ICANN’s Paris conference has thrown up some interesting ideas and questions, chief among them has been the possibility of introducing thousands of new TLDs on a pay and play basis. This BBC News Story has the crux of the issue.
What they’re essentially saying is that anyone willing to fork out between $39,000 – $390,000 for a TLD could possibly buy their own! What this means is that if I had the money and the inclination – I could buy and promote .mwzd (not really, merely an example ) and Coke could get .coke and Ebay could get .ebay, ad nauseam.
My first reaction was probably what every developer thinks – “Wow, thats great! it will future proof the web for a trillion trillion trillion names, just like iPv6 is doing versus iPv4. You want a good domain name, get it in one of the new TLDs instead of springing millions for an aftermarket name.”
But when you see this from a domainers perspective – its a clarion call. Would domain values tumble? Will all extensions become worthless? What will happen to parking income? Who would buy our precious names? Will the aftermarket crash? What will we do? I’ll try and answer these questions based on my knowledge and experience.
1. Would domain values tumble?
Not that I can see, when there are too many players in any field, the 80:20 rule comes into effect. In advertising and marketing one of the first things you learn is the 80:20 rule – 20% of your clients will generate 80% of your business and vice versa. For your clients – 20% of their brands will generate 80% of their turnover, and vice versa. For the average individual – 20% of his investments will give 80% of the returns and vice versa.
That is why people try to get into the top 20% for any field – those are the guys who make 80% of the revenue, quite simple. Once in this league the company’s aim is to raise the bar so high that most people wouldn’t think of entering the field without substantial funding and experience, but then thats another blog post.
Which essentially means established TLDs will continue to do well in the near future… say for the next few generations at least. Till this generation and probably the next will have come and gone.
2. Will all extensions become worthless?
No. Simply launching a new extension does not guarantee success, much like launching a new brand of soap does not guarantee sales. After all brand value does count, a whole lot, thats what domainers have been saying all along. .Travel only increased the value of Travel.com or even Travel.mobi – why would it be otherwise?
.Com still has the most recall and probably will for the forseeable future, too many people have invested too much money in it for it to be otherwise. Likewise any other existing TLDs that have substantial development. All the other TLDs launched for the next 50 years, combined, probably would not match the investments various stakeholders have put into existing TLDs – its just simple economics really.
People will tell you ‘Oh, if thousands of TLDs are launched, .com will go up and .mobi will go down” – this is nothing but hogwash, it is best taken with pinch of salt. If .com continues to go up due to a global acceptance, so will the ccTLDs and other gTLDs like .mobi, .pro and even .travel over a brand new TLD.
3. What will happen to parking income?
Aside from the fact that parking income is its at its lowest and the smart money is already moving to development, parking as we know it is going to morph into instant development platforms.
Companies like WhyPark, GridParking, EVO, and even BANS are already showing the path forward, not to mention 100,000s of ‘white label affiliate sites’ floating around the internet. Even existing parking companies have realised content is king, without which you can just about kiss your long term traffic goodbye. Parked has a method to add content, Bodis does too… eventually all the others will as well.
4. Who would buy our domain names?
Domains are like real estate. Only the biggest players even bother owning their own. Restaurants lease the space because they make more money from selling food. The landlord rents it out because he makes more from multiple properties. Microsoft has its own facilities because it needs it due to the thousands of local employees who will permanently be located there.
The simile here is that while some people will launch their own TLDs as a viable business, an end user would always prefer a good domain in a known extension. He wants to make money from his venture, his primary motive will never be to popularise the TLD itself.
Its relatively easier to become a Domain Name Registrar today, however currently ICANN only lists about 944 Accredited Registrars. Not every domain owner or even portfolio holder is interested, or able to, launch their own registrar inspite of the fact that some companies hold hundreds of thousands of domain names.
5. Will the aftermarket crash?
Because of reasons outlined above, not at all. In fact I’ll go the other extreme and say – the aftermarket is going to be thriving like never before. Volumes and price points will continue to rise for those extensions that have already carved a niche for themselves in the popular mindscape.
Plus the aftermarket will grow exponentially in sheer numbers – more TLDs means more sales, maybe not in the short term, but eventually, as more and more of the ever increasing six plus billion inhabitants of the planet come online.
6. What will we do?
If you’re not developing, you’re already missing the boat. I would use “dead in the water” as a long term perspective of your portfolio. All the big guys have been saying this for the longest of times. They have also been busy going about doing exactly that with their portfolios. It not only generates a higher return short term, it also enhances the value of domains themselves.