A number of domain owners have come to the misconception that I don’t believe in the new gTLDs. This couldn’t be further from the truth! What I’m wrestling with is the when not the if the new gTLDs take-off.
In the last 12 months there has been a lot of growth off a small base with the new gTLDs. According to ntldstats the numbers have grown from around 3.6m to just over 10m so far this year. This is around 270% growth this year (off a small number compared to the incumbents) and pretty good when you consider it wasn’t long ago when there were none. Yes, I know these numbers have to be taken with a grain of salt.....but let's ignore that for the time being.
The number one problem for the new gTLDs isn’t the initial flurry of sales and trying to hit yet another quarterly target. The problem is getting accepted by society as a means to navigate the Internet. Most people have been scripted to automatically type in .com or their ccTLD extension. To change this behaviour is going to take time.
You also can’t compare the new gTLDs to the early days of .com. They’re completely different. When .com was released, it and a handful of other extensions were all that you could get. It was a case of a limited supply and a massive latent demand fueled by billions of dollars of investor funds and media hype.
If you tried to compare .club to the early .com rush you would say that it’s not growing fast enough. But this would be a completely wrong conclusion. Dot Club is ultimately competing against 1,000+ other extensions all vying for a slice of the domain market....let alone the entrenched players. To already have 348,000 plus registrations is nothing short of phenomenal.
Just for the record, I picked dot club as an example because they do an amazing job at marketing and in my opinion will be one of the winners in the new gTLD registry race. I didn’t pick them because they sponsor the my blog!
What all of this is telling me is that the growth rates for the top ten new gTLDs are impressive but the bottom 690,000 are lagging behind. Is it their product, their marketing or something else?
I’ve heard people say that the registries should spend a lot more on marketing….in my opinion, this is really muddy thinking. The registries are selling a low value item and crossing their fingers that renewals in future years will yield them an ultimate return on their investment. Besides, if you’re tackling a global marketing anything less than about $100m for a marketing budget is not enough. The fact they are spending anything is a real miracle.
So what are most of the registries doing? Really simple, they’re growing, maybe not as fast as they might want to but the growth is still there. So my guess is that many of them are keeping their cash in the bank as they effectively buy time to become profitable. The ones that can't stretch the cash will fall by the wayside (ie. be sold) and the ones that reach profitability effectively have a license to print money. It really doesn't cost that much to update an entry in a database....so costs per unit sold trend towards zero. Verisign proved that this model worked and in the case of the new gTLDs they just need time.
So now I want to put my domain investment hat on to decide whether to invest or not. Here’s my challenge, other than through blind luck in a market that is saturated in supply it’s really unlikely that I’ll pick up the right domain now that I will sell for a fortune in the years ahead. So I’m waiting….
I’m waiting for the general public to start using them, not the odd showcase. I’m waiting for my kids to use them and my wife to tell me about a new website she’s just been to that happens to use a new gTLD. At that point in time I’ll have done all of my analysis, picked what I believe is the right extensions and buy in big time. Up until then, it’s a bit of a crap shoot.
In a market where there is a massive excess in supply there is no rush to buy. Just be patient and wait….let the market settle down and see what happens to the different registries. Do your own analysis and pick off what you believe will be winners. After all, what’s the point in investing in an extension if the registry is sold to someone else and they change some of the rules about your investment?
It will be really interesting to see what happens over the next 12 months and how many of the new gTLDs get picked up by people in some of the underdeveloped countries. They haven’t been born and bread on .com so it is likely to be a bell-weather of the future of the Internet.....so my advice, look to the newbie Internet users and how they navigate to help guage the timing for your investment.
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Michael Gilmour has been in business for over 32 years and has both a BSC in Electronics and Computer Science and an MBA. He was the former vice-chairman of the Internet Industry Association in Australia and is in demand as a speaker at Internet conferences the world over. He has also recently published his first science fiction book, Battleframe.
Michael is passionate about working with online entrepreneurs to help them navigate their new ventures around the many pitfalls that all businesses face. Due to demands on his time, Michael may be contacted by clicking here for limited consulting assignments.
