[Editor’s note: this is a guest post by Francesco Cetraro, Head of Registry Operations for .Cloud.]
Last week I had the honour of being invited to speak at the first edition of DomainersMeet in Dubai. The main focus of the event was to drive awareness in the Gulf/Middle-East region about the opportunities related to investing in domain names, and the organizers managed to bring to Dubai a number of well-known domain industry experts, filling the agenda with a broad spectrum of information and opinions on the subject.
Not being a domainer myself, at first I had my doubts as to whether this event would be a good fit for me, but in the end I am very happy I went. Preparing my talk about “A day in the life of a Registry” gave me a great opportunity to reflect about the work that new TLD Registry Operators have to do to promote their extension and the role that domain investors can play in actively supporting the development of the industry.
Domain investors often like to compare domain names to virtual real estate: getting your hands on a great domain name is the virtual equivalent of acquring a luxury condo in the center of a bustling city like Dubai, an investment that is very likely to keep growing in value and bring back a very solid return when sold on.
The obvious reason for that is the fact that Dubai is a major hub and a place that has been successful in attracting a growing number of businesses and people that want to operate and live there.
But just a few decades ago the same location looked very different and not particularly attractive.
When we see what cities like Dubai are today, we often forget that it did not all appear overnight as a result of a simple stroke on a magical lantern. It took time and a lot of investment, vision and effort from the local rulers to make a small village in the desert into the city of lights we see today.
The same is clearly true when we look at the domain market: the “legacy” TLDs like .org or .com have established themselves slowly over several decades. They have been there from the time when the whole idea of “getting an online presence” seemed like an outlandish fad to the present day of superconnected devices and always-on internet.
With this in mind, it seems clearly shortsighted to judge the impact that new TLDs have on the market after just a couple of years of existence, just as it was probably naïve of some applicants to look at the millions of domains registered in legacy TLDs and expect their new TLDs to provide immediate returns and make them filthy rich and famous without any effort.
The way I like to describe the new TLDs is as the modern equivalent of an unexplored, new world: full of possibilities and great opportunities, but still wild and in need of a lot of work and effort before a shiny new city will start to appear and become prosperous and famous like the great cities of today.
Every business owner, startup or individual that adopts a new domain extension is to a certain extent the modern equivalent of the settlers that went to America in the late 1800s and early 1900s.
As a Southern Italian with relatives all over the world, this is a dynamic that I am extremely familiar with. When the first emigrants left the “old country” to try and build a better future in the US or Argentina, many called them crazy as they headed for the unknown and unexplored. But as the stories of their success on the other side of the ocean started to make their way to relatives and friends back home, the old fears were quickly replaced by dreams of better opportunities. More and more people quickly followed their examples and ultimately helped turning small outposts of civilization into rich and famous cities like San Francisco and Buenos Aires.
While choosing a domain name is not as dramatic as moving to the other side of the planet, the mindset is the same. Today the majority of prospective registrants still prefer the comfort of staying in the flock and buying their domains in familiar extensions like everybody else always did, even if it can mean settling for a longer domain in a traditional extension. The new TLD early adopters are instead choosing the road less traveled and taking a chance to build something potentially better for themselves in these new digital territories.
Each and everyone of these “settlers” is the most precious resource for a newly started TLD. The only way to establish solid foundations to build a strong Registry business is to find a way to attract the best and the brightest early adopters. I personally see it as my top priority to put every effort I can into making .cloud as attractive and welcoming as possible, so that hopefully many of them will see the opportunity to use it to make it their new home and build their fortunes on it.
A few Registries in the past have succeeded in building a strong sense of community around their extensions, and probably the best inspiration on how to do this properly is the .ME Registry.
Their example is a clear indication that if I genuinely care and take an active interest in the success of my registrants, the higher the return will be for me as well. Not only because they will be more likely to renew their own names, but most importantly because the better off and the happier they are with their domains, the more likely are other potential “settlers” to notice their achievements and see the opportunity to build their home in my ””ittle corner of (digital) paradise”.
I am personally very proud of running .cloud: I am convinced we have a great extension that appeals to a broad audience also well-beyond the cloud industry itself. It is a great ”new territory” where many settlers can come and help build a great new “city of lights” we can all call home and benefit from.
As a Registry Operator we do our best to keep it affordable and easy to register and use, and I personally spend a lot of time talking and writing about the “opportunity” offered by new domain extensions and .cloud in particular.
I however don’t claim to be “the best for everything and everyone”, and I try to refrain from comparing ourselves (or worse, bashing) the established extensions or the other new TLDs. I feel we have a strong product that can stand on its own merits, and in the fight for consumers’ attention I prefer to focus on what .cloud is and what it can do to help those that choose it to achieve their purposes.
To be honest, I find claims of “being the new .com” and attempts at bashing the legacy TLDs quite sad and a sign of lack of imagination. The goal of the new TLD program is to offer consumers more choice (not to create “get rich fast” schemes for a small group of insiders), and the value of new extensions is not in the simple fact that they are new, but in the opportunity that they offer consumers to find a good domain that really fits their brand and their goals.
While there are quite a few terrible new extensions out there that have me scratching my head as I wonder “what the hell were they thinking”, we luckily also have plenty of great ones that do serve their purpose very well. I am happy to see that many fellow Registry operators are in this for the long term and are really making a big effort in engaging with end-users, highlighting the value of choice and ultimately explaining how a relevant domain can be an important stepping stone in building a successful online presence.
But what does this all mean for domain investors? As with any virgin new territory to explore and colonize, new TLDs offer many opportunities to invest and prospectives of great returns as they become more popular. There is clearly an advantage in being an early entrant in a new market, but it also does take vision and a long-term perspective to cut through all the noise surrounding new TLDs and make the best of it.
As the organic growth in registrations in new TLDs has been slower than many anticipated (and budgeted for), many Registries have been raising the pressure on investors (established and wannabes alike) to get into the game and stake their claim on the best bits of “prime (virtual) real estate” before someone else does, and with promises that their investments will increase in value steadily over the coming years.
However, just like with real-life investments in something like a luxury condo, ultimately even as the asset changes hands and is sold on (hopefully with a profit), its value remains dependent on how likely it is to attract the interest of a buyer who would eventually use it for its intended purpose, i.e. live in it. In other words, a luxury condo in Dubai can only grow in value as long as more and more people want to live in Dubai and are willing to pay the price the market commands to do so.
From an investor perspective, there is however no worse nightmare than spending a lot of money into something presented as “prime real estate”, only to discover that it happens to be in a neighborhood where nobody lives nor would ever want to live.
And what better way to illustrate this point than with an image of a Chinese ghost town?
Speculation from China has been fueling the explosive growth of the domain market in the last few months, to the point that over 50% of the domains registered in the new TLDs are currently in the hands of Chinese Registrants. While it is undeniable that a market comprising a sixth of the world’s population should have an important role in any Registry’s business, the fact remains that the overwhelming majority of these domains are not bought to be actively used.
Regardless of whether this impressive level of interest is really due to small investors looking for alternative placement options away from the high fluctuations of the Chinese stock market as some suggest, it is ultimately only sustainable as long as more money gets pumped in the system and as long as buyers have faith that the value of their domains as assets will keep growing, which is all dependent on whether the market still believes that eventually someone will want to use the domain in question and be ready to pay a premium price for it.
As the number of new domains added to the pool keeps growing faster than the number of real people looking to create a website, it is only a matter of time before reality catches up with the Chinese investors and the bubble bursts.
For the time being, while we obviously don’t turn away Chinese investors that want to register .cloud domains, we do not actively seek their attention either. Our energy and our efforts remain focused on reaching real prospective users, make sure they know that .cloud exists and that a growing number of companies and individuals are using it, so that when the time they will need a domain comes they will hopefully consider .cloud their best option too.
Selling a few premium names to investors can be an excellent short-term strategy to raise cash to reinvest in the Registry’s operations and most importantly into driving user adoption and ultimately building a sustainable business.
Reality is that building a quality zone is an extremely time-consuming process that requires patience, resources and passion as one struggles an uphill battle for consumer’s attention. However, it still remains a better strategy than just keep dropping the price trying to convince the market that empty volume can ever be an acceptable substitute for real adoption. Ultimately, if I were a domain investor I would ask some serious questions about a Registry operator that spends more time pitching its TLD to investors than to prospective real users.
In conclusion, there are certainly great opportunities in new TLDs for domainers that have a long-term perspective and that choose their investments carefully. What is even better, the wide variety of new extensions on the market provide an excellent opportunity to build better portfolios in specific verticals based on one’s personal interests and areas of expertise.
New TLDs are however still very young and barely starting to get visibility and traction in the mass market. There is a real risk that excessive and irresponsible speculation might end up damaging the good work that many Registries, Registrars and domain enthusiasts are doing to build real value and gain the trust of prospective Registrants.
I do believe that serious investors have an important role to play in helping new TLDs succeed, by being selective about where they decide to invest and by becoming ambassadors for the extensions they support, helping to spread the word about this new opportunity for domain owners. Ultimately, that is also the best way for them to protect their investment and help it grow in value.
Konstantinos Zournas says
You are a domainer.
All registries are domainers whether they want to admit it or not.
Francesco Cetraro (@findub) says
I meant that I personally have never been much of a domain investor.
Obviously as a Registry I am in the business of selling more domains, but I doubt expanding the “domainers” label to include that too helps clarity much.
Mike G says
The way that Registries would have more chance of suceeding with new tkd’s is by pricing them FOR Domainers to sell on. I have let a lot of .london drop as have many other because they are TOO EXPENSIVE to sustain. (Please note that Minds & Machines) I w0ont buy anymore of them.
Andrew Allemann says
FWIW, .cloud domains are pretty inexpensive.
Francesco Cetraro (@findub) says
If by “pricing them FOR Domainers” you mean they should all cost a quarter to register so you can buy loads of them, I have to disagree with you.
My point is exactly the opposite: a domain’s ideal retail price should be a reasonable match to the value that someone who is going to actively use it to promote his/her “brand” sees in it. Clearly, the lower the perceived value, the lower the price will have to be for someone to want to buy it. At the same time, if I give my domains a higher price, I will probably also need to put more efforts explaining “why” someone should be willing to pay that price.
Ultimately, if you buy thousands of bad domains that no one wants, it remains a bad investment even if you only paid them a quarter each 😉
janedoe says
Premium price is one thing, premium renewal is entirely different.
Premium price vs a lower priced matching .com?
…
I am not a domainer, I am an end user.
I like the GTLDs
But seriously, the biggest turn off are premium renewals and if end users balk at those than it doesn’t matter what you think they are worth, it is a waste and in the end you are relying on domainers till end users adopt the new extensions to cover your operations.
John says
Nice to see someone else come into the blogs with the perspective of an end user, which is what I am primarily. I’ve been talking about price for a long time now re the new gTLDs. A lot of them appear to be quite out of touch with reality and deluding themselves. Wishful thinking can do that.
Premium renewals are definitely an even bigger turn off than both premium pricing and higher than normal basic reg fees, yes.
Only a few extensions can get away with the higher than normal reg pricing, the rest are deluding themselves to the point of languishing on the vine or dying and falling off of it.
Francesco Cetraro (@findub) says
We tried to keep our premium list short, and most names renew at standard price.
Colin says
Nicely said Fernando!!!
Steve says
If you run your .cloud registry/extension as the .me registry has, you will do well. They had a long-term vision at the outset, and focused on long term gains, rather than short-term and/or dubious gains.
The .ME registry promotes .ME success stories (companies, apps), not the .ME sales.
I registered or bought several cloud domains in the .com extension in 2006. About 50. 42 of these domains were and have been acquired by end users. In fact, the market cap of the companies which purchased my cloud domains would be close to $800 Billion. Several companies purchased some of my cloud domains to rebrand.
I believe you have a solid extension with .cloud. Best wishes — buona fortuna.,
Andrew Allemann says
They’ve done a great job. It also helped to be a partnership with Google, which featured them on the home page for many years.
.Co is another great example.
Francesco Cetraro (@findub) says
Thanks… I think the key to .ME’s success is that they are geeks first and foremost, you can’t fake or plan that kind of dedication to the cause 😉
I certainly hope we can make a difference just like they do, and maybe be as successful too 😉
John says
Pricing is Marketing 101. It’s also the reason why .gold is not up there with .club and .xyz now.
Vivian says
Good read–thank you.
The thing is that all those empty lots/land in your example where not being sold as if they had already been built and were a desirable address; the risk was in buying them for “cheap” sums when compared to other available and developed land.
Steve says
Francesco,
“The Cloud’ will be going strong for a while. I understand some are projecting Google will be making more revenues from cloud services than ads (not sure about that). But Amazon certainly has grown its market cap big-time via AWS.
I don’t know what your marketing or outreach program is. But you should probably consider giving .cloud domains to those companies who already are called ____ Cloud. I recently sold a ____Cloud.com to a company and it’s already rebranded to this moniker and filed a trademark. And a whole new website.
Of course, this transaction went through a broker, but I can guess by offer and name whether the buyer is an end-user.
Andrew,
I agree with your mention of .co. The founding team did a super job of presenting the value prop of the extension and reaching out to the tech communities. And they kept adding value, prior to its acquisition.
I don’t see that same level of commitment from the buyer of .co, But maybe they will amp it up.
John says
It doesn’t matter how well “the cloud” does. The Internet and the World Wide Web are “the cloud” and always have been. What matter is how appealing and catchy the term itself is in business naming and branding. And it’s not. It’s a myopic case of wishful thinking by those who are in business, not the more important consideration of what appeals to people and has traction in terms of popular usage and terminology. Just think of some of the best and most common keywords in a broad spectrum of fields from the perspective of and end user or member of the general public if you are able, and it’s plain to see:
Loans.cloud
Insurance.cloud
Dating.cloud
Dogs.cloud
Gold.cloud
Diamonds.cloud
Travel.cloud
Hotels.cloud
It’s a blatant no-brainer when you look at it that way, the way it’s supposed to be looked at primarily. Virtually “Anything-dot-cloud” falls completely flat, lifeless, awkward and unappealing, even a bit confusing.
John says
(A few typos there)*
John says
P.S. People don’t think in terms of “cloud” unless they are business insiders. People think in terms of “online.” And see what Frank S. said about “.online” in his video interview down in Australia. If “.online” can’t blow people away in terms of appeal, “.cloud” is miles behind. Even “.web” is years past the time of it’s prime, though still okay.
Francesco Cetraro (@findub) says
Thanks John.
See, this is exactly why I talk about nTLDs (and .cloud in particular, for obvious reasons) as an “Opportunity”.
By definition, an “opportunity” implies the free will to pursue it or not, and the possibility/risk that things might (or might not) work out in the end.
You clearly see more the “risk” of nTLDs, and I clearly can not provide any guarantees on how things will go. I respect your opinion and I honestly don’t feel compelled to try and convince you I am right at all costs.
Luckily however there is also a growing number of other people that choose to see the “possibility” and do something with nTLDs, and that’s where I plan to focus all my efforts.
Francesco Cetraro (@findub) says
@Steve – we ran a Pioneer program before the launch and reached out to big brands as well as startups, and we ended up with a few good names (see https://worldof.cloud). The big challenge is always to find the right person to talk to particularly in big organizations, and timing also is a pretty strong factor (you’re not likely to get them to do a full rebrand, but if they are launching a new product/offering there might be an opportunity, like it was the case for odin.cloud, or most recently with Samsung launching artik.cloud).
As I mentioned in the article, we convinced that “real life usage examples” are the best way to advertise a TLD, and so we remain committed to outreach and do our best to make sure that at the very least people know .cloud is an option.
Alexander says
You mention Dubai and the 1889 Oklahoma land-rush (I do so since 2005 as well when I explain gTLD applications) .
See: Dubai has NEVER “sold dirt”. You couldn’t go in and buy dirt (plots) for amount X to wait as free-rider for 5 to 10 years until these plots where worth two hundred times more (because others had created all this glittering Dubai around your plots). Instead Dubai allocated plots ONLY to those who REALLY build smth – really build offices, apartments, restaurants, etc.! And do not mix “apartments” with “plots”: Domains are not apartments – domains are plots!
Dito the Oklahoma Land Rush: You couldn’t go and claim 50 plots for “free” (just the title fee). You got ONE 160 acre plot, that’s it! And you HAD to live and work on it – or you didn’t got the title. And ONLY because of that the region flourished. Had “investors” been allowed to get 50 plots at 1% of the value these plots would have 10 years later …. what do you think had happened? Well: There would have been even more “sooners” (google it) – and they would have taken ALL the good land immediately, long BEFORE the settlers arrive! Most of the land would have been empty, and all you saw were large billboards advertising smth (parking pages). The land would be dead, no schools, no stores, no markets, no cities.
And sadly that is PRECISELY what happens in many new gTLD’s right now – and that is why they do not work (do not “mature” – but just accumulate registrations)
So yes: Dubai and Oklahoma 1889 are prime examples of how you do it right. But why don’t you do it that way then? No land speculation was allowed in either case.
Francesco Cetraro (@findub) says
Hi Alexander,
As much as I would *personally* maybe like to only give domains to people who are going to build something on them, I don’t think that from a commercial/operational perspective we (the domain industry) have yet managed to come up with a system to do that efficiently and without creating bigger problems than the ones we try to solve.
Putting up restrictions, requirements and higher prices, we might limit “speculation” but we would also most likely scare away a lot of legitimate customers who will go somewhere else if I make it too difficult to get my domains.
In this situation I personally think the only viable approach is to try to find a balance and focus on positive reinforcement and outreach to the kind of customers we do want, while trying to contain speculation (for instance, by NOT selling domains for 25 cents…).
C.S. Watch says
Well, that is one looong drink of ham-fisted reverse psychology. And about ten pages of protesting too much.
I enjoyed the romantic analogy between selling .cloud and southern Italians getting rich in the New World.
Since historical nuance isn’t the order of the day, here’s some dry fact: bandwagon terms die. You’re selling this year’s cyber, e-, web, link…it’s like telling people to put a fedora on their brand. These TLDs aren’t solid ground, they’re fads that start smelling before you even start selling.
If you get some rube to build a for-profit on a .cloud, you are picking his pocket. (Ya .mobi there.) And my read is that you think domainers don’t have clean hands so they’re a clean kill. You want me to be an ‘ambassador’ and ‘spread the word?’ Then where’s my free hat? Amway gives yeggs a free hat…
The intuitive suffix delivers trademark, brand, and fraud protection—that’s the whole point. You’re selling an open wound that never heals.
Merv says
You stated: “there are quite a few terrible new extensions out there that have me scratching my head as I wonder “what the hell were they thinking””
EXCUSE ME, BUT I WOULD APPLY THIS STATEMENT TO EVERY SINGLE NEW GTLD OUT THERE WITHOUT EXCEPTION! After all this time, .com has become not just the gold standard, but the only standard.
John says
Confession: I didn’t even read the actual blog post. Also, I didn’t want to do this, so as to be a bit nice about people’s investment of time and energy, but I think there is value in being honest. So, that said, in all honesty while I regard a few of the new TLDs to be genuinely great from the perspective of an end user and publisher, I genuinely think “.cloud” is just awful and virtually worthless. Maybe it’s better they hear someone say that sooner rather than later so that they can cut losses sooner rather than later.
John says
I have a post “awaiting moderation” that was not meant to appear as a reply to you, Merv. However, since you mention the “gold” standard, do a Ctrl + f on the word “gold” here and see what I wrote about that.
John says
See what I posted above beginning with “It doesn’t matter how well “the cloud” does”…
Francesco Cetraro (@findub) says
@C.S. Watch & @Merv – I think my reply to John before applies to you as well https://domainnamewire.com/2016/05/06/domain-investors-new-tlds/#comment-2238710
I am not trying to convince everybody… I just need to convince enough people 😉
Steve says
I believe the extension .cloud has more value than .online (which really seems extraneous)
.App is the mother lode — and the golden extension. App discovery is still primitive and cumbersome.
Google will monetize .app through discovery, search, ads — and deep links. It’s in the process of indexing content from apps.
.Cloud could serve as re-branding, product launches. I can see another way to monetize this extension, besides just revenues through registrations or auctioning premiums like private, mobile, enterprise. But it would require resources.