Worthless gTLDs and Extortion

[tomcarl]

This is all just my opinion. Wondering if I was the only one who felt this way...

The more ridiculous the extension the more I'm starting to feel as some of these extensions are simply coming out for the purpose of extorting defensive registrations from those who have brands that already end with the word in the TLD. There is no real demand or practical use for certain TLDs except to create a hack and a hack on brands that are already trademarked and/or already being used.

Letting just anything, just any word become a gTLD and not requesting feedback from the public like they do with zoning laws on brick and mortar stores was highly irresponsible and I'm predicting we're going to see a TON of backlash in the years to come once businesses and trademark holders really catch on and trademark holders get tired of this whole defensive-reg/udrp charade. We're already seeing problems slowly unfold now with the Bloomberg situation, how much has gTLDs cost them so far between UDRPS, disruptions to their business and defensive registrations? What does this mean to the smaller business that can't afford to play this game?

Some extensions are worthwhile, they have a purpose, an underlying value to those who register them because they represent categories (app, tv, photos, etc) Then there's some that have no true value or purpose except to make a mockery out of the entire gTLD concept and put out a HACK on popular brands and trademarks.

When a new gTLD is created don't you think it's taken into consideration how many .COMs, etc are registered that end with that word? Example .dog, I just seen this one is coming out, seriously.... What is the purpose to put this on the internet? Except that there are already tens of thousands of .COM domains (or brands) that end with 'Dog". Thousands of established businesses and trademarks, HungryDog, GameDog, WorkingDog, etc. Now it's either PAY UP to acquire your Hungry.DOG, Game.Dog, etc or risk someone else operating on a confusing version of the name you been using for years and possibly disrupt your business. And the same applies to the next one, and the next one, and the next one?

For example, I acquired a great KeywordHoldings.com domain, I had to pay and will have to continue to pay mid $xx on a defensive reg .holdings and I didn't want to, I have no interest in it, I don't want a .holdings domain but I feel forced, I can imagine how other brand owners feel when the renewal is $xxx - $xxxx, and to say this isn't a part of the strategy today with many of these new gTLDs coming out would be ignorant. When you see some of these ridiculous extensions coming out that have no practical use or represent something meaningful, think about the hacks they make and how many trademarks brands are already operating on the phrase because I believe the owners of that gTLD thought about it already.

I think that's why it's more important than ever to secure and operate your .COMs, at the end of the day the traffic to your website will never leak to your hack counterpart, but that is something the hack will always have to worry about.

 

[Kate]

The more ridiculous the extension the more I'm starting to feel as some of these extensions are simply coming out for the purpose of extorting defensive registrations from those who have brands that already end with the word in the TLD.

This is the truth. I think this is part of the business plan of registries.
Some registries like .sucks are even taking extortion to a new level. And getting away with it.
Icann too know what they are doing. This is a deliberate plan.

The issue of defensive registrations is downright vicious and affects any party who would set up an online presence on a new extension.
Here are some examples delegated strings:

• PICTURES
• PICS
• PHOTO
• PHOTOS
• PHOTOGRAPHY

Obviously, some are redundant, while others are confusingly similar.
If you have a .PHOTO but don't own the matching PHOTOS you may be in trouble because of the potential confusion. Your competitor's site could resolve to a very similar URL.
Of course, Icann may very well approve more similar strings in the future, and continue to stab you in the back, and there is nothing you can do. Oh wait you can. Just stay away.

So I firmly believe it's not the .com holders who are at risk in this game.

... I'm predicting we're going to see a TON of backlash in the years to come once businesses and trademark holders really catch on and trademark holders get tired of this whole defensive-reg/udrp charade.

The proliferation of new extensions means you have to be even more proactive. As I said, the abundance of strings provides more opportunities for scammers to mimic known URLs for phishing purposes.
So the new extensions create new dangers but do nothing to alleviate the issues that they create. Of course, there is the TMCH but...

This is all just my opinion. Wondering if I was the only one who felt this way...

You are not alone

BTW if you are subscribed to UDRP decisions, you can see for yourself that new extensions are featured quite often. I would say the number of case is disproportionate in view of their low registrations numbers. Surprising isn't it ?

 

[Name Trader]

@tomcarl - I guess it will be all smiles when you sell your Holdings domain. In the meantime, your holding costs have increased.

Actually the reverse has happened to me. I regged a new gTLD, and decided I needed the .com as well

I kinda agree and disagree with your extortion comments. But generally the New gTLD's aren't doing anything more than the .net/.org have done for years, only in a more targeted way. However, I'm absolutely sure that there is more than 1 company named "Keyword Holdings" in the world and the new element of choice offered by these New gTLD's is refreshing. No longer do they have to pay gobs of money for an overpriced .com in order to get a useable (some would say inferior) New gTLD. But they generally pay higher renewal costs, which can be written off as expenses.

If you were serious, you'd get both. Which it seems you have done

 

[RogueWriter]

The introduction of variety on generic keyword domains is a good thing for businesses at large, imo, but not necessarily a good thing for dot com investors in the short run. I would be willing to bet, though, that in the long run, the successful companies that get established on a new tld and become profitable will revisit the idea of purchasing the .com as a defensive registration, once their cash flow is large enough that it won't affect their business significantly.

 

[ealfert]

if you are subscribed to UDRP decisions, you can see for yourself

Hi Kate,

Which website do you use to get notified automatically when new UDRP decisions are reached?

Thanks.

 

[asset.domains]

domains are like diamonds, there are big diamonds, there are small, there are very rare, sometimes there are no more diamonds and the mine will close , people will go search in another mine..

 

[Kate]

Which website do you use to get notified automatically when new UDRP decisions are reached?

https://www3.wipo.int/newsletters/en/#domain_names

domains are like diamonds, there are big diamonds, there are small, there are very rare, sometimes there are no more diamonds and the mine will close , people will go search in another mine..

But all they get is coal, that they mistake for diamonds

 

[ChubbyDfat]

I would agree with the idea that these new extensions are being used as a way to bilk money from the system but I see a major flaw with that idea.

It costs no less then 200k to bring a new TLD online and that is assuming that it is uncontested.
Now we also have to consider the overhead to keep the TLD going??? I have no idea what would actually go into that but I am going to assume it is not free.

If the average price per nTLD is around $20, that tells me that you would need a minimum of 10,000 domain names sold just to make it a wash.
I know that number is incorrect because the registrar takes a cut on the names they sell, but lets just keep it simple here.

So 10,000 names sold just to make it wash... and looking at the nTLDstats.com.... only the top 119 extensions actually meet the criteria of having over 10,000 domain names sold and that is out of roughly 400 extensions.
So 1 in 4 extensions will be a wash with even less making a profit at this stage.

Personally... if I was a person looking for a "GET RICH" scheme, I think I would pass on this one.
Very little of the premium domains names sell at premium prices and we are only seeing those that do sell in the upper tier extensions (i.e. CLUB, maybe XYZ).

The other sales are mostly aftermarket (i.e. domainer sales).

The numbers do not support the idea that its a money grab. I would hazard to bet that most of them are will be in the red for some time to come.

Just my thoughts.

Cheers

 

[Kate]

Hi,

What you say makes a lot of sense. My own posts on the issue may even look contradictory, because I have predicted that many registries would not be profitable. But they are nonetheless in the game for profit. So I think there is a huge gap between their expectations and the reality.

If you look at the business plans submitted to icann by registries such as .pro or .tel, you'll see predictions that are zany. They anticipated huge adoption rates, millions of regs in the first years of operations etc.
In the end the registries have all failed to even meet their most pessimistic targets. Mind you, they have all failed miserably, in conditions of limited competition. What's going to happen now with hundreds and soon thousands of strings ?

In fact, we should not assume that the people running registries always know what they are doing. Some are just playing with investors' money. Some people may be smart, but they don't necessarily have a lot more insight than we do...
IMHO.

 

[asset.domains]

running a registry is not too complicated, it's like running a forum website, of course you need more support, but compared to hosting companies, there are less work , if they have invested money , they have a plan, or sorte of plan...

 

[ChubbyDfat]

Hi,

What you say makes a lot of sense. My own posts on the issue may even look contradictory, because I have predicted that many registries would not be profitable. But they are nonetheless in the game for profit. So I think there is a huge gap between their expectations and the reality.

If you look at the business plans submitted to icann by registries such as .pro or .tel, you'll see predictions that are zany. They anticipated huge adoption rates, millions of regs in the first years of operations etc.
In the end the registries have all failed to even meet their most pessimistic targets. Mind you, they have all failed miserably, in conditions of limited competition. What's going to happen now with hundreds and soon thousands of strings ?

In fact, we should not assume that the people running registries always know what they are doing. Some are just playing with investors' money. Some people may be smart, but they don't necessarily have a lot more insight than we do...
IMHO.

It is always easier to play with other peoples money (at least until those people demand the repayment).
I truly believe that ICANN is probably the only ones making any real $$$ here.

Regardless of business "PLANS", the numbers do not support gross exchange of money here (with the exception of the top several domain extensions but even XYZ is iffy in that regard because of the number of free and cheap domains that are out there).

Lets really break this down.
For the original complaint (from the OP), (s)he was claiming that:
"extorting defensive registrations"
On face value, it sound about right and one could make an argument for it however, I do not recall any premium price being added to the sunrise names. Where you register the domain names may add a fee of some sort for the sunrise period but all in all the numbers that sell during that period are few (I would guess around a few hundred given the numbers that are presented from nTLDstats).

Lets just stick with the simple math. $200,000 to start an uncontested domain name (at a minimum).
If you want it to go anywhere, you have to add in overhead.
Servers of some sort (I would imagine) and the energy cost to run them on a monthly basis.
At least one technical savvy person to run the show and interact with the registrars. (monthly salary there).
Probably more then one person... but this is all guessing!
PR and advertising to get the word out (I am sure that can add up quickly).
Phone lines, communications, web services/web site building, SEO maybe???

All of these can be added on top of the original $200,000 it takes just to start the domain name.

Now reality sets in. $20 is a guess as to the average cost of the nTLDs that are out there. It sounds about right to me from my point of view and it makes the math easy.
As I said before... At $20, you must sell (not give away or discount) 10,000 domain names and this is ONLY to make the initial $200,000 a wash. This does not take into account the overhead that is listed above.
This also does not take into account the cut that registrars take when they sell a domain (I have no idea what their cut is... but I assume there has to be one).

At the end of the day, I would hazard to guess that many of these domain extensions are not profitable yet.
The only way we will know for sure is to look at their books but as of right now... no one is willing to show that information.

All companies (by definition) have to be out for profit. As we know only about 90% of companies make the first 5 years. Out of the 10% remaining, only about 90% of those make it to the next 5 years.
I am going to assume that most of these companies (in time) will probably be bought out before they fold under.

Business people (by in large) are not very smart. Only a few select companies stand the test of time and many of them go on to become well known companies. Those who run those companies are the exception and not the rule.
Just look around, think about how many mom and pop companies are around after 5 or 10 years. Not many and most of the companies that are around have become big time companies.

I would hazard to say that almost all of these extension owners suffer from delusions of grandeur and some may even employ out of the box marketing but all of that will be settled in the wash.

I dont think these companies are out to fleece anyone. No one holds a gun to our heads to make us or the other companies purchase these domains.
Most of us domainers are speculators and we place our bets on domains in the hopes to make $$$ in the future. No one forces us to do this.
Companies may chose to protect their brand or they may chose not to. Its up to them and whether or not they are willing to take chances.

Just remember our perspective here. Most of us are domainers and by the same virtue are speculators. Gamblers if you will. Some will succeed in making profit, some will fail, and some will be somewhere in between. Hopefully everyone will learn a lesson or two in the process.

Just my thoughts.
Cheers.

 

[asset.domains]

the same is for startups, only 15 % will go gold, but people are still investing in startups, it's a trend, if we backward retranslate all this , that mens startuping idea is bad ?

 

[ChubbyDfat]

People invest (speculate/gamble) in business in the hopes to one day find that "Microsoft" moment.
Others (like Angels or VC) will only invest in known business models that have a high percentage outcome OR take a huge stake (%) of the company for their speculation.
Lastly, most startups are funded through "BANK" roll. That just means that they are personally on the hook or have some sort of collateral in the balance. Short of that, they have one hell of a business plan that will sway a bank to give them the funds.

In the end, to bring this full circle to the topic of the post. I do not believe that these extensions are out to rob us blind. I think if we look at the numbers, a majority of them are not profitable at the moment.
They may turn a profit in the future but right now.... I do not see how the numbers work out that they are making piles of $$$ off of us.

A very very very small number of high priced domains have sold. They normally make the news.
Very few domains with premium prices sell... we know this because they are still for sale.
The numbers just are not there to say that these companies are robbing us blind.

As domainers we may be spending too much for unproven domain extensions. That would be our fault and not theirs.

This is just my opinion.

Cheers

 

[Kate]

...I do not believe that these extensions are out to rob us blind. I think if we look at the numbers, a majority of them are not profitable at the moment.

I still think there is at least one TLD that is based on extortion: that is .sucks. Obviously, nobody forces you to buy your company name in .sucks, but there is always a veiled threat that by doing nothing you leave yourself open to cybersquatting. It is a form of blackmail because they know that the large companies always register a lot of defensive domains, and thus they expect a steady revenue flow from their scare tactics. I think it is dirty money.

The other issue I raised earlier is when you have overlapping/competing strings: a good example is .PHOTO. If you made the 'mistake' of buying one for development you later find out that you 'should' also register .PHOTOS and maybe .PHOTOGRAPHY to cover yourself against the risk of confusion. And who knows what else icann in their infinite wisdom may release in the future. For example variants in foreign languages.

The whole idea behind the new extensions program is to artificially increase the number of registered domains regardless of actual needs. What we have speculation of course, but also a lot of defensive and otherwise unwanted registrations, not to mention the increased risks of TM issues and phishing.

I think this so-called gTLD program is a big joke, at the expense of the registrants and the TM holders. I expect a lot of litigation in this industry.

 

[ChubbyDfat]

I still think there is at least one TLD that is based on extortion: that is .sucks. Obviously, nobody forces you to buy your company name in .sucks, but there is always a veiled threat that by doing nothing you leave yourself open to cybersquatting. It is a form of blackmail because they know that the large companies always register a lot of defensive domains, and thus they expect a steady revenue flow from their scare tactics. I think it is dirty money.

The other issue I raised earlier is when you have overlapping/competing strings: a good example is .PHOTO. If you made the 'mistake' of buying one for development you later find out that you 'should' also register .PHOTOS and maybe .PHOTOGRAPHY to cover yourself against the risk of confusion. And who knows what else icann in their infinite wisdom may release in the future. For example variants in foreign languages.

The whole idea behind the new extensions program is to artificially increase the number of registered domains regardless of actual needs. What we have speculation of course, but also a lot of defensive and otherwise unwanted registrations, not to mention the increased risks of TM issues and phishing.

I think this so-called gTLD program is a big joke, at the expense of the registrants and the TM holders. I expect a lot of litigation in this industry.

You have a good argument with .sucks. Let's really look at cybersquatting and what it is.

For someone to cybersquat, they need to have a trademarked name and attempt to profit from that name with a similar setup, surroundings, keywords, or direction as the original company as to cause confusion.

I am not sure you can accomplish that task with .sucks.
In the of simplicity, let's use Google.
Google(dot)sucks
Cybersquatting...maybe... on face value it seems more like an anti Google website. I am not sure how confusing one could make Google sucks, with the Google site, enough so to be confusing and make a profit.

I am trying to make the point that the extension is more an anti business extension then a cybersquatting extension. They also only have about 6,500 domains sold.... not many at all.

If it's anti business that you are worried then you have a whole world of problems and that is just in the king extension .com.
For example:
Googlesucks(dot)com
Googlelicksdogballs
Googlesleepswithgoats
This list can go on for days.

Cybersquatting,probably... 1st amendment rights (at least here in the states, maybe)... it would all need to come out in the wash.

I would say that .sucks would be considered an anti business/anti brand extension BUT is no more dangerous to a business then .com, .net, .co, etc...

Too much to type right now on this tablet so I will end this here.

Just my thoughts

Cheers

 

[Name Trader]

The majority of my New GTLD's purchases have been defensive .com registrations, but there have been few which I couldn't buy in the .com. Which for me, is the esscense of any New GTLD registration. I do however agree with most of the points @Kate makes when she is posting about the New GTLD's. I'm not a big supporter of New GTLD's, but they do have a small place in my portfolio. Less than 0.1%.

 

[Traveler]

nvm