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Should Domainers Invest in New gTLDs?

Posted on 30 January 2014 by Andrei

Morgan wrote a post about a very important topic earlier today and explained that in his opinion, domainers should stay away from new gTLDs. While I understand and respect his arguments, I disagree and through this post, will try to explain why.

First and foremost, I don’t think domainers should embrace or dismiss new gTLDs based on a thought process that revolves around comparing the extension in question to dot com in terms of popularity, sales volume and so on.

I’m sure everyone agrees that none of the new gTLDs can in any way surpass the dot com extension but as domain investors, the only thing you should care about is whether or not on a case by case basis, investing in a new gTLD domain would have a more attractive risk vs. reward ratio than investing in a dot com.

For example, let me ask you a question: would you buy Insurance.web at the registration fee?

I’m sure most people (probably everyone) would.

Ok, so we can conclude that there’s lots of demand for Insurance.web among domainers at the registration fee.

Would you buy it at 100 bucks?

Again, I’m sure everyone or at least almost everyone would.

Therefore, we can conclude that there’s lots of demand for Insurance.web among domainers at $100.

What about $500? What about $5,000?

The list could go on and on. As the price goes up, the demand at that price level goes down but the most important thing is that for great new gTLD domains such as Insurance.web, there’s definitely quite a bit of demand among domainers if the price is right.

In my opinion, the only question you should be asking yourself whenever a new gTLD investment opportunity presents itself is this:

Is this the best I can do with the amount in question or could that amount be used to make better purchases elsewhere?

That brings us right back to the Insurance.web example.

At let’s say 3 figures, I doubt you’d find better investment opportunities than Insurance.web in the dot com extension.

At low 4 figures, it would be hard to find a more attractive dot com alternative at that price.

But at a considerably higher price level of let’s say mid high 5 figures or more, there are probably better opportunities in the dot com space or elsewhere.

The bottom line is this: in my opinion, dismissing new gTLDs altogether isn’t the best strategy. Instead, I’d recommend analyzing each potential acquisition on a case by case basis and going with the option that gives you the best bang for your buck.

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6 Comments For This Post

  1. Michael Says:

    Great way to look at it, spoken like a true economist. Nice post Andrei.

  2. Domenclature.com Says:

    @Andrei,

    Your scenario with .web has two problems: 1. You completely avoided telling us how dot web differ from .biz, you had to make that historical link. You had to tell us why the general public did not embrace .biz, but would embrace .web.Including .US, .mobi, .travel and so on. Even if you say that the .web extension is only 3 traditionally as .com, .net, .org, .mil. .gov, so is .biz; even if you say that web means something out there, so is biz. Because you failed to make this historical case, it’s difficult to respond to your opinion, it is therefore incomplete, and inconclusive. I will wait till you add to the post.

    (2) You are assuming that “everybody” will take insurance.web for $100 and so on…

    I would NOT take insurance.web for free. Especially if I have to pay a nickel for renewal; I don’t know about anybody else, I can only speak for myself.

  3. Rick Schwartz Says:

    Spot on!
    Well done!

  4. Andrei Says:

    @Domenclature.com: sure, there may very well be exceptions, that’s why I decided to say “I’m sure everyone or at least almost everyone would” as opposed to “I’m sure everyone would” but I’m sure you agree that almost all domainers (the overwhelming majority) would be willing to buy Insurance.web at $100.

    Therefore, I’d say my assumption that there would be overwhelming demand among domainers at the $100 price level is reasonable.

    Again, I strongly recommend analyzing each acquisition on a case by case basis. Just like you would with a potential dot com acquisition and the same principle is valid for the older gTLDs such as dot biz for example. I for one wouldn’t say no if someone offered let’s say Money.biz at $100 and I’m sure lots of other domainers would also jump in at such a price.

    There will be lots and lots of new gTLD launches, what’s happening is unprecedented and for this reason, I’m convinced domainers will be exposed to all sorts of interesting new gTLD acquisition opportunities.

    Under such circumstances, simply dismissing new gTLD acquisitions altogether would be a mistake in my opinion.

    The conclusion of this post sums up my position quite nicely: in my opinion, dismissing new gTLDs altogether isn’t the best strategy. Instead, I’d recommend analyzing each potential acquisition on a case by case basis and going with the option that gives you the best bang for your buck.

  5. Bernard, publishingtools Says:

    Sure, some 1 keyword domain may be interesting, and if related to the new extension. But do you think that you will get these domain for a reg fee?

    Most new gTLD applicants are perfectly where the (modest) value is, and won’t let you flip easily.

  6. Isaac Says:

    Why are you assuming that I would want insurance.web? I wouldn’t. Why would I want to build my business on a foundation of mud knowing I will continuously lose hits and email to insurance.com or insuranceweb.com?

 
 
         
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