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The Effect of New TLDs – My Opinion

Posted on 27 October 2010 by Andrei

Most people are in a “let’s wait and see” mode when it comes to new TLDs and it’s an attitude I don’t understand. As far as I’m concerned, the effects of new TLDs are fairly predictable, not exactly rocket science. If you want to find out how I think new TLDs will affect dot coms and the other extensions, read on:

Dot Brand vs. Dot Keyword

It’s important to understand that there will be two main categories of new TLDs. On the one hand, we’ll have “dot brand” TLDs such as .apple or .IBM and on the other hand, we’ll have “dot keyword” TLDs such as .music.

Now there’s a HUGE difference between the two when it comes to the goals of the people behind them. The people behind dot brands will not be interested in convincing random folks to register domains, they are simply interested in the branding effect of owning a vanity TLD. On the other hand, the folks behind dot keywords will probably (assuming they’re not billionaires who are only doing it for fun) want to run a profitable business, in other words make more from registrations and renewals than they spend keeping the TLD alive.

Let’s analyze both of them and their impact on the domaining industry:

Dot Brands

“Oh noes, all businesses will apply for their own TLD rather than go after the dot com!”… yeah right! In case you didn’t know, the costs of running your own TLD will be quite restrictive, so anyone with half a brain will realize that only huge businesses can afford their very own dot brand.

If you’re the owner of “Dan’s Car Dealership” which operates in Chicago, does going after your own TLD make financial sense? Why spend six figures initially and then a lot of money each year in order to keep your TLD alive when you can just buy a domain like ChicagoCars.com for a lot less and only pay a few dollars each year (literally) in order to keep it? And let’s not forget that running a registry will be a lot more complicated than simply signing up for an account at a major registrar, a process which takes a minute or so.

Will some huge brands spend millions promoting their dot brand TLDs? Yes, some will and the result will be that consumers will pick up on the fact that there are a LOT of TLDs these days fairly quickly.

  • Will this affect the value of dot coms? Nope, in my opinion it won’t because think about it. Over the years, billions upon billions of dollars have been spent promoting dot coms and money talks. Which sites do consumers love? YouTube, Google, FaceBook, Twitter and so on. What do they have in common? They all have a “com” at the right of the dot. So in my opinion no, the small islands of marketing efforts (remember, each company will promote its own TLD: Apple will promote .apple, IBM might promote .IBM and so on) will have no affect on the value of dot coms. It’s a millions (the amount a huge brand will probably spend on marketing) vs. billions (the amount spent promoting dot coms) thing.
  • Will this affect the value of ccTLDs? Nope, for the same reasons outlined above (small islands of marketing efforts will not “kill” something as huge as a country’s ccTLD) but on a smaller scale.
  • Will this affect the value of existing TLDs? As always, money talks. Some TLDs will gain traction, some won’t. Yes, new TLDs will make it harder for existing ones to gain traction but there’s no “one size fits all” answer to this question.

Dot Keywords

Now as opposed to dot brands, dot keyword TLD owners will run their registry as a business and, naturally, everyone wants to make money. As mentioned previously, it’s all a matter of money and eyeballs.

What do most people see when looking at billboards which feature a domain? They see the dot com TLD in most cases. What do they notice when they take a look at their bookmarked sites? They’ll notice that most of them are dot coms.

What do they notice when they deal with their ISP? They’ll notice that quite a few companies like comcast or cox use a dot net domain. What do they notice when they analyze the charities and organizations they support? They will notice that quite a few of them use a .org.

It’s all about exposure and exposure costs money. I gave you three examples of TLDs which receive lots of exposure but what about others such as .ws? How many people visit dot ws sites? Not a lot unfortunately and that’s what will make or break a TLD.

The principle will be the same for both existing and new TLDs: if enough people have adopted your TLD and are using their money to promote it (billboards and whatever), you’re on the right track. If not, too bad.

No, the Sky Is Not Falling

Forums are always flooded with “the sky is falling” threads but they should be labeled as “noise” and nothing more IMO. Take information from as many sources as possible but use your own brain and don’t just blindly accept the “facts” others feed you.

[sarcasm] Of course, I could be wrong so it might be a good idea to sell all of your high traffic one-word dot coms while you still can. Out of the goodness of my heart, I’ll gladly help you by offering 1x yearly rev for all of your one-word dot coms, you know where to find me ;) [/sarcasm]

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63 Comments For This Post

  1. LB Says:

    Do you have any favorites of the new extensions that have already been announced like .web?

  2. museumaero Says:

    I agree with your most part but you sayed some of the new tld appearances will have success which I don’t agree with.if you ask me it will be all like museum or aero appearances with no exception

  3. Domainer Says:

    Brilliant article.

    (Um, does this mean that you think I should sell my .COOP domains? But I had such high hopes for them!)

    What gets me are buyers who waste their hard earned money on .BIZ, .NET., .ORG and silly ccTLD’s which are destined to go nowhere.

    Stick with .COM, boys and girls. As Wil Rogers said of conventional real estate, it’s a good investment cuz they’re not making it any more. Same 3 rules of real estate that have ALWAYS applied throughout the ages: location, location, location.

    Here ya go: This hilarious 30 second video on http://www.OceanfrontDomains.com says it all!

  4. Anthony Says:

    economies of scale may bring costs way way down :)

  5. Domainer Says:

    Why is that, Anthony? If anything, prices of .COM’s will only increase exponentially after the gTLD failure. It will be a classic example of supply and demand.

    Or, are you referring to the widely anticipated $185K price of the new gTLD’s? If so, I don’t see that happening since ICANN will want to keep it an exclusive club. Lower that price and in come the squatters. If anything, it too will go up.

  6. Michael Castello Says:

    Good article. First off, I hope everyone that engages in the new gTLDS makes a lot of money. Three points I’d like to make: Anyone that does not use a dot com loses Internet recognition (dot com = Internet). It is it’s own brand that we all can use. Also, the new gTLDS will make search engines more powerful. Something I don’t think is needed. They have enough market share. I don’t think billions of people need domain names. Those that do will empower themselves.

  7. Domainer Says:

    You hope gTLD investors make a lot of money? Er…more realisticly, they will all lose their cyber-shirts!

    Remember: the reason ICANN introduced .TRAVEL, .AERO, .MUSEUM, and the .COOP was because their studies showed that those were the categories that were MOST in need of additional options. Well, we know how that story ended, don’t we?

    OK, now fast forward to 2012 — after .COM has further intensified its stronghold for still longer. Let’s say someone offers .NYC — sure a few hardcore New Yawkers will want it, but nowhere near the amount needed for the TLD to go mainstream and for it to not end up as just a Wikipedia entry in the ashheap of history.

    Just as the article above pointed out, it will be a case of millions vs billions; and, I would respectfully submit that, by 2012, it will be trillions (of dollars)!

    The collective advertising of the .COM Fortune 500 will be impossible to approach, and, as the author above pointed out, the numerous individual registries will be each be virtually helpless to counteract the overall .COM brainwashing that has been so engrained into the minds of consumers.

  8. Domainer Says:

    Whoops, I forgot about good ol’ .JOBS! I actually did see that in use once at a Wendy’s. They own Wendys.Jobs. The funny thing is that it now simply redirects to their .COM site. Why have it? Why not just promote Jobs.Wendys.Com or Wendys.Com/Jobs (which is where it now goes).

    Regarding the proposed gTLD’s…I predict that they will be the .JOBS, .AERO, .TRAVEL and .MUSEUM and .COOPs of 2012. If Delta airlines wasn’t (and still isn’t) interested in promoting DELTA.AERO, what makes you think the story is gonna change the next time around. Here, let me save you some time. Delta.Aero simply goes to their .COM. Same chip, differnet dip.

    Those who fail to learn from history are doomed to repeat it.

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  13. Domainer Says:

    I second that emotion, SDW. It will be an Alaskan bridge to nowhere. No diff than the other failures of yesteryear.

    Stick with .COM. As hard as they are to get now, it’ll be significantly worse after this failed .TLD fiasco. Good luck!

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