.Loans .Tires and .Bargains, oh my!

One of the more controversial topics in the domain name industry has been regarding all the new domain name extensions that have come out over the past few years (commonly referred to as the “new gTLDs”). A lot of our clients are asking us whether they should buy into them and what their future holds.

At Dot Associates, we generally advice clients to NOT choose domain names that depend on one or more of the new gTLDs and here’s why:

Background

First, a quick primer for those unfamiliar with the term “new gTLDs”.

  • gTLD stands for Generic Top Level Domain and refers to the characters to the right of the dot in a domain name. These characters are also known as the domain name extension. This website’s domain name, for example, is dotassociates.com, with “com” being the TLD or extension.
  • The “g” in gTLD refers to the fact that the extension is generic (and not associated with a particular country for example). FYI, country specific TLDs are referred to as Country Code Top Level Domains, or ccTLDs. Think .ca (for Canada) or .au (for Australia).
  • The “new” in “new gTLD” is commonly used as a convention to describe the 700+ gTLDs that have been released between 2013 and the present time (this includes extensions such as .TATOO, .LOL, .SUCKS and many other “gems”). These releases have been achieved through a large initiative by ICANN, a non-profit organization who oversees the Internet’s domain name system (or DNS) . New gTLDs do NOT include other gTLDS released before this initiative.

The Case In Favour of New Domain Name Extensions

Proponents for the new gTLD program argue that it is adding more affordable choices for consumers, and that this is especially important in the domain name market as most good domain names (i.e. .com names) are already taken or are selling for large sums of money (i.e. in the domain name aftermarket).

In addition, the ability to have meaningful words both to the right and left of the dot of the domain name is more beneficial than ending with something generic like “.com”. This also has a side benefit of reducing the number of characters in a domain name.

To illustrate with an example, one of the new gTLD’s is “.associates”, so for our own domain name, we could have chosen “dot.associates”. As you can see, both words to the right and left are meaningful, and there are 3 less characters to type into the browser URL bar compared to our actual domain name dotassociates.com.

The Reality

On the surface this sounds like the new gTLD program could have a lot of promise. So how can all of this be a negative for the consumer? Well let’s first look at the two main arguments put forth by proponents of new gTLDs.

Myth #1: New gTLDs Provide More Affordable Choices

The first issues with the “more choice” argument is that the idea of having more gTLDs available is actually not new and has actually been implemented before. The results….have been unspectacular to say the least. In 2001 new gTLDs such as .AERO, .TRAVEL, .MUSEUM, .JOBS, .MOBI, .NAME, .TEL, .PRO, .CAT, .BIZ, .XXX, and .ASIA were all released, and have mostly been disregarded by the market. What has changed so much today that the new gTLD .CAREERS will succeed when .JOBS has not? Why will .VOYAGE do well when .TRAVEL has largely been ignored by consumers?

Second, there really is no shortage of choice when it comes to domain names. In fact, the number of choices people have today is pretty close to infinite, even without the new gTLDs. For .com domain names alone, there are still plenty of choices available directly through hand registrations, you just need to be a little flexible and/or creative (we hand registered dotassociates.com from NameCheap just a few months ago). In addition there are 50,000+ .com domains expiring every single day. Although there is competition for some of these names (usually in the form of auctions), the majority fall back into the pool where they can again be hand registered (for under $10).

And as we mentioned earlier, aside from .com there are a lot of other domain name extensions that have been in existence for many years. And with these domain name extensions, there is an absolutely astounding number of great name combinations available at hand registration prices (obviously much, much more than dot com).

Finally, most of the applications to become new gTLD registry operators were actually made by well-known domain name investors. If you can believe it, these insiders have actually scooped up many of the best new gTLD domain name combinations for themselves! Furthermore many of these domain names are being re-sold for premium prices by these same registry operators. As an example, dot.associates is considered a premium domain name by the registry operator Donuts Co., and as such is being sold for about $100 USD, where as we were able to register dotassociates.com for less than $10. So much for more affordable choices!

Myth #2: Meaningful words to the “right of the dot” provide an advantage

As mentioned above, before the new gTLDs came about, there were plenty of meaningful “ right of the dot” domain name extensions available, and practically all of them have been disregarded by consumers. This begs the question, have consumers actually been complaining about having to end their domain names with a generic extension, such as “.com”? Have they been asking for more meaningful “right of the dot” words? The answer is NO. In fact, we hear almost the exact the opposite from our clients, i.e.they looking for a great “.com” name for their business, but sometimes have to settle for less desirable extensions.

We do concede that there is one VERY small advantage of having meaningful words to the right of the dot, and that is the ability for consumers to have slightly shorter domain names (i.e. dot.associates vs dotassociates.com). This can make for 3 less characters to type in when directly navigating to a website via the browser’s URL bar.

But even this isn’t really much an advantage if you really think about it. If I tell you that my company name is Dot Associates, and you decide to try and directly navigate to my site, would you instinctively type in dot.associates into the URL bar of your browser or would you type in dotassociates.com? The latter would occur 100 out of 100 times.

Further to this, if you asked us what our website address was and we told you that it was “dot dot associates” would you understand that to mean “dot.associates”? Unlikely. You may even think our website address was something like “dotdotassociates.com”! However if we told you that our website address was “dot associates dot com”, you would instinctively know to type in “dotassociates.com”.

Other gTLD Issues

Here are some of the other major issues with new gTLDS:

Unpredictable Market Adoption and Longevity

Regarding market adoption, first there is no doubt that a few of the new gTLDs will have large market penetration at some point down the road. However figuring out which gTLDs will be the winners is the real challenge.

One prediction that seems to have consensus among even the biggest new gTLD proponents is that 80% of new gTLDs will likely fail (meaning a 20% success rate). We tend to think the failure rate will be closer to 90% but for argument’s sake let’s just agree with the “proponents” on this one and go with an 80% failure rate. At this point in time, it’s nearly impossible to figure out which of the new gTLDs will be among the lucky 20%. Is a consumer expected to build their brand on a domain name that has (on average) an 80% chance of being obsolete one day? Business owners manage big risks every day. The last thing they need is to unnecessarily add the risk that the domain name they build their brand on will be one of the unlucky 80%.

Now wait a minute, you may be saying, there are already market usage statistics that show which gTLDs currently good market penetration, and which ones are trending upward. Unfortunately even these statistics can be deceiving. For example, let’s look at the the new gTLD “.xyz” which happens to have the most registrations (over 900,000 to date) out of all new gTLDs.  This seems impressive considering that .xyz has only been available to the public for a bit over a year. However, looking a bit deeper brings out concerns even for this new supposed “front runner”:

  • A large number of .xyz domains were either given away for free, offered at $1 or have been automatically assigned to current .com domain owner clients by certain registrars. See this Domain Name Wire article (and accompanying comments) for more information.  What will happen to the registration numbers once the .xyz domain names are up for renewal and more than $1 has to be spent? And even if people do renew, will they use their free .xyz domain in any meaningful way?  By the way, we recently received a notification from one of our registrars (NameCheap) that dotassociates.xyz is currently available for $1. Shockingly we haven’t take them up on the offer.
  • Just based on common sense, would you trust your business’s domain name to the “.xyz” domain name extension? For example, if our own online presence was built around the domain name “dotassociates.xyz”, wouldn’t it put some doubt in your mind as to whether you were dealing with a legitimate business?
  • Finally, one of the main points in favour of owning a domain with a new gTLDs is having a meaningful word to the right of the dot. Clearly the “.xyz” is not meant for this purpose in most cases.

The point of the above analysis is to show that even the currently best performing new gTLD (in terms of registrations) still has an uncertain future. Are you willing to build your online business or brand with this type of uncertainty?

Synonyms ??!!

One other unfortunate consequence of the new gTLD program has been ICANN’s allowal of domain name extensions that are almost synonymous with other extensions. This will no doubt have the effect of confusing and frustrating consumers. For example, if you’re a photographer trying to decide on a domain name, you can choose from (in no particular order) .photo, .photos, .pics, .photography, .camera or .pictures. When making this decision there are just too many additional considerations (i.e. which extension sounds the best with my company name, which one will potential website visitors be most familiar with, what are other legitimate photographer websites using, which of the these extensions is likely to be around for the long haul etc.).

Consumers going through this kind of “risk assessment” would be better off to just choose a .com and focus on the word(s) to the left of the dot. The process of selecting and acquiring a domain name this way can be complicated enough!

Our Recommendation

We would like to first clarify that we actually don’t think new gTLDs have no place on the World Wide Web. In fact we believe they could be quite useful for businesses in certain scenarios. Here are some examples where having a domain based on a new gTLD could make sense.

  • As a Complimentary Domain Name to Your .com: Acquiring a new gTLD to create a “cool” domain name alternative for a .com domain name has been successfully marketed by some businesses and can display a sense of style and trendiness. For example, the registry operator for .xyz uses the domain name gen.xyz for their main website. In our opinion this is a great, domain name with a lot of branding potential for the .xyz registry operator. The point here though is that the .xyz people are no fools and also made sure to hedge their bets by acquiring genxyz.com (which is configured to automatically redirect to gen.xyz).
  • Company Branded gTLDs: Many larger companies have become the registry operators for their own branded gTLDs that they then have control over. For example, Google is the registry operator for .google and Amazon is the registry operator for .amazon. How these behemoths decide to use these gTLDs is still to be determined, but it’s important to note that these companies are definitely NOT giving up their famous .com domain names any time soon!  It should also be noted that the application cost to become a registry owner of a new gTLDs is in the hundreds of thousands of dollars, so for most companies this option does not make financial sense.

In summary (and to repeat what was stated at the beginning of this post) what we are recommending is to not DEPEND on a new gTLD for your business or brand. In other words, if you’re going to get a new gTLD, make sure to ALSO have the .com equivalent. Since .com domains have a virtually 0% chance of disappearing or becoming irrelevant on the web, you can go to sleep every night knowing that your customers can find you and that your domain name is going to be around for a very long time.

This article has 2 comments

  1. Enis Reply

    There are a lot of ccTLDs that can be and are used globally, mstloy because they mean something more than just the country origin.For example .in is used in USA, UK, Germany, Switzerland, Netherlands, Poland, Japan, Korea, Vietnam etc primarily because it can be used to denote the preposition in’ or even as a short form of internet’, international’, insurance’, etc.Similarly, other refashioned cctlds have been used outside their geo ref .tv being the best example, others include .co, .me, .ws etc.

    • Rajiv Reply

      Thanks Enis, that’s a good point. Those type of ccTLDs provide yet another alternative to the new gTLDs!

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