The Association of National Advertisers (ANA) an opponent of the new gTLD program wrote a post on its corporate blog today asking “Already Launched New gTLD’s : Is Anyone Out There?”
The post is a “report” written by their general counsel Reed Smith LLP, and Brad R. Newberg of the firm wrote the piece which gave its rundown of the state of the new gTLD program and is definitely worth a read.
Here are the highlights:
This post asks the question: Putting aside cybersquatters, domainers (those who speculate in domain names for profit), and in-house counsel at brandowners, when it comes to the public at large, if a TLD launches in a forest and no one is there to hear it, will it make a sound?
“ICANN’s purported reason for launching the new TLD program was to open up domain names in non-Latin characters (through new TLDs in Arabic, Chinese, etc.), foster competition, increase consumer choice, and offer alternatives to individuals and businesses who might have been shut out of their preferred .com name.
However, the actual launch of these TLDs has seen practically no advertising, resulting in a collective yawn from the general public—most of whom are blissfully unaware that any new TLDs exist.
In fact, given the registration numbers, it is hard to imagine that most of the already-launched TLDs will still be around in two years. None has failed so far, but it is possible that the first TLD to close its doors will start a domino effect.
A Look at the Numbers: Almost 200 new gTLDs have launched, passed through sunrise (the period where only trademark owners could register second level domain names), and are in the general availability phase (where anyone can register a domain name). Some have been in general availability for more than six months, although for almost all of the gTLDs, a significant portion of their registrations came in the first few days of general availability.
According to the statistics, approximately 1.8 million domain names have been registered across those 200 domains, for an extremely low average of 9,000 domain names per gTLD.
But those numbers are misleading as the actual number of registrations is far lower.
Many gTLD registries have taken to reserve names in dummy registrations either to sell them later for premium prices or to pump up their numbers, or they have given domain names away for free just to make the gTLD seem popular.
For example, the #1 gTLD registry right now is .XYZ with a staggering 25% of all registrations (almost 450,000).
However, only a small fraction of those domains have been paid for by actual end-users or even domainers investing in the name—some have stated that .XYZ appears to have a goal of getting to a million registrations whether those registrations are paid for or not.
Even where the numbers have not been artificially inflated by the registries, many of the domain names were bought early by domainers hoping to flip the name for profit.
When one looks at the actual number of end-user registrants—importantly, they are the registrants likely to actually renew registrations when they come due (typically in a year)—it is hard to imagine the total actual number being outside the mid six-figures (and probably far lower), for an average of closer to 3,000 registrations per gTLD.
.BERLIN, .CLUB, and .GURU are the only gTLDs above 50,000 registrations, and only 35 gTLDs have more than 10,000 registrations.
The gTLD that went into general availability first (by a day), the Arabic word for .WEB, has registered fewer than 2,000 domains in six months.
By contrast, .COM has 114 million domain registrations and still nets (new registrations minus discarded registrations) almost a million each month.
Success May Depend on the Big Brands: Given that the gTLDs have been launched for profit—as opposed to supporting brands—one would think that there is a profitability threshold well above 10,000 names.
It is possible that many of the gTLDs will do their best to stick around for a year after launching general availability, see what their renewal figures are, and then close shop if the numbers do not meet whatever threshold they have set for themselves.
Ironically, their survival might depend on the success of the .BRAND TLDs, almost none of which has launched yet.
The large brands that have applied for TLDs have the money to market their new TLDs if they so choose and make their new TLDs a key part of their marketing strategy.
If they do, and if the public latches on, perhaps that will fuel interest in the non-brand gTLDs.
If not, the whole system could fail and few will have the stomach to apply for more gTLDs when the second round comes around.
Brand Protection: In terms of brand protection, brandowners have different options.
Some companies have taken a wait-and-see approach given that this territory is uncharted—especially as opposed to the costly approach of blanketing the gTLD landscape with defensive registrations.
Some companies have taken a mix and match approach to the following options:
1) paying approximately $3,000 for a block across the gTLDs run by the registry “Donuts,” since Donuts operates a significant number of TLDs and $3,000 is less than what it typically costs to go through a Uniform Domain-Name Dispute-Resolution Policy (UDRP) proceeding;
2) putting important marks on the Trademark Clearinghouse List (TMCH), and responding to the TMCH notices when a threat arises and monitoring for cybersquatting and typosquatting as usual; and
3) registering domain names for important marks during the Sunrise period for gTLDs associated with a company’s particular industries. You should consult your internal experts and, if necessary, outside counsel, to come up with the right approach for your brand.
The most amusing thing about these sorts of “The End is Nigh” all are “Doomed” write ups is that there is a contractual requirement to maintain the extension for 10 years.
Perhaps if a Registry declares bankruptcy and shuts up shop, but even then ICANN has EBERO in place…
https://www.icann.org/resources/pages/ebero-2013-04-02-en
…which is geared to maintain the basics until an extension is sorted out.
Lets face it, by the looks of it, .WED with around 80 registrations is slated for doom unless .WED drops the massive second year price tag to maintain a domain (unless the public decides to jump on board at some point and it suddenly becomes popular though there are now far more options coming online) so if .WED is dropped or the registry goes under, the chances are DONUTS or the like would negotiate to take over the extension and bring it into line with their own business model.
As far as BRAND TLDs go, if a business/organisation fails to maintain their end it doesn’t really matter as it’s existence is only relevant to the business…though if a brand extension does close down, I believe that there is a period the extension will cease for a couple of years before being made eligible for re-application by others.
But doom and gloom articles are easy to write based on the idea that success can only be possible if the new GTLDs perform as well as .COM currently does.
Far better to look back at how .COM performed when first introduced than how .COM is performing now.
This is the first year…we do not have enough data to determine how this will all work out because how it works currently can change.
https://www.icann.org/resources/pages/ebero-2013-04-02-en
First of all, although clapping my hands makes little noise online, let me applaud Michael Berkens for republishing this overwhelmingly negative article, which does run counter to his commercial interests as a large-scale registrant of nTLD domains and a consultant to nTLD registries. And — what is more — for publishing it without rebuttal. Many domain bloggers skip over whatever runs counter to their monetary interests or opinions. Some go so far as to suppress reader comments. And certainly very few would go out of their way to publish an entire post like this. That’s a lot of sentences to spell “integrity”.
Secondly, it looks like the Association of National Advertisers (ANA) is mostly right. I’m actually fairly optimistic that we’ll see innovative real-world nTLD usage in the near future. I have bought some nTLD domains myself, and wouldn’t hesitate to recommend them to clients when they fit a project. Yet, as I say, the ANA has summarized the state of affairs quite accurately. It’s actually a sad reflection on the domain industry that so much of our discourse about the new TLD program during the past year appears to be largely driven by propaganda and stubborn emotional / monetary investment. In contrast, an outside entity paints a much more succinct and accurate picture.
The only problem Joseph is their assumption is off, first off extensions had to put up three years operating, Second there is the Ebero program and thirdly ask Mike there are Vulture funds sitting on the sidelines with money waiting if there should be a bankruptcy or something of a business failure that would step in.
Plus other registry operators might also say to ICANN just give us the extension, no money for you but we take it over and run it and everything continues smoothly for registrants.
You’re probably right on those points, Raymond. And so is John McCormac regarding the net monthly increase in .COM.
Overall, though, I think the ANA paints a true-to-life portrait.
Whether some of the registries technically go bankrupt or are bought out by others, and whether that happens next year or somewhat later, it’s pretty clear that some of the registries are going to go under quickly in some form or fashion. There’s so little buyer interest in their wares that they’re simply unsustainable as businesses. And I’m not persuaded that Donuts or other companies operating with much greater economies of scale would want to or even could salvage some of the duds.
So the only words I’d change in the following paragraph from the ANA would be “most” (to “many”) and the number “two” (to something long enough to meet those minimal contractual obligations):
“In fact, given the registration numbers, it is hard to imagine that most of the already-launched TLDs will still be around in two years. None has failed so far, but it is possible that the first TLD to close its doors will start a domino effect.”
The procedure for handling TLD flops is undoubtedly more complicated than what the ANA suggests. But the flops have flopped, and more flops will flop tomorrow. Some such domino effect will happen, although it won’t affect all nTLDs, by any means.
Wouldn’t you agree?
It is a more realistic than some of the happy-clappy hype that has been floating about. The .COM monthly net increase is not even close to a million domains.
The brand protection points were well made. Perhaps every new TLD needs three elements to kick start growth: domainers, brand protection registrations and natural registrations. Domainers are often attracted by the prospect of good domains at reasonable prices that can be sold for a profit. But many of the registries have already taken those. Bang does the speculative engine. Brand protection registrations formed a major revenue stream for many of the large TLDs launched in the last ten years or so. But with the emphasis switching from defence to enforcement, that revenue stream is gone too. That leaves natural registrations from end-users. But end-users seem to be happy with their .COM and .ccTLD domains. So where exactly does that leave some of these new gTLD registries? Have they the financial resources, the marketing resources and the publicity resources to drive growth in their gTLDs in those critical first three years?
From the looks of it, EBERO is a emergency measure to resolve domains affected by a registry closure. I see no long term structure to handle renewals, transfers, or much of anything else. It was not intended to handle hundreds of dead registrys permanently.
Sure, Donuts or others will happily pick up any registry that is profitable, but if ICANN wants it’s $25,000/year then nobody will be interested in many extensions. And if ICANN drops the fee for some then it would have to drop it for everyone.
There does not seem to be any guarantee that a domain in a dead TLD will continue to exist over the long term. And certainly no refund clause if the domain you invest in goes poof!
I don’t think Accent we will ever hear about deals where ICANN asks Donuts or Uniregistry to take over a tld that otherwise would go away. Those deals I think will remain private and secondly companies do get favorable deals when they are bailing someone else out. There is nothing to say ICANN may not ask for their $25,000 from a struggling new gtld while still receiving it from other new gtlds.
ICANN wants to be releasing new gtlds for a long time they would look really bad if an extension fails and say 1000 registrants were all like my domain name just disappeared. It could happen, but I think ICANN would take a lot of measures to prevent that.
The other point one has to look at is what is failing ? By a domain investor standpoint they would think Dot Luxury is a failure but they are making money with less than 1000 registrations.
Raymond, you have a lot more faith than I.
I remember Registerfly going on for months and months stealing domains and renewal money – half a million domains were lost by their rightful owners, according to one speaker at an ICANN conference. ICANN was inundated with complaints but moved reluctantly and extremely slowly. No consequences except ICANN moved their offices out of American legal jurisdiction, as I remember. Not a hint of discussion on making those harmed by Registerfly whole. They just dumped it on Godaddy and the losers were SOL. I see no reason for a different attitude today.
Quote: “I think ICANN would take a lot of measures to prevent that (loss of domains).” Other than the token EBERO, they have done nothing so far to prepare, and the issue is obvious and large. Remember Donuts built a separate corporation for each extension to make bankruptcy easy.
Oh I am no fan of ICANN, Accent. I just mean they would do it for self serving reasons, they want to be selling extensions for years imo, this is just round 1, remember Frank Schilling talked one time of 40,000 extensions. I think that’s nuts but who knows.
ICANN can certainly say to Donuts for example DOT***** is out of money, we can’t have 1500 registrants suing us for that extension going out of business and having their domain disappear. If you would like to take over Dot*** We will hand it over to you and you don’t have to pay us nothing for 5 years.
I am just saying they have many options to cover their own butt, because if Round 1 strings go away, how can you sell new strings in Round 2 ?
In 1982, at the dawn of the video age, Motion Picture Association of America President Jack Valenti infamously told Congress, with more than one unfortunate reference to various types of crime, that the advent of the VCR would spell immediate and irrevocable doom to the motion picture industry, and the device should certainly be thrown to the scrap heap even before its arrival.
It wasn’t one of his better predictions, as home video sales went on to become a massive new revenue stream for Hollywood, and cornerstone of movie studios’ portfolios for the next several decades.
All of this is to say it probably makes sense to take ANA’s prognostications about the new gTLD program with a giant shaker of salt. Like the MPAA was with early VCRs, the ANA has been violently and dogmatically opposed to new gTLDs for as long as it has been aware of the program. Having lost its cynical bid to kill new gTLDs in the crib, ANA has now apparently moved on to trying to hasten the program’s demise, in which effort they will be equally ineffectual.
The real story of the new gTLD launch is that with minimal marketing, users around the world have registered more than 1.8 million addresses in less than 9 months, and that’s despite the fact that many of the most attractive, general-interest domains have yet to clear the contention and delegation process.
And contrary to the ANA’s frothy rhetoric about domainers and brand protectors, back in the real world, we are seeing new gTLD addresses being put to use in new, dynamic ways every day [http://www.donuts.co/featured/].
ANA gleefully points out 4- and 5-figure registration numbers for some gTLDs as signs of failure, but those numbers tell a different story. For the first time ever, domain name registrants are participating in a truly abundant market, free from the false scarcity and artificial value of the past two decades. In less than 9 months registrations and adoption have exceeded our expectations, with more to come.
In the meantime, ANA is free to continue its Chicken Little routine. Those of us with actual work to do are providing value instead of spouting tales of doom.
The problem with a lot of those 1.8 million registrations is that a significant percentage consists of registry landgrabs and robo-registrations. There is development in the new gTLDs (I ran a web usage analysis on the top 10 new gTLDs in June) and some gTLDs are already ahead of the curve in terms of usage. The ones that will succeed will be the ones where the users (rather than the registries) find a use for the domains. The registry landgrabs have affected development in some new gTLDs as some of these might have been developed into working websites or services instead of being plonked on PPC.
The new gTLDs are not, apart from the few city and regional gTLDs, a global event. They are overwhelmingly US focused. ICANN screwed up with the data retention issue and this forced registrars in the European Union to apply for waivers. It staggers belief that something so important could have been banjaxed so badly by people who were supposed to know what they were doing.
Minimal marketing is not something to boast about. The new gTLDs need to be promoted and advertised. People need to know that there is an alternative. If they don’t then they will keep on registering their .COM or .ccTLD. The new gTLDs don’t have Brand Protection Registrations to rely upon as a revenue stream. Domainers are not speculating as some of the prices are too high. That just leaves end-users. And if the end-users don’t know the new gTLD exists, why would they register a domain in it?
Oh, come on, Donuts!
Yes, of course, the ANA has its agenda. But pointing that out is really just an ad hominem fallacy. Let’s stick to the arguments and the figures. Even though I register domains in various Donuts TLDs, I still see the ANA’s assessment as mostly true to life.
This Donuts corporate response, though, reads like PR. I’m guessing it’s aimed at passers by from outside the industry. Surely Donuts has more respect for the typical reader of TheDomains.com who will know how misleading some of these claims are.
“The real story of the new gTLD launch is that with minimal marketing, users around the world have registered more than 1.8 million addresses in less than 9 months.”
Really, Donuts? In case you haven’t heard what the rest of the domain industry has been talking about for months, several registries have been caught padding these numbers with their own registrations. So “1.8 million addresses” registered by “users around the world” is most certainly NOT, as you claim, “[t]he real story”!
Talk about VCRs may work with people who don’t know about domains, but it’s just a sleight-of-hand distraction. The domain industry should be analyzed in terms of domains — not platitudes about progress and the inevitable resistance to change.
It’s ironic to hear the ANA article rhetorically dismissed as “frothy rhetoric”. I found no froth at all in their article, but I see nothing but froth in Donuts’s response here. Frankly, it’s pretty condescending.
I agree with Peterson 100%.