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Domainers and Registry Operators, A Short-Term Paradox?

Posted on 22 August 2014 by Andrei

The Dot Investments new gTLD has 877 registrations after the first day of General Availability and while that number is not exactly impressive, the registry did reasonably well financially. Why? Because a .investments domain costs about 2x – 3x more than most new gTLDs.

The cheapest price I found Dot Investments domains at was 80 bucks and in a lot of cases, we’re looking at a $100+ price tag.

As mentioned yesterday, I just don’t see enough upside for domainers at such registration/renewal fees and that leads me to today’s question: are we dealing with a short-term paradox when it comes to domainers and registry operators?

On the one hand, most new gTLDs are currently being bought by domainers. Let’s call this Observation #1.

On the other hand though, and Dot Investments is a good example, registration fees are so high that we can hardly call a lot of new gTLDs domainer-friendly. And let’s not even start talking about reserved domains, premium pricing and so on. Let’s call this Observation #2.

Both observations are, in my opinion, reasonably accurate.

You’d think that due to the situation described when referring to Observation #2, domainers would simply decide not to buy certain new gTLDs and therefore, as per the implications of Observation #1, the registry wouldn’t make money.

Yet as today’s numbers prove, the registry did ok with Dot Investments revenue-wise.

A short-term paradox?

I think so.

At this point, such situations can and do occur due to the fact that we’re still in the early stages of the new gTLD phenomenon. As time passes however, I doubt this situation will continue.

Domainers will gradually become more selective and extensions which aren’t domainer-friendly will be avoided by investors. In fact, I have a feeling we’ll see something similar to what happened with Dot TV. Initially, things like premium pricing structures and high renewal/registration fees will work ok-ish but in the future, I expect a lot of extensions to become considerably more domainer-friendly.

Again, just like what happened in Dot TV’s case after the March 2010 Verisign policy change, as a result of which a lot of domains which were previously considered premiums became available on a first come, first served basis.

For the time being however, analyzing the short-term new gTLD paradox we’re dealing with is quite fascinating. Regardless of how you feel about the new extensions, I’m 100% sure you’ll be learning a thing or two over the next few months/years.

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2 Comments For This Post

  1. Leonard Britt Says:

    For a real estate agency, a $69 annual renewal on a .Condos domain is going to be no big deal. Many new TLDs with premium renewals are going to be challenging investments as premium renewals make it difficult to hold a portfolio of them for perhaps a decade until an aftermarket emerges.

    Even if the new TLDs do gain traction over the next decade that doesn’t mean early investors in those TLDs will do well. There is practically no existing end user market at the moment and return on investment for a new TLD domain portfolio will be heavily influenced by renewal fees. Perhaps at some point in the future the registries may lower the renewals to new investors – which happened with .TV – early investors got stuck paying $250-$1000 annual renewals while newer entrants were able to pick up good keywords and pay $25-$35/year. The legacy investors were not happy campers about this policy.

  2. Johan Says:

    Waaaaaaaaay toooooooo looooooong of an extension! 3 = MAX!!!

 
 
         
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