Can new TLDs increase demand for domain names, or will they merely take a percentage of the existing market?
A few weeks ago Dan Warner posted an analysis of sports related top level domain name applications. He compared the strings applied for (e.g. .baseball, .football) to how many of the 100 million + .com domains already registered include that term (e.g. BaseballFan.com and FootballGames.com).
He found that many, including rugby and cricket, had fewer than 15,000 registrations in .com.
Warner believes “that each new gTLD will capture a share of the existing market”, so domains like .rugby need to plan for only a fraction of an already small market for domain names.
Do you believe that as a newcomer registry that your brand is big enough to topple .com? Are people going to throw out all their business cards, forms, and stationary to change their brand for an unproven new gTLD? Are new buyers that haven’t had an interest in the last 20 years all of a sudden going to decide they have to buy a new domain name?
I tend to agree with Warner on this. But a lot of applicants are betting that there are new buyers who will come out of the woodwork. They believe that the total market size is greater than the number of currently registered .com’s that include the keyword.
Let’s examine some ways this could happen.
Defensive registrations
A certain number of trademark holders will believe it necessary to protect themselves by defensively registering their domains under a TLD, even if it’s not completely related to their business.
While Nike already owns NikeCricket.com, NikeRugby.com, and NikeTennis.com, it doesn’t own Nike.fans or Nike.coach.
And Verizon might register Verizon.baseball just in case.
The effect of defensive registrations will be greater with small registries.
Marketing
Have rugby fans ever been targeted to register domain names in the past? I doubt it.
With a concerted marketing effort directed to rugby players and teams, it could drive a lot of domain name registrations.
Consider the baseball prospect in high school or college. He never thought to register firstlastnamebaseball.com for himself before. But if all of his friends are getting firstlastname.baseball and showcasing their talents, will he do it to?
Niche TLD backers will (or should) market directly to possible registrants at industry events, in trade publications, and online. Verisign has never gone to an equestrian convention and promoted to people to register domain names about horses. But I guarantee Top Level Domain Holdings will do that with its .horse domain.
Add-ons
One of the bigger hopes is that there’s demand for niche domains attached to relevant services.
Consider .Club Domains LLC’s application for .club. Sure, there are a lot of clubs out there. But do they really each need a .club domain name?
No. But what if you throw in club management software? A way to easily get your club online, collect dues, and recruit new members?
For many niche TLDs, the domain itself will be an afterthought. Most services like this don’t need to be a top level domain to operate. They could offer the same services under an existing .com domain. Still, it could boost the overall registration numbers for these domains.
The Cool Factor
I imagine the number of domains that include “ninja” are quite small. But Demand Media is pushing this domain a lot. Let’s face it, it’s fun. And while the geek in the cubicle next to you might never think to register HTMLninja.com, he might think snagging HTML.ninja before the next guy can is worth it.
I would never get myDogsName.com as a domain. But as a .dog? OK, I still wouldn’t. But many dog lovers would. Especially if a service is added on to it that makes it easy to showcase their dog, track them if they’re lost, etc. Instead of a dog tag with a phone number on, why not a URL? It’s something most dog owners would never think of unless they were told it’s an option.
And if someone thinks something is “cool”, they’ll be sure to tell their friends.
More of the upside
GoDaddy registers about half of new domain registrations. But it has much less than half of the market. That’s because a lot of domains were registered before it became big.
The same thing goes for new TLDs. .Com is big, and getting a big slice of the existing market will be tough. But what about the eight million .com domains registered every quarter? Will new TLDs get a bigger slice of that growth?
I wonder if having a domain like “mycompanyname.horse” or “myname.rugby” will sound more like I’m a subsidiary of a larger organization or blogging on a themed website, as opposed to it looking like my personal website? I just can’t imagine, for example, having “mycompanyname.domain” instead of “mycompanyname.com” for a domain business, especially if there is a hoard of others doing that same trendy thing. Dot com will never have the gimmickiness of any of the new tlds, even if they do prove popular. For this reason I think domains chosen for quality and value shall retain their value.
Absolutely amazing how little anyone including us industry vets really knows about something supposedly so big and so close to becoming reality. Any of the above usage scenarios may or may not be applied or prove fruitful. Novelty, greed, protection, all probable buying emotions. One thing for darn sure is that without awareness aka marketing (and lots of it) this giant has not chance to get up off the floor. And so we wait for the marketing roar. I think I’ve heard the words dotCon tossed around. Time will tell… it always does
It’s all about defensive registrations. You need only look at .xxx, that said they expected a large number of adult sites to migrate or register. The IFFOR financials make it clear that most .xxx don’t resolve, and were registered defensively.
Add-ons are a tricky sell, because most wise purchasers don’t want to be locked in to a single vendor (I think one of the .secure applicants wants to use that kind of a model), as that creates vendor risk (I can accept .com “vendor risk”, because at least there exists direct oversight by the Department of Commerce). What happens if you get suckered into buying one of these new gTLD registrations, and want to change (perhaps due to pricing, etc.) your underlying software, services etc., which are tied to the domain? Oops, big trouble due to massive switching costs. This is a reason why there’s number portability for telephone services.
As for the “coolness” factor, that’s simply “fad” money, highly discretionary spending and going to have an enormous churn rate, once the registrant passes puberty, enters the real world, etc. If a registry’s business model appeals to those who change their domains as often as they change their hairstyles, good luck, especially given most new gTLDs are going to be like a hairstylist trying to sell a “mullet” hairdo.
Expect a train wreck. Folks in dot-com who “told ya so” will be left to pick up the pieces in internet governance and domain name policymaking once the damage is done and those insiders motivated by “fast money” have left the building.
Thanks for this post Andrew. Dan was always good with stats 😉 However, for those that think that the new TLDs are here to take business from the .com, that is unlikely to happen initially, however, I would not rule it out over the next 10-15 years. From other extensions? probably most of them will see more immediate pressure when new TLDs come out for sure.
But remember, this is not about providing 500 – 1000+ new TLDs to a stagnant market, this is about supplying new industry, category, Brand, and keyword specific domains for the ever expanding worldwide internet market. The above may be true if everyone has a domain and is using it and there is no more growth in the market. Quite the contrary, the internet is projected to double in users and quadruple in traffic by 2016! Although the US market is about 78% penetrated with internet users, Asia is only 27% penetrated, Africa is only 16% and even Latin America and the Middle East are only in the low 40% of internet users. In summary, only 34% of world wide possible internet users are online as of the end of 2012. And as our world population continues to grow, there will always be opportunity for new internet users, etc.
Whats more astounding are the world region internet growth rates since 2000. Africa’s growth rate is 3600%, Asia is close to 900%, Latin America is 1300% and even North America grew at 153% over this period. That’s not little water hose – that’s a the Hoover damn and it wont be turning off any time soon.
So to put this into perspective for everyone, as new regions turn on and expand their broadband and wifi connectivity, as more kids learn about designing websites and as more individuals build more online businesses world wide, there will be a place for many many new domains in these new categories. It’s just going to take some time for the world to catch up with the concept and for the concept to catch up to the world.
Well said Monte. As the saying goes however each journey begins with a single step. The issue as I see it is that I don’t see new registrars taking any steps to educate the market outside of pushing sunrise to an already domain overloaded group of domainers. When do you see public marketing beginning in earnest? What organizations? What media will they use and what forms will it take? I think that the physical acts of open marketing will get a lot of maybe investors and end users off the fence. Up to know although I ‘ve been watching I am just not seeing the GTLD education and awareness push that I think will be mandatory for success of the program.
You are correct Scott – ICANN has done a poor job of marketing and educating about the new and even the existing TLDs. Not that anyone is depending on it, but hopefully some of the $500mm they have sitting in their coffers, will be steered towards these efforts in the future. With that said, it will take large companies such as Godaddy, Web.com, Endurance, United Internet, Verisign, Neustar, Affilias, Donuts, Amazon, Google, and even UniRegistry, etc. to start those marketing efforts. Again as I stated in my post above, “It’s just going to take some time for the world to catch up with the concept and for the concept to catch up to the world.”
It will also take veterans and industry pioneers like us to lead these efforts on all fronts. That is why Michael Berkens and I started RightOfTheDot.com almost 3 years ago…..
I agree very much with you, my visionary friend. The Internet citizens are expanding rapidly from 2b to 6b or more. Everyone will have more than one domain name, just like everyone now has more than one email addresses. Many new gTLDs will fail, but those folks who have marketing skills will succeed. An extension that makes sense, extensive retail outlets, competitive price, and aggressive promotion will all contribute to the success.
Cahn and Berkins, my right of the dot dudes –
Don’t quit your day jobs guys. The gtlds are going to fizzle faster than a firecracker at the bottom of a swamp.
many upcoming registry will go bankrupt in 2 years time.
Nice article Andrew and comments from Monte are always enlightened.
My quick research using Sport new gTLDs was just a quick study. A point that might have been lost is that it wasn’t predicting the number of domains that would be cannibalized by new gTLDs – it was about using the number of domains that exist in the .Com zone file after 20 years of marketing as a benchmark of realistic market size. Why are some new gTLDs predicting 10 or 20 times the size of the current .com market for a niche as their expected registrations?
Of course the existing domain owners in .Com are the most likely buyers for new gTLDs, but they aren’t the only buyers. With extensions like .Rugby there will be a lot more ccTLD domains that also include that data. The point is you need to start somewhere and use real data to back up your gross assumptions. It can be realistically done and takes real work to get there.
The difference between a great success and a great failure is often the perception of expectation going in. If you put on rose colored glasses and fail to see reality your unrealistic expectations will come back to bite you. Even a business that in a more realistic light would have looked like a success – will be perceived as a total failure. Bad business decisions will be made.
If you want to read my quick market size assessment here is the link: http://registrystrategy.com/consulting-blog/item/227-measuring-registry-market-size
Monte- its been more than 20 years or so since .com started. Most companies or ppl barely see value for domains. So yes, hopefully more money will be spent on educating the public and bringing more end-users. However, realistically, with all extensions that exist and looking back at what was…Do u really believe demand for domains will grow?
Yes Mory I do believe that demand will grow over time. Of course not all the new TLDs will be successful as they all flood into the market at one time. Success is measured in different ways, so its not all about the number of registrations and it may not be based on the amount of money an extension makes for success to be achieved in these next rounds of new TLDs.
Many of the new TLDs have much different business models and products and services attached to them that do not make them reliant on quantity of registrations. Some will be priced much differently than we see today. Also we cannot compare the current TLD offering to what is to come. Domain extensions that you may think are not successful, actually are and they make plenty of money for their operators. Even those with only 30K total registrations. Also please remember that many of the current TLDs are sTLDs and come with rules, restrictions, and hurdles that prevent wide spread usage and marketability….and even the majority of those are very profitable and successful. That is not going to be the case for the new TLDs where most will be open to the public.
In the new TLD market, there will be many niche and very targeted categories designed to only address a certain market segment and customer base. This is by design not by accident. When some of the key brands start using their own TLDs, you will start to see a transition to a new generation of users starting to “get it” when it comes to what extension they should be typing in or searching for and use. Remember Google, Amazon, Microsoft and many other large corporations are all applying for multiple new extensions in this first round. I predict that many of the other technology companies and well known brands will apply in the next rounds to come.
In the old days, no one thought we could manage with more than one zip code, or more than one area code, or more than one toll free number. Over time, that all got figured out and now look at how many are in existence and coexist with others. I think the same will be true for domains over time…but there will be some spectacular failures along the way just like there is in every new business offering. Most new businesses fail…..but some become the best at what they do and make it.
I too used to be a .com only believer and helped grow the entire market through online and live domain auctions, appraisals and escrow, etc. We will begin to see all kinds of products, services and new innovations invented and launched around the new and even the existing TLDs market. New companies are springing up all over the world and employing staff because this is the future. Its coming!
Yes, registration number is not necessarily the only measurement of success. The residential real estate in the digital world is still not developed yet. Imagine a “Beverly Hills” type addresses marketed only to the very rich and is limited to only 100 lots in the digital world. Who needs the numbers! The day will come when the domain extension is your social status symbol.