Early investors in new top level domain names might get a better return if new TLDs as a whole are a mediocre success instead of a home run.
Domain investors have registered a good chunk (the bulk?) of new TLD offerings to date. Is this a good investment?
I’ve thought about the potential returns from a number of angles. There are three scenarios I see:
1. New TLDs are a big failure. They don’t take off and end up being small niche TLDs like many existing sTLDs.
2. New TLDs are a mediocre success. Some companies adopt them, similar to what they did .me and .co, but they don’t put a serious dent in the psyche that .com is king.
3. New TLDs are a huge success. Consumers adopt them in droves and start paying attention to what’s right of the dot.
Under which scenarios do people investing early in new TLDs get a good return?
Obviously not #1. But I’d also argue investments don’t pan out well under option #3.
To get the best return on new TLD investments, domain investors should hope that new TLDs are a mediocre success.
Hear me out.
It’s 2025. New TLDs are a modest success. Ones that came out in the 2012 round (starting in 2014) are doing OK for the most part. Some have folded, others have built up a nice registration base. Some brands are using new domains in limited ways. Maybe a brand or two has made a wholesale switch.
Since applicants in the first round made a decent return and some brands are happy with .brands, there was a gentle nudge to get the next round out. Not a huge push, but eventually a second round was opened. The number of “new” TLDs grew slightly; there are now perhaps a couple thousand out there.
In this case, some of the earlier registrations of new TLDs have value. True, there’s a lot of supply. Domains generally don’t sell for as much as .info and .biz have during the first decade of the century. But some targeted domains sells for five figures and many more for four figures, much like clever .me domains.
Investors have a chance at a decent return based on the good domains they snapped up early.
Now consider a scenario in which new TLDs are home run. People no longer assume .com or a ccTLD is to the right of the dot. They pay attention to what the TLD is and appreciate clever ones. Brands love them and major brands have made the wholesale switch to .brand.
Based on the early success, ICANN has opened up multiple rounds of expansion (or even a continuous expansion). With few historical costs to recoup and an understanding of expected legal costs, it only costs about $25,000 to get a new TLD.
Even some smaller businesses are jumping at the opportunity to get .companyname at a relatively low cost.
ICANN has eliminated some of the early restrictions on new TLDs.
.Com is still the most common domain, but a company wouldn’t think twice about paying $5,000 for a great keyword.something instead of $500,000 for keyword.com. They’d also rather hand register mediocredomain.newTLD instead of pay $1,500 for the matching .com.
In this scenario, early investors don’t do as well as under the mediocre scenario. There’s simply too much supply of new TLDs. Yes, some of the better TLDs came out in the first round, but there are so many “synonym” domains applied for later (not to mention singulars/plurals) that it’s impossible to command much of a premium for a domain.
Indeed, I see an opportunity for investors to make some money from new TLDs. I just think the opportunity for returns is higher if new TLDs are only a modest success.