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How Many of the New gTLDs Will Fail?

Jennie-Marie Larsen

I was just asked the question: How many of the new Top-Level Domains (TLDs) will fail? This poor listener might have hoped for one sentence as response, but that subject is too interesting to be brief.

In this scenario you can't look to historical data to measure or predict the success rate of the new TLDs because past new TLDs have been largely managed by big businesses who have strong revenue streams from other business lines that they could use to support a slacking TLD. Nor, in fact, can you use a traditional '9 out of 10 start ups will fail' sweeping analogy that VCs and other entrepreneurial commentators use. This space works differently. There is added support from the registrar channel, and there are considerable barriers to entry for a hopeful new TLD from the regulatory environment.

I think it's safe to say a strong number will fall out before they even hit the market. They will perhaps not make it past the objection contention phase, or the auction rounds will tire their cash reserves. Or the simple waiting game of the ICANN process (negotiate, award, contract, delegation, launch x months x bleeding into years) will cause them to run out of cash or motivation to continue with the business. This could be as many as 20% of the names, possibly more.

And then you have their actual market testing. This industry has the benefit of a long-standing and strong registrar channel. If the name is reasonably generic and they are picked up by many in the channel, the name should tick along over time. Look at .BIZ. We braced ourselves expecting bigger results because it wasn't registering enough to cover it's costs (nor our expectations). But Neustar is a big business and continued to run .BIZ, and now the years of investment in that name have paid off with over 2 million names. Time and the registrar channel take care of a decent generic TLD.

Alternatively, if you as a niche applicant (geographic, community or industry) have been diligent about exploring and fully understanding your market, you also have a great shot at this space. It's reasonably unexplored territory.

The ones to fail will be:

  • the underfunded, who don't manage to make it out of the gate.
  • the understaffed/under 'strategised' who haven't understood their buyer's market and behaviour clearly enough. This kind of ineptitude will translate to the registrars, who will say 'no thank you' to picking them up.
  • those who died a death by policy-wonking. Businesses who just got caught up in the barbed-wire of the ICANN new gTLD evaluation, contention, auction, contract, delegation, +time, +time.

A clever man said recently: Tears will run when this new gTLD goat rodeo plays out.

By Jennie-Marie Larsen, CEO at DomainDiction

Related topics: Domain Names, Registry Services, ICANN, Top-Level Domains, Web

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