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The Real Facts About New gTLDs

Jeannie McPherson

Many with financial interests in new gTLDs, such as Donuts, have painted a rosy picture of how new gTLDs create greater availability of meaningful domain name options that the global masses have been waiting for. Their message seems to be: FINALLY, there is an alternative to .com in new domain extensions like .guru, .photography, .blackfriday and .tips. But, the reality is that we have always had options other than .com to choose from when registering a domain name. The challenge isn't choice, its relevance and credibility.

While all of this bravado is par for the course in marketing new products, the real shame is that the registrants whom these new gTLDS were supposedly intended to serve may be the ones who suffer in the end when they invest their time and money into branding or rebranding their businesses with new gTLDs without all of the facts.

It's been well under a year since the first new gTLDs became available for registration; however, we are already seeing several troubling trends that are being glossed over, including:

  • Data reported by ntldstats.com shows considerable drop off in new registrations for the top five new gTLDs. Even with an assumed renewal rate upwards of 80 percent, as recently forecast by Donuts, if there is no solid growth to offset even a seemingly small loss, at the end of the day — or financial year — most new gTLDs will see their customer base shrink.
  • The number of UDRP/URS cases filed in new gTLDs is more than 15x higher than all other domains, indicating that brands are not going to play the defensive registration game (For more info and a list of UDRP cases filed, read The Domains' article).
  • Plurals and synonyms of new gTLDS continue to be deployed, making it difficult and confusing for registrants.
  • About a fourth of the new gTLDs registered to date were given away for free or registered by the registry or a related party, according to The Domains, raising questions about the behavior and motives of those who cite registration numbers as a sign of the popularity of a new TLD. DomainNameWire recently published a relevant analysis of new gTLDs titled, "Lies, damned lies, and new TLD statistics."
  • Noted DNS expert and ICANN Security Advisor Paul Vixie warned that some new gTLDs will be blocked by many because of collision security issues. If new gTLDs don't resolve everywhere, what will that do to their value?

These are but a few of the realities that you won't hear about from some of the new gTLD sellers. This is why new gTLDs do themselves a disservice by comparing themselves to .com, which has a record of growth and stability. Domainers, Internet experts and business owners alike agree.

All one has to do is take a look at the "data" being used to tout the benefits on new gTLDs to see that the argument to invest should be met with strong skepticism. For example, a recent CircleID post from the CEO of Donuts states with regard to search, "Internet addresses registered in new gTLDs are holding their own against — and in some cases outperforming — comparable addresses registered in legacy domains like .COM." However, the examples cited clearly show the comparable .com domains performing better. This is equally true for .com domains that don't contain any of the keywords of the new gTLDs referenced. That's because the most important factor for search is the quality of the content on the site, while the most important factor in domain registration is choosing a globally recognized, used and trusted TLD like .com, a point echoed by Google's John Mueller recently. Mueller, whose title is Webmaster Trends Analyst at Google, felt the need to set the record straight and wrote the following on his Google+ page on Dec. 11, 2014:

"It feels like it's time to re-share this again. There still is no inherent ranking advantage to using the new TLDs… If you see posts claiming that early data suggests they're doing well, keep in mind that's this is not due to any artificial advantage in search: you can make a fantastic website that performs well in search on any TLD."

There's no question that there is room for additional gTLDs that make sense, but that's the key — making sense. It's not about shorter, more keyword rich names — as some with vested financial interests in the new gTLDs keep saying. If that were the case, new gTLDs like .xyz would never have been delegated.

There has been a flood of options and a land rush to secure the best property in this new online real estate, but that is where it seems to have ended for so many of these new gTLDs that don't make sense. The CircleID post cited above says, "Even as new gTLDs grow exponentially in popularity, we are many years away from any scenario in which registrants have difficulty finding available, keyword-rich names in the new gTLD space." I guess the question is: Do they want to find space there?

As the expansion of gTLDs brings about a massive range of new — and often similar — domain extensions, it increases the likelihood that consumers will be unsure which new gTLD extensions provide a secure and appropriate experience. Moreover, the process (or lack thereof) to secure one of these new gTLDs is often difficult and confusing, as noted in this GeekWire article titled, "Buying a new gTLD domain name? The process .sucks."

For example, in this new world of hundreds of domain registration options, if I'm a photographer trying to decide on a domain name, I can choose .photography, .photo, .pics, .photos, .camera or .pictures. I may even consider .exposed or .digital, or perhaps I am the photography.guru. In this scenario, the average user could become overwhelmed and confused; not only in trying to choose an appropriate extension, but also in trying to figure out which registrar offers that extension. Similarly, their customers will now need to remember which similar sounding extension they need to type in to find their vendor. Or, perhaps they'll just go with whoever resolves to .com because that's what they know and trust. That's why I elected to secure about two dozen personal domains on .com, where I had no problem registering domains to suit my needs and I know that .com will be here for the long haul.

Encouraging small business owners to put their online presence in the hands of unknown, untrusted and unestablished TLDs, where an unknown number of them likely won't be around in the next year or two is simply bad business advice in my opinion. In addition to paying to rebrand themselves, they will need to have a high SEM budget to rank decently on a new gTLD, and then if that gTLD fails, they will have to pay to do it all over again on a different TLD. This is a real risk that is being totally glossed over. The real costs that should be discussed are those of building and marketing an online presence and the natural conclusion by those without a vested financial interest in seeing new gTLDs succeed is that it behooves small businesses to do that on a TLD with staying power, like .com.

Established companies like those cited in this NetworkWorld article have passed by the hundreds of new options to .com because they know that .com is a smart and secure investment. Similarly, The Domains reported recently that the week of Nov. 15 — only two weeks before Black Friday — 559 domain names ending in .com were registered containing the term "blackfriday." During that same period, there were only 16 domain name registrations in the .blackfriday new gTLD extension. If there is such enthusiasm for new gTLDs and such a lack of availability in .com, as some have suggested, this wouldn't happen.

There has been a lot of hype about new gTLDs and there's no doubt that some people will find new gTLDs that work for them. Registrants should make the choice that works best for them, but they're entitled to know all of the facts before making that decision. The better informed they are, the better decisions they will make.

The good news for those who make the decision to entrust their online business to a new gTLD and find it didn't work out as expected, is that .com will still be there for them — just like it has been for the last 30 years - when they need to make the switch like so many others already have.

By Jeannie McPherson, Senior Manager of Corporate Communications, Verisign. More blog posts from Jeannie McPherson can also be read here.

Related topics: Domain Names, Top-Level Domains

 
   
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Comments

"Many with financial interests in new gTLDs..." John Berryhill  –  Dec 17, 2014 7:02 AM PDT

As if Verisign were not also an interested party.

It is surprising that a "Senior Manager of Corporate Communications" would employ such a juvenile rhetorical device.

.COM .NET stats and trends Phil Buckingham  –  Dec 17, 2014 8:35 AM PDT

Jeannie, Could Verisign provide the net movement for .coms and .nets for the period since Donuts launched the first ( 12 February 14) of 350 + gTLDs into GA to 30 November.  We have the equivalent gTLD numbers with growth trends for a comparison ( of course, stripping out non arms length registrations to affiliated registrars). Would be interesting to know.

Unlike many of the new gTLD purveyors Norman Payne  –  Dec 17, 2014 3:18 PM PDT

Unlike many of the new gTLD purveyors who are selling the sizzle and not the steak, this piece has a lot of meat in it.  Sure – go ahead and shoot the messenger.  But all they did was package what a lot of other people are saying.  Reread the piece and refute what others have said.

When you take away Verisign’s financial interests and take away the new gTLD financials interests, the facts don’t lie.  This program has at best, gotten off to a suboptimal start.  It’s easy to write off some of this as growing pains but the reality is, many of these new gTLD operators won’t be around in 5 years.  Pretty sure Verisign will be.

Phil - that stuff is reported by Verisign in their earnings but save your time as your proposed comparison is flawed from the start because 1) you want to compare year 1 growth with year 30 growth and 2) we have renewal rates for com and net.  We won't have that for new gTLDs.  And even then it will vary widely.  Near 100% for brands and who knows how low for the freebies and those with variable or premium renewal pricing.

Phenomenal Article from a completely objective 3rd Party Fred Krueger  –  Dec 17, 2014 5:49 PM PDT

It's so reassuring that Verisign is helping the world come to the smart conclusion that new TLD's just "don't make sense".

Let's dissect this interesting piece of corporate propaganda:

1. An "unknown" number of new TLDs will fail in the next "one or two years". Really? ICANN has set up an EBRO process for making sure that this does not happen, and I believe Verisign itself offered its services in this regard. An "unknown" number of any unknown events is going to happen "in the near future" — but TLD's actually failing is not exactly likely.

2. Because of this "risk of failure" (remember there is "some risk"), its best for people to certainly not waste their money on acquiring meaningful domains in new TLDs — instead better to concentrate on paying domainers fortunes to acquire third tier .com names

3. There are "plenty" of .com names left. This PR person actually found and registered two dozen all by herself. I am guessing they are really easy to remember names likes jennie.com and mcpherson.com — names that she paid $10 for at GoDaddy.

4.Amazingly, Verisign itself offered its registry back end services to over 200 TLD applicants, only to put forward propaganda like this. Well, whats it going to be? Are they good, or bad, or both at the same time? Is this like some kind of bizarre phenomena of quantum mechanics where the same object is in two alternative states at the same time?

5. Customer bases shrinking? .com being the only "smart investment"? Easily said — but there is absolutely no justification for it.

6. Google and search rankings. Who knows? Does Google know? They applied for over a hundred new TLDs so they couldn't have been completely anti. On the other hand, if you are Google, do you really care about 3 million new domains at this point? Is it meaningful? Do you have enough data?

7. People giving away new domains. So what? Last I checked facebook accounts are free and they seem pretty popular. Some names WILL BE FREE. Its not a bad thing. It doesn't mean IBM should rebrand as IBM.xyz but, maybee jeannie.xyz is a decent choice for an individual blog.

Jeannie,I respect Verisign greatly but I do Constantine Roussos  –  Dec 17, 2014 9:17 PM PDT

Jeannie,

I respect Verisign greatly but I do not understand what this article is trying to accomplish.

.COM is a legacy TLD with a long track record of adoption and a significant head start. Comparing new gTLDs (at their infancy) with .COM makes no sense to me. I agree about the issue of confusion in regards to gTLD singulars and plurals (.PHOTO vs .PHOTOS) as well as synonyms (.LAW, .LAWYER, .ATTORNEY, .LEGAL, .ESQ, .LEGAL etc).

However, you are discounting the effect of respective community adoption of some of these new gTLDs to provide more reliable and safe usage. For example, I can make a solid argument that .MUSIC (under our company's music-focused policies) would be more desirable for the music community than .COM because it has music-tailored policies (which .COM lacks).

For example, here are a few arguments when it comes to .MUSIC vs .COM:

1) A globally protected music marks list for artists and music companies. Many have registered famous artists names in .COM and cannot get their names back
2) Takedown policies when there is copyright infringement or the registration of a famous music name. Under .COM you would need a court order since ICANN does not deal with content regulation.
3) Name selection policy which only allows the music community to register their name and disallows registering others' names. Fans can register artists names under .COM just as long as it is used in good faith. We disallow that.
4) Content and Use policy that only allows legal music-related content and use. This helps with search relevancy and trusted click through rates
5) No parking pages which are considered low quality. .COM allows parking pages.
6) Restricted to only music community members to create a sense of community. Networks that are trusted matter.
7) Stronger enforcement, which builds trust and credibility

Highly relevant music-related content with no parking pages creates credibility. Legal music content and efficient enforcement creates trust. Community adoption creates brand recognition.

I could go on and on but the one element you have missed in this gTLD article that paints a negative image of the new gTD Program is ignoring those initiatives that have not yet launched. Many will create a recognizable brand that will instill trust, confidence and credibility to achieve a stronger user experience, reduce abuse and help increase search rankings due to better relevancy pertaining to the gTLD's subject-matter.

Why do universities in the U.S choose .EDU over .COM? Why do local communities in Germany use .DE? Why does Google rank most ccTLDs better for local searches than .COM? It is all about search relevancy, personalization and localization. That data supports that some new gTLDs will be a success under the right model, the appropriate policies and adoption by their respective community. It has not happened yet but it will, which will help overall exposure of all new gTLDs.

After 5 years, I think we will have some more reliable data (e.g renewal rates, community adoption, brand recognition etc) to judge if new gTLDs will do well. I understand the new gTLD Program might pose as a threat to .COM but the legacy nature of .COM means that it will remain the leader for years to come. No ultra-generic new gTLD (e.g. .WEB, .SITE etc) poses a threat to .COM. I agree that .COM cannot be toppled as the most "generic" TLD out there given its head start and brand awareness.

Happy holidays!

Constantine Roussos
.MUSIC (DotMusic)

I really admire Constantine's dedication Norman Payne  –  Dec 18, 2014 12:35 PM PDT

There is a small handful of applicants who personify the community approach to the new gTLD program.  And no one has worked as hard as you have Constantine.  You point out a lot of benefits of what could happen with community TLDs.  But do you really think ICANN really cares about community applicants?  If they did, wouldn't the results from the EIU be different?

Sorry to say but after having to redo the budget last year because revenues from new gTLDs are well below their projections, ICANN is all about maximizing revenue and they stand to make a lot more money from either a last chance auction or a wide open gTLD that s focused solely on selling domains without the reasonable safeguards/operating principle you outlined.  Everything they have done so far is about maximizing revenues and shirking liability/responsibility.

If you get the chance to run .music, I have no doubt you will do a great job for your community.  But as Puff Daddy once said - It's all about the Benjamins.

Thanks for the vote of confidence Norman. Constantine Roussos  –  Dec 18, 2014 1:47 PM PDT

Thanks for the vote of confidence Norman.

Suffice to say, we compared our application to those that prevailed CPE (i.e. .HOTEL, .RADIO and .ECO) and we can prove beyond reasonable doubt that we exceed their policies from a community perspective and have gone a step further when it comes to custom-tailoring the gTLD to the music community. Also — just as those prevailing applicants did — we used an inclusive community definition that fulfills ICANN's criteria which is corroborated publicly by many sources.

While I understand that ICANN has a conflict of interest to go after what brings it the most money, it cannot avoid accountability and serving the public interest. The optics are important and they already know that the world is watching, especially after what happened with .GAY not prevailing CPE because of the "Oxford dictionary" community definition technicality and the unsubstantiated opposition letter filed by a supporter of a competitor (which is anti-competitive and a conflict of interest). We have done our homework and we understand the environment we are in and ready to use any Benjamins needed (which we have thus far) to prove our case beyond reasonable doubt.

If we are consistent with other prevailing CPE results and meet the criteria required then it is all that we can do at this juncture. The criteria is pretty simple: an all-inclusive definition and nexus of the community, support from a majority of the community and registration policies that are custom tailored and not generic.

But going back to the topic of Verisign, my entire argument is that a overly-generic .COM cannot provide more value than gTLDs with customized policies and a global community willing to adopt them because of those safeguards, policies and value-added services they provide to serve those constituents.

Happy Holidays!

Constantine Roussos
.MUSIC (DotMusic)

Informed Choices are Good Jeannie McPherson  –  Dec 18, 2014 3:07 PM PDT

Hi Constantine,
Thanks for your thoughtful comment. I believe we are on the same page with regard to your point about comparing new gTLDs with .COM, but there are many other backers of new gTLDs who continue to use the flawed comparison. Likewise, as I stated above, I agree with you that there's no question that there is room for additional gTLDs that make sense, but that's the key — making sense. The goal of this post is simply to provide information to the community and to registrants so they can make more informed choices.

Fred,
As a Communications professional, I have long been interested in the value of domain names as communications and marketing tools, and like most others, I have sought to register my domains on .com - all by myself :-). As a matter of fact, your comment inspired me to look again at what additional domains might be available, so yesterday I did go to GoDaddy (the registrar that has always supported my entire portfolio) and I was able to register my legal name, jeanmcpherson.com. Thanks for the tip. I added it to my portfolio of .com domains that consists of other variations of my name, such as jeanniemcp.com (my Facebook and Twitter handle) and the names of my family members (all registered in the last year), as well as several other keyword rich and memorable domain names.

Interesting that you mention Facebook. Got me thinking that with the 1.35 billion active Facebook users, 284 million active Twitter users and 425 million active Gmail users, if even a fraction of those register their unique identities associated with those accounts as a .com like I did, that leaves a huge amount of room for growth in the .com zone. What a great idea for a PR campaign!

Also, I asked our team about your EBERO (emergency back end registry operator) comments. First, Verisign is not one of ICANN’s three EBRO providers. They are CNNIC, CORE Association and Nominet. We never sought to become one. Second there have been at least two registry failures that according to the ICANN new gTLD applicant guidebook were required to be moved to the EBERO. They were not and ICANN never publicly explained why. As far as we know, there has been no testing to demonstrate an EBERO transfer.

We think that providing this kind of information to the community, which includes our backend customers, is important.

Best,
Jeannie

Jeannie,Thanks for your comments. The .COM vs Constantine Roussos  –  Dec 18, 2014 5:51 PM PDT

Jeannie,

Thanks for your comments.

The .COM vs new gTLD discussion is very real and pertinent and a frequently asked question.

Competing head-to-head with .COM is a battle that can never be won. I understand the Donuts/portfolio applicant approach but it is flawed because it is based on a "factory-based" COMmoditization strategy which can only be won by .COM.

Registrars will always promote .COM because it is the safest choice and the most recognizable and "sellable" TLD. What incentive do registrars have to promote one new gTLD over another? The competition for shelf space will only get more intense as more new gTLDs enter the marketplace.

Our approach was to assume registrars will do little to promote us. This leaves the registry alone to market the TLD and if it is an authentic community-based initiative then the corresponding communities will market it within their ecosystem to unleash network effect benefits facilitated by the customized rules we built to expand the value proposition overall. 

This is where the Donuts/portfolio applicant model fails. They do not have the appropriate expertise to handle all the gTLDs and market it to their communities. The factory approach of COMmoditization and lack of a branding strategy and identity beyond the novelty nature of the domain name is a weak strategy but it can be profitable.

ROI is what is important for most portfolio applicants. Most portfolio registrants can achieve ROI with the current system in place without diversifying their strategy or the need to specialize. Economies of scale drive costs down and help get the necessary registrations to break even and have recurring income (This might not apply for TLDs that have been overvalued and acquired via expensive private auctions).

The result of the factory approach is that adoption is difficult and usage at below average levels. The "jack of all trades and master of none" will never create adoption and a compelling value proposition but most registries only need a few thousand registrations (or tens of thousands if the gTLD is priced low) to break even.

The gTLD registries that will succeed beyond merely ROI are not those who battle it out with competitors based on price or other similar attributes in the same ultra-competitive space. This means thinking beyond domain names, differentiating and solving issues that are important to their corresponding communities. Our main objective is not maximizing domain registrations. It seems most players in the domain space are infatuated about registration volume (quantity) but there is little talk about the influence of quality or relevancy or adoption or other important indicators. Pricing is another critical factor when it comes to volume (e.g. .LUXURY has a very high price, low volume strategy). If volume is the indicator of success then why isn't anyone talking about .TK, the second largest TLD in volume?

I really like community strings such as .BANK or .PHARMACY because they serve beyond the novelty name and have appropriate restrictions. Under .BANK one can trust that their banking activity is secure. Under .PHARMACY one can know that medications they buy online are authentic and safe. These are good examples to me because the mission is beyond having a novelty name. There is a sense of purpose and serving the public interest. Purpose drives adoption and awareness.

Constantine Roussos
.MUSIC (DotMusic)

Phenomenal Article from a completely objective 3rd Party Fred Krueger Michael Berkens  –  Dec 18, 2014 4:57 PM PDT

Fred

Do you have the same opinion about Paul's article is that a "Phenomenal Article from a completely objective 3rd Party"

x.com versus x.y Fred Krueger  –  Dec 19, 2014 4:28 AM PDT

The debate here is not "whether there are great .com names left".

You can argue that all day long...everybody knows it is not true. Simple math proves the point:

- the average college graduate has a total vocabulary of about 10,000 words
- there are order of magnitude 100,000,000 .com names

therefore there are 10,000 times more .com names than common words — or just about the square of the number of common words. So for example "atomiczebra.com" — the first two words that just popped into my head, in fact is a valid .com address — under construction of course.

Now obviously you can create your own exceptions — "theatomiczebra.com" is, shockingly "available" — (you might want to use that as the cornerstone of your next "it's available" campaign) — but fact of the matter is trying to cram all of human information into a single extension is long term just not feasible.

This changes completely when you open up the naming of human information from x.com to x.y.  With over 1,000 new choices for y as of next year, and probably 10,000+ more in just a few years (once the second round of gtlds is completed) — almost every single common word will be available in some extension.

zebra.golf will be available for a new line of gold clubs, zebra.yoga for a yoga studio, zebra.family for john and marie zebra and their children.

if this happens — and i clearly expect it to happen (as does ICANN by the way) — there simply will be no need for .com. Like AOL dial up accounts, they still will will exist (nothing every completely dies in the new digital economy), but it will no longer be a common (pun intended) way of naming things on the internet.

Verisign — with its vast resources — can still adapt. But it will need to re-invent itself. If it doesn't, it could and probably will go the way of AOL.

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