Not all TLDs will fail. But here’s why yours will.
Are you thinking about applying for a new top level domain name when the application window opens in January? Here are some things to consider — reasons your new TLD might be doomed to fail.
1. You pick a TLD that’s too broad. Here I’m thinking mostly about something like .sport. Yes, there’s a sporting community. But they tend to identify with particular sports or types of sports. .Sport is just too broad. You might be able to say the same thing about general TLDs such as .web. There’s a role for .web, but it’s something similar to what .info and .biz have now.
2. You price domains too high or too low. It’s tempting to charge a lot for domain names so you can earn more overall. But charge much more than existing TLDs and registrants (and registrars) will pass. On the flipside, pricing your domains too low could also cause problems. If your TLD is cheap it will attract spammers and other bad actors (e.g. .cn). This could lead to search engine penalties for your entire TLD or loss of confidence in users. .Free seems particularly worrisome on two fronts: its price, and it tells web visitors that the web site publisher wasn’t willing to fork over ten bucks for a “real” domain. Kind of like Geocities addresses.
3. You make your TLD too restrictive. It’s important for community top level domain names to have good restrictions to keep the community’s trust. But burdensome and un-automated verifications will doom your domains. First, registrants don’t want to spend time fulfilling your requests. Second, registrars don’t want to bother with introducing a verification system in the registration process.
4. You don’t get into bed with major registrars. In most cases you’ll need to sell your domain names through existing registrars. You have to make best friends with the major registrars. Wine and dine them for shelf space.
5. You offer products that compete with registrars’ profitable add-ons. Registrars make little money on domain sales. They make it offering products such as hosting, whois privacy, etc. If your idea of TLD innovation is to offer a package of competing solutions to the registrant, don’t count on registrars giving you shelf space. Consider .tel. It didn’t offer competing products, but it eliminated two profitable ones: web hosting (because you can’t host sites on them) and whois privacy. GoDaddy still doesn’t carry .tel.
6. You pay too much in auction. If you go up against many competing applicants for the same TLD you could end up spending a lot of money in an auction. Make sure you have money left over for marketing.
7. You think ‘if you build it, they will come’. Registrants won’t be lining up at your door. Consider the significant marketing .co undertook with its recent launch. It’s not easy, and it will be even harder when competing with hundreds of other new TLDs.
8. You attract too many domain investors and not enough end users. If domain investors snap up all of your domain names then few of them will be developed. You need developed domains in order to spread the word about your TLD. Take a look at what happened to .eu. I really like the RFP process some registries are using to allocate premium domains by requiring a solid development and marketing plan.
9. You don’t have a local sales channels for your city TLD. City TLDs will be tricky. Don’t expect GoDaddy to offer .nyc anywhere near the top of the list since it applies to so few customers. (Unless, of course, they use geolocation to pitch it to New Yorkers.) You need a door-to-door salesforce for these TLDs. Same thing goes for community TLDs — the smaller the niche, the more you need to focus on marketing directly to that niche.
David J Castello says
#10) Not enough speculators to prop up 500 new TLDs 🙂
Jon says
I am very sure that literally 100% of new TLDs will fail for speculators. And I am including the very best of the best early landrush domainers who will cherry-pick the best of the best of the new domains.
And I am sure that all but maybe 5-10 of the new TLDs will be big time money losing ventures for the registrars. I actually think it is very likely that every single new TLD will be money losing business for their registrars.
There is just no escaping the fact that there is no real need and no real end user demand for any TLDs. The whole thing is based on speculative pump-and-dump mentality.
Dashworlds says
9 Reasons….and a Question
If you’d been employed by ICANN and spent your last few days as Chairman pushing aside opposition to ensure implementation of a contentious New gTLD program that you’d worked on for some time….and if, immediately after getting your way you’d left ICANN with an opportunity to join the private sector to take advantage of these supposed phenomenal gTLD “investments” (carrying with you all the knowledge, experience and contacts that you’d gained over the years)….Would you:
(A) Apply – either yourself or in partnership with a commercial entity – for one or more New gTLDs with the most income potential?….OR
(B) Join a company that effectively gets a cut helping ICANN to sell gTLD “investments” to other people?
With all due respect and it is opinion only, Mr Peter Dengate Thrush, the former Chairman of the Board of Director of ICANN seems to feel that option (B), selling gTLDs to other people, is the only choice worth making….and with his experience who would dare argue with him?
At a starting price of around $500,000 per gTLD and the potential profit share-out therein, should we all be trying to sell new gTLDs to other people too?
Phineas says
#11. The demand just ain’t there. Let’s say you own .DOG and, because you love dogs so much, you(erroneously) decide that other dog lovers throughout the world will want to partake in this seemingly great extension. Newsflash: they won’t. Only a tiny, tiny, tiny fraction will actually step up to the plate and pay your annual fee. Disagree? Did you know that .CAT is already an approved TLD? Yep, go ahead and Google it. I’ll wait.
::: ::: ::: ::: ::: ::: ::: ::: :::
Ok…
So, now that you agree that the .CAT tld has been around for several years (it stands for Catalan — and has been live since 2005!), why haven’t feline lovers throughout the world flocked to own it? In fact, I don’t know anyone that owns one, do you? My guess is no. And we are domainers!!!!
As such, what makes you think that anyone will want to buy your .DOG — if they never wanted to buy ICANN’s .CAT?
Pherb says
#12. You won’t have enough money. You will need to UN-brainwash the world from .COM infavor of your .FART. Yeah, good luck with that.
Candance says
#13. gTLDs will only help the .COM owner. So let’s say someone actually does go and buys the domain Fleacollar.DOG. They would be foolish to set up shop there. Here’s why…90% of the people who see the firm’s billboard on I-95 will accidentally go to the .COM version. I guess this ties in with #12 above, but it’s a game of paper, rock, scissors in which the gTLD will ALWAYS lose and .COM will always win. As such, why play?
Doofenshmirtz says
#14. There is no easy exit option. Unlike a business which can simply shut down its doors, a TLD operator has both a fiduciary and financial responsibility to its subscribers who have relied on you to provide a foundation for their online home and email address. A closure will get very ugly very fast. Sure, you can try to sell, but who is going to buy if you only have a handful of subscribors and are hemoraging cash? And, if no one wants to buy your precious TLD, what are you going to do? Your only option will be to continue to lose and lose and lose. Or, shut down and face serious legal consequences from your former subscribers. Stay away!
Andrew Allemann says
@ Doofenshmirt – it’s baked into the guidebook as to what happens if you shut down. In most cases I suspect the backend registry provider you work with will take over.
name says
phineas didn’t someone point out to you in another thread that .cat is restricted to catalonian entities.
Phineas says
Ok, Mr. NAME, let’s say that the reason .CAT is a .FAIL really has something to do with some sort of registration limitations.
What, was wrong then with .BIZ, .MOBI, .JOBS, .AERO, .COOP, .TRAVEL, .MUSEUM and the others that no one wanted?
Do whatever, but it seems painfully obvious to me that the new extensions will be an uber failure, only to raise the worth of .COM’s in the process.
name says
Those are either restricted (like jobs, travel), or not particularly interesting. And .biz is too similar to .com.
Some interesting things should come from the process. And speculators will find it less easy to gouge entrepreneurs looking for a name.
On the other hand, plenty of people are going to be upset at needing to register additional domains to protect their trademark or business. And I wonder whether applicants will really be allowed to get away with using generic TLDs monopolistically.
WorkOne says
#15) The legal exposure you will have as a result of squatters within your tld. Say someone registers a name that you thought was ok, but some big company says is not. They will surely sue both your client and YOU as the underlying registry. You really gonna want to spend all that money to defend yourself time after time? Little to gain. Lots to lose. @Jon – Agree that there is no need for this exercise in futility and that the whole tld concept is conceptually .flawed!
Snappler says
I agree with those who have said that the new tlds are gonna go down in flames. It seemed obvious the day the proposal was approved when most news broadcasters read it as a snark focusing instead on the crazy astronomical price of $185,000. It was read as a joke, taken as a joke and will be treated as a joke. Bad move, Icann, bad move. The system isn’t broken. What are you trying to fix? Yes, .com is hard to come by, but so is New York City real estate? So what? Let the forces of supply and demand take over. No need to artificially create an infinite supply. It’s just not needed and won’t work as a result.
name says
Part of the problem is that the forces of demand and supply do not work properly within the .com market.
Real estate is sold to the highest bidder. But domains are unique, giving the seller an extraordinarily strong hand. Jimswidgets.com may be reg fee but if Jim has so named his business then seller can take him to the cleaners.
He must not only beat all other bidders, but do so by a factor of 10 or a 100. These grotesque possibilities are available in very few other markets, because there are nearly always satisfactory alternatives available.
Andrew Allemann says
@ name – I could argue the opposite, too. In domain names there are so many variations you can choose, and they’re only a few keystrokes away.
Glad I Passed on .MOBI says
Ha! Just found this:
http://www.internic.net/faqs/new-tlds.html
Imagine the poor suckers who invested in these “new and exciting”, “up and coming” domains in November of the Year 2000.
IMHO, the new gtld’s will suffer the same fate as .COOP and .MUSEUM. I see absolutely no difference — oh, except for the fact that .com is now considerably further engraved in the consumer’s mind.
Why are we wasting time even talking about this foolishness instead of buying more .COM’s?
Uncle Sam says
@Name: Welcome to the United States of America. If I want to sell my house for $1M more than I paid, it’s my perogative to try. Maybe I can, maybe I can’t. That is how capitalism works, my communistic friend. You are welcome to go back to Russia if you liked it better over there.
Markus Jalmerot says
I believe a handful or more of the new TLDs will be profitable within 2 years. .NYC is one good example. If promoted properly, I’m sure .DOG could be profitable as well..
Crwth34 says
#16) Way too expensive with way too little return. So you pay the $185K and agree to the $25K/year for 10 years and invest the $500K in startup equipment and staffing expense…how much are you going to price your individual registrations at? If you go higher than $12, people will opt for .com (honestly now, wouldn’t you!?) and if you come in lower than $12, you will take a financial bloodbath. This ain’t exactly the type of deal you can make up in volume!
Crwth34 says
#17) ICANN is only budgeting a measly $750,000 to help promote your gtld. Actually, I should say …all gtld’s in general, not just yours. Basically, they will whisper in the wind the message that “there are now other tld’s out there”. Yeah, that message is gonna get heard by the masses (sarcasm!). Just like it did with .Name. Ha!!! Hoot – Hoot!! LOL!!!! I believe it’ll take an amount significantly greater than $750K, yet, they have defended the tiny dollar amount and seem to stand by it. Alrighty, then! Good luck with that!
Bhavin Turakhia says
“You have to make best friends with the major registrars. Wine and dine them for shelf space.”
BT: As a Registrar I wholeheartedly agree 😉
September says
#18. Your tld will probably be considered to be too long. It is a given that if it’s longer than 3 characters, it will be deemed to be too damn long. That is why .travel and .museum and .aero and .coop never took off. Very few words can be spelled with only 3 characters. Dot web comes to mind, but if the world didn’t get excited for .net or .biz, .web will probably be a big snoozer too. I agree that this proposal is on the express train to nowhere and that it will only make .com’s increase in value.