Company drops new top level domains as it becomes a shell company.
DigitalTown, Inc. filed its delayed 10-K yesterday. It covers the fiscal year ending February 28, 2019.
The annual report discloses that the Company is no longer acquiring or renewing its domain name portfolio. It had $0 in renewal fees during the fiscal year, so many of these domains have already expired. At one point, it had 13,000 .city domain names.
DigitalTown also appears to have wound down most of its “Domain Marketing Development Obligations” in which new top level domain registries paid DigitalTown to register their domain names.
The company has sold off all of its revenue-generating assets and is effectively a shell company. It owes lots of money to creditors, which it hopes to pay off with nearly worthless stock. Shares (OTC: DGTW) last traded yesterday at $.0006. (Hey, it was up 50% on the day!)
Many of the acquisitions the company made in recent years were paid with stock. Assuming the owners didn’t liquidate this stock earlier, they have been wiped out.
One of the more prominent victims of the disaster aka the new gTLD program… 13,000 .city domains. LOL, what were they thinking?
who didn’t see this coming?
Off the topic…
Just want to know when can we listen to latest DNW podcast ?!
I was searching daily…
Did I miss it ?!
My favourite 🙂
In retrospect, the Board made a fatal mistake when they forced me out in August 2018. There are very few entrepreneurs capable of conceiving and executing an idea of this magnitude.
The fact remains that this was an incredibly challenging project even if there was ample funding. As a OTCBB-traded company with an ongoing litigation, it was the hardest startup project I have ever worked on.
Specific to the idea of DigitalTown, I continue to view it as being compelling.
For those not familiar with the DigitalTown concept, it is described in my banned TED Talk:
https://www.youtube.com/watch?v=iDOhMk1zbNo
As for the main domain name, DigitalTown.com still resolves.
As for the .CITY domain portfolio, we appealed to Donuts for accommodation on renewal fees. They were relatively unaccommodating which certainly did not help them or us, not just for .CITY but for the new gTLD economy as a whole.
As for the acquisitions, they were companies that were happy to get the exits they got and to be employed with market salaries. Those deals were all acquihires. The real tragedy is that DigitalTown did not keep those people.
As for the debt, Epik and I personally am among the largest creditors. My relationships with the shareholders is largely constructive. They know I worked my ass off trying to reinvent a dead dog OTCBB company.
Looking ahead, I am actually no longer an advocate for the new TLDs. At this point, the speculative downside is greater than the projectable upside. The way for the new TLDs is as I have told them repeatedly:
1. Offer Forever registrations in order to de-risk the economics and front-load revenue for registry and registrar.
2. Bundle TLDs with platforms that provide differentiated value propositions with or without network effects, e.g. through interoperability such as single-sign-on or cloud wallet.
The DigitalTown story is not done. I am focused on Epik right now but the concept of DigitalTown is near and dear to my heart and will likely remain such for the foreseeable future.
As for the inevitable pot-shots from the holier-than-thou peanut gallery that frequents this thread, you will eat your words in due course.
At least thank you for that honest statement.
“Looking ahead, I am actually no longer an advocate for the new TLDs. At this point, the speculative downside is greater than the projectable upside.”
There is a TLD quality issue with the numbers of registrations, Rob,
Digital Town basically registered a lot of domain names that would generally only be seen in mature TLDs. Many of these went undeveloped and it meant that the end-user perception of a TLD would suffer. A registry’s first duty is to its TLD. It has to effectively kickstart development in a TLD. Having a block of registrations taken out of circulation and remaining generally undeveloped means that people who might have developed the domain names into working sites cannot register them. (This was similar to the mess that Eurid, the European Commission and its “advisors” made with the launch of .EU ccTLD. The .EU ccTLD, as a result, never became the EU’s ccTLD and .COM still is the second choice TLD in the EU.)
Digital Town’s main problem seemed to be execution.It didn’t seem to be developing sites. Development is critical for any new TLD. It attracts users and they begin to register their own domain names in the TLD and develop sites. Having large blocks of registrations remaining undeveloped is not a good thing for a new TLD. If Digital Town had been actively developing these domain names, it might have been different.
The search engine angle seemed extremely optimistic because it is very difficult to build and maintain local and regional search engines. However, each local site would need a good marketing budget to get established.
Epik/DigitalTown picked up an extremely similar set of .boston domains to a group that I had registered in .nyc domains.
Generally, I’d put this down to a coincidence – sure keyword domains and a set of first names, but the list was almost identical to my recent acquisitions that it even included the name of a school that I work at.
I had registered the [schoolname].nyc at the same time as my other registrations and then I see this in a list that Rob/Epik/Digital Town registered…
I was actually quite flattered that they believed in my strategy so much they might be copying all my reg’s in a different city-TLD… but I really wondered how much they were actually paying to register these domains given that they aren’t really checking what they’re registering.
I watched that TED Talk a while ago and am surprised to hear that it was banned in any sense. Wow. It was actually very hard to find when I watched it too.
Rob, this project was your idea and it was a terrible idea. Man up and take responsibility.
>you will eat your words in due course.
Agreed.
The young folks of today don’t have our “.COM bias”. They will reg what makes sense to them, individually and as a group. Or put it more bluntly, they will reg NTLDs, use them, and build traffic to them. It does not matter if a single one of their domains appears on the top 100,000 of the Quantcast list so long as they have the audiance they desire.
When I left the bricks and mortor business world all people told me was what a mistake I was making and that “the internet will never amount to anything”. Yet:
https://www.usnews.com/news/blogs/data-mine/2015/12/11/the-internet-is-6-percent-of-the-us-economy-study-says
https://www.mckinsey.com/industries/high-tech/our-insights/the-great-transformer
I also recall at the beginning various news agencies demonizing the internet as their older board members also did not get it. Then Rupert Murdock did a hit piece on MySpace in his news services about how it was being used by pedophiles …. His trick worked, the share price of MySpace went down dramatically, and then he purchased it after intentionally damaging its value.
Bottom line, these things do not happen overnight. The posts before deployment of NTLDs made it sound like they’d all go bankrupt in 6 months … Not happening is it? I constantly asked “how many NTLDs regs define success?” NOBODY would offer a number and NOBODY challenged the validity of the question ….
As for games being played by the NTLD registries, yes they are. I also watched many games take place back in 2001 …. ENOM and Afilias perhaps being one of them with 2.5 million free adjacent registrations …. And upon renewal, half WERE RENEWED. So much for the predictions. That renewal of those domains said a lot, especially when one considers most of those free regs were to domain investors who also complained about them being placed into their ENOM accounts.
Then going further back in time I vividly recall posts about the worthlessness of .ORGs on DomainState. The comments made no sense to me ….. So I did an analysis of registrations at the time and, if memory serves, found that 26% of .ORG registrations stood on their own, there was no adjacent .COM registration for them. I posted the results on DomainState. That was when I received perhaps one of the most important lessons I have ever had in this industry, there are a number of domain investors that play as many games of self interest as the registries do …. Soon after that I started watching the whois records more carefully and noted the very people talking about the lack of values of .ORGs were the ones going after quality .ORG domain names. How dare I point to games played by “Domain Investors” over the years!
It is not my claim that this is going on regarding the posters in this thread. But as I point out, naysayers have been a huge part of my life since I first participated in this industry. FWIW.
That was my greatest concern regarding GDPR and whois, it does little to protecting privacy, but it does help protect liars and thieves and many other nefarious activities ….
So to sum up, years ago I recall others stating many of the things I have posted above, such as also being told they were making a mistake and the internet will never amount to anything. All of us old grey haired domain investors were mavericks at the time pushing against the the status quo. We played a huge role in the success of the internet via our promoting domain names. That is what Mavericks do. So I would suggest a little humility and thoughtful reflection on history might be in order.
Completely agree about the games played in the past pre-new gTLD. People have short memories or more likely just want to attack new gTLDs.
To the folks commenting on this article and trying to make this about new gTLDs do you realize that “the new gTLDs being bad” probably isn’t the main idea?
Sure the company is no longer acquiring or renewing its domain portfolio but the big questions are:
1. What on earth was their plan for 13,000 .city domains?
2. Why did they think their plan would be successful? What was their strategy and why did it fail?
3. What discounts were they receiving from the registries? I expect they were given many names for free or for pennies based on the quality I saw.
4. What was the scope of the “Domain Marketing Development Obligations” in which new top level domain registries paid DigitalTown to register their domain names? Were they buying domains for $10 and being paid more or less than $10 for registering them?
5. How sketchy or legit is the behavior in #4?
6. Why were the shares up 50% on the day and why do investors think the company will survive with all the debt?
7. Who are the creditors and why do they have any faith?
8. Did the folks who were paid for the acquisitions with stock know how risky that was or were they sold an outlook that was way more positive? Did they sell in time to make any $?
9. Looking at Rob’s comment above is also pretty interesting that he seems to think the company is failing because he was ousted (“There are very few entrepreneurs capable of conceiving and executing an idea of this magnitude”).
I remember talking with Rob a few years ago at Name Summit in NYC about his plan about giving away subdomains (I think) on these city TLDs and then later charging folks once dependent… I remember thinking why would anyone ever use what you were giving them for free in the first place – Just didn’t see the value.
So most of the takeaways from the article have little to do with new gTLDs and more about the above.
It is really shameful (or ignorant) that folks would make out this disaster is down to new gTLDS. The more I read comments like this the more I can smell the fear.
IN NO SIGNIFICANT WAY do I think new gTLDs are for investors (there are some very niche opportunities), but I think there are folks who have been holding a large number of marginal .coms for a long time, who now sense the inevitability that END USERS are starting to adopt the new gTLDs and it is scaring you guys to death.
+1
> holding a large number of marginal .coms
Matt, my comments are not directed at you:
On that point, many years ago, and i have continued since, suggested people get hold of the COM/NET zone file and EYE BALL IT.
Yes, I mean spend a week or more and actually look at it, not guess what the registrations are.
I have done this.
I think it was one of the most sobering domain related research projects I have ever done.
The amount of absolute computer barf in there is staggering. The amount of money wasted on those domains is staggering. I have to wonder if many are not registered and just there for “marketing purposes” … I saw plenty of evidence of this in the past in pre NTLD tlds. Large blocks of domains deleted at times not matching their whois and registration dates, deletes at a rate in keeping with new regs so as to keep the regs counts increasing as the lies were exchanged for truth …
I feel the COM/NET zone could drop by maybe 80% and few on the planet would notice the loss of those domains.
There are 5.6 million employer firms in the US:
https://sbecouncil.org/about-us/facts-and-data/
Most people I know do NOT have personal webs sites, and have no clue how to even set that up. Social media has rid them of the very idea.
I know I am over simplifying, but I think my point is more than fair:
141 mil * 0.20 = 28 million (drop 80% of .com domains)
28 mil – 5.6 mil = 23 mil (total non business .coms)
The US has 130 million households:
https://www.statista.com/statistics/183635/number-of-households-in-the-us/
23 / 130 = 17% (percentage of homes with their own website)
And I think we all know 17%, or 1 in 5, of US household DO NOT have their own websites. The total number of US households plus employer firms is less that the total number of .COM registrations. Each first world country has its own TLD, only the largest corps go after .COM, I suspect similar registration polution in some ccTLDs. So a .COM drop of 80% may be generous, perhaps it could be much more.
There is FAR more computer barf regs in COM than any other TLD. Go look for yourselves. The COM/NET zone file speaks for itself …. Only stock holders care about the .COM reg count.
141 mil * 0.80 = 112 mil
112 mill * $10 = $1.1 Billion
Again, I know I am over simplifying. But unless you have actually EYE BALLED the COM/NET zone file, do so before questioning what I have presented here. When you do review it, I’d be most interested in hearing from those that think what they see MAKES SENSE and that they feel most .COM registrations are in fact justified. I will be STUNNED if a single person, gives their full name, and says most (>50%) .COM registrations are justifiable.
Hi Charles, your comments are thought provoking. I’ll have to run through your numbers when I have more time.
I look daily at .NYC drops, registrations and backs.
I think in a way the “useless looking” .nyc domain registrations are a sign of the .nyc domainspace maturing… it’s clear that .nyc has gone beyond one and two word registrations. Especially with $20-40 registration prices on a TLD that requires registrants live/work in NYC.
This sign of maturity is the same as people registering multiple spellings of the same domain or people registering the singular/plural of their domain.
What a joke. Feel bad for people who lost money. Way to go Rob!
There was never any upside to new TLD’s (.mobi proved that) and everyone knew it, including the people who were promoting and selling them.
Same goes for ccTLD’s that got pumped and dumped as well .co .tv .me .io
None of the above will reach mass adoption, because .Com already did.
Hard enough to sell good .com’s let alone extensions most have never heard of. Domain investing looks more and more like a bubble waiting to pop every year.
Have you seen prices lately at the auction sites, mainly Godaddy? When wholesale prices > retail prices, ladies and gentlemen we’ve entered bubble mode.
Flight to quality. Money is still cheap, people want to diversify and invest in digital assets. New gTLD’s are not “investment grade” (in fact the opposite) so that leaves investors only with .com.
Ultimately I think retail prices will catch up / are already catching up.
Tom, either the pricing is a bubble or you don’t understand the “retail” price. I’d bet on the latter.
Some random thoughts:
Do they have anything to lose by speculating in cryptos with whatever funds are left to try to recover financially? For instance, some people think XRP is going to skyrocket.
“DigitalTown / Digital Town” is a great name in itself. How about if any next venture simply sticks to Examples.DigitalTown.com or DigitalTown.com/Examples instead of anything else?
What about pursuing creating their own crypto offering?
Do they even want to do anything else?
Okay, I guess the “owes lots of money to creditors” part precludes speculating in cryptos. Would still like to see some kind of “resurrection” though.
The company is basically insolvent so you think they should start gambling with the rest John?
Next will be some blockchain nonsense probably, round 2, Rob says he isn’t done with this concept.
Epik is a PR nightmare.
Gotta wonder about the people putting money into these ideas, it says they lost $7million last year and $10 million the year before.
Who is investing in this nonsense where a company has $80,000 in revenue in a year and over $10million in expenses?
I’m convinced in a few years the new GTLDs will go down as the greatest money dump in thee history of domaining — One million x the .mobi fiasco (which cost me not a lot, but about 80 K — and I was very stupid)
Will some strings survive? Yes — probably about 10% (just a guess). And there will be an aftermarket for certain key words + .casino, bet, club, .games, .app, and a few sites that acquire customers and reach critical mass should make it, but then they will look into acquiring the .com — if growth continues, commensurate with revenues.
I can’t even imagine the millions lost, the stress-related maladies, the divorces, credit scores diminished, debts, etc experienced by those who went all in on the new GTLDS and registries that weren’t able to make bank by dropping out of auctions for payouts.
One of the prominent domain bloggers should write a book about it, but i also realize the risks as the domain community is not that big. Maybe Rick Schwartz could write about it, as he’s expressed his opinion even pre-launch, and he hasn’t wavered. I’d imagine even he is a bit surprised by the quick destruction and red ink dotted new GTLD landscape.
I do feel bad for the investors and their families and I hope they can recover. I own only about 12-15 GTLDS, all related to .com domains/sites I own. and I’ll keep a few for another year.
Bad branding. Fools could of operated as digital.town or better, digital.city, instead they are using that junk .com, and set themselves up to fail. This is sabotage to smear the image of newtld. http://seed.town come at me.
What you talking about? The problem is they bought a bunch of new tlds, bad idea no matter how you slice it, but this was bad on an “epic” scale. You think they spent $50million or whatever it was on new tlds to try and smear new tlds? Wake up.
As usual insiders got rich and bailed, and shareholders got screwed.
A company that does not have any vision of turning a profit, and pays 6 figures a year for crap domains, the writing was on the wall.
The early guys took the money out via salary, and travel expenses.
They had plenty of vision. Rob was being paid in shares and doing 100 hour weeks. That’s called personally invested, among other things. Get the picture?
IMHO, if it is not a .com (or .co, or local domain), then it is not worthy.