm probably not...:xf.wink:)

Why .Com is the Venture Capital Community’s Power Player

We analyzed 1587 funded startups and their domain name choices — here is what we have learned
 
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Original article at: http://namecult.com/warning-the-ngtld-and-cctld-fallacy-and-trap/

I’m writing this as the .VC tld is about to try to get their domain extension on the .CO and .IO bandwagon with a deep discount sale. While these are technically ccTLDs (Country Code Top-Level Domains) and not actual ngTLDs (New Generic Top-Level Domains), they, along with others like .TV, .ME, .GG, .AI and the afore mentioned .CO and .IO. have been repurposed into more generic non-geo-specific domain extensions (although some have been repurposed into very narrow specific niches not much wider than their original geo-specific intent).

Over the last year or so we’re seeing an increased number of particularly .CO, .IO and .AI domains start to sell into the 5-figures. Some even high 5-figures. A couple of weeks ago a domainer sold two .VC domains within a day at about $5,000 each and created a fairly big buzz (the likely reason the .VC registry is trying to take advantage of the publicity by doing a big discount promotion).

Whether coincidence or exploitation, this fact the .VC registry is about to start a discounted sale on new registrations of their domains in turn leads me to write this very strong warning to all domain investors not just about .VC domains, but about most of these “repurposed” ccTLDs and even ngTLDs in general …

The big problem with these extensions is that when one of their domains do sell in the 4 and 5-figure range, it becomes big news. But deceptively does not make “the news”, is the fact that it’s almost only exclusively the very strongest one-word domains that sell at these levels and frequencies.

YES .. before anyone jumps in with some examples of rare exceptions, as with all things domain related, there are indeed are exceptions, and there will continue to be. More importantly, there are some TLDs that are stronger than others in certain categories. .CO for example is more of a broad ranging domain extension, and as such it appeals to a wider range of potential buyers, which in turn means that a wider range of domains have the potential to sell at relatively decent multiples. Including compound words and even the very best of two word domains (although very rarely in the 5-figures).

What is important to note however, is the unseen reality. Which is that the vast super majority of domains in these supposedly “hot” domain extensions actually do not sell, and very likely will never sell .. and even less likely to ever sell at a multiple that would make them a worthwhile investment to domain investors. In fact, the reality is that compared to .COM, these TLDs are NOT “hot” at all .. they are simply hotter than others, as most are simply uninvestable at just about any price.

What does increasingly sell at higher prices and higher frequencies, are the very top-tier one word domains of these “hotter” extensions. Not only are the domains selling the very best, but portion of the domain left-of-the-dot (SLD) also needs to be related to the TLD and/or a great generic brand name.

For example, the .GG extension is hot for video game related websites because “GG” is a term gamers often say to each other after playing each other to mean “Good Game”. So if you have a strong single word or very strong term related to gaming, that indeed would make for a good domain to invest in *IF* you get it at the right price.

The domainer fallacy, and big problem with these extensions, is that newer domain investors think the range and scope of sellable investment-grade domains is similar to that of .COM where hundreds of longer two and three word domains sell every day into the 4+ figures (GreenRoads.com and GreenStreet.com sold for $160,000 and $100,000 in the last year). Basically Adjective+Noun type combinations like AmazingTravel.com, GreenMountain.com and CarWashPros.com indeed can often be wise investments in .COM depending on the acquisition price.

The big warning to all potential domain investors, is that these type of multi-word domains do not sell in extensions other than .COM and ccTLDs that serve countries with strong economies and large populations (like .DE, .CO.UK, .CA., etc). There certainly are exceptions, but nowhere near enough to make multi-word Adjective + Noun domains a good investment in .GG, .AI, .IO and particularly not now with .VC.

Whether domains are investable or not really depends on their potential price-markup factored with their probability of sale, compared to the acquisition price paid by the investor. As the cost goes down, the potential sales multiple goes up. So when .XYZ ran their $0.01 promotion and even when .CO ran their $1 sale (before adding premium restrictions), it actually did make sense to slightly widen the range of potential domains to buy in those extensions. Although even then we saw domain investors buy domains that simply would never have any chance of selling at any price … otherwise known as burning your money.

Even within these niche “repurposed” TLDs, there is a wide range of optimal investment strategies. But as a basic general rule, it’s best to find single words or terms that match the purpose of the TLD itself. Meaning gaming related for .GG, tech related for .AI and .IO, media related for .TV, and finance related for .VC. VC stands for Venture Capital for the people and companies buying .VC domains at the highest prices, even if technically the .VC extension is the ccTLD for Saint Vincent and the Grenadines.

The best thing to do as a potential investor in these extensions is to check to see what previously sold. For example, in the last 5 years the only .IO in the top 50 highest reported sales that was not either a one-word domain or a two-letter acronym was CoinPay.io at $22,500. Otherwise it’s VERY strong single-word domains like Swipe.io, Lucky.io Tank.io, Jackpot.io, Matrix.io, Wiz.io, Home.io, Voice.io, Studio.io, Gate.io, etc

For .VC the only reported 5-figure sale in the last 5 years was VS.vc at $10,000 exactly. Then it drops to Bond.vc at $6120, and then a bunch in the $3000 to 5000 range like Basic.vc, Apollo.vc, Fuse.vs, 12.vc, Cash.vc, Launch.vc, OI.vc, Scale.vc, TM.vc, YY.vc.

The reality is that while most of these domains actually cost more than a .COM domain, they actually sell significantly less. Most importantly, the types of domains that do sell in these extensions are extremely limited in scope.

It’s best NOT to invest in anything not very short and not specific to the niche of the TLD. Most definitely do not acquire any random Adjective + Noun domains that would usually be a good investment in .COM. Same story for one-off brandable domains with deliberate misspells like removing a vowel or replacing an “S” with a “Z”.

I will end this by agreeing that there most certainly are exceptions to the guidelines I’ve mentioned. But until you’ve researched and learned what those likely and probable exceptions are, then avoid them at all costs. In fact, while I’ve singled out some of the more popular alternate domain extensions in this article, the same theory should be applied to just about ALL repurposed ccTLDs and ngTLDs … it’s the main reason why new domainers are warned to focus on .COM domains more than anything else when they start, because while even the vast majority of .COM domains acquired by domain investors are surprisingly actually bad investments (a warning for another day), domains outside of .COM are far worse.

So buyer beware of promotional sales of various TLDs .. at the end of the day, if a domain is virtually unsellable, then you should never invest in it regardless of price!


NOTE: Domain Data for this article was obtained from NameBio.com

Original article at: http://namecult.com/warning-the-ngtld-and-cctld-fallacy-and-trap/

I think it's a good move and it makes sense for .Vc to be repurposed and marketed to venture funds and venture capitalists.With the exploding rise and demand for vc firms, i'm sure short/dictionary word .vc domains would be considered a better alternative by firms, that don't own the exact match .com, either because of their unavailability or for being too expensive.

The additional upside to ccTLDs like .vc and .ai are, they're self-explanatory in the business sense, as opposed to .co or .io.
I am quite optimistic about my domain 'Idea dot vc', since it's one of those instances where the keyword and extension get along perfectly.
 
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What if somebody wants to build another "chinese 4L bubble", but with .vc and more globally? He will cashout at some point of time. But, it will still be a bubble without any real endusers involved.
If so, current .vc registrants might need to find correct time to liquidate their purchases... Just imho.
 
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