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The Great Domain Correction of 2017?

There were only 1.8 million registered .com names when I joined the NSI (Network Solutions) Marketing Team in the summer of 1998. ICANN was formed just a few months later.

By the time we were acquired by Verisign in June of 2000 there were roughly 14 million names in the .com database. I recall predictions that one day there would be 100 million registered .com names. Some thought that was a craaaazy number and wanted to know what we were smoking.

To me achieving that number seemed possible, but that it might take a decade or more. The market then paused for a few years. Looking back it was incredible buying opportunity for those that understood the long term value of good generic keywords in the form of .com names. Today Verisign manages roughly 128 million registered .com names.

Relative to today’s lean operations at many domain registries and registrars, it’s hard to believe that back in 1998-2000, with a monopoly position and .com practically selling itself, NSI employed 50+ people on the marketing team pumping out the .com message day and night.  Messaging that included how .com could be used with this incredible “killer app” called “email” where you could have an address such as mary@flowers.com instead of marysflowers582@aol.com.

Now it seems that some TLDs are at a growth pause or experiencing negative growth, particularly in the cases of some new gTLDs that were heavily promoted in China, or where promo deals were done with greater China area registrars. I don’t need to call them out. You know who they are.  

Today’s market and regulatory conditions surrounding the creation and trading of domain names is quite different from market conditions that existed in the past. The China bubble has burst and the free-to-nearly-free domain create promos don’t seem to have worked. 

Some registry and registrar operators seem to have never adjusted to the new realities, or figured out how to leverage all the incredible data, tools, and experienced human intelligence available to them today vs. relatively little that was available to us 15-20 years ago, not to mention common business sense.

Some registry operators have latched on to a PR huckster type of introduction to the Chinese market that might please inexperienced applicants and domain name investors at first, but does little to demonstrate value compared to .com or the local ccTLD (such as .cn) and how to achieve scaled up real business and end-user utilization of a particular TLD via the registrar channel.

I’m not immune to this and have learned tough lessons via my personal and business experiences in China over the years. Sometimes the best way to gain traction in a foreign market is to say as little as possible publicly and really learn how the market and culture operate before you press on with operations, marketing and sales.

Especially for China. China is HARD.

You will not be successful there, as a foreign registry operator, at a minimum, unless you understand that you will likely lose money or barely break even for several years and are prepared to deal with that reality. You must be in it for the long term. Long term, at a minimum, is 5 years of sweating it out (flying back and forth on a near monthly basis) before things *might* work out.

Over the short to medium term the domain industry is likely to shed inefficient registry and registrar operators and investors, especially some of those who banked on new domain extensions (new gTLDs) that have no real consumer traction—which are many— and can no longer, or are just unwilling, to fund the basic holding/operating costs, let alone fund any marketing team or person.

For sure there is an easily foreseen correction—if not outright registration numbers recession—going on right now for some in the domain industry. Perhaps a short growth pause for .com and some ccTLDs, but their long term outlook to me is strong (same for some generic IDNs) as they do not need explaining to their primary target markets.

In case you didn’t read the latest Verisign Domain Name Industry Brief, the 294 ccTLDs make up about a 43% share of total global domain registrations, with the top 10 ccTLDs composing nearly 65% of the overall ccTLD count.  This has been rather consistent over the last 8 years, nudging from about 40% of the total market in 2009 to today’s 43%.

By comparison, the roughly 1,224 new gTLDs have only managed to capture about 7.7% of the overall global domain registration total, with the top 10 new gTLDs composing 64% of the total count—and that top 10 list is likely to shift around a bit in the coming months.

In May of 2013 I posted my thoughts on Zone file size of the average new open gTLD in 2016 and stated:

“…if applicants, the channel, and the industry as a whole do a bang-up job educating, marketing and selling their value props through existing and new channels—essentially hit the ball out of the park—we could see the global market share for new gTLDs in aggregate reach 18% by the end of 2016. I mean they/we/you would have to *kill* it to get to that point. That would be an achievement that means at least three times better performance in 3 years than what the legacy sponsored TLDs have achieved in the past 12 years.”

It is clear now that the new gTLD industry has not “killed” it.

Don’t get me wrong. There is money to be made with non .com TLDs depending upon your portfolio size, function and purpose to the industry. Even in China. There will continue to be plenty of opportunity there, and risk. (Disclosure: I provide consulting services to registry operators doing business in China or that have China on their radar.)

I think some new gTLD portfolio holders and backends are in a position to take advantage of the situation if they can carefully manage expenses for the next two years and don’t bet the farm on China. This includes ICANN, that may need to shed some personnel as a result of what may be “The Great Domain Correction of 2017.”

Last, I’m thinking some domain types that had dollar signs in their eyes just a few short years ago may be now wishing they invested the same funds into bitcoin!

Speaking of bitcoin, its status in 2017 reminds me of .com in 1998. It’s a relatively new digital asset that sells itself and appears to be enjoying rapid traction in a relatively unregulated “wild west” type of market. The “killer app” seems to be the blockchain and big time household names are paying attention. It doesn’t need much of a marketing team and the general public still doesn’t quite understand its future significance. 


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39 days on the road

Back home in Austin after 39 days, 7 countries/territories, 13 flights, 7 hotels, 2 rental cars, countless meetings, Ubers and taxis—and 1 carry on for the whole shootin’ match.

It’s the longest I’ve been away from home in years, although some of that time was spent working from my “second” home in Ireland, where I was a resident for five years.

All told I’ve spent nearly three months total in China alone in the past year. It’s been rewarding learning so much from my Chinese colleagues and friends.

Here are a few pics from various meetings and events with registrars and others in the domain biz in China over the past few months. Some of the friendliest and hardest working people you’ll ever meet in the domain name industry.


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The inside track to TLD success

I originally posted these thoughts via the DomainDiction blog in June of 2012.  I believe they still hold true today.

So perhaps you have survived reading the Applicant Guidebook, paid your fees and waded through the TAS process. Assuming your application is successful, how are you going to engage your channel(s)? What will you need to do to garner their attention? Why should they care about your TLD? What will you need to do to make them choose to work with you? Or will it be the other way around—in that YOU will need to decide who to target and YOU will need to decide who you want to work with?

I think some new TLDs will need to look beyond the traditional registrar channel, but many others will depend on the established global distribution network to help them quickly build essential new “create” revenue. Most new TLD business models will absolutely have to have this revenue just to survive year one, so let us focus on the registrar channel in this first blog post.

One need not look too far beyond the introduction of the older “original” new TLDs sanctioned by ICANN such as .info, .biz, .mobi, .tel, .asia, .museum, .jobs, .pro, .xxx etc. and “repurposed” ccTLDs such as .tv, .me, .co, .cc to learn what seems to have worked and what does not work.

Here are some things that I know that work:

Relationships. You must have them in the registry/registrar world and the domain investor (domainer) world. As digitally connected as we all are, nothing beats old-fashioned relationships.

Trust. Do what you say you are going to do. Registrars don’t like surprises and they do talk to each other. Your reputation alone may determine whether you can even get in the door.

Plan ahead. Way ahead. Registrars that matter don’t like doing things last minute.

You better have a plan that makes sense, even if you have the relationship–with-the-registrar part down. Flush it out. Twist it around a little with a few test cases, but in the end it better be spot on. Otherwise you are probably toast. You need to communicate how you are different, how your domain will work. Define the problem and what you are doing to solve it, how the registrar and end-user registrant will benefit AND of course how much money the registrar can make!

You must inform registrars of key sunrise, landrush and general registration dates/deadlines/policies well in advance. Registrars must clearly understand your application, technical and OT&E procedures. They must understand payment procedures and all fees.

BD. BD. BD. Market. Market. Market. Sell, sell, sell. If you are not doing all three you are not going to capture revenue. You must first get to the registrar and then, even if they buy your story and your deal, you will have force feed many of them with your messaging/value proposition along with other critical integration information that won’t make them choke on their morning coffee and croissant vs. all the other stuff they have to do that day/week/month/quarter/year.

What doesn’t work:

Registration restrictions. The more you have the more I can guarantee you will lose in new creates and the fewer registrars you will have in your distribution channel. It creates confusion. Besides, registrars don’t like it when they get more support calls and their costs go up. The history of the DNS is littered with restrictive policy TLDs. If you want to join me for a beer sometime I could easily discuss how much money has been made and lost in this industry with overly restrictive TLDs.

Not talking directly and often to prospective and existing end-user registrants. Those who have studied the history of the DNS know of the wall that is supposed to exist between registries, registrars and the registrar’s customers. We all know that has changed and will change again moving forward, but beyond just offering your TLD in a registrar’s storefront you must establish a relationship and build trust with your end user base. That relationship must not end a few months after launch. It must go on, for years.

Marketing and PR programs with no clearly defined goals. How will you gauge success? How will you know you are on track to achieve that success? How many registrations do you need on a daily basis to achieve your goal with your top 10 accredited registrars? Do you even know who your top 10 partners should be?

I’m simplyfing here based on past experience at dotMobi. How the TLD game is played with registrars moving forward is changing and will likely change quite a bit with the introduction of new TLDs.

The introduction of new TLDs, to the scale being contemplated at this time, represents an incredible opportunity for those that understand their market and the channel opportunities to make a difference and ultimately profit to a great extent. I look forward to examining issues in greater detail and to your feedback to get the conversation going!