New gTLD Madness?

Back in 2014 I was sharing the platform with a couple of the new gTLD registry representatives at a TRAFFIC conference (one of the last). Both of them were telling everyone at the conference that they needed to buy what they were selling before it was too late. I had a decision....should I gag myself or not?

I listened as they both told the audience that the new gTLDs were the most awesome thing to ever occur on the Internet. To get into the gold rush all the conference attendees needed to do was secure their stake in the future of domaining!

After all the huff and puff I decided it was time for someone to bring some sanity to the debate and remove the self-imposed gag of politeness. So I waded in and attempted to pour a bucket of hard cold reality over the audience. A summary of what I said was, “There is no business model for investors in the new gTLDs.”

I then ticked off the business models. Do they have traffic? Nope. Can I buy one for $10 and sell it for $2,000? In a market of massive supply….unlikely. Can I buy a premium domain for $10,000 and sell it for $100,000? Nope. Can I build them out? I may as well build out the many .com domains I have.

Have some investors made money selling the new gTLDs? Yes. Just like some people win the lottery….but as a rule there is no sustainable business model for investors.

I then stated that I believed that as investors we were on at least a seven-year journey while the market decided which extension would succeed and which would fail. It would also provide some time to see which of the three major investment business models would become viable.

As I spoke a hush descended over the audience. I then said that some in them would ignore my advice and mortgage their houses to buy some of the new gTLDs. As their cash ran out I would likely pick up some of the domains for registration cost, post seven-years.

I was upfront with exactly what I was going to do…..and yet, I’ve seen houses squandered in a quest for fool’s gold. Many people forgot the two golden rules of investing.
1.  Only enter into an investment if you know how you’re going to make money.
2.  Only invest money you're prepared to lose.

A couple of things occurred after the conference. Some domainers didn’t want to speak to me again as they didn’t like what I said. Some of the new gTLD registries didn’t like me raining on their parade.

To the first group, I’m not apologetic…..sometimes you just need to hear some bad news. Now to the second group.

Believe it or not, I’m actually a believer in some of the new gTLDs. To lump them all into a single bucket is a mistake. The question I’ve always had is the timing where investors can make a reasonable return on their investment and this timing will vary by extension.

What is clear is that some extensions have focused more on end user adoption than others. This is good news for domain investors as there will be a potential windfall through both recognition of the extension for buyers and an increase in traffic. Then again, some new gTLDs have drunk their own kool-aid and believed their hype….the result is failure.

Here are a few extensions that I do like (not exhaustive btw)

Many of you know that I’m very positive about .CLUB because of the team, focus on a single extension and their marketing efforts make them look like their everywhere. This three pronged attack on the market has meant that .CLUB is succeeding with end user adoption and has nearly 1.4 million domains in circulation.

Another extension I like is .GLOBAL. Once again, they’ve focused on end users combined with keeping their price point relatively high. So although they have 43,000 domains registered you can effectively multiply that number by five (due to their price point).

I also like .bank. They’ve sold just over 3,000 domains to, you guessed it, banks. Doesn’t sound like a big number until you realise the price point is literally thousands of dollars.

To date, what’s clear is the majority of the extensions by themselves are not profitable or at the most walking dead. The only saving grace is that many of the extensions are owned by aggregators (eg. Donuts) and they are able to spread their costs across all of their new gTLDs.

Have I starting buying in as yet? No….as I said at the conference, the seven years aren’t up as yet, and the majority have at least a few years to go. In the meantime, I’ll keep on looking for the opportunities and letting ParkLogic clients know when it’s time to dive in.

What I do hope readers have appreciated over the years is that I'm not one to wear a gag when it comes to the new gTLDs.