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Premium Generics, the Domain Industry's Luxury Goods

Stéphane Van Gelder

Categories. The mere mention of the word risks eliciting groans from any domain industry specialist. In the run up to the new gTLD program, this concept was oft discussed. It seemed obvious to most that TLDs were not a homogenous ensemble but instead, could exist in many different shapes and sizes. Except to ICANN staff. They systematically refused to entertain the notion of categories. Even when ICANN Board members suggested some kind of recognition for different TLD types should be hardwired into the program! The debate went on for months. It was painful.

Now, more than a year into the program, TLDs are clearly not all created equal. The question is no longer whether the TLD application rules should have allowed for different categories or business models. That argument became moot the day the applicant guidebook was set in stone and the first round opened. Since then, several different business models have come to the fore, making precise analysis of this fast moving industry difficult.

This is where Starting Dot comes in. The Irish company and registry operator for .bio, .archi and .ski is launching its chart of the best selling premiums called, not surprisingly, Premium TLD 50. What makes a premium gTLD, you may well ask. According to Starting Dot, they are the domain industry's luxury goods.

Yes premiums require more investment in marketing and branding, but for Web users, they carry a much greater recognition factor. One which is similar to the edge a luxury watch or car will enjoy over a standard car, even though both are in the same industry.

A premium gTLD sells for at least 3 times the average retail price of a .com, so over $40. But price is just one factor. Premiums tend to reference specific communities, sectors or products. They provide more meaningful web identities and make for a more sustainable model for the industry in general. Registrants tend to value premiums more, so are more likely to renew them. Registries and registrars get better margins from premiums, making for more solid, long-term businesses at a time when many are expecting the cutthroat price war raging at the lower end of the new gTLD market to leave a few corpses. Not good for ICANN, not good for the industry, and not good for the consumers who end up finding themselves on the receiving end of such registry failures.

Premium TLD 50 makes for interesting reading. Alongside itself, the firm lists Donuts, ICM Registry, Rightside and DotGlobal as leading premium gTLD operators. Seeing ICM in the list may initially surprise some people, but it actually makes sense. After all, with over 4.8 million domains registered through 576 suffixes that did not exist before 2014, can there really still be such a thing as a "new TLD"?

The Q1 2015 Premium TLD 50 shows 337,186 premium gTLD registrations up to March 31, 181,020 of which come from new gTLDs. A testament to their specific model, premiums account for 3.80% of the total new gTLD market by registration volume but 13.50% of that market by revenue.

Starting Dot plans to update its Premium TLD 50 every quarter. Read the Q1 2015 Premium TLDs Ranking on the Starting Dot website.

By Stéphane Van Gelder, Consultant
Related topics: Domain Names, ICANN, New TLDs
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Stéphane,Yes premiums require more investment in marketing Alex Tajirian  –  Apr 07, 2015 8:51 AM PST

Stéphane,

Yes premiums require more investment in marketing and branding, but for Web users, they carry a much greater recognition factor. One which is similar to the edge a luxury watch or car will enjoy over a standard car, even though both are in the same industry.

Defining premium domain names as luxury items suggests rip off, in that such a domain name’s price would be much greater than its utility value. Also, I am not sure about the need for more marketing and branding than for other domain names. Nevertheless, domain names are not luxury items, because their prices are not expected to go up with increase in people’s income, which is the economic definition of a luxury good. Domain names should be bought for their utility, unless you think they are a special kind of luxury called Veblen goods, whereby their demand increases when their prices increase. For example, making a perfume more expensive can increase its perceived value as a luxury good to such an extent that sales can go up, rather than down. And that’s the reputation that the new gTLDs program needs inflated prices.

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Promoted Post

Buying or Selling IPv4 Addresses?

Watch this video to discover how ACCELR/8, a transformative trading platform developed by industry veterans Marc Lindsey and Janine Goodman, enables organizations to buy or sell IPv4 blocks as small as /20s.