Will New gTLDS be Profitable Investments? Will they Sell and Scale?

Saturday, June 07, 2014

By: Dianne Heath

The introduction of new gtlds is routinely compared to the advent of the dot com and its widespread adoption by the public, even the less tech savvy. However these comparisons are somewhat baseless and deceptive because we can't assume that the new gltds will have the same type of success as dot com or dethrone its significance without considering the differences in conditions and studying the interaction of circumstances that led to the dot com boom. For example, domain and website companies didn't need cumbersome separate advertising expenditures to vouch for the dot com; it was simply how you got online. Companies just needed to advertise the benefits of developing a website, generate excitement to be a part of the internet and it was inferred that a dot com meant a credible web presence. Also, the 90's were a supremely different economically and culturally than now.

To not openly acknowledge this and tout new gltds as a new innovation that is supplying assumed customer demand, which has vastly evolved, is quasi fraudulent. There are several obstacles that need to be confronted before presuming new gtlds will scale and be consistently used by millions and not just thousands of stale investments.

Old model of online ventures is saturated: New gltds are mismatched with their market and doesn't directly cater to the appropriate demographics. In the 90's, the internet was unfettered territory and thus there were high incentives for early adopters to compete. New gltds will have competition with millions of dot com websites. Acquiring a domain name is the least of their problems. Since the old model of online ventures is saturated, the high tech skilled entrepreneurs are moving on to more profitable and less competitive ventures such as apps. For ambitious entrepreneurs that still desire to build a platform online, we can't assume that an appealing domain name is the highest barrier to entry but rather an exciting, innovative idea or concept that attracts investors.

Also ambitious individuals with technical skills have cushy and prestigious career opportunities that sharply diminishes the need to embark on the perilous startup journey. In the 90's, the tech industry was still blossoming but now they are billion dollar industries that are extracting the top tech talent from the job and start-up market, and possible customers for new gtlds. 

Need small and midsize businesses use but these demographics are difficult to reach: Small and midsized businesses can intimately scale new gtlds to individuals by word of mouth and by example. However before this commences there needs to be initiative from renowned companies widely recognized and even celebrated as industry leaders with the disposable revenue and talent to make the risky investment. Once industry leaders take the plunge, admiring and competitive small and midsize businesses will be more eager to follow along to as the community and regional innovator. Industry leaders transfer importance, trust and prestige to new developments while traditional small and midsize businesses don't have the clout, recognition and budgets to buffer the risk and  burden of getting the nation to adopt a new developments. However the outlook for this initiative by industry leaders are dim since they are settled in and invested in dot coms. The future for dot brand, like .google, appears very promising but they eclipse the budget of small and midsize businesses. Since these companies probably won't win privileged and exclusive control of dot generics, like Amazon in the .book debacle, they have hardly any vested interest in guaranteeing its success. The fact that industry leaders are not moving to new gtlds sends an implicit message about their lack of significance. It exposes new gltds as the cheap option compared to dot com or dot brand and to be avoided especially since small and midsize businesses have to work harder to gain status and legitimacy. If industry leaders are not heavily involved then under-resourced and time constrained small and midsize businesses won't have the adequate guidance on how to use new gtlds. 

Claiming new gtlds will have widespread adoption also ignores the predominance of social media site such as Tumblr. Before there were active fan sites for celebrities now it is official Facebook pages and Twitter. Before there were personal bloggers and now there's Instagram where people can showcase their lives like a glossy lifestyle magazine. Social media takes a huge chunk out of key demographics that would build visible and active websites on new gtlds.

Needs widespread authentic use to build prestige, trust and familiarity: The advent of the dot com and even dot edu resulted in naive, non-scripted and experimental success stories of early adopters that convinced others to overcome their hesitation. Many did not know about domain investing and ironically that's precisely why the dot com begin to build in value after several years because value comes from use. Without the eventual and widespread authentic use of dot com, generic domain names such as finance.com would have never been valuable. Visible and admirable success stories centered on new gtlds risk being overwhelmed and crowded out by more established dot com websites that have a 10 year head start. While dot com hit the ground running, new gltds appear stunted in their authentic use since the majority are being held as an investment or to redirect to dot coms.

Some critics of dot com explain that dot com means nothing and generic domain names adds meaning and trust for new visitors. However that is beauty of dot com, it focuses the visitor's attention on the brand and not being defined by a generic word that could already have negative, bland or unsettling associations and connotations. The structure of new gtlds dilutes that possibly of branding. They are too limiting and suffocates the prospect of expanding. Lack of branding also indicates low status and will not be an viable or attractive option for those seriously considering a name space as a platform.

Stability and long term use is also required to add prestige and trust to new gltds. If popular websites simply move on to dot com once they save enough money, like del.icio.us moved on to dot com, that uplifts and reinforces dot com as the pinnacle. This behavior influences other webmasters with new gltds that it isn't ideal for building a permanent platform but new gltds are just a starter platform. If malicious webmasters are disproportionately attracted to the preemptive meaning from new gltds this could compromise the aggregate trust in new gltds. Dot com namespace is able to absorb this predicament due to the trustworthiness of other websites that call dot com home. However new gtlds may not be able to absorb this threat and lose credibility. Just like co.cc was dropped from Google's search due to prevalence spammy sites, new gtlds could drop from user's trust.

Being an expert in new gtlds require a new or modified skill set and perspective than dot com since circumstances are different. Keep this in mind as you invest. Some new gtlds will be more widely used than others due to the industry they appeal to and their unique needs. For example, some industries don't require or need branding, especially the ones that operate behind the scenes. While others just want complementary websites, as lovato.club is for demilovato.com. I doubt new gtlds, with the exception of .brand, will widely sell and scale outside of other domain investors; but culture evolves and the new generation could accommodate the inclusion of new gtlds. New gltds are still somewhat exciting. I have one and plan to register a couple more.


DNPric.es said...

Some numbers and answers were touched here about a year ago: http://thenextweb.com/insider/2013/06/09/how-many-domain-names-will-the-explosion-in-gtlds-really-produce/

Quite rightly!

Anonymous said...

The gtlds will not be accepted, will only cause confusion and have no resale value. They will help the owner of the .com version by bleeding traffic over to him. They are a bad idea and will never work.