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DI Leaders Roundtable #4 — Big predictions for 2020

Kevin Murphy, December 30, 2019, 13:31:56 (UTC), Domain Services, Leaders Roundtable

Hindsight is 2020, right? Not this time!

We’re rolling up to the end of the year, so for the fourth DI Leaders Roundtable I thought I’d task my panel of industry experts with the wholly original and unpredictable question:

What do you think will be the major trends or developments in the domain name industry in 2020?

I’m wonderfully happy to report that the panel grasped the opportunity with both hands and delivered an absolute smorgasbord (selection of open sandwiches) of informed opinion about how they reckon 2020 will play out.

From potential changes to security practices to ongoing consolidation to increased government regulation to the death of new gTLDs to the growth of new gTLDs, 2020 is certainly going to be a fun year to report on.

In no particular order, this is what they said:

Rick Schwartz, domain investor

Mugshot2020 is going to be just a fabulous year.

It comes down to two words: re-branding and upgrading.

Businesses that have gotten domains that may have not been prime to begin with want prime domains now to help them grow and be taken more seriously.

Businesses, especially global businesses that made the mistake of using non-dotcom domains, have realized their mistake and want to upgrade to a dotcom domain because of their own self-interest. They don’t care what domainers think! They only care about what they think and their bottom line, and in that regard they only have one choice and they all know it.

It’s mandatory if they want to grow and become part of the largest franchise ever known to mankind. The dotcom franchise.

If you add up all the net worth of every company on earth using the dotcom brand, the number is unfathomable.

As we go into the seventh year of the new gTLD experiment, they are meaningless. They haven’t been adopted by almost anybody. Circulation is poor. So many registrations are questionable or penny-promotional. The majority are parked and not in use nor will they ever be. And 99.9% of the people on this planet could not name a single one of them! Not a one!

The poor roll-out, poor marketing, poor circulation, questionable tactics and rolling out hundreds of extensions at one time was a death wish. A demolition derby as I have described and look at the HUNDREDS that are truly dying on the vine. They are not viable!

The registries themselves wanted the same result as dotcom but they smothered their own product by holding back anything they deemed to have any value whatsoever. They wanted the same result as dotcom but they certainly didn’t use the same playbook. There was no such thing as premium domains with Network Solutions. That was what gave life to the aftermarket.

They changed the recipe and it is what it is. Instead of replacing dotcom domains they should have marketed them as an on-ramp to their main dotcom website. That was a fatal choice.

Country-code extensions with dual purposes have outperformed all the new gTLDs put together.

.org has legs. Even .net domains seem to be in better shape than any of the new extensions.

According to NTLDStats.com there are 400 extensions with less than 20,000 registrations. Not viable! Over 300 of them have less than 10,000 and more than 200 have less than 5,000 and most of those have 2,000 or less.

On the other hand, there have been a lot of gimmicks used by the top 10 to gain HOLLOW registrations. Those 10 control 63% of all new gTLD registrations. Leaving the other 37% to be divided by over 500 other extensions. It’s laughable.

And when it comes to aftermarket sales, 2019 was worse than 2018 and 2017. Wrong direction for something that is supposed to be “emerging.”

According to TheDomains.com reported sales, of new gTLD’s are in a nosedive for 2019 vs 2018 and 2017. And most were done by registries themselves and not individual domain investors. Wrong direction!

2017

1,007 Total Sales
$5.2m Dollar Volume
$5,118 Average Price
$500.3k High Price

2018

1,490 Total Sales
$5.7m Dollar Volume
$3,847 Average Price
$510k High Price

2019

865 Total Sales
$3.4m Dollar Volume
$3,940 Average Price
$335k High Price

To me, 2020 is a year of total clarity. The experiment is over.

Get on board or get run over.

Sandeep Ramchamdani, CEO, Radix Registry

Mugshot

Within the new domains space, we will see a clear separation between the top 10 most popular extensions, and everything else. Many new TLDs have been able to jump volumes by operating at ultra-low prices. As the reality of renewals hit next year, the top TLDs by DUMs will more closely represent the most popular strings overall. Registrars will naturally tend towards focusing on these strings at the cost of everything else.

We will continue to see the normalization of new strings, as its visibility driven by legitimate end-user usage, rises. Our hope is that more registries play an active role in driving adoption by highly visible end-users and accelerate this evolution.

Jeff Neuman, Senior VP, Com Laude

MugshotLooking into my domain name industry crystal ball for 2020, I can see the continuation of some of the same activities, the start of some new debates, and even more maturation of the industry. Here are my views on three of the policy issues likely to be center-stage in 2020 (in no particular order).

Transitioning to a new Steady State of New TLDs.

OK, so the next round of new gTLDs will not open in 2020. However, there will be some real progress made towards the next round. The Subsequent Procedures PDP will complete its policy work on its review of the 2012 round and deliver it to the Council, who in turn will approve (hopefully) the policy work and submit to the Board.

The ICANN Board will put out the report for public comment and we will see those that oppose any new more new TLDs come back out of the woodwork to file the same type of comments reminiscent of 2009/2010. They will claim that more TLDs are not needed, we should not be moving too fast (despite nearly a decade between rounds), and that we should not be adding new TLDs until we solve DNS Abuse, Name Collision, WHOIS/SSAD/GDPR/RDAP/UAM, (insert your own issue), etc.

Despite the likely negativity from some, the community will realize that there is value to additional new gTLDs and maintaining a competitive landscape. There is still value in innovation, encouraging consumer choice and competition. The community will rise above the negativity to realize that many of the issues we experience in the industry are in fact related to the artificial scarcity of TLDs and that we need to continue to push forward towards completing one of the original missions of ICANN.

Rights Protection Mechanisms move to Phase 2.

Admittedly most of the community has not been paying attention to the Rights Protection Mechanisms (RPMs) Policy Development Process PDP. Currently it is working on Phase 1: Reviewing the RPMs introduced for the 2012 Round of New gTLDs. This work includes looking at the Trademark Clearinghouse, Sunrise Processes, the URS and the Trademark Claims process.

2020 may likely see the beginning of its second phase, the first ever review of the Uniform Dispute Resolution Policy (UDRP).

The UDRP was the first of ICANN’s Consensus Policies, and one that has been in place for more than to decades. Great care must be taken in the review of this policy which most will argue has been ICANN’s most successful policy in its relatively young history. The UDRP not only protects the intellectual property community by going after the bad faith registration and use of gTLD domains, but it also has been instrumental for registries and registrars to stay out of the middle of domain name disputes.

Prior to the UDRP, the one domain name registry/registrar was constantly in court defending itself against claims of contributory infringement and hoping that courts would not impose liability on it for allowing the registration of domain names by cybersquatters and not taking back names when notified about the abuse that was occurring on those names.

The passage of the UDRP drastically changed all of that. Registries and Registrars could extricate themselves from domain name disputes by referring the parties to the UDRP and agreeing to following/implementing the decisions. Courts agreed that following the UDRP served as a shield of liability for those registries and registrars that faithfully followed the policy. The bottom line in my view is that domain name registries and registrars need the UDRP as much as the IP Community.

The DNS Abuse Debate continues.

Although some progress has been made in defining and mitigating DNS Abuse with a number of registries and registrars signing a Framework to Address DNS Abuse, more discussions by the ICANN community will continue to take place both within and outside of ICANN. In my opinion, those registries and registrars that are serious of addressing true DNS abuse, will continue to educate the community on the already positive steps that they have been taking to combat phishing, pharming, malware, botnets, etc. as well a number of other non-DNS abuse issues (illegal pharmaceuticals, child exploitation, etc.).

Other groups will continue to press registries and registrars to do more to combat all sorts of other non-DNS forms of abuse, while others will strenuously argue that the more that is done, the more we threaten the civil liberties of domain name registrants. The community will realize that there is no right side or wrong side in this debate. Each side of those complicated debate is right.

Hopefully, a true sense of “multi-stakeholderism” will arise where domain name registries and registrars continue to mitigate abuse while disassociating themselves from those that are not as serious about combating abuse, ICANN will develop tools that will constructively assist with mitigating abuse (as opposed to focusing on contractual regulations), and the rest of the community will work on how to combat the growing problem without trampling on the rights of registrants. At the end of the day, all of us have a role in protecting end users on the Internet.

Note: I know the ePDP work on Universal Access will of course be ongoing, but I am sure others will give their thoughts on that. From a non-policy perspective, the domain name industry will continue to consolidate. We may very well see more registry/registrar combinations, registries purchasing other registries and private equity investment. We will see some more innovative uses of brand TLDs and others following suit.

Christa Taylor, CMO, MMX

Mugshot

  1. The predicted 2020 recession will reward agile organizations who embrace machine learning to enhance operational efficiencies, customer experiences and protect corporate profit margins. Naturally, organizations with high operating costs will be the hardest hit with impacts being felt in the second half of 2020.
  2. The potential recession combined with mounting pressures to increase efficiency will lead to a renewed focus on reaching niche markets to expand business.
  3. Protection and representation movement of identities will continue to gain strength and momentum in 2020 as more and more people recognize the importance of controlling their own personal data.
  4. Horizontal and vertical consolidation along with increased synergies will continue throughout the industry.
  5. The 4th industrial revolution (IoT, VR, AI, BC) will gather momentum and provide additional opportunities for the use of domain names.
  6. The next round of new gTLD applications will encounter unanticipated challenges causing delays.
  7. New gTLDs registrations will continue to grow in 2020.

Michele Neylon, CEO, Blacknight

MugshotI suspect we’ll see more consolidation across the domain and hosting space. Afilias will probably acquire a few more under-performing registry operators. Some will already be on their platform, while others will be using their competitors. CentralNic will continue to acquire companies that fit with their portfolio of services.

There’ll be more mergers and acquisitions across the hosting and domain registrar space with a small number of companies dominating most developed markets.

The PIR acquisition by Ethos Capital will close and the sky won’t fall. PIR will increase their wholesale price by a few percentage points which will upset domain investors. There’ll be increased calls on ICANN to take action, but these will be rebutted.

More country code operators will start using AI to combat abusive registrations. In some cases I suspect we’ll see more stringent registrant validation and verification policies being introduced, though many ccTLD operators will find it hard to balance maintaining new registration volumes while also increasing the overall “quality” of the registration base.

There’ll be an increase in internet shutdowns in less-developed democracies, while governments in Europe and elsewhere will increase pressure on social media companies to stop the spread of propaganda. Internet infrastructure companies will come under more pressure to deal with content issues.

As we enter a new decade the role of the internet in our daily lives, both business and personal will continue to grow.

The big challenges that lie ahead are going to be complex. Without increasing security there’s a tangible risk that consumers will lose trust in the system as a whole and governments will want to impose more regulations to ensure that. One of the challenges is going to be balancing those increased levels of security and consumer confidence while not stifling innovation.

It’s going to be a fun future!

Dave Piscitello, Partner, Interisle Consulting Group

MugshotExpect increased scrutiny of the domain registration business. Our study and others to follow will continue to expose enormous concentrations of abuse and criminal domain registrations at a small number of registrars.

Domains registered using bulk registration services will attract the most attention. We call these “burner domains”, because cybercriminals use these in a “register, use, and abandon” fashion that’s similar to how drug dealers use disposable or burner mobile phones.

Governments will become more insistent that ICANN does more than acknowledge their recommendations and then defer adoption. They will increase pressure to validate domain registration data and legitimate businesses will happily comply with the additional validation overhead because of the abuse mitigation benefits they’ll receive.

There’s a possibility that a government other than the EU will adopt a data protection regulation that exposes the flawed logic in the ill-conceived Temp Spec “one redaction fits all”. Having decided to “run with GDPR”, what will ICANN do when faced with a government that insists that email addresses be made public?

The governance model will also fall under scrutiny, as the “multi” in multi-stakeholder appears to be increasingly dominated by two stakeholder interests and public interest barely receives lip service.

Ben Crawford, CEO, CentralNic

Mugshot

  • There will be more creative ways to bake identity, cyber security, crime prevention and policing, and IP protection measures into domains and registration services
  • More registries will be auctioning their own deleting domains
  • Large tech firms, finance players and telcos will play and increasing role in the domain industry
  • Further consolidation of gTLDs as the bigger registry operators continue to acquire some of the smaller ones
  • More regulations impacting the domain name industry
  • Smart independents like .XYZ, Radix and .ICU (which went from zero to 4+ million DUMs in 18 months) will continue to dominate the nTLD space (without blowing $100m on the rights to their TLDs)

Jothan Frakes, Executive Director, Domain Name Association

Mugshot

Consolidation will continue — look for a lot of M&A activity and corporate development. Lots of moves and role changes with people changing companies as the consolidation occurs. With change comes great opportunity, and there will be a lot of change.

The industry is kicking off the year with oomph — the new location and format for NamesCon, billed as as the Domain Economic Forum in Austin. The event looks promising, as it begins refreshed and demonstrates the strengths of the team who produce Cloudfest. Austin, like Las Vegas, is a mecca for tech startups, but larger, so hopefully the convenience of the venue to the local tech companies, along with with GoDaddy demonstrating a heavier presence at the event this year will be a big lure to attract more new faces to this great industry (and event).

There will be more focus on making things easier for new customers to use and activate services on domain names. Cool technologies such as DomainConnect or other methods that enable “app store” type activation of domain names will continue to make it simpler for a domain name owner to activate, build and use their domains. This is a crucial evolutionary step in the business, as it plays a significant role in renewal rates and overall customer growth.

We’ll see further innovation in the use of domain names become more mainstream. IoT, GPS/Geo, AI, Bots, voice, AR/VR and other technologies will drive expanded use of domain names. Even Blockchain, which seems to have gotten more pragmatic about purpose, has a lot of promise with how it can interact with DNS now that the hype has scaled back and the designated drivers that remain are plowing forth with their efforts to deliver on the core purpose/benefits they set out to deliver.

Domains, as well as the cool things that you can do with them, will continue to be a growing business that enables people and organizations to build and do great things.

A very happy new year to all DI readers and supporters!

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Comments (4)

  1. Andrew Hyde says:

    All experts considered, I have to agree with Rick, the numbers don’t lie.

  2. John says:

    While a number of the experts danced around the edge of the volcano, not one came out with a prediction that U.S. Senate hearings would be convened, and that the most recent, disastrous and failed TLD round … together with domain abuse on a massive and criminal scale worldwide … would result in the repatriation of the global DNS management system back into the direct control of the Government of the United States of America under President Donald J. Trump, a fearless leader, albeit one with bone spurs.

  3. Brian says:

    Same here, The domain king is always right and DOT COM would be the king always.

  4. Rubens Kuhl says:

    While I agree that registry consolidation will continue, I don’t think that Afilias will be largest buyer. They usually offer low values for such assets, and there are others out there with more appetite.

Leave a Reply to Andrew Hyde