I’ll keep it simple: ICANN opened the sack of Aeolus, containing the winds, and they can’t be stuffed back in – get ready for some extreme turbulence.
In other, less lyric words: the introduction of gTLDs is not an experiment, or a partial guesstimate of how the Internet might evolve into something.
It’s the real thing. It’s approved. It’s happening.
It can’t be reversed.
The bigger the resistance domainers display, the harder their downfall will be. Embracing the new gTLDs as a fully equal alternative to the existing TLDs, including the almighty .com, is the smart thing to do.
I know, it sounds like heresy and a deviation from the domainer bible.
But I didn’t write the book, ICANN did – so shooting the messenger isn’t effective.
Here’s another thought-provoking statement available to digest: your super-duper, ultra-generic .com might now have a capped worth of around $200,000.
How so?
In some cases, a company willing to wait out the ICANN application process, will probably spend the $185,000 dollar application fee, plus assorted costs, than double that amount or more for the matching .com.
Obviously, not every .com will fall in this category: there are generics that match a list of terms prohibited by ICANN to become gTLDs; there are also plurals and singulars of the same keyword that face scrutiny and resistance during the application process.
Overall, however, a company might choose to take the gTLD application road, a highway that is wider and offering lots of other possibilities for the branding and sharing of products through domains allocated under the gTLD, than spending an exuberant amount of money on the .com.
The era of smart domain pricing began when ICANN pulled the cat out of the bag. But enough with the cliches, you decide.
As opposed to an annual fee of $10 for a one word .com, compared to the regulatory mubmo jumbo of icann, and new gtld annual renewals?
Ron – If you want $300k or more for that .com, your asking price would be less appealing to a company that is after a solution that encompasses more than just a domain. They might as well pay the gTLD application fee – renewals aren’t nearly as high – and become a .whatever registry. It’s all related to a company’s long term strategy.
I already explained this isn’t a silver bullet, but you’d be surprised how many .com domains priced in the millions would suddenly become re-evaluated to match the new reality.
We may well be heading toward a future where the value of a domain name will be associated with the development of that domain more so than the intrinsic value of the name on its own. The winds of change are blowing and there is bound to be a paradigm shift in domain investing and domain valuations.
Robin Jilderda
Robin – You absolutely nailed it. It will be less about the name/TLD, more about the core business it represents.
So, here’s the solution to retain the worth of every high-valued .com, or other domain really: start developing it into a viable business. Your sign is worthless without a store and inventory to sell.
Acro, your capped prediction might hold true if there was only one possible buyer, but to be a ‘killer generic’ presumes the opposite would be the case.
And if one – or even better, a number of entities – pays the $185,000 fee and associated maintenance costs for a new TLD, and numerous naming permutations thereof, that still leaves ample room for one company to negotiate to buy the ‘killer generic’ dot com that has not decreased in value, but has increased as a result of those various new TLDs.
fizz – If you’re seeking $1,000,000 for your example.com, I doubt that in this new reality you’d get it from the company that wants to:
1. Get the Example brand
2. Create products under the Example brand
3. Franchise the brand out
This isn’t about a company declaring their intention openly to buy Example.com and everyone jumping in for the gTLD, unlike the current gTLD opening phase. It’s about paying $1 MM versus considerably less, even when other operating costs are concerned.
I’m sure that small companies and individuals that don’t have a high budget won’t take that avenue. The bottom line is, the scenario I describe is quite possible. My post serves as a wake-up call about a new reality and its many possibilities. Some are uncharted, and we need to use caution and an open mind.
This could be true. In any scenario I sure would not take the chance in not owning the .com. Things like car.insurance and carinsurance.com could become problems for the .insurance extension.
It’s going to be quick end game for 98% of these extensions after BIG G starts giving away domain names they have to much marketing power.
IMHO -Owning any extension in more than 3 letters is not a good idea. Regardless of the word. Though securing the extension and matching .com would give anyone peace of mind and protection of the main asset.
I hope Old Aeolus blows my ship in the right direction 🙂
Donny
If you are in the business of selling x, would you rather own Keyword.com or .Keyword? Think Hotels.com vs .Hotels or Sports.com vs .Sports or Singles.com vs .Singles. I would prefer the .COM by far.
Leonard – Your thought process doesn’t seem to take into account that it’s already happening.
When Singles.com has a price tag far exceeding that of viable alternatives, it makes sense to become a .Singles registry and own the vertical.
It’s not a matter of preference, it’s a matter of a) dollars b) adjusting to a new reality: that alternatives at a lower price will naturally affect the asking prices of super generics.
Donny – The bias against TLDs longer than 3 letters is understandable; when .info came out, it broke the mold. Ten years ago, the Internet was a far cry from what it is today; social media, content collaboration, technological evolution all lead to a natural change in how standards are defined.
However, this new top level expansion isn’t about gratifying domainers and keeping the ‘faith’ – it’s about introducing new lanes to a crowded road. In fact, if you think it’s too wide now, in 5 years you won’t have other options than to take that route. In an analogy, my suggestion is that if one is only used to driving on a country road, they learn how to drive on the highway as well.
I don’t disagree that .com is the instinctive suffix to attach after a keyword. The fact is, that due to the method behind the structuring and allocation of gTLDs, every Registry has a plan for .whatever and obviously the dollars to market it accordingly.
My argument in this post, is about the ability of traditionally high-priced .com domains to continue fetching such high prices indefinitely. In my opinion, this will change; it won’t happen overnight, but prices will most likely be adjusted lower, versus higher.
Sorry Theo but I don’t agree on this and there many reasons.
Just a few are:
1. Cost of a single new gTLD application is a lot more than the $185000.
2. Annual cost and complexity of running the back end of a registry costs a lot. (That is why companies with many new gTLDs have more chance in making money of new gTLDs. Cost is divided.)
3. Nobody is going to invest $500k or more plus annual costs and have the risk of losing traffic the .com. (That applies to someone getting a generic new gTLD to run it without selling domains)
And even if the .com is not developed when you get the new gTLD. Can you risk it that noone will ever develop it? Or that a competitor may buy it immediately after?
There is no cap. Value of most matching .com of new gTLDs has already gone up.
In 10-20 years when all of the above have changed (cost, new gTLD recognition, etc.) maybe it would be true but until then…
Acro- You make some really good sense.
For example, I look at mutalfunds.com and .mutualfunds now if a company is just buying the .mutalfunds for themselves to use that, is that smart or would a registry want to take a stab at selling the abc?.mutalfunds to the public in the hopes of getting 50k registrations @20 bucks. I have no idea.
This very well could make companies think twice about buying a .com and just creating their own .whatever so I could see where some values could go down for .com.
I guess the consumers will decide if any of these new extensions make it. If people are not using these names and putting a real business behind it then they could crash.
I just saw the pre-reg prices for some new .whatevers at godaddy, 800 to pre-reg on .luxury maybe I misread something but if this is the trend then some of these guys are dreaming.
2 stalls make a market place. That a looong way to go / http://blogs.verisigninc.com/blog/entry/verisign_to_issue_new_domain / for gtld classifieds and the (brand) .com or (brand) country code within the constraints – limitations of one / two word generics, Yes I will buy from Ebay or take a gratis add on a classified, But send the packaging in a Louis Vuitton (brand) box =.com
Depends on the domain. The outlook is particularly uncertain for generics that address a niche within an industry, if that industry becomes dominated by a strong tld. Besides offering their own services, if the registry throws its weight behind niche.tld, then it won’t be the .com doing the killing.
Kosta – The company that in my example takes the road of becoming a gTLD registry has already made that decision based on the cost comparison. If example.com is on sale for $500k, they might choose to pay half as much instead. The annual operating cost that you mentioned is inaccurate. Registry-in-a-box services are already being offered at a minimal cost, and that’s the beauty of the new economy: the process can be replicated infinitely. On the alleged increased value of .com domains matching gTLDs, that’s the reverse process of what this article is about: I analyzed how the .com value will be capped in order to avoid seeing a buyer go the gTLD way. There will be no more exuberance in pricing, and Google – a big gTLD player – will take care of that.
Donny – The future is unpredictable, but trends can show what kind of future it will be: one with more options and less .com supremacy. Verisign is already promoting .net heavily, do you know why?
Jonathan – Right now, the world knows only of what they are familiar with. This is about to change. Whoever said that “.com is your grandfather’s TLD”, wasn’t trying to be insulting, but was simply ringing the bell of upcoming change.
dab – Absolutely. My post isn’t about defrocking the .com, it’s about how the canonization of new gTLDs will introduce multiple domain churches; everyone should be aware of that expansion of the faith, today being Sunday and all.
Theo, I did not say that $500k will be the annual cost. $500k is my estimation of what will cost you for the application only. Plus the annual cost that I estimate it to be at least $100k per year. Plus any man power to run the new gTLD. It’s not easy as changing the nameservers and renewing a domain.
Registry-in-a-box might be cheap enough if you run 100 registries but for 1 it is not so cheap. Maybe in the future…
You said that the .com price will be capped to avoid going the new gTLD way but I believe that the opposite is the true. Anyone going the new gTLD way will increase the value .com the matching .com.
Over the next 20 years a new gTLD would cost about 2.5 million to get and run. Plus you have the .com leak to take into account and security issues if you intent to run solely on the new gTLD. There not a lot of .com that are worth that.
Do you think that sex.com will be priced at 200k tomorrow? No way.
Love the defrocking analogy. The brand / user patterns take a long time to build, “grandfather’s TLD ” was a snide comment that did insult one’s intellect. All change is good if it simplifies the process, Google the executioner awaits the public jury before serving up gratis domains + anything you ever wanted at auction.
Theo, I replied to you on The Art of The Name, as I was not saying sounding a caution bell meant drinking Kool Aid, the first part of the article was about things I have seen written on both sides.
I liked this article its why I linked to it, I agree domainers have to be looking at so many things and keep an open mind to everything no matter which route they choose, I think nothing can just be dismissed and you need to follow a lot more data now. Things have gotten a lot more complex and there is so much more nuance now, that along with a lot more homework for domain investors.
Nice food for thought 🙂
OK now let’s say that there exist 5 big players in the “Example” category. Each one’s options are :
– Buy Example.com
– Apply for .example
– Buy a lesser .COM
I believe .example will have high promotional costs, and still it is not clear how G will treat this extension – is it ever possible this extension will be deemed more trustworthy than .COM ?
Another thought, is it possible that the company behind .example will be able to ultimately grab Example.com from its owner ? Lately there is a trend to favor complainants in UDRPs under the “renewed in bad faith” paradigm.
Kosta – The application cost is $185,000 and due to existing ‘registry in a box’ services, the annual cost is considerably lower than your quote. Essentially, you can be a single person running the entire show, all you need is a corporate formation. Donuts, Inc. did that 305 times, are you saying they invested 1/2 million dollars per application?
Regarding the price capping, a domain that is for sale at $500k would have to face the new reality that its immediate potential buyer with a matching brand won’t blink twice before applying for the gTLD. If the opposite is true, e.g. that they would be raising the price of the .com, it’d be an instant turning away of customers that don’t even appear in the vicinity at the time. Google won’t care about the TLD a brand is built on. Keep in mind my concern is about undeveloped domains, Sex.com is a developed venture; I never said that it’s worth $200k. So build it while you have it.
Jonathan – Amen 🙂
Raymond – Thanks. Glad to see that we agree that conditions are changing and everything is possible.
Saki – A lot of new gTLDs incorporate technology that assures trust at registry level, even .XXX provides that. If you referring to brand awareness, that comes with time and nothing is promised to achieve this overnight. But Bob’s Mall Tattoo Shop will go for Bobs.tattoo, instead of a long tail .com, rest assured. The last part about UDRP proceedings initiated by the .brand owner is interesting; I am not sure but it’s a question that requires an answer from legal experts.
Theo you are not reading my comments.
Quote from above regarding annual cost: (That is why companies with many new gTLDs have more chance in making money of new gTLDs. Cost is divided.)
Donuts didn’t pay 500k per application but those who applied for 1 did.
My estimate on application are not just ICANN fees. It’s ICANN fees plus all the work to prepare the application. If you have just one then $300k on top of the ICANN fee is a very moderate price. That is why domain consultants are making huge $.
And sorry but you can’t be a single person running the show. Even if you are brilliant and have no life you sure have to make a living and pay the annual ICANN fee, registry in a box fee, insurance etc. $100k is again very moderate.
And you are talking about a registry that sells no domains. So no domain registration income. One man show with products, brands etc.? Not likely.
Sex.com is “developed” every time it’s sold. It’s not so difficult to develop an adult website with that much built in traffic. It is currently still in Beta. 🙂
Still believe that london.com, nyc.com, web.com, hotels.com etc. price has gone way up since announcement of the new gTLDs.
@Saki There is no such trend. There were a couple of decisions by complainant-friendly panelists. And it’s not the first time in the past 15 years.
You make some convincing arguments, how do we know you’re not steering us away from .com so you can buy them? 😀
Kosta – Your quote of $500k as the cost for a single gTLD application, as opposed to some other average when applying for more, does not compute. Applicants don’t get discounts for more than one gTLD. While operating costs do exist, the “registry in a box” product makes the process very transparent. If one had to run it by themselves – obviously, companies already employ IT, marketing and management personnel for the job – they very much could.
My position on this post is exactly what you don’t seem to understand: price determines whether a company buys an (overpriced) .com/.net/.org/ccTLD versus creating a brand and a gTLD from scratch. Hence, my reference to price capping.
You used sex.com in an attempt to claim that its $13 million price tag would go down to $200k. I didn’t say that, because however you shift it, sex.com is a developed domain and business. In fact, currently it’s the best version in terms of content it has ever been. However, keep in mind .sex is coming out, along with .adult and .porn.
Richard – My entire argument is about price adjustment of overpriced generics. The .com domains will continue to be the prime option for many years, hopefully. This does not mean we should not be ready for some toppling of supremacy in the domain name space.
Theo,
1) applicant with 1 application cost: $185k ICANN fee plus consultant fee: total $500k
2) applicant with 100 applications cost: $185k ICANN fee plus their internal team working on just applications for a year: 100x$185k plus 15 people working for them: total 18,5m plus about 3.5m = 22m
22m for 100 applications puts the cost of each application at $220k.
That is the discount.
Not sure when do you expect this price cap to kick in…
We don’t even know when the second round of applications will be. Or when there will be no rounds at all. You could then just apply today and in a couple of months you will have your new gTLD. Not happening very soon.
The price cap will only exist, if ever, when new gTLDs have a widespread recognition(10-15 years?) and when .com traffic is equalized to all other gTLDs (20 years to oo).
Kosta – I honestly don’t see ‘consultant fee’ to be $300k. In my opinion, these numbers are extremely massaged; if you need 15 people to run a brand, you don’t hire separate employees for the task: you assign it to existing ones.
Just because we don’t know exactly when things will change, it’s good to be ready before the change occurs. I would not put such brand recognition that far into the future, the Internet adapts fast these days. In 3-5 years we’ll be ‘swimming’ in .brands.
We agree to disagree on the numbers. But at $300k I am really lowballing the fee.
The 15 people are for new gTLD companies created just for the purpose of preparing and running new gTLDs. These companies didn’t exist before the new gTLDs. And there was no brand.
The thing is that in your article you say that .coms have a capped price right “now”. That is clearly not true. Now you say 3-5 years and I say 10-20 years (if ever).
Let’s wait and see. Meanwhile I see my domains selling for 5 figures faster than ever.
I misread your comment. Your 3-5 years was on brand recognition.
So the cap is on right now?
Kosta – I think the real number has yet to be defined; my point isn’t the precise amount but the trend itself.
My article is related to a company’s quest for a domain, in the process of branding itself, creating a new product or changing strategic focus; in the greater world those companies already possess the basic personnel to address the matter, from a marketing and IT department to legal and management. This is not about Joe Blow wanting a .com for his weekend project.
Regarding price capping “now” versus in the future, this is from Ryan Colby of Sedo, as posted today: “Searching for one word .com domains for sale under $50,000 in ANY category. (ryan@outcomebrokerage.com)”
I see Ryan Colby’s message as merely stating a budget level of $50,000.
Well what a broker is searching for is not exactly a trend. They are searching for domains they can sell fast and get a commission.
I am searching for 1 word .com category killer domains for $5k. Frank, call me. 🙂
Sandwich.com sold in a well-publicized auction for $137k today. Reserve was only $50k.
Definitely a steal; had Yahoo! been asking for a million, that would not sell under the new gTLD reality.