The Coming Fall in Domain Name Values
Friday, June 11th, 2010
It’s only a matter of time before sales prices of second tier TLDs fall.
Is it unwise to invest in generic non .com domain names right now? With the exception of ccTLDs and perhaps .org, I think so.
Sometime within the next 2-3 years we’ll see a flood of new top level domain names on the internet. We’ll see some topical TLDs such as .radio, .eco, and .radio. We’ll see geographical TLDs such as .nyc and .vegas. We’ll see some top level domains in non-Latin characters. But most importantly when it comes to existing non .com domains, we’ll see generic TLDs such as .web and .site.
I don’t think many of these TLDs will be “successful” in the traditional sense. But they will have the effect of depressing values on .biz, .info, and other existing top level domains excluding .com.
Think about it. Right now you might pay $5,000 for save.info. But if save.web or save.site was available, would you still pay that much? I doubt it.
I’m not being a .com snob. I own plenty of non .com domain names, and I fully expect their value to fall.
Some people, including former ICANN staffer Kieren McCarthy, think even .com has seen its peak. I disagree with him, although I won’t be able to prove him wrong for another 10 years or so.
My suggestion: don’t pay premium prices for existing second tier top level domain names. Unless you’re buying them from me.
No related posts.
Here’s some food for thought: when those secondary gTLDs do arrive, the registries will hoard the premium keywords. So yes, save.web or whatever will be priced at $5k+ by the registry as “premium”, even though the TLD itself will be bottom of the food chain (ok, with the exception of .tel)
The original group of TLDs are still very strong; a lot of people undervalue .net over .org and that’s fine; sell me your single word .net’s cheap!
It’s funny I was discussing this exact same subject a few days back with one of my clients. With the impending new top level domains I also feel .org will be impacted too to some degree, but much more so biz and info. Perhaps even cctlds will be impacted too.
Of the multitudes of new tlds most will wither on the vine but no doubt some will flourish.
I agree with Acro; if not held back by the registry, the best one and two word domains will be taken during the sunrise and landrush.
And then dropped two years later.
To me the whole point of dealing with alternate extensions is the low entry cost and end user potential.
“Reseller” value might go down, but there will still be end users who are looking for top terms in (BIZ/INFO etc.)
Brad
Domainers will grab the best keywords in any new TLD and then this argument becomes less of an issue. That keyword won’t be available in these new TLDs either and .Net will still be favored over a new TLD.
A tangential question is will parked domains with these new TLDs get 100% smart priced (both G and Y/B). If Yahoo will only show their penny-per-click secondary feed on .us (which has been around a long time), then what chance do these new TLD domains stand?
I agree with all of the above.
Upon reflection, who here can chatter off a few .biz or .info domains names that they don’t own but visit regularly.
I can’t. There’s a wasteland out there. I stick with the .com’s, .org’s, and .net’s. I actually find myself steering clear of the sub-human extensions like .info or .biz. The experience that I usually find is akin to drinking gasoline.
.com>.net>.org
SL,
Good point. You can have the best keywords possible in US / BIZ / INFO etc. and they are listed as “Quality Block” by Yahoo.
Brad
A lot remains to be seen. I would not exclude BIZ/INFO from “favored status” … and certainly not .US. Each of these extensions have registration numbers far beyond the initial 200,000 keywords which are always secured. Real companies are actually using these extensions. They are everywhere and have a solid footprint. That won’t be reversed. Gradual organic growth over 8 years supercedes artificial, pumped up registration numbers like we’ll see with some of the “new gtld’s”. Not to mention that many companies have already secure their domain name, many in .com or .net, but also a substantial number in BIZ/INFO/US.
I disagree somewhat with Andrew about non-com values necessarily “falling” due to forthcoming competition with the ICANN gtld orgy. If anything, BIZ/US/INFO/TV have become part of the tried and true internet with longevity and growing registrations year after year. These extensions also provide a popular, tld-specific meaning that cannot be duplicated , biz = business, US = United States, info = information. No new tld can compete with these three. A .media or .video could possibly compete with .tv although .tv is considerably better than either of these,
The ICANN tld orgy will have a few that take off … and a ton that die on the vine.
Andrew: How. Right. You. Are.
less than premium .com names will also take a hit.
and as top companies start to get their own TLD, even top .com prestige will be affected, as the fortune 500 will be weaning off .com.
With .nyc and the likes coming, focus on .la (Los Angeles, Louisiana), .al (Alabama,) .sc (South Carolina) and the likes.
look at the Vancouver TRAFFIC auction
HomeGardening.com SOLD for $3,000
Here is the advertisement from WSJ with a $30,000 price tag
http://bigticketdomains.com/advertising/wsjad1.jpg
so what happened here?
A .com will always be the most prominent tld on the Internet. You see more an more three and four word domains in advertisements on tv. I have even seen some five word domains in advertisements.
I disagree with this in a number of ways but I have to say that the new gtlds are a risk to domain investors in general. I’ll try to briefly state my personal opinions.
1. Relevant extension matters for branding. .TV is a perfect example – there are tons of keywords that are perfect for the extension and then there are some keywords that just don’t make sense at all (VaginalWarts.TV – available for hand registration!) .COM has been heralded as the king of brands, and while I don’t see that changing any time soon, I like to hedge my bets
That said, please name a relevant, brandable use of .NET other than use with Microsoft’s .NET platform. And if you say “it’s the internet stupid” I’m just going to laugh at you 
2. If .COM values fall, it doesn’t mean alternative extension prices fall. I don’t think the current 100:1 price difference we see is sustainable (Investors.us sold for $1.3k, while Investors.com would be banging on the door of 7 figures even if it was undeveloped). It’s kind of like why I like investing in Silver when the price ratio between it and Gold get too far out of their historical mean.
3. Aftermarket/End User sales of alternative extensions are going to be hit or miss for some time to come, but that provides opportunity for the smart investors. CheapCars.us sold for $9k and I picked up CheapCars.info for just over $100 at Bido. Atlernatively, you may find yourself on the raw end of a deal if you aren’t careful. That’s why it’s unlikely you’ll see super huge sales of ultra premium keywords in alternative extensions for awhile yet: domain investors just aren’t willing to take that kind of risk. Once these inconsistencies have a chance to work themselves out and pricing stabilized… watch out!
4. Development of domains in the alternative extension space is really the only avenue for “recurring revenue” as parking isn’t going to cut it and once you sell a name, you don’t make any more money from it. As scaling up development isn’t easy, that means stick with specific niches, stick with premium keywords and keep your portfolio of alternative extensions trimmed as much as possible. If development isn’t your forte… well, maybe you should look to invest elsewhere
5. Introducing “geo extensions” like .nyc makes .us and other relevant ccTLDs even more attractive IMO.
‘Introducing “geo extensions” like .nyc makes .us and other relevant ccTLDs even more attractive IMO.’
correct. ccTLDs will be the big winner. they are not being diluted, just as the battle between ccTLDs and .com heats up.
and all new geoTLDs support ccTLDs as they bring in geo but dont encroach the country space.
as TLDs begin to have/need meaning themselves, countries mean a lot, and .com doesnt. legacy means little online ultimately.
new gTLDs will be useless as subdomain plays but are pure danger to verisign/.com leadership, prestige imho.
You may want to exclude 4-Letter .COM names from your calculations.
The 4-Letter .COM names have a special role
in the “new” DNS. Something was needed that
people could remember to jump-start the new
system.
They are sort of like NASDQ Stock Symbols.
There’s a reason those .info and .biz domains are blocked by yahoo, and why new ones will be too: there’s no reason they should get actual type-in direct search traffic.
As for domainers snapping up the same generic terms in all TLDs…There’s still a supply and demand issue. Right now you might pay $5,000 for save.info because you only have a few choice. But if there are 100 generic new TLDs, do you really think domainers will pay $500,000 to snap up all of the save.tld?
A lot of people buying .net or .org keyword domains are doing so to gain search engine advantages. To the extent that new TLDs are less favored in the engines (as .info, .biz, and other “exotic” gTLDs are today), they won’t represent an equivalent alternative.
The .NAME TLD can be handy for .NAME related
topics.
Example:
http://ZOOM.NAME
Even though a ZOOM.NAME. is not a domain name
it is handy to have a domain name to link to
the info. A ZOOM.NAME. is always 10 symbols
with no spaces.
A lot of the discussion on the new gTLDs is US centric. Outside the US, it will not make nearly the same splash. In most countries the ccTLD is king, even for brands with a strong .com. For example, here in Australia I read last week that over 85% of visitors to Google go to google.com.au and less than 15% to google.com. People prefer to buy (and type in) local. No amount of .cars or .sport is going to overthrow the preference for cars.com.au or sport.com.au here, and I bet it will be the same for .co.uk and .de and most other countries outside the US.
@ Aussie Guy – why would that make any difference? We say the same thing about .com here in the U.S.