The new gTLDs: the future

Within the ‘world’ of domain registrars the topic “New gTLDs” is widely spoken of. Slowly but surely this information is seeping to the hosting companies, the corporate world and eventually the consumer. What are these new gTLDs actually?

This blog post is the last in a trilogy concerning the new gTLDs: the past, the present and the future. The first part can be read here, the second part here.

The first gTLDs have already started in the Sunrise period. Some of these extensions have a big potential but this does not mean they are very exciting. Yet, there has certainly been a big step made. A step towards an Internet completely different to what we are used to.

Fighting for the ring seat

As there is competition on the highest level: in the past it was normal to register your .uk, .com and .eu domains and if you were more ambitious you would include a few extra European extensions. So it was clear: your choices were limited and almost made for you.

Now there is much more to choose from: for every application there is an extension. How will the market react to this? Let us use a retailer which sells cameras online in England as an example. He now has smith-cameras.co.uk and smith-cameras.com. He receives offers for smith-cameras.shop, smith-cameras.store and smith-cameras.online; for smith.camera and smith.cam; for smith.photo and smith.photography, smith.video and smith.webcam, and to be even more international smith.网店.

Mister Smith can no longer see the wood for the trees. Especially in the beginning a real scenario could be: nobody knows which extensions will be popular and which not, and the domain names will most probably still be available. So which one to choose?

This is a role for the webhoster: he determines which extensions he will offer to his customers and thus create some order in the chaos. Ultimately, it will be the webhoster who earns money with up-selling, so do not chase the customer away with too many options!

It is not sure yet how this will take its form in the future. I suspect that some hosting companies will be offering a whole lot of extensions, but the majority will most probably concentrate on a selection based on their clientèle. This is exactly as it currently is with the ccTLDs.

Internet becomes more local

We are now talking about the European market, where the obvious extension is the local ccTLD and the rest is considered as ‘added value’. Whereas for the almost 2 billion people who do not use the Western alphabet, the current situation is a type of compromise: the Russian Telecom giant МегаФон (MegaFon) uses the primary website megafon.ru – letters which many Russians are not familiar with.

MegaFon can now use мегафон.ком and thus better reach the local market. This target group is gigantic: 140 million Russians and tens of millions of Bulgarians, Ukrainians and others. And multiply this by 10 for the Chinese market.

We cannot imagine it now, but in the background these past years, the Chinese and Russians have registered more than 1 million international domains under their local extensions .рф and .中国. Calculated on 240 million domains worldwide this is but a small percentage, but we will see the rise of new gTLDs which will continue to work as a catalyst.

Extensions will disappear

There are more or less 700 open extensions. Let us be honest: they will not all make it. Of course they have all made a business case in which they have started this adventure, but the competition is big (why register .photo and not .photos?). Meanwhile the costs keep piling up: $25.000 annual fees for ICANN, infrastructure costs, back-end personnel, marketing and so on. Revenue per domain is limited (an extension of €100 per year has less registrations), income from other sources is possible so long as the extension justifies its existence.

The general extensions exist on volume and then by two kinds:

• enough registrations within an extension: .app may even beat .mobi (1 million domains) and thus become viable, or
• enough extensions within a registry, where the portfolio as a whole is assessed.

I foresee during the next years a shift of the general extensions that cannot make it on their own: they will be acquired by the big portfolio applicants like Donuts and Famous Four Media, resulting in huge registries that can really make a difference in the Internet landscape.

For geographical domains there are other rules, especially if there are local governments behind it. .london, .nyc and .paris are no-brainers: these cities have been presenting themselves as a brand for years. But can we say the same for .vlaanderen, .wales or .kyoto? Continuous campaigns can influence the success. But the volumes will not be extremely impressive: thousands, to tens of thousands of domains per extension, with a few exceptions.

Community-driven extensions remain at the mercy of the community. If the community is active, then success is certainly possible. It is easier once a critical mass has been achieved (which applies for all categories): the extension maintains itself.

Finally, there is much speculation about, and fear for, the Internet giants like Google and Amazon: what happens when they use their marketing power to bring their extensions to life? I think the target market is now mainly the “hotmail and yahoo-user” – individuals who have no interest in their own identity, so would not turn to you anyway for a domain name. But it is possible that it turns the other way: people become accustomed to having their own domain and may go looking for just that something extra – and thus pay you a visit.

The End

Is my prediction correct? We will see in a few years time. Maybe a new world of opportunities will open and the number of domains may double; or maybe we will all stick to the known .uk and .eu domains. Until that time we will do everything to make the new gTLDs a success and help you benefit from them.

This trilogy has given you the necessary background information concerning the new gTLDs and has hopefully given you the basics so that you can sell them to your own customers. More substantive information can be found on our website and in our newsletters, and definitely more information will follow in our blog. Of course you can always contact your account manager if you have any questions.