How will new TLDs affect your portfolio?
(Editor’s Note: this is a guest post by Shane Cultra, author of the popular domain investment blog DomainShane. I was interested in hearing new perspectives on new top-level domains, and Shane was good enough to provide his thoughts.)
It was inevitable. The growth of the internet and the ever increasing number of people using the web, was going to cause a shortage in domain names.
As the big three – .com, .net, and .org – reached the point that available domains were merely comprised of unpronounceable and hard-to-spell leftovers, internet users began looking for more.
Countries began to market their own ccTLDs as generics, trying to appeal to both local and international users alike. Domain name registries saw the dollar signs and began clamoring to introduce alternatives.
So now that they’re on their way, how will new TLDs affect the value of your domains? Will .web, .car, .love and all the other endless possible TLD options impact the value of your portfolio?
My answer to this question is simple: yes.
There is no doubt all the new TLDs will impact your portfolio’s value. If you own anything other than .com, I think the value of your domains will fall. I feel that .net and .org will fall the least.
The real answer comes down to how the search engines rank the new TLDs. The TLDs that hold the most value will be able to compete in both the US and the international search market.
If Google treats them well, then they will be in the upper tier. The problem is the more TLDs that Google ranks, the more choices a domain owner will have.
As we know, the more choices the lesser the value and chance of a sale. If there are only three shoes on the shelf from which to choose it bodes better for the seller than a shelf with 100 shoes.
In my opinion, the real money being made is by the companies selling these new TLDs. The new releases will leave the domain investing community and domain buyers in general “holding the bag”.
The .travel and .mobi TLDs showed early what will happen as people shy away from a TLD after a short period of time. Speculators were left with worthless domains.
In order for a new TLD to work it takes massive adoption. The local geographic community, the domain investing community, business, and the general public must be a part for it to succeed.
The new .co TLD has come as close as any in the last five years to getting over this hump; .tv, and .me, have also found their place.
A profitable endeavor for the companies managing the release , but only profitable for a handful of people that hold the best of the names.
So back to the original question, will this hurt the value of my portfolio? My second response to my “yes” answer is I think it will increase the value of your .coms.
Dot-com domains are king and will always be the king. They are scarce , wanted and all those that hold the same keyword in alternative TLDs wish they held the .com. Those that tell you different are either naïve or lying.
Domains are often compared to real estate and .com to beachfront property, and I think it’s a good analogy. Beachfront has continued to be considered the most-wanted and highest-priced real estate.
I would throw in big city real estate in this comparison too. You can still buy homes and land outside the cities and away from the beach. Homes just as nice or nicer. Areas of land that are twice as big but still don’t have the value of the beach and city.
When people think of the internet they immediately think .com. When they think of high priced real estate they think of the beach and city. Along with beach and city property, I believe people will always perceive the .com as the highest value.
This is how I am approaching my investment in newer TLDs. I am treading lightly. I continue to invest heavily in .com with a 10% investment in other TLDs. That 10% is invested in super high-quality keywords.
I have no plans to invest in lesser domains, as I think the only possible way to make a profit on my investment is development and I don’t feel comfortable developing domains outside of my field or keywords from random categories.
When I buy outside of .com, I tend to buy in my niche (the names of plants) as they are in my “comfort zone”. For example, I purchased hosta.me because hosta.com is taken and would cost me a ton of money.
I have all the photos and information to develop a site and with hosta being a very collectable plant I thought hosta.me would work. I also can target US Internet users using my webmaster tools – the audience I am trying to reach.
That same domain was a hand-register which tells me that although that has value to me, I would have very little chance of reselling that domain. In short, a bad investment for a flip. In my opinion, this will be the case with 98% percent of all the new TLDs so be very dot-careful.
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Spot on, Shane.
.com will remain king, but the extra supply must have some effect on value, particularly on .coms that may compete against community tld’s.
I agree. If someone wants to buy NewYorkHotels.com, but the asking price is too high, he may well settle down for hotels.nyc or NewYork.hotels, if they are cheaper to him. They are easy to remember and advertise. With all the new TLDs and their commercials, people will get used to anything after the dot without confusing with .com.
Those who think .com will benefit from new TLDs are either naive or lying. 🙂
Other TLDs that were “launched” over the last ten years, like .tv, .travel, .jobs, .me, .us etc, haven’t been a success. A couple of these registries have been struggling with bancruptcy, and none have had any real success in development or popular recognition. Any new TLD will have the added problem of finding traction in a flood of other extensions that will all be released in a short space of time. Previously, these registries have relied on speculators to pay the bills, but the speculator cash will be spread pretty thinly amongst dozens, or even hundreds of new extensions. Even .co, which has probably been one of the more successful launches (at least for the registry, not for the speculators), has failed to gain any real recognition in the general population. Start a website on a .co and most people would end up at the .com.
@James
I am neither naive or a liar. DotCom, particularly primary Geos and Generics, will come out way ahead about a year after the intro of the new TLDs after the dust has settled and marketers realize the limitations and liabilities of the new TLDs. The public, not us, will have the final say and they will embrace the new TLDs at the speed of a pregnant snail. Anyone who says otherwise is either a speculator or lobbyist 🙂
Believe it or not, I am not heavily invested in domains.
Let’s think about it this way. Introduction of new TLDs is not a new technology that will create new wealth. It will only attract some money from the current pool, no matter it’s the end user pool or the domainer pool. We have seen money went to all these new TLDs in the past. Some money may come back later to .com, some money will stay there. There is just less money for .com in short or longer term.
Ask yourself, does existence of .net or .org increase the value of .com? I bet you have seen it many times that end users walked away and registered .net and never came back. Did introduction of .mobi, .travel… increase the value of .com? Domains increase in value over time like anything else. But just like anything else, more supplies lower the price. Does more houses in suburb increase the house value in beachfront?
If .com owners truly believe new TLDs will increase the value of .com, they should push new TLDs. Is anyone doing that now??
I do not agree with Shane here on the fact it will strengthen .com but i do agree it will not change much.
I regard .com as a ccTLD for the USA that also carries some weight outside the USA.
When you have that mindset you understand why .com is king and why ccTLD’s are doing so well in the country they originate.
As mentioned on the last domain fest in .CZ the leading TLD is .CZ.
Same in holland.
Same in Italy.
Same in Germany (even bigger then .net)
That is simply due to the fact that “local” marketeers go for the ccTLD.
Spain couldbe great i see south america moving there.. Cept REDES is not a flexible registry.
So moving on to the new gTLD’s
most of them will fail..
Unless they brand it.. .CO did a good thing but is just starting..
Or the new gTLD is offering something that you can actually use.. ie offer something no other TLD is offering… couldbe anti spam , free email redirects , couldbe many things .
There needs tobe a drive to go for this gTLD.
No drive .. they will suffer the same fate as .mobi and everyone will keep drinking pepsi or coca cola.
And this goes back to my original grocery store comment a few days ago …
The characters to the right of the rightmost “.” dot are supposed to be TOP LEVEL not medium level or small-category-level and what they’re doing is taking lesser categories in the world and forcing them into the TLD position, it’s TOP level not low level, it’s supposed to be: server1.ibm.com or blog.volunteer.org not org.blog.volunteer and not ibm.com.server1 and not world.games.baseball etc. ICANN is making an utter mess out of the internet and it should be stopped. For example: .weeds .canon .carpet ARE NOT top level categories of anything they are small categories and do not ever belong in a TLD position – unless you are a self-serving money-loving quote unquote “non profit” organization like ICANN.
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I don’t think .com will hold its value. Domain names are fundamentally different from real estate in three: First, they are not limited, we can make as many new Tlds as we want. Land, in contrast, is limited. Second, more importantly, transportation on land takes time but online it’s instant. If you can teleport from rural area to beachfront then rural area also worth a lot. Three, most importantly, under every domain you can plug in a collossal website, while you can’t build a masion on 2 square feet. Before Google is founded, google.com means nothing.
With the above said, I think domain market is fundamentally different from real estate, and a domain’s value should be determined by its content. New tld will help make this come true (a shitty domain with good content is pricier than a golden domain with shitty content).
In short, I think ultimately what determinea value is connections (between websites) and tools (search engines), and .com will rise in price in the near term and fall in the long term. New tld won’t hold value either. New tld benefits people who looks for good names to put content and domain registers.
Welcome more discussions domainarsey@gmail
i don’t think icann is making it messier. SEO and search engine has drove people to own domain name even they don’t need. so many good names goes to shitty ads page while new business owner can’t find a good name. that’s what i call — a mess. new tld probably can make it better. there are many places on this planet where conservatism wins but any minds shouldn’t expect the internet be such a place.
domainarsey@gmail