Domain Name Wire

Domain Name Wire

  • How much will good keyword domain names sell for in new TLDs?

    1. BY - Sep 16, 2013
    2. Domain Sales
    3. 25 Comments

    Supply and demand will push prices for good keyword second level domains down in alternate TLDs.

    Sales of premium domain names have been a revenue driver for top level domain registries as they’ve launched new domains in recent years. Will this be the case with new top level domain names that come out in the next year or two?

    I doubt it.

    It’s a simple supply and demand equation, and it’s the same reason that existing second level domain names in “second tier” top level domains will see their value drop, too.

    Consider the domain name Refrigeration.biz, which sold on Sedo earlier this year for 1,100 EUR.

    The buyer was commercial freezer company Traulsen.

    I don’t know exactly what went through Traulsen’s thought process when buying the domain name. But it’s clear the company decided it wanted a new domain to use in the future. Refrigeration is a good keyword for this company. Obviously, Refrigeration.com was taken. So the company looked at alternate extensions, and all the major ones were taken (.net, .org, .info, .biz, etc.).

    So it decided it was willing to pay more than a typical registration fee to acquire the domain, and Refrigeration.biz was the winner.

    Now fast forward to 2015. Would this scenario play out differently?

    You betcha.

    Traulsen is looking for a domain. It wants refrigeration.TLD.

    Although .com, .net, .org, .info, and so on down the line are taken, it is now presented with more choices than just Refrigeration.biz:

    Refrigeration.shop
    Refrigeration.web
    Refrigeration.store
    Refrigeration.online
    Refrigeration.now
    Refrigeration.guide
    Refrigeration.website

    What happens now? How does the thought process change?

    We already know the company is OK with buying a .biz rather than .com.

    Let’s say that two of these are available for a $15 registration fee. A couple others are owned by speculators. The registries for two others have priced them as “premium domains” but with reasonable price tags of $200 or so. Another registry has priced theirs at a premium of $5,000.

    Which one will the buyer select?

    The company may have somewhat of a preference between the extensions. But you can almost be guaranteed that the buyer will skip on the $5,000 one. If the speculators also want thousands of dollars, the buyer will pass on those. The buyer has options. There’s lot of supply for Refrigeration.TLD domains, and only a handful of buyers. So the prices will fall.

    Notice that I didn’t throw .com into this bunch. At least in the near term, a business likely will prefer the .com domain.

    All things being equal, the buyer will go for the lowest priced option.

    Now, refrigeration is not a fantastic keyword. It’s just so-so.

    But think of great keywords that have sold for five figures: Hotel.biz, Car.biz, Flowers.info, Mortgage.info, Freebies.org.

    Will these domains sell for anything close to five figures in the majority of new TLDs?

    No.

25 Comments
  • Here is the thing, like the trend has shown all the good keywords will be held for auction, most likely to be bought by domainers, then held for cost plus profit if a profit ever happens. I still remember the .mobi auction at sedo at the $600K plus bids, user burnout, epic fail on 90% of extensions.

  • I think it depends on what new extensions become the “it” extensions. One or two imo will really take off, they will have better marketing, it may be .shop it may be .web but one of these will get more hype, get someone with some following in domaining or in tech to tout it and it may see 5 figures for some of the top keywords, not many but a few

  • But are the new GTLDs going to offer top keywords for reg fee? Probably not – they either get reserved or auctioned off. And yet to speculate in one of 1000 new GTLDs for anything other more than ~$50 and a true premium keyword is too risky IMO. Even then you would have to place limits on how many domains you acquire in each TLD. There just isn’t enough available capital except for someone with very deep pockets. I may have to lower pricing in .Net or .TV but I don’t plan on acquiring any new GTLD domains. Note I don’t hold any domains in .CO (even though I speak Spanish) or .ME.

    • In addition to reserving some high quality domains for auction and direct sale, some domain registries will offer tiered pricing on their domain names at the registrar level. This will eliminate some of the domainer’s ability to make money investing in the domains. It reminds my of .tv’s premium pricing – although hopefully new TLD applicants will be smarter about it.

  • Here is how I see it at the moment (viewpoint subject to change).

    Registries have a185k investment plus interest plus overhead to recuperate.

    Not going to be easy at $15 per given hundreds competitors pitching to the low end buyers

    So, I am guessing that they are going to overlook the low end in favor of selling premiums for top dollar.

    If this happens look for per domain prices to be higher not lower and look for this concentration and new bar to preclude some of today’s smaller domain investors from participation.

    I use the low .co and .me hand reg fee and much higher renewal fees as examples of how increased prices affect the lower end investors decisions.

  • When you have a billion shares of outstanding stock and then they issue 50 billion more the price of that stock goes down. This is what we have here.
    An extra thousand or so extensions. I would dare say it will be hard to get people to even register them for free..LOL..

  • I believe city gTLDs will be compelling for many local businesses that don’t have a physical/web footprint beyond a 25 mile radius.

    • Good point. I’m really interested to watch the city TLDs. I’ll be curious how they price them, market them, and where they can be registered.

      A .city TLD might be where the “all things being equal” breaks down. If I own a pizza restaurant in NYC, which will I pay more for: jimspizza.nyc, jims.pizza, jimspizza.restaurant, or jimspizzaNYC.com? You still have a lot of choices, which ultimately lowers how much you’re willing to pay for one domain over the other even if there’s one you prefer. Of all these, though, I could see .nyc becoming trendy for local stores, and I could see someone paying a premium over other extensions.

  • 1&1 has been placing ads related to pre-registration of GTLDs. I just tried to see what would happen if I attempted to preregister Football.web. Of course it wasn’t available (already pre-registered). So what happens when all the good keywords are already taken in these new TLDs which no one really cares for except to get their hands on a great keyword?

  • Hotels.mobi and Property.mobi were both dropped recently, an indication that premium names may not have a market to sell.

    I’m not sure here, but I vaguely remember Frank Schilling saying that he’ll not follow the conventional approach but just allow registrants to compete for the premium names through hand-reg.

  • The norm will become domains priced below $1k, or more likely $500 each in the aftermarket.

    Most investors can’t really afford to work with 10-20% margins, cost of capital itself is much higher.

    And with registries booking most of the profits in new gTLDs, the playing field for investors will remain constant – .com mostly.

  • I think we should be surprised by many new extensions.
    When the name + extension makes sense as a sentence, the domain name becomes immediately very interesting in a marketing point of view.
    Look the .ME success!

    • .Me has had some success, and some people who bought them have made good money. I suspect most new TLD registries would be thrilled to copy the success of .me.

      That said, keep in mind there are still well under 1 million registered .me domains, despite being pushed heavily by the biggest registrar (which is a partner in the .me registry) and facing virtually no “new TLD” competition.

      There will be a lot of new TLD’s that you can make cute domain hacks on. Will the success be spread amongst these?

      Interesting times ahead.

  • We also need to consider the de-facto owner of the internet, Google. They could depricate the new in favor of the old. Google is the main reason why (in my opinion) the .xxx domains have little value.

  • Nicely thought out article and some cogent replies as well.

    Tempting as it is, I don’t think we can generalize very much. These new gTLDs are all over the place in terms of meaning and quality. And the business plans of the various applicants will also be a factor. Speaking of them as a group, the average outcome is pretty obvious. There simply isn’t enough buyer demand to make them all successful when they’re being dumped on the market simultaneously. But the failure rate won’t be evenly spread; so a handful of success stories should emerge.

    Overall, I expect the failure rate of these new extensions to be high — as measured primarily by consumer adoption. And by consumers I mean, first and foremost, website visitors — those individual human atoms that make up “traffic”.

    Whether other kinds of consumers embrace the new gTLDs matters much less. Registrants will buy a significant number of them — for reasons ranging from domainer speculation to the prospect of cheaper startup branding. But, as mentioned in the article above, those numbers will be diluted by the sheer vastness of the supply. It will be like making a cup of tea by adding one tea bag plus Niagara Falls!

    Importantly, the “protect your brand name” tactics won’t work anymore. I’m talking about the approaches that scared universities into registering .XXX domains or which are now trying to bully / cajole businesses into getting “their .PW”. There comes a point, after a company receives hundreds of extortionate overtures to “protect” their brand name by registering .WHATEVERs, when people will be trained to ignore such emails and exclude novel extensions from their brand strategy. Once a few companies say “enough”, their competitors won’t feel much peer pressure to keep up with either. That will be a disappointment to registries and some domainers. But it’s inevitable.

    Here’s another issue that hasn’t been much discussed, from what I’ve seen. The abundance of opportunities to register a premium word in some new extension will cheapen ALL premium words in non-premium extensions. I’m not speaking just about the supply and demand of domain buyers. Rather, I’m thinking about what cybersquatters and email phishing scams will do.

    It stands to reason that they’ll copy existing brands or seemingly authoritative words and phrases but use whichever failing gTLD is offered up at the cheapest price. Consumers will begin seeing emails from the likes of Security.lol and Chase.guide. Give the average person out there a year to associate the new gTLDs with identity theft, phishing scams, and “Do you want a bigger penis?” scams, and most of society will learn to instinctively despise almost ALL new extensions. Such extensions will be guilty by association, and they’ll be shunned.

    This is, after all, why .COM holds so much value. Intranet.com appears venerable. People assume, based on their familiarity with the age and prevalence of .COM, that such a domain is established and important. .COM is by now so familiar and so deeply rooted in the internet (due to massive investment over decades), that there is no chance of a new gTLD replicating the same level of trust.

    We’ll see 2 phases. During phase 1, some business owners and many domainers will register domains in the new extensions without the intent to develop them. The business owners will primarily buy them just to get rid of them — taking them off the market due to anxiety about cybersquatting. And the domainers will list these domains for sale at the prices they’re accustomed to seeing BEFORE market dilution. There will also be some startups that will try to brand themselves using the new extensions, quickly realizing that they’re better off having the corresponding .COM also.

    Then comes phase 2. Domainers overall won’t be able to turn a profit with these new extensions, due to the massive market dilution described in this article. Accordingly, they’ll compete with each other to LOWER their prices, finally reaching rock bottom and dropping most of their portfolios. Businesses will “wise up” and stop buying the latest new extension to “protect their brand”. And the startups who have branded themselves creatively using these new extensions will come face to face with the lack of consumer adoption. Over here, you’ll have a promising Startup.shop. And over there you’ll have another promising Startup.lol. But they’ll find themselves almost completely alone TRAINING their audience to learn about the extension they’re using. In contrast, those people who use .COM or .ORG or even .ME will have very little explaining to do because so many other enterprises have blazed that trail ahead of them or with them.

    The failures won’t be confined to this crop of new gTLDs. The dilution effect will undermine the values of less secure gTLDs in the present market. .PW, for instance, will die a gruesome death. And .BIZ won’t fare well either. They’ll simply be trampled by the new lemmings.

    Whether the registries make money and see a lucrative exit is really not the question that interests me or the average person out there. They’d like to know if these new extensions will divide the new internet amongst them.

    They won’t. The new internet is a small sliver compared to the established internet. And that established internet shows a clear hierarchy, from a tip composed of .COM and some ccTLDs on downward. The biggest, most established institutions use these extensions and have no incentive to abandon their websites. So the new gTLDs are bound to be marginal.

    I’m not a .COM purist. In fact, I’ve invested in everything from .NET and .ORG to .TV, .FM, and .DJ. I may also buy a few domains with the new gTLDs. We’ll see.

    Failure won’t be spread evenly, though. And that’s why I say it’s dangerous to generalize. Some of the new extensions will succeed and become part of the internet landscape. Although they won’t be able to rival .COM, they’ll enjoy some more modest success.

    What’s most important, I think, is who succeeds early on. All the companies behind the new extensions will be bidding against each other for attention. So it will be a war of attrition. Domainers and startups will abandon whichever new gTLDs aren’t observed to thrive pretty quickly, in a panic not to be the only person caught with pants down. But the dust won’t settle until about 1-2 years in.

    These are all just my opinions. Shoot them down, please.

  • .CO would have been just another extension if it wasn’t for the Godaddy marketing machine. Godaddy made .CO what it is. Whichever GTLDs Godaddy sees is popular in the watch list that they are doing now are the ones that will succeed. If you want to know which GTLDs to invest in look no further than Godaddy.
    The blogs are next in line to watch. The GTLDs that are talked about the most by Elliot, Andrew, Michael, Rick, and Morgan will be the ones that Domainers will buy. The biggest problem the blogs will have is they won’t have enough space for all the ads that these GTLDs will give them and they will have to pick and choose which ones they will advertise. The chosen GTLDs will succeed. The domainer market is already shrinking and will shrink at a more massive rate because of all the new GTLDs which in turn will cause a massive drop in non dot com values. Domainer to Domainer sales will become a thing of the past and ALL extensions will drop in value when everyone courts the all powerful End User.

  • New TLDs are a waste of money as it is merely for misleading people and trapping them into speculation, registering domains that are not necessary. Silly registrations.

  • this is very nice sharing and also very informative i get really very much help from it How much will good keyword domain names sell for in new TLDs? this is very helpful to all of us thanks for the nice work,../.
    http://www.webdevelopmentseo.com/website/domain-name-forum-f17.html

  • Failure or not – new G’s are not going away and there are going to be more of them not less.

    Some observations…

    1) if .whatever gets launched and it fails, somebody will buy the scraps and re-lauch it.

    2) other .brands are going to apply in 2015. There “will” be a round-two and at a minimum, thousands of others will apply.

    3) it’s a marathon, not a sprint. Only maybe 1% of people on earth own their own domain today and that number will grow. The growth will happen in new G’s

    4) The padded maintenance cost of a new G is about 200k a year.. about 10,000 $20 registrations

    5) Many so-called premium names I saw listed in earlier comments will be held as “registry assets”. Every day more diamonds come out of the ground but the price does not go down. Same with new premiums.

    6) Some existing G’s will get a legitimacy bump and rebirth from this process… ie. .jobs and .travel

    7) Collectively, “all” the new g’s (together) “will” eclipse .com in the next 10 years (or sooner), Although .com will still be the strongest single G.

    8) People who say “previous new G’s didn’t change anything, so these won’t work either” remind me of a guy putting water from an eye-dropper on a roaring fire, saying “See, water doesn’t put out fires” — This round is like putting a bucket of water on a roaring fire.

    I predict everyone reading this post will own at least one name in some new Gtld within 3 years. To absolutely and completely turn your back on this opportunity would be a genuine mistake.

    • Regarding Registries that will fail, I confirm “somebody will be able to buy anr re-launch it”. Domain Venture Partners II Limited (DVP II) was launched as an Experienced Investor Fund in March 2013. DVP II is aiming to raise up to a maximum of $400m. The investment strategy is focused on acquiring either existing registries or other registry applicants within the New gTLD Programme. In this respect DVP II is a pure buy out play aimed at consolidating the registry market.
      More here: http://www.domainventurepartners.net/about/

    • Frank, I can see the natural progression from personal email to personal website, but I’m not sure if .brand will become popular. If top brands such as L’Oreal, Hilton, and GM have all withdrawn their application, there must be serious problem with the application system. What’s your explanation?

  • Cogent posting but overooks some consumer behavior issues. Consumers’ habits hard to alter, why ATT still is renting phones to some, and AOL still has a dial up business.

    On my Nexus Tablet there is a .com button in lower right corner, handy to enter .com URL’s. Making it easy (‘frictionless’) for user is the holy grail of ecommerce.

    Today’s econsultancy.com blog posting regarding the complexity and reduced traffic created by the move from guardian.co.uk to guardian.com domain suggests major brands will not so readily jump to rebrand their sites with the new TLD’s for such practical reasons.

    WebMuzer

  • This may appear abstract, but given the following scenario I’d really welcome anyone’s thoughts:

    Keyword.com – Premier Name, value circa $500k – $1m+ nominal value

    (premium).suffix (suffix as per keyword.com above) = $10k each at most?

    premiumsuffix.com = ???

    e.g.

    loans.com – $1m+ name
    loans.app – $10k+ name
    loansapp.com = $3k (On Sedo – I do not own it!)

    Is this a sensible breakdown?

    keyword.com – 100%
    premium.suffix – 10%
    keywordsuffix.com – 3%

    Considering 2 important factors:

    Not all domains/keywords/suffixes are equal in value
    Relevance is a subjective factor

    What do you think premiumsuffix.com is/should/could be worth in relation to these? $ or % terms?

Leave a Reply