20-Year Post Part 2; gTLD’s

Morning Folks!! 12/21

Tomorrow is my last post to celebrate my 20 years and then I am back off to being retired, silent and enjoying life. Hope to see you for the 25th in 2020.

If you have read my writings over the years you will know that I like to look at both sides of an issue. I can play devil's advocate. I enjoy balancing information and coming to a conclusion. Many close their eyes to new information. They get threatened by it. They have to lash out. Never understood why. Let the weight of what is discovered be the map forward not a meandering way to a dead end. I always adjust accordingly.

I may not be to the leading edge of technology but I have tried to keep up with it throughout my life because I always devised ways to work less and make more. I still have my original 12.5LB Radio Shack Cell Phone from 1981 and my collections of phones is over 100 including 12 iPhones. Cell service was expensive back then, but I devised ways to make it pay for itself and then some. Each new gadget I would buy may have been a bit speculative and some would say wasteful, but I always figured out a way to make whatever it was pay for itself. That way I could justify my purchases and continue to nourish my appetite for cutting edge whatever.

I have watched the evolution of the cell phone from a "Wasteful luxury" to one of the most important necessities in life. I have watched necessities of life reduced to complete insignificance. They still have a place, but their importance has been greatly diminished. Knowing the difference is key. Recognizing which items are candidates for that and which are not. Which have staying power and which will evaporate.

I have been is sales for 50 years. I understand the art and science of sales. I have seen sales through the eyes of 55 different industries. But what you sell is always what determines your level of success. That is where Need, Want and Desire are filters I use to qualify or disqualify any item that I might see. It was how I found success when traveling to Hong Kong and Taiwan and hundreds of trade shows.

What I knew in the years 1995 and 1996 was everything I had done in my life, everything I learned, every success or failure I had, was to prepare me for this domain name journey.

When it comes to the gTLD's, I just don't see the same thing. The demand is being driven by the sellers and domainers and end users are more focused on their .Brand as they should be. THAT is smart and that will keep them in the game no matter what happens. But domainers can't play in that pond. So for me, the top of the pyramid is not even in play.

The USA is .com centric. I don't see that changing to any degree. They will go to any url if it is in their self interest. Content will be what it is all about. Trust may become a big issue.

The reality is that 2 years into this experiment I have yet to see a single commercial on TV in the USA using anything other than .com with only a few exceptions for .org, .net and .tv. I have seen 3 and 4 words .com advertised. I have seen a number of things ending in tv.com advertised. I have seen domains with "dashes" in them .com advertised. I have seen one commercial with a .tv and I would expect more at this point. Sorry, that is directly related to the new gtld's. .TV vs .Horse. You decide which one is going to be used to advertise first and most. Lots of folks still waiting for .tv to take off. But no extension will have great value like .com until you see them used in real and long term advertising campaigns by folks that advertise all day long.

What do I see coming? My last post called the "Rick Schwartz Equation" is still fully intact. Still too early to see any clear winners. But there are several hundred losers and their carcuses are there for all to see. They are much easier to spot. The story really won't unfold until a truly strong new gtld comes along. In my mind .web still has the single best chance to shake things up. I think when .web is released you will see more registrations in their first week than whoever holds the number one spot the week before. That's what I see. And even that won't guarantee a success. But if .web were already out, it is my opinion half of the gTLDs would be on life support if they are not already. .web could become the next .com or the next .net. Either position is stronger than all others imo.

And speaking of the poor orphan .net. The stepbrother to .com. There are more .nets registered than all gTLD's combined. .nets that have a 1% value of their brother .com and 1/1000 the demand. We all have some .nets. So what? I get more inquiries on my .orgs. .Nets have been a piss poor investment. Thankfully they were all hand registered. You should see the arguments I had with folks about .com vs .net back in the day because techies looked down on .com. Does not mean there are not some .nets sold. So what? Who cares? But I would be scooping up .nets and .orgs today before .horse and most of the others. When they go into the boardroom, all the old extensions will be reviewed and .net, .org, .tv, .me, .info, .biz and others will be discussed and carry weight. It means that one may eventually break out as an alternative. Just not sure what happens to all the others. And when push comes to shove, .brand may be the way to go.

Despite what some say, I have welcomed new gtld's in the sense that it brings thousands of domain evangelists out into the public square spreading the word about domain names. There was a time there was only ONE doing that. Now there are thousands. That helps me and you. But that is a different discussion than taking hard earned money and reinvesting in a riskier side of things. Sorry, just not a path that interests me. Some believe that hurts .com and other extensions. Sorry, I don't believe that one either. Awareness is the key and that's what they bring. Whether the gtld flotilla will each fly on their own? Two words come to mind. Massive consolidation.

That said, the number of registrations will not determine value. The consumer and end user will decide their fate and therefore value not domainers selling to each other. Domainers are financially and emotionally invested. That is fine. But when you have that much emotion in something, you might not be open to the information you need. I am sure great collections are being put together. But the question is will those collections increase in value or become irrelevant in time? For every 1 gtld success there may be a minimum of 35- 40 failures the way I calculate. Possibly much more. Sorry, same or worse odds as Roulette. Gambling vs investing. Yes there will be winners and you will hear about them. But the losers will be a much larger group and they will multiply faster and they will be silent.

Then I always hear they are for "Start-ups." Well if I was looking at a startup and arguably the name you choose and your website are among the most important decisions you will make early on, and you chose a non .com at this moment in history, I would question your judgment. I would say you gave up looking too soon. I would say that for less than $1000 you can find a suitable and very good .com name. The headwinds in the way of lost sales will be more than you can afford. So if you can't afford a grand for a .com, you certainly can't afford a new gTLD. So cheap, misguided and lazy is the picture I see; Sorry. 

I think the keyword for the future is despite massive expansion is also massive consolidation. Folks that ignore the math will eventually be consumed by the math. But numbers don't have emotion or feelings. They are one of the few absolutes we have. That does not make me likable or charming. It makes me focused on facts and value. And if that pisses off those with skin in the game, they need thicker skin. The main fact of my focus is value, and you always must factor in circumstance and life expectancy. So if something is going to have great value in 85 years that's great! But you will be dead and so will your kids!  So it's more important to eat, pay the mortgage now and enjoy each day.

Clearly 3 out of 4 new gtld's are underwater by number of registrations. Of course the number of registrations may have little to do with the actual commercial success of a gtld. It just happens to be one of the only pieces of data we can judge by early on. Number of registrations may not matter to an end user. Then again, it may! I will judge by the total amount of money spent to advertise and promote any single gtld. That includes all Radio, TV, Magazine, Billboards etc.

Let me tell you how I define success...When I see 3 or more different corporations using the same extension to heavily and consistently advertise on TV and billboards etc. and promote their products and the campaigns last more than 90 days. That to me would be how I define a success. .Net is not what I would define as a success. But it has many millions of registrations. More than all the gtlds added together.

A registrar success is not a domain investor success and that has always been my main point. But through the lens of the registry game there are only a few clear winners out of the 400 extensions released so far IMO. And again many of the stronger extensions have yet to hit the market.

Here is a perfect example from just a few weeks ago and it is quite stunning. This headline from thedomains.com says it all when it comes to efficiency:

".XYZ Has More Domain Registrations Than Donuts 183 gTLD’s Combined"

Simply put one company has done better than another at this stage. Numbers don't lie even if they are skewed by people. You just have to factor that in. You can't discount it 100%.  10 extensions control 51% of all gtld registrations. The other 400 share the other half. The top 50 account for 75% leaving the other 350 sharing 25%. That is before we even have the other 1000 extensions.

As I write this the top 10 gTLD's have about 5.5 Million registrations.

That is more than 5.2 Million the next 400 gTLD's COMBINED!!!

Remember when .Kiwi was going to have millions of registrations? Well nearly 2-YEARS later, they just broke the 10,000 mark ranking them at #140. That means nearly 300 extensions have yet to even reach 10,000 registrations. By the time you get to the 5000 registration level you are at #220. Meaning over 200 have not even gotten to 5000 registrations. Sorry, these numbers are pitiful. MANY will die on the vine regardless of what is being said. They will most probably be propped up by consolidation for the purpose of saving face by others in the space. But don't kid yourself, they are bleeding dollars on a daily basis. Numbers don't lie.

No one is in business to lose money and the numbers paint a picture that are VERY clear to me regardless of the spin.

When you factor in the fact that most registrations are domainers, then you can easily see the collapse coming.

They may be lucky to see consolidation. There is little room for the end user. The oxygen in the room has been consumed by domainers. Sorry, it was much different with .com so why would folks expect the same result. So many factors that are different.

See everyone is looking for the second coming but there is a HUGE difference.

With .com 98% were registered by businesses with the intent of having an online presence.

Practically every business in the Fortune 10,000 had a .com

Practically every business had and still has a .com

And for the vast majority of business, one domain is all they will ever need.

And my single biggest point during all these years is the collective advertising dollars spent promoting .com. From almost every TV commercial, to almost every advertisement, to almost every piece of literature printed, to almost every promotion piece, etc. etc. etc. If you were to add up all dollars spent, it would wipe out the $19 trillion national debt. In the history of mankind no other anything has ever been promoted that heavily by so many for so long with no end in site. I made this up of course because no one measures such a thing. I have to fill in the blanks beforehand. I don't have the luxury as a businessman of using 20/20 hindsight. I have to come to strong conclusions and stick with them. Folks are free to argue a point like this, but I won't budge an inch and one day it will be proven. It's a fact in my mind and I know it is accurate.

With gTLD's it is the reverse. 98% or more are registered by speculators. You really can't see the picture of what is coming and why it is so different? What is the total global spend on advertising new gTLD's? What is the total spend of 400+ registries promoting them? It would not put a ripple in a pond. THAT my friends is what many are missing. That is the key.

I can sit here and pick apart these numbers like a vulture on a carcass all day long.

I can come at it from a multitude of different angles and directions.

I can make grown men cry.

My posts on gTLD's were written early on, many of them and are time stamped.

How long will it be before hundreds of these extensions die on the vine? Numbers don't lie. These folks have ongoing expenses and many have peaked in their registrations. Sorry, but 5 registrations a day won't pay a single salary and dozens and dozens are doing 0-5 registrations a day. Will the other profitable operators pick them up just to help save themselves? That clusters*ck I have been talking about is starting to take shape. Can't see it? Have too much invested to want to see it?

Brands and Geo's have the best shot at success in my view and I have been on record with that for years. But .Brands are not a domain investor play. Plus many .brands will be internal and no one will be giving up their .com in lieu of their .brand.

Even Geo's with all the fanfare of the likes of .Vegas,  are stuck under 15,000 registrations.and declining after peaking at 17,000. That may be enough to keep them in business. It is not enough to make them important. The only thing that can make it important is heavy and consistent advertising by many. The entire advertising spend. That is the oxygen that can breathe life into an extension. The other is fantastic content available nowhere else. So until that happens, this is much ado about nothing and the entire domain industry is being consumed by tumbleweeds.

Once you factor in domainers that are not buying billboards and not buying TV time, how many registrations are from  businesses that are? And .vegas is a strong geo extension. I do believe we will see advertising by end users in time.

.Horse? Not so much. 4500 registrations in over 2 years and nearly 50% were registered in 1 day indicating a domainer.

Take away that day. .Horse averages about 3-4 registrations a day at best. And now I will make some cry. .Horse has nearly 200 gtld's that are doing even worse!

Kleenex anyone?

Give me a break! Success? Really??

Who is kidding who? Don't be too gullible. Don't let greed get in the way of common sense,

When you strip out the domain investor registrations, you have a pile of NOTHING! If you don't know about TULIP crash you are in the wrong business. "Human beings have always been prone to want things that are difficult to get, especially if everyone else seems to be doing it. Nutty behavior becomes commonplace when enough people are following along. It’s only afterwards that we stand back and shake our heads and wonder what came over us."

They will trample each other just getting to 5000 registrations. Pitiful. It takes TIME to shake out success. But failure is like a big full moon. Hard to miss unless you are invested. And now you see why the keyword is consolidation and the other is collapse. I would hate to be the fool that built a successful business on a bad extension and have it go dark one day. They may be putting some of these on the endangered species list pretty soon.

And while ICANN has so-called plans for this, it is not perpetual. Extensions will go dark unless they are propped up by those that are heavily invested. Numbers don't have emotion. They have no motivation. They are perfect and absolute. They are universal. They paint a VIVID picture that says more than the loudest voice or the best salesperson. Numbers don't lie. People lie.

When .web comes out, it may suck ALL the oxygen out of the room to the point where we might see mass casualties and huge consolidation. That could be the end of the party for many. I have a multitude of extensions and still waiting for the second coming.

Let me be clear on what I see in gtld land. If you want to point to .xyz as a success, then so be it. If you think .horse is the future. So be it. Everyone is free to believe what they want and invest as they choose. All I can do is share my vantage point and give it some basis. You can choose to ignore or embrace or even employ. No one is pointing a gun to your head. Take it or leave it. If my view threatens your view, that is your problem not mine because I don't care either way.

The current aftermarket, if there is one, is domainer to domainer and speculator to speculator by a huge margin when compared to end users. The demand by the end user is VERY SOFT! With 11 million gTLD's registered that is a minimum of $100-200 Million on the primary market possibly much more with the various premium and pricing schemes. The ratio between the primary market and the aftermarket is growing not shrinking. The aftermarket has yet to develop. Will it? I don't know. There is certainly strong evidence that it is very weak. Until that gap closes, IF that gap closes, is an important tipping point to watch and track. This is just another way to track what direction things are moving. Especially since now we are entering the third year of this.

What I see is based on the countless emails I get to sell me .whatever that would have no value if it were .com. What they are really trying to do is look for a bigger sucker than they are. Unfortunately most are suckers for one main reason. They still don't understand what makes one domain valuable and another domain worthless. Imagine jewelers that could not differentiate between diamonds and glass. Between tin and gold. You would laugh. Well when I get spammed everyday with the crap I see, oh my!!! Truly swampland and quicksand have much more value.

If you want to even be in the game of a gLLD success, I would focus on strong one word domains that are a known phrases and have commercial meaning. I have never posed a list of anyone's domain name that they have tried to sell me. If I did, it would make any professional domainer pee in their pants from laughing so hard. Remember, one domain that means something has more value than 1000 domains that don't.

The one thing I have stressed for years is to know the difference between an asset and a liability.  If you don't understand the difference, go learn it, understand it, then apply it. Your nice car may be an asset or it may be a liability. Depends on you. If it is paid off, it is an asset. If it is worth $20,000 and you owe $30,000, it is a liability.

My main point is please don't compare this to the domain rush of 20 years ago. The factors are so much different. The times are different. The world is different. Supply vs demand and Need, want, desire. Sorry, no one can hide from theses truths. Most importantly, the consumer has to embrace them and still holds the ultimate trump card. They will have the final say so. They may be more apt to adapt in areas where cctld's are used than the USA market which is dominated by .com. So region may play a role in this.

Overstock.co is still to this day the only canary in the mine we have seen using a non .com extension in a heavy advertising blitz. They failed miserably. But that was years ago and I am anxious to see the next big splurge by a non .com and see the results. Maybe the Super Bowl  will provide us that chance.  So if you want to look at a barometer each year and keep score, THAT my friends is the place to do it. The Super Bowl and Times Square Billboards. These are "Ground Zero" for forward thinking advertising. So until those venues are populated with gTLD's on their signs, and they are there long term, we still have a long way to go.

Let me end with this. I have never seen so many negative variables in any business in my life. Does not mean there won't be a HANDFUL of successes. Does not mean they won't be trumpeted loud and by as many as possible. But I would focus on eliminating the hundreds and hundreds of losers, that many want to just ignore, from the few with success. At least ask the question which ones can survive the long term? Ask what happens when a true and dominant extension like .web comes along? Will you have the funds to invest if ones does come along and catch on fire and is embraced?

I wish everyone great success in whatever path you choose. The surprises along the way will be many if you only see blue skies. The key is not being surprised but being prepared as to what will unfold; when and if it will unfold; and also get it right.

Tomorrow is the actual anniversary post I started with and then as I added these elements, realized it would be too long for just a single blog entry.

Have a GREAT Day!
Rick Schwartz