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New gTLD Scarcity Perspectives

Posted on 25 July 2014 by Andrei

I asked you guys how many end user offers you’ve received for your new gTLDs thus far yesterday and Frank Schilling posted an interesting comment:

“This is a lot like that time in the early to mid 1990’s when many good names were gone but the com zone file was quite small. You would approach sellers and ask for a price. They would quote you a very high number, and you’d scurry to the available-pool instead to register something at cost. It will take a few years to sort all this out and for good, available names to be stripped away. It happens every day. Then suddenly the good premiums in new-g’s will start to sell more regularly. It’s hard for a vibrant secondary market to exist when so many good names remain unregistered in the available pool. That said we’re still seeing offers on premiums each day and with each passing day less good stuff remains unregistered.”

On the one hand, I have to agree that this makes sense: a lot of new gTLDs (not the best of the best by any means but good nonetheless) are still available at the registration fee and therefore, a lot of end users can simply hand register a decent one.

But once/if the good/decent ones will be taken, will we deal with a new gTLD scarcity phenomenon?

This is where I no longer agree with Frank, for one simple reason: all of the new gTLDs that have been launched and will be launched in the near or relatively near future are part of the first round of new gTLD launches.

In my opinion, this is only the beginning.

In fact, I expect the process of launching a new gTLD to gradually become easier as well as considerably cheaper.

Let’s say we’ll have 500-1000 new gTLDs after the first round is over (I’m excluding the dot brands).

If no other new gTLDs would be launched aside from these then yes, I could envision a scarcity scenario.

However, that is unlikely to happen.

Instead, there will probably be more rounds of new gTLD launches and should the costs end up becoming lower, the next rounds may very well end up consisting of more extensions than the first one.

Under such circumstances, I don’t think we’ll ever be dealing with scarcity in the true sense of the word when it comes to new gTLDs.

Does this mean there isn’t money to be made?

Of course not, it simply means you should be very picky.

The game has changed and there is less and less room for profits if your business model revolves around medium or mediocre domains. This goes for dot com business models, legacy TLD business models as well as new gTLD business models.

In fact, the term “picky” is too soft.

In 2014 and beyond, I’d recommend becoming brutally rational because with so many options out there, you have to up your game if you are serious about not only surviving but thriving.

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6 Comments For This Post

  1. Leonard Britt Says:

    .Net has been around since 1985 so it has been around for 29 years – nearly three decades. Now look at DNJ’s YTD sales report for 2014 in the non-.COM domain sales section. There are fewer than twenty reported .Net sales over $10k out of some fifteen MILLION .Net registrations. What are the odds of a five-figure .Net sale? Pretty slim. The good thing is that .Net renewals are less than $10/year. Again, the median .Net sale at SEDO is about $500. So how can one expect to pay $XXX for a premium new TLD domain plus premium renewals for a decade or more and then only be able to sell their domain at market for $XXX and still make money?

  2. Leonard Britt Says:

    I’ll give you another example using .TV which was launched in 2000. .TV is now fourteen years old, has close to 600k registrations and does have limited developer / end user adoption for video-oriented websites. If you look at DNJ’s YTD sales report for CCTLDs, you will only find six reported .TV sales over $10k. There may be a few others but regardless five-figure .TV sales are not common. As well, I can state from personal experience that even four-figure offers are not common. Thank goodness I wasn’t buying .TVs with premium renewals like some of the early investors who found themselves paying anywhere from $250 to $1500 annually. Many .TV investors with legacy premiums got burnt. Regardless, $25-$50 annually for enough domains adds up when sales do not occur on a regular basis – even though the extension has existed for over a decade and is only two letters.

    My experience with .TV which I believe is a superior TLD to at least 90% of the new TLDs being launched is another reason for my reluctance to buy new TLDs. There will be no meaningful aftermarket for them for years and even then the likely scenario will be like two recent low $XXX offers I received for .TV domains. People will only want to buy them if they can acquire them for basically what you have invested in the domain.

  3. Snoopy Says:

    Agree with what Andrei has said. You’ve got potentially thousands, even tens of thousand of new tlds that could come out at some point. Adds up to potentially hundred of millions of “good” new tld names. I would argue good new tld names are getting less scarce with each day as more extensions are launched.

  4. Business Show Says:

    If the registrars actually released the premium names we would have a much better chance of success, at this point at least you can purchase a high quality .com because it is on offer, hard to buy something that is not offered for sale, This may come back on all of us. You need to release the good gtld names for this to succeed. Quite simple really.

  5. Savio D'Silva Says:

    Leonard makes some truly significant points in his comments here. And so does Andrei (in this post). Somehow I believe that there is a bright future ahead for all of us since most of the new TLDs are category related and hence do not directly conflict with others. For example, next year, one of the best new TLDs will be out (.NEWS). Will a domain name like Breaking.News conflict with something like Breaking.Services. Of course note. I see things differently. More choices equals a much bigger market in the coming years. One only needs to see domains like .luxury which have rich companies registering them. You think those companies are foolish enough to spend hundreds and thousands of dollars on .luxury names without them seeing a definite return on investment? I don’t think so. The best new TLDs are yet to launch (.app, .online, .web, .blog) so it’s far too early for any of us to make harsh judgments and conclusions based on the limited input and facts on hand right now. I certainly hope domain bloggers focus more on helping us sell more domains than focusing on their own self-created fallacies.

  6. Roy Says:

    I have a point I’d like to make.

    The gtlds are confusing to the public. They are not selling. They are not re-selling. They are not wanted. They never will be. ICANN has tried this before with “high demand” extensions such as .mobi, .aero, .travel, .jobs, .cat, .museum, .coop. We all know how that story ended. Why is this new sequel any different?

    We live in a .com world. Face it. That is not going to change.

    You mentioned .brands in the post and we all heard about .Cannon before the launch. In reality, very few .brands actually exist and any that do launch, I predict will soon fail. Quickly. If utilized as a destination website, they will leak traffic to the guy who owns the .com. So, wouldn’t you rather be the .com guy and not waste your money on anything else? And what about your gtld-address email? Don’t you think some of of it will get erroneously addressed to the .com guy? Again, who would you rather be?

    To me, it’s a simple game of paper rock scissors. Paper beats rock, rock beats scissors. Dot com beats dot net. Dot net beats dot whatever.

    The gtlds have absolutely nowhere to go but down. Total duds.

 
 
         
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