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Why New TLDs Don't Change a Thing

I have a heard a lot lately about ICANN unanimously voting in favor or relaxing top level domain rules and had a few people come to me and ask 'how does that affect what you do?' The short answer is, it won't; at least not for a long time and here is why:

  • Open addressing - If you open a new Top-Level Domain (TLD) (mobi/biz/info/etc) speculators run in, no large businesses really take advantage or have any special incentive to use the extension. Sure they buy already existing brands to protect their trademarks, but they presumably own .com already and have advertised it). Big companies with big marketing budgets aren't saying 'wow this new brand.biz looks a lot better, I'll buy that instead of .com.'
  • Closed addressing - If you close the TLD (.pro) and try and make it reputable, very few companies jump on that train and those with the money to really brand it already have something better (presumably brand.com)
  • Development - People constantly argue that development of a TLD will create greater awareness and promote it. Have you seen it happen? del.icio.us and imageshack.us are both very popular sites, but has any real effect been felt on .us market? Not really. A few sites don't seem to convert a TLD from obscurity to household names. Perhaps, there is a tipping point somewhere where once enough do, it will, but I am yet to see a new TLD (outside com/net/org/gov and ccTLDS) reach it yet. The 'who' behind development is often ignored or unreal in its expectations. A lot of webmasters' just search engine optimizing .info and .biz sites has had no real benefit for those TLDs. The notion behind mobi that all these companies were supporting it hasn't translated into real financial commitments to brand it and actively develop it and integrate it (.com button on the iPhone anyone?)
  • Memory - People have limited memory space (well most, some apparently do remember everything). Phone numbers are 7 digits long because they found that was the most the average person could remember. Why wouldn't the same apply for TLDs? Unless everything worked where I thought I need brand.producttype, there is no way consumers are going to magically assume it exists and have a tacit belief they will get what they want. We have type-in-traffic on .com (and others) because most of the time when a user typed in what they wanted .com, it was there in some form. It is possible a few become successful, but I don't think this will cause any major shakeup in the Internet community.

The biggest defense of the status quo is a prisoner's dilemma analogy. The benefit of sticking to .com is a natural equilibrium in the domain world. There might be some huge potential gain if all shoe companies got .shoes and branded it, but someone would have to manage it and each would have to spend money to brand .shoes to consumers. Adidas gets adidas.shoes but spends nothing to brand it and lets Nike pay to brand .shoes and Reebok to brand it as well and leech. So instead of cartel like behavior (which is hard to maintain), we fall back into .com which has already been paid for by everyone and everyone (well at least the status quo) benefits from each other's millions of dollars of branding .com continuously into consumers' minds. I don't believe in most cases an organization or structure will overcome this, and if it can, it will be so limited in demand and usage that calling the TLD a success would be no less than a farce.

Let me address some counterpoints now.

  • Vanity - There is a lot of talk about vanity TLDs… these things aren't free and application costs I believe are over $100,000 each (and doesn't mean it's exclusive or you're guaranteed acceptance.) So maybe a Saudi Prince buy's a TLD, so what? This has 0 impact on end user demand and end user behavior which are two most important things driving the domain business.
  • Sudden End User Demand - Each company with its own TLD? It might make sense for some companies like Google who operates so many things on the web, mail.g or mail.goog might be brandable, but let's be honest, if Google started a new product and had gproduct.goog, they would still need gproduct.com. Thinking about some of the biggest advertisers around Vonage, Classmates.com, eBay, Netfilx, Monster, All the banks/investment/stocks/etc, ISPs, etc. - how many really have a use for their own TLD? comcast.isp? verizon.isp? Can you really see these companies working together for a common one or even bothering with www.verizon? I am not even sure what I would put if I bought .companyname. There would have to be some coordinated effort across every company that did it to standardize it like www. is standardized into consumer's minds as a prefix and .com is a suffix. Verizon.verizon? Home.verizon? Sure you could wildcard the DNS, and say 'oh just type anything .verizon and you'll get there'. Really the only potential upside to this is ad tracking, you use different url/promo code per advertisement and you collect all bleed outside TLD confusion (you know they will type home.verizon.verizon.com, and look at that, we're back to .com and why it won't be dethroned).
  • Got more? I will be happy to add and discuss!

I think there is a lot of smoke blowing about for no reason. A lot of opportunity is being created for some, and a lot of risk for others in trying to take advantage. I think the biggest winners of this are ICANN (fees anyone?) and service providers to registries and registrars (Afilias, Tucows, DirectI, etc). They will be getting more business to use their systems and make money regardless of TLD success.

I know this all sounds very negative, so here are a few positive notes to end on, there could be a few successful TLDs, it wouldn't surprise me. They could reach .info/.tv level popularity and there will almost certainly be a few popular sites on these new TLDs without a doubt. However, I don't see this shaking up much at all for the status quo or drive demand away from .com. Those who will be turning to these new TLDs presumably will already have their .com or aren't in a position to even afford the .com and will have very little impact on the Internet user population as a whole.

Also .com came at a unique point in time with a unique set of variables that will never repeat itself. The Internet is now a proven mechanism and is no longer some obscure gamble that was relatively cheap for lots of companies to undertake at the time with low levels of speculation to pump prices to make it prohibitive to invest in. There is the .TV model of tiered pricing and .TV has done pretty well, but I don't see much happening with those premiums, speculators don't really want to pay the renewal, and I am not sure about companies how much they enjoy paying the high renewals, time will tell. I think it is a good example of how TLDs can be branded and become somewhat popular and why I think a couple might succeed but will still pale in comparison to .com and not hurt the demand for them. For every one of these new TLDs there will still be bleed to the .com version(s). As A domainer and someone who is very familiar with a lot of TLDs, I can still honestly say I don't think I have ever seen a .tv ad and then went and typed it in.

In conclusion, the late night commercials really reinforce what I believe anecdotally, I see these make money from home stuff at 4 am where they use some set of keywords of brand with a number .com. They could use anything, but they are using .com and buying bunches of them to track, because obviously, they, whether consciously or unconsciously, believe that users will be more likely to go to the .com. It's that notion and behavior, a familiar feel, even a sense of trust that makes .com and why it will keep its crown for years to come. Also, no new comers, no matter how successful, will really impact it.

This article will be continually updated at it's source http://ohashi.info/article/why-new-tlds-dont-change-thing

By Kevin Ohashi, Web Developer
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