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The Domain Industry at War with Itself

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In the beginning there was dot-COM and everything seemed fine. Users were happy with it and understood what it meant, so business knew where they were – you buy a domain in your country for a local presence, or a dot-COM for a global presence.

The problem was dot-COM was filling up – well, that's not quite true as the theoretical capacity is almost infinite, the problem is that each name can only exist once – this means there was a scramble for the short meaningful names. Quickly pretty much anything even vaguely sensible was taken.

With nearly 130 million names now registered in dot-COM, any new business will struggle to find a name of their choice. Most decent names are now either in use, or held by domain investors.

Domain investors, like real-estate investors, have bought up prime locations that were not already in use, and offer them for sale to developers. In the case of domain names, this means entrepreneurs with new ideas who want to develop a brand into a global business.

It was against this back-drop that ICANN decided the world needed more choice, and opened up the top level of the internet for anybody who wanted to join.

The result was over 1000 new generic top level domains (new-GTLDs) which cover almost every conceivable area of business and society – but opinions on them are sharply divided and getting more divided by the day. But why has the new choice resulted in the outbreak of war?

To answer this we have to look at the two sides of the battle lines.

On the dot-COM side you have domain investors who have sunk many thousands of dollars in rare and desirable dot-COM names. These investments have the potential to be threatened, as the oversupply of new top level domains should cause downward pressure on prices. Although this is yet to materialise, it is still in their interests to talk-down any potential gains by the newcomers.

Drawn up against the dot-COM lines are the cohort of new top level domain registry operators, all convinced they are sitting on a gold mine, but often struggling to turn their ore into polished metal.

The new-GTLDs struggle against the twin difficulties of user ignorance, and indifference in the investor community. To some this indifference may seem a little odd, given all this new real-estate, why aren't investors piling in?

The answer may be two fold. Firstly, it is not the job of the speculator to create the demand for the product – that is the job of the original supplier – in this case the new-GTLD owner.

Secondly, the new-GTLDs nearly all have a banded pricing model – pricing more desirable names at a range of ever increasing (often eye watering) prices. This cuts into, or even eliminates, the margin available to the investors and increases their exposure to risk – this is not a way to make friends and helps widen the battle lines.

In many cases the “purchase” price and the “renewal” price of the domain are the same, effectively meaning the registry operator is not selling it, but renting it out. Few investors would be interested in getting involved in that sort of model.

dot-COM – for

  • User familiarity
  • Controlled renewal prices
  • dot-COM – against

  • Limited availability
  • Desirable names often fetch 6 or 7 figure numbers
  • new-GLTDs – For

  • Massive availability
  • new-GLTDs – Against

  • Unfamiliar to users
  • Erratic and uncontrolled pricing
  • Surely the answer to this war has to be “why not both?” - If the overall demand for domain names can be expanded by creating imaginative and innovative ways to extend their usage, then both sides win.

    This is what UK start-up Names.of.London look to achieve with their product phrases.for.sale – they turn slogans, straplines, events names, product names and business names into clickable phrases using the unique selling point of many of the new-GTLDs – the fact that, unlike “dot-COM” (which can sound more like computer code) many new-GTLDs are made of natural language.

    The creates phrases like baby.and.mom, beer.for.sale, hooked.on.fashion and cycle.to.work. They can be entered into any phone or browser and are automatically clickable on social media platforms like Twitter.

    Unseating an incumbent in any business sector is difficult, often it can be easier to carve out a new market playing on your own unique selling points to appeal to customers in novel and innovative way.

     

     


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