Domaining is An Elite Industry. Like it or Not!

Morning Folks,

There are two basic groups in domaining. Those that make money and those that would like to make money. Whether we like it or not, it is a very small group that actually makes money. An "Elite" group. Not that they are "Elite". But the group as a whole is elite because it is such a small but fairly powerful group of less than 2000 out of 7 Billion.

The industry is not growing. At least not yet. In a success, .whatever should grow this industry exponentially. With that growth it becomes less elite as more join those that make money. Or not because it may not unfold that way.

We have watched several waves of domainers come and go and come and go and come and go again. Many are the type that will chase shiny objects and we may or may not see that. Guess it depends on how shiny things are.

2014, 2015 and 2016 are just going to be fun. Lots happening. Lots of dumb business is about to be shown us. We are gonna die from laughing because some are going to make the dumbest mistakes you have ever seen. And some are going to be very methodical and fail anyway. It's just "Survivor" and it is being filmed right in front of us.

It seems you hear the same few extensions over and over when it comes to favorites. .Web is the front-runner almost every time. .App, .Blog, .Shop seem to be the runners up. Your guess is as good as mine. I can't stress that enough no matter how certain or opinionated I might be. But even in that race, I see .web vs .net if there is a race.

The key element for .com, like it or not, is type in traffic. That was the hidden pot of gold that is likely missing from the new extensions. Ask Google, they get most of the typos for .whatever right now and I bet it does not mount to a hill of beans.

Ask those in an elite group that are still standing. They ALL have type in traffic. Not on all their domains. But they have type in traffic and if not there would be no reason for PPC would there? So that is one of many missing foundations and how many have to be missing before you have a collapse? Type in traffic was the single biggest key and accelerator to domaining and growth whether folks want to understand it or not.

Each new .whatever has some dependence on other .whatevers. They will suffer the burden of the bad moves by others. So those with solid plans have the weak as their biggest obstacle not me. Nothing I can say can be as bad as a horse falling down right in front of you during a race.

Believe me, major mistakes have already been made by major players. It may not reveal itself yet, but in time, it always comes to the surface. So far the big winners are the auction losers which is funny and cool in and of itself.

This is an elite industry with even more elite people coming into it. If they succeed, they become more elite. .whatever barons and just like the Kentucky Derby, only a very elite group of people in the world could actually handicap this and from those maybe none of us will get it right. That is how you transform elite back down to earth.

700 horses coming out of the gate and the one thing that is pretty certain and almost all agree, some will be complete flops and be trampled at the gate. The only question is which ones and will they hurt others?

Rick Schwartz



21 thoughts on “Domaining is An Elite Industry. Like it or Not!

  1. Observer

    As an observer of the domain industry, I am more interested in seeing what the market price ratio of exampleweb.com vs. example.web will look like. 10:1 or 100:1 ? I just don’t know.

    Reply
  2. P Tilmann

    this is the difference.. mm hmm .. id rather have EXAMPLEWEB1234567890CATSHITSTOCKINGSTUFFERS.COM than “example.web”

    Reply
  3. UFO

    I think the social media and social groupings will have the most success as a grouping. By this I think extensions like .blog .club .band etc (But rather than spending cash on marketing they’ll need to spend it on software etc that will give these groups reason to use their domains rather than using facebook etc).

    I only see a few commercially focused TLDs that I think will make it like .shop .web

    While I think many TLDs will struggle to get the required est 37k of registrations it has to be seen against a background that the actual run costs in marginal cost terms could be as low as 25k if you have multiple TLDs and run them yourself. The issue being if you have lots of rubbish TLDs then none of them are going to pay the run costs… some backers of applicants are going to realise along the way that rather than pigeon shit domains they’d bought into dinosaur turd TLDs.

    I see some potential for domainers to profit, but it will be a very long term play and will have to kick off once registries have burn their cash and their backers say no and they dump good names at cheap prices, the other potential is in dreamers selling their names in the secondary market after a year or 2.

    Can’t see myself buying any of these TLD domains. Too much downside for not enough upside. One word commercial com’s are still a certainty for increase.

    Reply
  4. UFO

    One other aspect that I constantly see missing from the ‘debate’ is the recognition that .com IS A TLD for .commerce it is the best TLD for commerce. Commerce is where the money is made and the money exists to buy domain names at amounts higher than reg fee.

    You can have a great TLD but if your target market doesn’t have much money they won’t pay that much money. TLDs have the same characteristics as all the metrics we use to assess domains.

    Another point that really kills a number of these TLDs is buy shifting the keyword to the right any domain buyer is buying a subset of that keyword rather than the whole keyword. camera.com is a whole heap bigger that domain.camera, worse still is that subset will often have to be described by a trademarked brand which is obviously not a good idea.

    My perspective on these TLDs for domainers is that: Prospect of sale = low. Prospect of high return = low. Amount of work required to find prospect of sale high and return high = excessive compared to .com’s.

    Reply
  5. steve

    I’ve been seeing a number of commercials on television advertising their websites with an extension of .tv. What do you think are the future prospects of holding such an extension especially if it is an EMD with high cpc, traffic, and competition? Obviously the .com’s are taken so I know that it is preferred to have that, but otherwise does .tv seem like a viable alternative?

    Reply
  6. Jeff Schneider

    Hello Rick,

    Everyone is very aware of the consumers hesitancy to use .Whatsthis? extensions.

    The key point they are missing is that the corporate .COM holders also have great resistance to taking a chance on these new right of dot derivatives experiment.

    You may want to check out a synopsis comment i made on this subject over at Domain Kings Joint Venture Group at Linkedin.

    Gratefully, Jeff Schneider (Contact Group) (Metal tiger)

    Reply
  7. Jonathan

    Direct type in is very much a North American thing, the rest of the globe tend to use the engines, But still prefer the .com or cc brand for credibility or national recognition. I believe it is important for the powers that be advertise the com & cc’s group status. It is the brands group status that will hold the higher ground when the big G steps in to mop up the pieces with free big G url’s.

    Reply
  8. Robbie

    So is the guy buying buildings in Las Vegas, hiring staff, pumping money into marketing for .xyz completely clueless, he has to see something we don’t here to keep piling money into this non essential extensions, any thoughts?

    Reply
  9. BullS

    @Robbie

    That why he is located in Vegas, burst or booze.
    Remember, the house always wins.
    Same goes with Donuts, I can’t wait to see who is eating the real donuts$

    Am sure glad I am part of the successful Elite Industry.

    Reply
  10. UFO

    @Robbie

    Depends what he is intending on doing with the TLD. If he follows a normal registry model which seems the case then yes, there are better TLDs, if you see that nobody else sought the TLD then it pretty much highlights the fact.

    But, like I’ve said, the actual run cost of a individual TLD could be quite low if done in conjunction with other TLDs and there are aspects such as gaining knowledge of how to run a registry that could be very profitable for the second round when it comes.

    The issue with xyz is that its TOO non descript. Businesses aren’t going to be interested in being .xyz. Heck they can’t even get US businesses to sit on the .US. Even just straight off the bat there’s a whole bunch of extensions that I’d rather trade or provide content off in preference, that includes .us .uk .ca .net .com .cc .co .info etc etc etc… and thats not even including all the new TLDs that may sound better like .web .shop etc etc. Also, what happens in round 2 and they bring out more and more of these non descript TLDs…

    Not sure its a case of knowing something we don’t as much as believing something we don’t… and being interested possibly in some spin off benefits.

    Reply
  11. AlanR

    It’s funny how most people haven’t figured all of this out yet. There never has been a need for any of those new extensions! The only reason why they are being launched is so the registries and registrars can make more money. That’s it! No other reason! I’m sure they pressured ICANN into doing this in the first place They know from past history that the poor fools will rush in and buy up all the keywords. Just like when Monte laughed in the debate, he knows how to successfully launch a new tld like he did with .mobi. Beware! Lots of well respected people in this industry will be pitching their best to get your money. Even though they know how to successfully launch an extension, ask them if there has ever been an extension that has even come close to a dotcom. Since all of the extensions launched in the last 12 years or so have more or less been a failure, then there isn’t much to base anything on, is there? The only thing they have is their hyped up speculation! So really, what’s the use in investing in anything other than dotcom?

    Reply
  12. UFO

    @AlanR

    I actually until a couple of days ago thought ICANN seemed to be on nothing more than a money drive. But, looking at their variable income which is just 25c a transaction and 25k a TLD, its definitely not a big money spinner. I actually believe they just want to provide as much variety as possible (The net to be open and least cost as possible) and possibly break down Verisigns dominance so that domain rates can get closer to the transaction fee of 25c they charge. Domains esp .com should be down at the $3-4 level for renewals.

    I’m not sure how Versign can justify its rate, it costs them nothing like 750m Pa to administer the .com (c150m domains x $5), these new registries are going to show its far cheaper, But I guess Verisign is applying a gold standard because all the worlds biggest corporates are sitting on .com (But then again how many cctlds have gone down in Germany, Britain, France etc… None.

    Reply
  13. D

    too much hype for type-in traffic in almost every post, Rick… tell what percent of traded names sold because they have type-in traffic? or when that factor been even taken into consideration at all..

    browsing lists of sedo/afternic/private sales one can’t miss the fact that the vast majority of sales are brandables (good or not, whatever), not type-in sort of names..
    yet we keep talking of type-in traffic as “the major engine” of the whole industry.. thats simply nothing to do with the reality

    of cause it a good thing and adds a lot of value and can even command the price of a domain if it has natural type-in traffic to it. yet, this is applicable to only a small percentage of domains and sales, probably less than 1% of total sales volume.

    you should also admit that the whole “type-in” thing works only because .com is still the default extension so lazy uneducated people routinely type “com” right to the dot when told to go to “SomeWebsite”, no questions asked. but people tend to get more knowledgeable and inernet savvy over the time (and that’s a fast process now), with thousands new tlds coming and browsers/gadgets/search engines dropping exclusive support for “.com” (automatic suggestions, dedicated keyboard buttons, higher ranking etc) in a matter of years .com type-ins are going to lose a lot. this game is over soon..

    Reply
  14. jon

    Rick is absolutely right about this. It is refreshing to see someone actually finally
    being honest about the domain business and not sugar coating all of the potential pitfalls out there. Only a very few select ppl are making money in the domain business these days and this is a FACT. Not only that there are ever
    more growing opportunities for mistakes to be made by domainers as a result
    of all of the new extentions that have come out recently.

    You literally have to watch your back out there! The domain business has
    totally changed recently and become even more of a Jungle, one where only
    the very smartest of investors who have done their homework even stand a
    chance to survive.

    Thanks for the good blog .. and wake up call Rick! ;)

    Reply
  15. steve cheatham

    It goes without saying but I am saying it…we will be seeing a lot of tld investors crying in their beer the next few years.

    Reply
  16. Domenclature.com

    It is an elite industry, but it should not be.

    “One of the key characteristics of an elite corps is its susceptibility to those more powerful than itself. Elite power is naturally attracted to a power hierarchy and fits itself neatly, obediently into the one that promises the most personal benefits. Here is the Achilles’ heel of [domainers], armies, police and bureaucracies.”
    ― Frank Herbert, The White Plague

    Reply
  17. Cyborg

    I have sold at least 12,000 or so domains so far, yet not enough to make a fair profit for myself…yet. Not recently, anyway. Selling domains for somebody else was easier, and I sold whole crapload more of them than I do now…but until I sell them I can torment the entire internet with them.

    Some are worth more than others, but they all started out from nothing.

    Reply

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