Domain Name Wire

Domain Name Wire

  • Analyzing .co two years in and what it tells new TLD applicants

    1. BY - Jul 20, 2012
    2. Uncategorized
    3. 6 Comments

    Your TLD is unlikely to be as successful as .co.

    The rebranded .co domain name is now two years old.

    .Co put out an infographic today charting its growth and Sedo released an aftermarket analysis.

    From a business perspective .co has been a huge success. It has a whopping 1.3 million domains registered after two years. It has generated tens of millions in revenue.

    But I caution new top level domain applicants that are basing their projections on recent new TLD launches like .co.

    First, the good news: many of those .co registrations were made at premium prices (e.g. $30).

    Now, the bad news:

    * .Co has spent millions marketing .co. Tens of millions? We’re talking co-branded Super Bowl commercials, dozens of conferences, professional advertising firms, etc. This isn’t cheap. You think showing up on Go Daddy’s home page doesn’t cost anything?

    * .Co had little to no competition. I’m talking about competition from other new TLDs. When you launch one of your “new TLDs” in a years’ time, you’re going to have a lot of competition. Sedo has helped sell over $1.5 million worth of .co domains since 2010. Much of that comes from domainers, no doubt. These same domainers are going to be spread really thin when they have hundreds of top level domains to choose from. (The $1.5 million sold at Sedo is dwarfed by hand registrations made by domainers.)

    * .Co is similar to .com. There, I said it. This was .co’s biggest blessing when it launched (people wanted to make sure they covered themselves since it was similar), but is probably its biggest curse now. The similarity makes it more difficult to differentiate the brand.

    If new TLD applicants have 1.3 million domains on their forecast for two years in, even if they sell them for a lot less money, I think they’re going to be in a for a rude awakening. A handful will reach this number. But most won’t even hit 50,000*, the amount at which they have to start paying additional fees to ICANN.

    (Note: the 50k threshold applies to each transaction, with a transaction including a renewal.)

6 Comments
  • Co also has the advantage of being two letters long, the new extensions can’t be that short.

    Could you say a bit more about the 100,000 registrations threshold? Do registries pay a flat penalty for falling below that?

    • @ Mark – I actually need to correct that. It’s 50,000, and it’s a bit confusing. Basically you pay an additional 25 cents for each “domain year” registered once you hit a 50k threshold.

  • @Mark: Why can’t the new TLD’s be that short? Is that a requirement of these new TLDs?

    I had actually noticed how many long TLD strings applied for so what you say makes sense.

  • @Orangelo

    AFAIK only Country Codes are allowed to have two letter extensions.

    @AndrewAlleman

    Are you saying you pay a premium on each registration once you sink below 50,000 per year?

    • @ Mark – You have a $25k fixed fee per year, which you would then spread across your domains.

      10,000 transactions in a year, you pay $25,000 ($2.50 per domain)

      40,000 transactions in a year, you pay $25,000 ($0.625 per domain)

      50,000 transactions would come out to the fixed fee of $25k, but then the registry level transaction fee kicks in. This is where it gets a little confusing for me. the way I read the language, this 25 cent per fee domain kicks in at 50k transactions. I originally thought it was part of the fixed fee, but now when I read it again it looks like it’s ON TOP of the fixed fee. So at 49,999 transactions you don’t pay it, at 50,000 suddenly you pay an addition 25 cents per domain. So you’d be better off at 49,999.

      This seems nonsensical to me, so I’ve reach out to a new TLD expert for clarification.

  • What if the new TLDs have nothing to do with end users. What if they are simply about leverage? Company A adds their awards to their existing assets, buys companies b,c and d then Google buys them?

    Have you checked out of GoDaddy lately? A registration fee is just a loss leader. Every domain has need for hosting, websites, Facebook pages, denial of service security, tech support, copywriting, promotion, additional domains, blogs, pr distribution, webcast, meeting, metrics, mobile apps, photography etc etc. Plus with every registration you gain a credit card on file. Just because you don’t make it doesn’t mean you can’t sell it…. not everyone who wears shoes registers a domain. But everyone who registers a domain buys shoes, and a lot more. KKR has much bigger plans then selling domains and these new extensions are like iTunes, lock you in and lock competition out. It’s no wonder demand, directi, google and amazon are all in the game.

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