Many people ask me about my view on new TLDs, so here are go few jotted notes worth sharing with the wider audience.
When I heard of .ME for the first time – I knew it would be a good marketing tool so I rushed in for good names. My company was #3 at landrush auctions by numbers, #17 by cash, and #253 or something by price per domain we paid. Coming from finance, I always check things in Excel.
.TEL made no sense despite nice TV ads. I discourage all the people from buying those names and I was very right from the investor point of view.
.CO was short – I had a lunch with Juan and I told him that this is a good extension. It has long term future. My research shows that hardly any domain name longer than 12 chars makes it. .CO along with other jingly ccTLDs is and will be the shortest base. The only problem with .CO was the price. To get any good name we would have to pay at least five times more when we paid for .ME – this killed the financial part, at least by adding some five years to the breakeven horizon. So I enjoyed observing all those names go. Some domainers make good money there, with names like angel.co – they stand great future. Still, less is left to investors though.
As to new TLDs, I spend a year making rounds in the City of London talking to my friends in private equity – we could raise $5m and the idea was to buy 5-10 .sexy names. .ART, .PET, .HOTEL were on the list. I spent a year trying to put numbers together and failed. I would have to put some of my money on the table to get the funding, so I passed, at least for the moment.
If new TLDs will even go ahead, the battle with the US government is not over yet, good luck ICANN! I am not part of it. My belief is that even if things go according to the best case scenario, 90%-95% of new TLDs will fail financially. So you have to spread the bets – a difficult task.
Marketing wise it will be difficult mission too. Can you see all those 1000 new TLDs competing for registrars and registrations? If all that happens in one year, .COM will lose its unchallenged market share, it will lose it anyway, not that fast though. The erosion of .COM as a dominant TLD as well as new approach to web search and online branding (no keywords bonuses soon from Google et al) – short and brandable names will always have good value – the rest will struggle to stay afloat.
This is my view on the matter presented in 10 minutes. With all the info accumulated in the past years I can write a PhD on it – will need another sabbatical for that.
Short link: http://➸.ws/~FnJL$F
Now that the ICANN world is celebrating the important milestone, few thought as of today. My views as of an investor did not change.
Indeed. Even if things get superefficient, which is very unlikely, they will only take applications in 2012. With all the preparations, there will be no new players until late 2013, 2014… this is official. Not really my thinking.
My thinking is that there are too many people on the market with deep pockets so they enjoy the game.
By the end of 2009 I decided not to proceed with it. The main reason – financially not attractive. I had to put some chunk of the money on the table myself, so would not risk losing it and would not recommend the same to other friends in the private equity world.
I ran many models in Excel – bottom line: IRR too low. Only brave and fool ones will venture there, some will be .lucky, most of the other will be .not 😉
There are still many unresolved issues, I am surprised the US government allowed for that. The game is complex, Verisign has too much of the spare cash, some brands would rather buy .canon than chase all TLDs… they have it all over, even on Wiki: http://en.wikipedia.org/wiki/.canon
Bottom line, whether we want it or not, there will be some new TLDs. Do we care? – only a bit. Marketing studies prove that only short and jingly brands make to the top. If your brand is longer than 12 characters – forget it.
Here is another proof that most of the brands are less than 12 letters long: http://www.chrisfinke.com/2011/07/25/what-do-people-type-in-the-address-bar/
http://www.chrisfinke.com/files/2011/07/domain-length-vs-frequency.png
(read the article to get the legend for the graph)