Brave New World – the Internet after the new gTLD launch
What will happen to the value of dot-com domains when most online traffic no longer goes to dot-com domains?
Currently dot-com dominates with a likely 95%+ share of US traffic.
23 of the top 25 sites in the US are on dot-com domains according to Alexa. All the top 25 sites are accessible via a dot-com domain, as Wikipedia.org and CraigsList.org, the two non-.com sites in the top 25, use the dot-com versions of their domains to redirect to the dot-org site.
92 of the top 100 destination sites in the US use dot-com domains. The other non dot-com sites are comcast.net, wordpress.org, bbc.co.uk, thepiratebay.org, mozilla.org and dailymail.co.uk. The only one which is not accessible from the dot-com version of its domain is the dailymail.co.uk, near the very bottom of the list, as dailymail.com belongs to the Charlotte Daily Mail.
One of the key reasons for dot-com’s dominance, and for why dot-com domains are worth more than other extensions, is because most online users in the US interact almost exclusively with dot-com sites. The dot-com extension becomes synonymous with the Internet for most US consumers.
Now imagine a world where most of the top Internet sites have registered their own brand as a new gTLD. Apple will have .Apple. eBay will have .eBay. Amazon will have .Amazon. Google will have .Google. CNN will have .CNN. HBO will have .HBO. Dell will have .Dell. Ford will have .Ford. CitiBank will have .citi. The Gap with have .gap. And so on for all the large consumer brands.
In this world, most consumer interaction with the Internet will be through .brand extension domains. Most advertising dollars will be spent to promote websites with .brand domains.
.Com will not be nearly as dominant. Consumers will no longer expect that most web sites they visit will end in .com, nor will they assume that most business web sites will have a .com extension.
We don’t know if this is the future. We don’t know how many top sites will switch to a .brand domain. But if this is the future, what will this mean for the value of dot-com domains?
My best guess is that even though dot-com domains will no longer be as dominant, they will still keep their value and continue to be the premier domain extension.
Even in the post gTLD launch world, the percentage of businesses that would shift their primary website from .com to .brand will be very small – probably a fraction of 1% -since only the largest consumer companies are likely to make this shift. Consumers may quickly learn the 50 or hundred top sites that have switched to a .brand extension, and of course their .com domains will continue to operate, if only as redirects to the .brand site. Even if the large brands do adopt .brand extensions, the rest of the consumers experience of the Internet is unlikely to change. All the other online businesses that a person visits, especially the local ones and the smaller national ones, will keep their .com domains. The local restaurant, dentist, plumber and so on, will still be found at their current domain which in most cases is going to be a .com domain. So consumers may readily adapt to the world where top consumer brands have their own .brand extension but the rest of the Internet continues on as before with .com as the dominant extension.
If you have a .com domain today that has an end-user value of $10,000 or $20,000, what will happen to that value 5 years from now if most of the traffic on the web shifts to .brand websites? Will that affect the value of your .com domain? My guess is probably not. Until the end user pricing reaches the hundreds of thousands of dollars, obtaining a .brand extension as an alternative to acquiring the.com domain is not cost effective. And as Rick Schwartz points out, it is likely going to be a big mistake to pay hundreds of thousands of dollars to launch a .brand extension without owning the corresponding .com domain. The demand for dot-com should continue to be as strong as ever, and will likely rise as the Internet becomes increasingly important.
Joe Alagna, in his comment on Domain Name Wire, put it very well:
.Com is not going anywhere and will be the most important domain name leader for years to come.
However, the fact that the largest advertisers will go to their own TLD will advertise that instead of their .com domain have an effect.
.Com is what it is because of the aggregate power of the big company ad dollars spent over the past 15 years. That will be reduced now because big ad dollar companies will concentrate that money on their own TLDs instead of .com.
However, there is an entire tier of smaller companies who still advertise, but who won’t be getting their own TLDs. And the biggest of those smaller companies will most likely still use .com as their TLD.
So .Com isn’t going anywhere in the near term, and the value of .com domains will remain strong, but it’s importance will be slowly diminished over time and as a new generation of Internet users arises.
What do you think?
It seems to me that this article was written by someone under the influence.
The author says to “imagine a world where most of the top Internet sites have registered their own brand as a new gTLD”. Yeah, sure. Next, boys and girls, image a bunch of pretty unicorns, flying fairies sprinkling pixie dust and little green leprechauns.
Realistically, .COM is not going anywhere and the new glds will all suffer the same painful fate as .travel, .aero, .jobs, .pro, .mobi, .museum, .cat and .coop.
You missed the point of the post. I didn’t say it was going to happen. I said what would happen to dot-com values IF top brand owners shifted to .brand domains.
Many top brand owners are going after their .Brand through the new gTLD program. So that’s not a fantasy.
I agree with you that most consumer-facing new gTLDs will have a rough time, and most will likely fail.
As you are doing, I previously limited my thinking to the effect of launching new mass-market gTLDs like .sports, .music, .law, .green etc. My best guess, as I wrote earlier, was that these new gTLDs could serve a niche market and could be financial successful for the new gTLD sponsor even with limited adoption, but wouldn’t become widely adopted to the extent that any one could challenge dot-com’s dominance.
I didn’t think much about the effect of the new “brand” gTLDs, such as .apple, .IBM, .Sony, etc, that would be launched by one company just for their brand. I assumed these would not have any effect on domain investment, because most likely these domains under the new “brand” gTLD wouldn’t be offered for sale, they would only be used by one company, and they wouldn’t be competing with existing resale domain extensions such as dot-com. So I didn’t think they’d have much effect.
But then I thought about the consequence of the bulk of Internet traffic possibly shifting to .brand domains, and that’s what led to this post.
Your analysis is based on the premise that the gTLD program is still a-go. But it’s entirely possible that it gets tied up in litigation for years, based on the positions taken by the various advertising consortia (see http://goo.gl/DekTH ).
Assuming that the program does proceed as planned, the only (possible effect) it will have on dot-com prices is at the highest end of the spectrum. Conversely, the demand for keyword and call-to-action (dot-com) names should actually spike — simply because there wouln’t be ANY gTLD alternative due to the entry price.
So, ironically, instead of considering the 185K published fees as a ceiling, it may set a price FLOOR for a huge batch of quality names.
Interesting perspective Nat.
I personally never go very far down the cause and effect path in my reasoning about new gTLDs because I find it difficult to believe that top brands will switch or shift to .brand ‘en masse’ in the short-mid term.
In a nutshell, my view is that if there’s any shift in traffic destination, it will not be so much from .com to .brand but rather from .com to Google to .brand.
Firstly, I’m unsure if it is right to assume that top brands will all, or most, completely “switch” to .brand. I would have to think that for Apple to move all its apple.com property to .apple, it would not require extraordinary technical means, however it would have to deal with canonical issues in the SERPs, as well as 403s and redirects and also application issues (in the sense that some applications like browsers and softwares may not understand .apple as a url/link/).
More importantly, switching to .apple would certainly create confusion and ultimately send more people to Google. Lots of people already use Google to “direct navigate”. I’m sure top brands are aware of this and would rather have targeted traffic bypass Google and the adwords tunnel and go straight to their website.
Hypothetically, would a brand choose not to switch completely to .brand but instead run two distinct properties on .com and .brand, I would think that this would still create confusion and send traffic to Google.
I think it will boil down to how the search engines will treat the new gTLD’s.
Sure there willbe type in traffic that leads to a .com.
I am not so sure about the latter.
IMO alot of of these gTLD’s will take the usual route and i think they will fail.
However i am keeping mind that some of these gTLD’s will do some heavy advertising and hammer away.
I’ll re use the example of pepsi again. Pepsi spend 1,8 billion on commercials back in the 90’s.
If only 20% of that cash is being put into adverts to something like drink.pepsi we will have a different ball game.
It will make the .CO advert campaign look rather blant.
And that is the thing about the new gTLD’s. What will a company/brand do with it ?
They take the old route… fail..
They invest a small margin of their marketing budget and you are talking full exposure unlike anything we seen before.
“it is likely going to be a big mistake to pay hundreds of thousands of dollars to launch a .brand extension without owning the corresponding .com domain.”
Schwartz was referring also to generics. But most will surely want to promote their own extension rather than a .com.
Your ‘IF’ is a big ‘IF’….too big, imo.
If I was a big corporate – and, had invested $1 billion over 30 years to build my global corporate brand….and had spent hundreds of millions of dollars cementing its online identity in the minds of our customers & the entire global market – via our .COM site – do you really think I would create an earthquake for ourselves, and relegate all that investment & .com mind-share for my brand to 2nd tier status behind my brand new shiny .brand?
…And, begin again establishing my global brand under a completely different right-of-the-dot term (albeit, that it may coincide with my company name)? No way……Too much re-education to get folks to type ‘.brand’, instead of ‘.com’, when they enter my URL (and/or have millions of customers change their bookmarks etc etc..).
I might apply for the gTLD .brand for my core (or best known) product/service brand – but, it’d be a defensive move, designed to stop a competitor from buying the product/service .brand – and, I’d direct the gTLD to my established .com – and, conduct all my online business via the .com brand, as usual.
Also….If I am, say, Kraft, or GE, or J&J etc…..I have, maybe, 20 global product/service brands…..What am I going to do? Buy the .brand for every one of them???…. No way….I’ve already spent billions establishing each of those brands, and each have a well established .com site. I don’t want to confuse my market with multiple new .brands (not to mention the expense!).
So, your premise is a big ‘IF’, Nat…..And, I don’t think .com is going to lose any value whatsoever in the forseeable future, for the reasons you outlined at the top of your article.
Voltaire,
Thanks for your thoughtful comment. I agree with you. I don’t get the need to relaunch under a .brand, when your .com is working just fine.
But there are reports that many big brands are applying for .brand gTLDs. I don’t think the explanation is that it is a defensive move. Under the rules, I’d think only Sony could get .sony, so I doubt there is a risk there. I suppose the Apple Growers association could go after .apple 🙂
So why spend upwards of half a million dollars to obtain a .brand if you don’t plan to use it?
Now the big brands have to pay big dollars to acquire the .com domains for any new product launch, or risk consumer confusion if they launch a new product without the associated .com domain name. For example, Apple paid big bucks for the iPhone.com domain name, but launched the iPad without owning iPad.com.
Perhaps Apple is thinking, that if it obtains the .Apple gTLD, that it can avoid these headaches in the future by rolling out iPhone.Apple, iPad.Apple, and then any future new product release could easily be launched online with the new brand name under the .Apple domain extension.
Of course, Apple could do that now by using subdomains on Apple.com. I can’t get into the mind of the marketing folks at Apple, so all this is just speculation. We’ll have to see what happens.
Thanks,
Nat
Advertising is not what drove (and drives) users to the .com extension, Adoption is. Companies with advertising budgets had to be dragged, kicking and screaming to the online advertising model and development. They were forced to because the content and users were flocking to the internet to glean info and data from the comfort of their desk that was typically only available via laborious efforts. The .com space was the initial TLD adoption method because of it flexibility and open registration policy. The public has been trained to go to .com because that is where their content needs were met. The old adage of “If it ain’t broke, why fix it?” applies here. Because of that the new gTLDs will be a marketing experiment rather than a seismic shift in how companies reach their customers online.
The real danger is not in new gTLDs stealing traffic and users away from .com but a new method of navigation that bypasses the need for TLDs all together…direct navigation via ip addresses instead. Hold onto your hats! Still a long way away though…I hope for my portfolio’s sake!
One group of potential buyers has been left out of the discussion – the new online business. True that virtually all businesses, local included have built their internet presence on .COM. But new businesses coming online will now have other choices. Rainbow Construction of Hawaii will be able to put up their business on rainbowconstruction.hawaii, for a small % of what it would cost them to buy the .com. Likewise for new loacl businesses in .NYC , .VEGAS, .DALLAS etc. And more businesses are starting to understand the value of multiple websites. So, may also develop on an alternative tld.
True that .com prices will remain solid and even spike in the short term post new gtlds. But gradually users will understand that the U.S. internet does not necessarily require a .com domain.
Most new gtlds will not ‘FAIL’ in the literal sense, meaning shut their doors, stop selling and abandon. What we’ll see is hundreds of new extensions carrying numbers in the tens, or hundreds of thousands.
Nat,
.com will not loose much. If the top brands ( not companies) shift into .brand…. it won’t hurt as much. These brands probably have a high percentage of direct navigation. When was the last time you went through google search when going to apple.com or ebay.com