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Dot Com vs. New gTLDs – Cognitive Dissonance?

Posted on 15 December 2013 by Andrei

Some of you probably know this but cognitive dissonance is basically the feeling of discomfort that occurs when you’re dealing with an inner conflict between contradictory beliefs.

What does this have to do with domaining?

Simple, here are two statements:

“Dot coms will continue to be #1″
“New gTLDs can be profitable for domainers”

Should these two statements bring us in cognitive dissonance territory?

Most domainers would probably say that yes, they should.

I don’t agree because in my opinion, these two statements are *not* contradictory.

First of all, there is no doubt in my mind that dot coms will continue to be #1. I said this on DomainingTips in the past as well: I’m convinced that even the people behind the new gTLD registries feel the same way.

So yes, dot coms will most likely continue to be #1 for as long as the Internet will exist in its current form.

But the thing is, I’m just as convinced that new gTLDs can be profitable for domainers.

Yes, for domainers.

Let me explain why and let me explain why the two statements are anything but contradictory.

Dot coms are basically the “safe haven” domain investments.

In other words, they are the least risky domain investments by far and deserve their safe haven status.

New gTLDs are considerably more risky but if you know what you’re doing, the rewards might just make everything worth it.

As an analogy, let me refer to the stock market.

Are you familiar with blue chip companies?

Basically, blue chip companies are considered the safest and most solid companies listed on the stock market. Realistically speaking, you can be reasonably confident that these companies aren’t going anywhere. Investment grade dot coms are the blue chip investments of the domain world.

Investing in new gTLDs, on the other hand, is kind of like investing in a new company. If you get it right, your returns can be huge but on the other hand, the risks are higher than with blue chip companies.

Therefore, I’d say it safe to conclude that the two statements I referred to at the beginning of this post (”Dot coms will continue to be #1″ and “New gTLDs can be profitable for domainers”) are anything but contradictory.

In fact, dot coms and new gTLDs complement each other in my opinion.

Based on your risk tolerance and goals, you can only you are responsible for calibrating your strategy.

That’s what it ultimately all boils down to.

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14 Comments For This Post

  1. Domenclature.com Says:

    I will not buy a single new gTLD. I’m prepared to miss the boat on them.

    However, I expect to see them sold in dozens for a dollar in a few months at forums. Even then. I won’t buy any.

  2. Jeff Schneider Says:

    R. E. = ” Investing in new gTLDs, on the other hand, is kind of like investing in a new company. If you get it right, your returns can be huge but on the other hand, the risks are higher than with blue chip companies. ”

    We have 40+ years investing Strategy experience and find your analogy above far off the mark. The gTLDs are far more resemblant of unlisted Pink Sheet Stocks, with NO Institutional Investor Backing. Institutional Investors are the main drivers of cash flows that drive Markets. An important nuance to understand is that Google.com and Amazon.com ARE NOT Institutional Investors they are REGISTRANTS of the gTLD Experiment !!!

    Although Amazon and Google may EXPERIMENT with the gTLD Derivatives ,like others , it is growing vertically, as Rick Schwartz has said, and they may just run sub-domains as a larger part of their marketing strategy. Sub-domains are a great vertical growth strategy for the proven .COM Franchise holders. The large proven .COM Franchise companies will use the gTLDs for .COM traffic aggrigating purposes, funneling traffic back to their .COM Franchise Profit Centers.

    Meanwhile many small business owners who are not well branded .COM Franchises will be fooled into adopting the gTLDs , and will be lost in cyberspace, by adopting the gTLD offerings over the wiser choice .COM Franchises, thereby cutting themselves off from the .COM Channels superior traffic velocity. This is Googles and Amazons grand design and it looks like there will be many unsuspecting takers of the gTLD industries offerings. The hook is being set and there will be many suckers taking the bait. We know one thing for certain Google.com, Amazon.com will always adopt marketing strategies to thwart new online business competitive startups, even if they have to swallow a bit of the gTLD Kool-Aid. JAS 12/14/13

    Gratefully, Jeff Schneider (Contact Group) (Metal Tiger)

  3. Andrei Says:

    @Domenclature.com and Jeff Schneider: a lot of domainers agree with you at this point but here on DomainingTips, I believe in also saying things that go against what most people think will happen.

    On the one hand, I made it clear time and time again that dot coms will remain #1.

    On the other hand though, I don’t think saying something along the lines of “all new gTLDs will fail, no exceptions” is the way to go.

    Jeff mentioned Rick Schwartz but even Rick did very well with a dot me domain, for example.

    Therefore, I think his attitude makes sense: even if he is a dot com guy, he is willing to take action whenever potentially lucrative non-dot-com opportunities arise.

    That’s precisely why I explained that the “all new gTLDs will fail, no exceptions” mindset is dangerous.

  4. Domenclature.com Says:

    @Andrei,

    Your blog is based on common sense, and rational thinking. plus a few Godaddy Coupon codes. None of those apply in the nGTLD.

    I have 6 secret barometer to measure the new gTLD program. I have revealed 3 on some blogs.

    But an obvious give away is:

    if .Travel, and .mobi is not flying off the shelves, and utilized by businesses, then the new TLD program is vanity and bullshit rolled up in one. Period. No other way to spin it. It’s not guess work, it’s science.

  5. Kassey Says:

    .com will remain the most expensive real estate in the virtual world, but new suburbs may provide opportunities as well.

  6. Andrei Says:

    @Domenclature.com: you hit the nail on the head, I always try to be brutally rational through my DomainingTips articles. What I want to point out is that in your case for example, when reading your comments, it’s clear to me that emotions seem to also be involved.

    That, in my opinion, is a mistake.

    Comparing new gTLDs with existing ones isn’t the best approach in my opinion, simply because once the new extensions go live, we won’t be talking about only a few alternatives. We will be talking about an avalanche of new options. Therefore, through the sheer volume of new gTLDs, the public awareness when it comes to new gTLDs in general will skyrocket.

    Right now, the combined gTLD registrations don’t come anywhere near to the number of dot com registrations. Not by a long shot.

    But let’s say 10 years from now, I’m convinced the combined new gTLD registrations will surpass dot com registrations.

    That’s the distinction I’d like to make because it invalidates your argument, the argument according to which new gTLDs will fail because the existing gTLDs didn’t gain traction.

    There are great arguments both in favor and against new gTLDs.

    On DomainingTips.com, I do my best to present all of them.

    But the one you referred to, the comparison between new gTLDs and existing gTLDs, isn’t valid for the simple reason that we are talking about an entirely different context.

  7. Kassey Says:

    In a blog dated Nov 30, 2007, Frank Schilling said only 5 to 10 millions of names could be called meaningful, powerful or generic. So I think these are the names that will continue to rise in value. But many long name dot com will be replaced by short, meaningful non .com, so as a result I see .com decreases in number but not in value. It is very possible non .com together will greatly exceed the number of .com.

  8. Domenclature.com Says:

    @Andrei,

    I hear you. I personally don’t like any thing devoid of emotion. That’s what differentiates human consciousness from say, a rock. Yes, I have emotions. Courage. Outrage. And a little luck.

    On the issue of “ten years”, even if I know new GTLDs will be successful n ten years, I will NOT get into them now.

    The entire internet is 25 years old. Since that genesis, there’s been many exodus! Who knows what human beings will be doing with internet, surf, and search ten years from now. If they still use typography, social media, and URL, I’ll be disappointed. I plan to dwell in Andromeda by then!

    Now, let’s use some logic. Do you envision Google, Amazon, Yahoo, AT&T, Verizon, Microsoft, Defense Contractors, Oracle, Sprint, Twitter, Facebook, Fortune 500 Comapanies etc etc abandoning, or even combining their dot coms and switching to right of the dot new gtlds in the next few years? If you do, go ahead and buy away the new GTLDs. Emotion or Not.

  9. Andrei Says:

    @Domenclature.com: I have emotions too, everyone has but letting them influence your way of thinking as an investor is a huge mistake in my opinion and I frequently articulate that opinion on DomainingTips.

    Let’s assume dot coms stop being desirable and that new gTLDs become all the rage. If that happens, I wouldn’t mind selling all of my dot coms (even if at a loss) in order to invest in new gTLDs.

    Let’s assume the exact opposite happens: that only dot coms will be desirable and that all new gTLDs will fail. In that case, I’ll buy more dot coms.

    If it’s something in between, I’ll calibrate my strategy based on whatever makes me more money.

    Time will tell what will happen.

    Whether new businesses will embrace new gTLDs or not.

    Whether or not any of the current huge websites will switch from a dot com to their own gTLD and if so, how many.

    Whether or not new gTLD domains will be liquid on the reseller market and if so, which of the new extensions will do well.

    I’ll just keep an open mind and follow the money, something I encourage all of you to do as well.

  10. Domenclature.com Says:

    @Andrei

    Excellent points, except when you “assume”. Like they say, when you assume, you make an “ass” out of “u” and “me”.

    I have never compared the new gTLD to .com. I have never used the number of dot com registrations as a measure of it’s strength. I actually don’t see it’s direct relevance. Sure, indirectly it matters.

    The nGTLD scheme has to be scrutinized on it’s merits and demerits. The entire idea lacks “need, want, and desire”(Schwartz).

    It is trying to solve a problem that does not exist.

    Remember, Businesses are rational actors. Thy calculate their in terms of relative gain. They are not about to do a paradigm shift based on this new release of internet names, for the sake of doing it. These names have to bring something to the table. They bring ZERO! Not even price break.

    Have you ever heard of “wag the dog”? Let me explain: these nGTLD hawkers are going to be looked upon by Businesses as nothing more than “domainers” playing Registries. These businesses ain’t about to trust their future, brand, et al on a bunch of “domainers” playing the role of registries. Most businesses are in love with their brands in the first place; they were dragged kicking and screaming to use the internet. A lot of them own super generic dot coms, yet they leave it fallow. They don’t use them. They use their brands. It’s a stretch that they will all of sudden adopt these things, with unstable, unproven Domainers as registries.

    The business that are internet savvy, are applying for their brands in closed strings.

    In the US, the businesses are the trend setters. Success breeds success.

    I’ve been watching TV everyday, both local and international to see any mention of the new GTLD program, Guess how many I’ve seen?

  11. Andrei Says:

    @Domenclature.com: at this point, nobody knows what will happen.

    Maybe businesses will love new gTLDs.

    Maybe businesses will hate new gTLDs.

    Maybe something in between, time will tell.

    Sure, we can speculate and share opinions about what we think will happen but while it’s an interesting thing to do, it shouldn’t be our main focus.

    In my opinion, our main focus should be figuring out what our attitude/strategy should be over the next months and/or years and as far as I’m concerned, following the money is the best approach.

    As mentioned during my previous comment:

    “Let’s assume dot coms stop being desirable and that new gTLDs become all the rage. If that happens, I wouldn’t mind selling all of my dot coms (even if at a loss) in order to invest in new gTLDs.

    Let’s assume the exact opposite happens: that only dot coms will be desirable and that all new gTLDs will fail. In that case, I’ll buy more dot coms.

    If it’s something in between, I’ll calibrate my strategy based on whatever makes me more money.”

    This is my strategy, this is the approach I consider appropriate at this point in time.

    I know a lot of people are 100% sure they know exactly what will happen. I, for one, don’t. I don’t believe in predictions, I don’t have a crystal ball and therefore prefer to simply follow the money.

    If however people choose to believe in predictions and even share theirs on DomainingTips, no problem. I respect all opinions and always love being exposed to a wide range of arguments.

  12. Domenclature.com Says:

    Thank you Andrei for an interesting debate. I like your blog, and I recommend. Have a great day!

  13. DomainLogos Says:

    Predictions.. bah humbug!

    If you believe in comparing domains to real estate then we would agree that money trades hands in almost every neighborhood.
    The new gTLD’s may represent some interesting opportunities and a quite a few desirable properties, but I would ‘predict’ mostly hopeful promise for new brand and store owners and plenty of fools gold for wishful domain investors. There is one thing we can predict with strong assurance …. markets rarely change overnight.. and domains are barely even a market yet.

    It’s hard to imagine some folks are so worried that dot com will suddenly lose all of its glitter with the coming of the new gTLD’s. For those hoping .com will finally bomb I say to them… uh, good luck with that. I know this.. the mansion on the cliffs of Santa Barbara is not going to be desired any less because there are some condos being built down in the valley (or are they apartments?) And also the new playground looks very similar to others that have been out there for some time like .me, .co, .info, .biz .. but the world is changing I know I know.. just not overnight right?

    Last note – I enjoy some of the true ‘domain guru’s’ out there, but I also love to ‘hate’ the self proclaimed fake ones which include a number of highly regarded brokers that live in a bubble. Domaining is serious business but it is also supposed to be FUN!

  14. Andrei Says:

    @DomainLogos: as a domainer, it will be your responsibility to make the right choices and sure, that will be a challenge when there are lots and lots of options competing for your attention. It will be anything but easy and that’s precisely why those who get it right will be rewarded handsomely :)

 
 
         
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