It’s A Profit Deal

In the 1979 Steve Martin classic The Jerk, Martin plays Navin Johnson, a likeable rube who at one point is working at a carnival and guesses the weight of people walking by for a small fee.

I’ve already given away eight pencils, two hula dolls and an ashtray…
…and l’ve only taken in $15.
Navin, you have taken in $15…
…and given away 50 cents worth of crap!.
Which gives us a net profit of $14.50.
It’s a profit deal.
Takes the pressure off.

For those who are not fans of the new gtld program, Donuts would be playing the part of the carnival boss, Go Daddy the part of Navin Johnson and registrants are playing the part of the fools paying for junk.

It has been almost 4 months to the day since the new gtld madness began. The first seven new gTLDs — .bike, .clothing, .guru, .holdings, .plumbing, .singles and .ventures.

So far here is how the initial seven have done:

.bike 11,308

.clothing 11,505

.guru 59,280

.holdings 4,932

.plumbing 4,363

.singles 7,012

.ventures 5,916

Stats courtesy of ntldstats

Over the last four months we have seen a lot of hyperbole, some shady dealings and a whole lot of confusion. There have been some pricing errors where a registrar told a registrant they had a domain and then came back and asked for more money. Registrars are protected against these mistakes in their TOS, so there is not much one can do when they happen.

There have been numerous domain investors who have not realized that what they registered has a premium renewal like the old days of .tv. So there are some, not all but some registrants out there who thought they got a good name and were willing to pay a one time fee but now know it will be recurring. One does not have to graduate from Wharton to know many of these will be dropped in a year.

I have approached the new gtlds as an opportunity with a lot of risk, unfortunately in some strings all the potential opportunity has been wrung out due to premium pricing. The new gtlds are not for the new domainer imo, they don’t have an understanding of what is good and what is not in .com, now they come in to this minefield of confusion, variable pricing and premium renewals.

The foundation of how ICANN wanted to present the new gtld program has been whittled away to this is about getting in and getting out and making the most money. I have a  hard time believing that some registries will even care about the long term as these new gtlds in some cases are front loaded. By that I mean with the initial launch and hoopla the front end or beginning is the time when the most money will be spent on many of these new gtlds.

Not all registries are cut from the same cloth, some are trying to be creative and market. The thing that remains tricky is who will remember .gallery three years from now ? Who will think it makes sense to pay $1,000 a year renewal for an extension that a small fraction of the online world knows about ?

Premium pricing and premium renewals is the number one reason many people had a problem with Verisign and their handling of .tv. Verisign has to be looking at how some registry operators are handling things and saying WTF ? Verisign has started holding back all two character .tv domains in what can only be seen as a response to the new gtld pricing scheme. Verisign says these names are being held for marketing purposes, (Yeah Right).

More choice has also been a farce, with collision lists and premium reserved names this has not proven to be true, unless someone meant more choice of names that make no sense in extensions many people never wanted. Donuts and their EAP system has rubbed many smaller domain investors the wrong way. Smaller investors who pre-ordered a domain were surprised to find out that someone else stepped up and paid $1,000 for a domain they hoped to nab for $50 on the first day of general availability. Many understand deeper pocketed domain investors can pay up, their problem is with the system in most cases, not the bigger bankroll.

People a lot of times tend to use the word we when talking about the Internet and domains as well. There is no we, ICANN has a very different agenda and opportunity than the registries who have a much different opportunity than the domain investor.

The domain investor is on the bottom rung, and all the banter of this sucks and sham, shell game, etc… is not going to change that. Domain investors have to look at the fact that currently they have no secondary market, there is not a place to sell and generate some liquidity currently, that may change to a certain degree but will most likely be generations for anything close to a fraction of what we see in .com today.

The new gtld registries have an aftermarket it is the domain investor, the domain investor needs to think long and hard before spending money. A checklist would include:

• Who am I selling this domain to ?
• Why would they want or need to buy it ?
• How long can I hold this domain ?
• If I paid a premium, how will I explain this to a potential buyer ?
• What is the overall financial health of the registry ?

There will be some outlier sales, no doubt a few start ups or someone at a mid sized corporation in a marketing department will think a certain name combo is great. They have to worry about the other piece of the pie, the actual web users around the world, and remember the Internet is global, most of these strings are in English, so using a local cctld will still make sense to a lot of people in the world.

A focus on the best keywords possible is what is going to matter for those regging new gtlds, quality over quantity, if you can’t sell your best three why register another 100 ?

The greed of registries may also come back to bite them as they imo should be focusing on getting some of the best names in the hands of those who want to actually use them. A novel concept I know.

I look at the variable pricing on .dance, both of my sisters have been involved with dance for many years and my one sister is a part of many dance organizations. When I told her there was a .dance she said cool. She knows nothing of domains but for $19.99 why not its a cool novelty, good for email, branding in that community and a blog.

When I started checking firstname.dance names for her and some of her colleagues they were $312.50 to $375. So we went from cool to no thanks. These are people that would have used the name, more importantly to a registry/registrar they would have renewed. Now I know the flipside and a registry thinking if I can get one person to over pay at $312.50 well that is 15 years of renewals up front. I get that but for sustainability someone has to use these things.

I am all about opportunity and people making money, I look at the new gtlds individually like 700 different apps, there are gaming apps that hit and thousands that make no money that few know of. So everyone should get a chance to make their mark. I think the things that need to be fixed are:

• Uniformity in pricing at least within the same string
• Make money, don’t be embarrassingly greedy where the extension has no chance to succeed
• Get some good domains in the hands of people with passion
• Stop marketing nonsense and hype to domain investors, it will only hurt you with tremendous blowback, you don’t go after the most knowledgeable people in a niche with bullcrap.

We are only in the first inning of a game that is going extra innings imo, Google has not even arrived at the stadium and that could change the game drastically. The other thing domain investors have to be honest with themselves about is, How does the time frame for acceptance and aftermarket line up with my personal investing time frame ?

It’s a different game today, make sure you are not playing checkers while others are playing chess.