Beating a Dead Horse (II): new gTLDs

I don’t expect that the new gTLDs will have a widespread impact.  But they could be successful even if they aren’t widely adopted.

There are different ways to measure success for the new gTLDs.  Even if a new gTLD develops a niche following of no more than 50,000 registrations, this could still be highly profitable for the sponsoring registry.  Let’s assume the start-up costs for a new gTLD are $1 million, and the annual profit margin on the 50,000 registrations is $10.  Then even a gTLDs that only has 50,000 registrations would generate $500k in profit a year, for a recurring 50% return on investment for the gTLD sponsors.  This would be counted as a big success for the gTLD sponsor even though the extension never has more than a small number of registrations.

As a domain investor, I don’t see the need to jump into the new gTLD space.  The key to success is marketing and partnerships, and those aren’t my strengths.  So I’ll leave the new gTLDs to more talented people.

I don’t see a great demand for new gTLDs so my guess is that most new gTLDs will flame out quickly.

Perhaps there are a few uses.  Mayor Bloomberg is excited about .nyc. That could be useful for local businesses to be able to get their exact match domain in an .nyc extension.  Here in Washington, DC, businesses often just add ‘dc’ and ‘.com’ to their name to come up with their domain name.  Tryst is at trystdc.com, Bombay Club is at bombayclubdc.com.  Sequoia is at sequoiadc.com, Hook is at hookdc.com, RIS is at risdc.com, and so on.  Works just as well and you don’t need a new extension to get a decent domain.  So we’ll see how much demand there is for .nyc.

.me has some adopters, as does .fm, and .info.  I expect many new gTLDs will find their niche as well.

But it depends on your point of view.  A new gTLD could be a success from the sponsor perspective and could have many happy registrants.  But my perspective is as a domain investor.  Since I’m not going to sponsor a new gTLD, I’ll wait to see if any of the new gTLDs are a success in the marketplace before deciding whether I will sink my money into buying any domains in that gTLD.

The greatest potential in new gTLDs is for non-English language uses.  Verisign will use the new gTLD process to obtain .com and .net variations in the major languages, so that there can finally be fully native language .com and .net domains.  This is the one clear and powerful use for new gTLDs.