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New-GTLD registries should listen to Margaret Thatcher

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Of all the things Margaret Thatcher was famous for, she was famous for a saying.

“You can't buck the market”

Meaning that market forces are stronger and more persistent than any organisation or government that tries to manipulate them. Put bluntly - if you try and fight market forces you will always lose.

The most basic law of the market is the Law of Supply and Demand. This is Chapter-1, Page-1 of any book on market economics. It expresses the most basic relationship between the price of a commodity and the available supply.

“The supply and demand model states that the price of a good will be the level where the quantity demanded equals the quantity supplied”

If the demand for a commodity outstrips the availability (supply) then it will become “rare” and can fetch a premium price – as the price rises demand will fall back. Where as if the supply outstrips the demand, people will be unwilling to pay a premium for a commonly available item and the price will fall.

The problem that the new-GTLD operators have is that, since the introduction of hundreds of new top level domains, the supply of their commodity has soared, but a lot of them appear to have set their pricing levels based on the days before their new-GTLDs existed.

Ten years ago, before the new-GTLDs, the only choice in top level domain for most businesses was either their national top level domain (ccTLD) - e.g. dot-UK, dot-FR, dot-DE etc, or dot-COM. For a business with international ambitions, there was no choice - it was dot-COM.

New-GTLD registries might argue that their domains are rare, in that each domain name can still only exist once. There can only ever be one “racing.game” - so doesn't that make it rare and push up the price?

The problem with this argument is that it is being made in isolation - they are not looking outside their little bubble. It doesn't take into account all the other alternative possible domain names that a business has to choose from. From the trendy “RacingGame.io”, the consumer friendly “RacingGame.tv” or the new-GTLD “RacingGame.fun” to the most obvious “RacingGame.com” - yes, you may have to pay a premium to acquire the dot-COM, but after that its going to cost you less than $10 a year to keep it.

So what can they do about it? To answer this they need to go back to basics and look at the two sides of the equation – supply & demand.

Its possible that had the supply of new names been restricted, e.g. had all the new-GTLD operators all agreed to only release a few names at a time on a drip-drip basis, then the availability could have been restricted and premium prices might have been maintained. But that horse bolted some time ago.

That leaves “demand” - they absolutely have to increase the demand for domain names – and therein lies their problem. In a world where each business maintains a single domain, that they use for all their branding, the demand for domain names is never going to reach the kind of levels they need to meet their aspirational pricing models.

This leaves them with no choice but to find new uses for domain names. Curiously, (as of time of writing) they seem to have made very little effort in this arena, although an independent UK start-up called Names.of.London may have hit on the kind of innovative and imaginative solution they should be looking for.

Under their brand phrases.for.sale, this start-up is using one of the unique selling points of new-GTLDs – the fact they are often made of natural language words – to turn domain names into clickable phrases that can match a company name, slogan, strapline, product or event – for example taste.of.london (food festival) or just.for.men (hair care product) - as well as a whole host of more generic phrases like baby.and.mom.

These phrase can be used alongside a business' main corporate (dot-COM) branding, not instead of it, to help customers more easily find content and create a human-friendly bridge between traditional media (tv, radio, posters, leaflets etc) and an online presence.

With a phrase like watches.for.men at the bottom of a poster, people seeing the poster can easily read and remember the phrase. Its also easier to enter into their phone and tell their friends about. 88% of existing clicks on these phrases come from phone users, 51% from iPhone users.

Being real domain names, the phrase are recognised by social media platforms, like twitter, and automatically made clickable through to the specified content.

Creating demand for a multitude of domains within every business can be the only way premium pricing can be achieved in a market so flooded with supply. You can't buck the market.

 

 


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