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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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English site is up for the 2017 Global Domain Industry Summit slated for 7-9 July in Xiamen, China

You can now view information in English about the 2017 Global Domain Industry Summit slated for 7-9 July in Xiamen, China.

www_gdsday_com

The agenda for all three days has been posted, although you won’t find too much detail. The main event IMHO, as at any domain conference, is the opportunity to network. You either plonk down your cash for a ticket (cheap by western standards), book your long-haul flights, and prioritize your time to be in Xiamen and meet people to possibly do business with in China, or you don’t. It’s that simple.

Here’s a screen shot of the ticket prices. You can slum it with a “Common Ticket” for 19 bucks. Or go all out with the bling-bling “Diamond Ticket” for $399.

GDS 2017 Ticket Pricing

The website states that the 2017 event is being co-organized by Go Daddy, AliCloud, Baidu Cloud, eName and Bizcn. Since their “Cooperation” page is still up, it also appears they are actively looking for additional sponsors to pony up anywhere from $3,000 for a Bronze sponsorship on up to $100,000 for a Diamond Sponsorship.

For three grand you can cover the reception car with your company’s advertisement and logo tags.  Or for $15,000 you can sponsor a “closed-door meeting” and “organizing propaganda.”

Shell out $50,000 or more and you get a “High Class” stand.  Anything less and you get an “Ordinary” stand.

There’s still no further information about the auctions as I had mentioned in my previous post. That page remains in a “coming soon…” status.  The clock ticks as I think many are interested in this, and it is unfortunate so little information is available to date.

Lots of “guests” photos and names are posted. It’s a wish list, not a confirmed attendee list. This is typical with domain conferences held in China.

I have to chuckle just a bit at the English translation. I see the same mistakes being made from Chinese to English by some of my good Chinese colleagues as I see from English to Chinese by western companies. One cannot simply rely on Google Translate or that intern who understands a bit of Chinese or English.  A professional interpreter who understands DNS industry lingo and marketing can add so much more value and benefit.

With the above stated, I do recommend that you consider attending if you are serious about making connections in China. It’s easy to get there via Hong Kong or Beijing.

You don’t need me to tell you that China is a massive country. It is so much larger in scale and complexity than the USA or Europe.  It is impossible to describe or even communicate with pictures or words. You have to see it for yourself and meet the people. There are not too many chances to meet a lot of China domain industry movers and shakers in one spot this year. This event in July is a splendid chance.

 

 

 

 

 

 

 

 


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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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Video: Setting up your business in China. Some basics.

Earlier this month, during my most recent business trip to China, I sat down for a chat (on behalf of ChopChop.domains) with my friend Anton Li, Managing Director of A&L International Business Consultants Ltd. in Beijing, about the intricacies of assisting foreign nationals in setting up, establishing, and maintaining legally recognized businesses in China. Lately he’s been helping domain name industry customers.


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Video: Summary of Global Domain Summit in Hangzhou, China

I was very fortunate to attend the Global Domain Summit in Hangzhou earlier this month.

I flew to Beijing first and spent a few days there. Then we took the 6 hour high-speed train to Hangzhou, and were promptly and warmly greeted by the conference organizers at the train station.  We were immediately whisked in a private bus with other attendees to the Relax Hotel where we received our badges upon walking in the lobby.

I have to say everything seemed well-organized for a conference with over 1,000 attendees, at least from an attendee point of view. There was plenty of food on hand if you were hungry, and plenty of friendly conference workers to assist.

My only complaint early on was that the air-conditioning did not seem to be working in the main “ballroom” of sorts, and during the opening ceremony I found it to be quite uncomfortably warm and sticky.  Being originally from Houston, I know what this kind of heat is like. But it’s another situation when you are in a room with hundreds of others and there is no air blowing at all. I literally had to leave the room after about 10 minutes.

Eventually that little matter was resolved and the rest of the conference provided ample opportunities to meet up with old industry friends and lots of new faces.  I found many of the local China domainers on hand to be very friendly and engaging. Many came right up unannounced and immediately introduced themselves.  By far WeChat is the way everyone exchanges basic contact information.  I have found it to be an indispensable tool when traveling in China.

So on behalf of ChopChop.domains, I put together the following video summary that will give you a little taste on what a Chinese domain name conference is all about. I also had all of about 7 minutes to grab the person that ran the entire conference on behalf of the main organizer, BizCN.com, and do a quick video interview. It sheds some light on the increasing role of women in the China domain name industry.

 


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Zone file size of the average new open gTLD in 2016.

Many new gTLD applicants and others have their fingers crossed that ICANN’s new gTLD program will lurch forward over the coming months, resulting in a controlled explosion of new gTLDs that will offer registrants new options to connect with Internet users and lead them to the content that they expect. I’m sure some applicants are dying to see some revenue start flowing in the door, not to mention related vendors.

Hopefully, for many of the applicants that need to turn a profit at some point, before plunking down $185K+++ just to be in the game, have carefully thought out what the market for new gTLDs might be in the future, what volume of competition and negative sentiment they might face, and what numbers they will need to be successful by a date certain.

So what kind of market share can we expect by the end of—say 2016—from the new gTLDs? What kind of monthly ‘net new create’ numbers are needed for a single new gTLD to achieve a particular number by the end of 2016, assuming they can get 36 months of selling time by launching by January 2014? No one really knows, but I’ll take an educated stab at it. 

Having the experience of being involved with the launch and ongoing management of .mobi—I’ll call it a ‘legacy’ new gTLD, or to be technically correct, a legacy sTLD (sponsored top-level domain), I’ve been thinking about how hard it really has been for a non .com TLD to get consistent volume through the channel on a global basis.

A lot was learned through the .mobi experience and I can tell you it is no small achievement to get your registrar channel onboard and with you the whole way—not just during sunrise and the heady land rush, early premium auctions and general registration phases, but for months and years down the road.  Imagine how hard that might be when you are competing against multiple new entrants in the game who are also vying for attention from the registrar channel and potential registrants. Let us not forget that existing incumbent TLDs will likely fight like hell to maintain their market share—and they already have the channel in their pocket for the most part. I believe this will be especially the case for top tier ccTLDs.

For all that was accomplished and spent in the early years of .mobi, and despite some criticism, it is today ranked in the top 30 off the roughly 268 existing TLDs worldwide with nearly 1.1 million active domains in the zone.  The .net, .org, .info and .biz TLDs have greater volume and it’s taken them years to get where they are today.  Repurposed ccTLDs such as .me and .co have carved their niches and enjoyed attention, but even with their well-executed marketing and registrar programs I’m sure they are well aware of the challenges of making a market entry splash and maintaining momentum.

If you take the 15 sponsored TLDs that have been added since 2001 (legacy ‘new TLDs’ if you will) and count their total number of registrations, they amount to less than 5% of the current total estimated number of 252 million names registered across 268 TLDs. The vast majority of that 5% is with .info, .biz and .mobi. I won’t dive in here as to their relevance or other issues for not grabbing a larger market share, just stating numerical facts.

Take away the withdrawn applications and contention sets and there is potential for an estimated 1,112 new gTLDs. Take away the IDNs, the dotBrands and ‘closed’ generics and you are left with about 256 potential ‘open generic’ new gTLDs in the marketplace, assuming contentions, objections and other delay and/or death mechanisms are resolved—but don’t count on that.

So here’s where I think we might be at the end of 2016. This is high-level. If you would like detail on my assumptions and forecast for any set of new gTLDs please contact me. Disclosure: I provide consulting services to new gTLD applicants and others.

I believe .com and legacy gTLD zone files will experience moderate but continually slowing annual growth, ending with 129.5M and 41.5M registrations respectively. ccTLDs will continue their fast annual growth, ending with 163.8M registrations.

But wait, what about the new gTLDs? Well, 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. That would mean an additional 73.6M new registrations in the marketplace—bringing us to a total of 408.5M names in all TLDs at the end of 2016.

I believe the vast majority of the growth in global registration will come from open generics, as in 94% of that 18% market share.  I will admit there are some unknown factors that could change all this—especially as it relates to what brands could do with their TLD assets—but that’s a post for another day. So if you are an *average* new open gTLD, my estimate points to about 270K registrations in your zone at the end of 2016.  Of course some will do better than average. If you do at least 5 times better than the average you’d be the next .co or .mobi.  If you do at least THIRTY-SEVEN times better than the average you could be the next .org, .de or .co.uk.

No one in this business wants to be average, but to even get to my estimated average you’d have to sell 7,500 net new registrations every month for 36 months to get to 270K in my forecast model.  So do the math and get cracking with your marketing and sales plan if you want to be at least average or better with your channel and end user targets.


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Support the growth and development of the Internet domain name industry.

For many of us in the domain name industry it seems that ICANN’s new gTLD program has been moving along slower than a snail on tranquilizers for the past few years.  That’s all about to change as we seem to be on the cusp of dozens, if not hundreds of new gTLDs hitting the streets before the end of this year and into 2014.

Trouble is, that as ICANN moves from rolling out these new gTLDs at what may be an old-school dial-up pace at first, to likely a fibre-power broadband delegation pace later, the public at large seems to know nothing about all this.

Don’t take my word for it, read the research posted by SEDO earlier today that said “More Than 60 Percent of Small and Mid-Size Businesses are Unaware of New gTLDs.”  We all know that Internet users might get confused by new gTLDs. This has got to change.

And change will be possible if folks such as domain registries and registrars, applicants for new top level domains, and domain related service providers manage to get organized via a new trade association that’s just now getting off the ground.

Thanks to Google’s new gTLD team, a bunch of old (like me) and new faces in the industry got together alongside the ICANN regional meeting in Amsterdam last January.  We talked about setting up a domain name industry trade association to help educate the world on the coming changes in the domain landscape and to support the interests of the domain name industry.

Thanks again to Google, and those that attended that January meeting, volunteers are now working towards getting things going to the point where the trade organization is launched and operating.  It’s very early days and much work remains. So far a very basic informational site has been set up at whatdomain.org.

As stated on the site: “This is an opportunity for your organization to collaborate with your peers involved in the domain name industry to define how the industry works together to promote and ensure success through a period of major change.”

If you are interested in joining, I encourage you to visit whatdomain.org to learn more.  Even if you are unsure of how you might participate you should submit the interest form and the organization will work with you to help you decide.

All in all I believe this initiative is worthwhile and very important. It needs support and execution to ensure the growth and development of the Internet domain name industry.