Are .Com Domains Headed For A Fall?

By | November 11, 2014

There are already over 400 new gTLDs available right now, such as .music, .shop, .love, .nyc, .eco., .news, .hotel, .dentists, and .money, with thousands more soon to come. There is a huge debate within the domain industry as to whether or not these domains will succeed, and if they do, will .com still remain king. Some say a rising tide lifts all boats, meaning an expansion of the domain business will help all domains. Others say all this competition will kill .com domain prices.

Let’s not forget that since the beginning, people could register .net, .org domains, and then in the early 2000’s ccTLD (country based) domains became available (such as .nu., .ws, .cc). In fact, I hand-registered many amazing one word ccTLD domains on the first day each of these registries opened, but back then there was no domain parking and no domain auctions/markets, so after 4-5 years I decided the $30/year renewal fee per domain was not worth it (none of those extensions had really taken off) and I let the domains go.

More recently, there has been a lot of action in the .info, .tv, .biz and .co markets. Even .io is being used by many cool tech startups. I would consider these big successes. But, how many extensions failed that we forget about (.mobi anyone)? And, how many years did investors have to hold these winning domains before they were able to profit from them? And, will these soon be crushed by all the new domain extensions?

Up until a few years ago, any non-.com domain was on the fringe of the domain business. The general public had almost no understanding of anything not .com, but that is slowly changing. I still don’t think people really understand it, but they are at least used to it. If my website was impulsecorp.biz instead of impulsecorp.com, people probably wouldn’t care that much. It might make my site seem less legit, or maybe less impressive, but they would at least understand how to get to it. Plus, since most searches are now done on phones, they might not even notice my domain.

Let me make it clear that I own over 500 .com domains and zero gTLD or ccTLD domains and have no interest in buying any. But, that does not mean that I don’t consider them to be significant. .Com will probably always be the top choice for a domain, but it is possible all of these new domain extensions will lower resale value for higher priced domains. If I had to choose between buying CheapFlowers.com from a domainer or hand registering Cheap.Flowers, the choice is obvious for $100. Even for $1000. But what about at $10,000 or $50,000? I would guess that 99% of the general public has no idea yet that the new gTLD domains even exist, so it might take years for people to get used to them. These registries have huge marketing budgets all aimed at taking business away from .com, so they are sure to get some traction, especially because they are solving a real problem, which is that the average new business owner can’t get the .com domain they want because it is already taken.

All this is very similar to what happened with toll free numbers. For many many years 1-800 numbers were king (and vanity numbers like 1-800-Flowers sold for big bucks). Then in 1996 1-888 numbers came out and things got very confusing. Some people thought it cost money to call them (like a 900 or 976 number did [by the way, I used to own a 976 number, but that is another story for another time]). And, many people saw/heard ads for 1-888 but got confused and called 1-800 instead. Then later came 1-877 (in 1998) and 1-866 (in 2000) and more recently 1-855 (in 2010) and 1-844 (in 2013). It took years for all this to happen, but I bet younger people nowadays don’t care that much. And, even more importantly, toll free numbers were somewhat replaced by websites. And, websites are somewhat being replaced (or changed at least) by mobile and social media.

Some people also equate the introduction of the new domains to what happened with Las Vegas. For decades Vegas was the center of the gambling universe. Then came Atlantic City (the .net of the gambling world?). Next, casinos were built on Indian reservations, making it so most people in the USA are within driving distance to one. Yet, Vegas still is thriving. The thing to keep in mind though is that Las Vegas is more than just a place to gamble. It is a destination. An event, an experience you can get nowhere else. All of this probably parallels the paths of a dozen of so alternative domain extensions that have become popular (.info, .tv, .ca, etc.). But, with online gambling on the verge of becoming legal nationwide, Vegas’ great city walls may begin to crumble.

There is a famous quote “Those who don’t know history are doomed to repeat it”. Many people in the domain business are young and have not lived through a lifetime of changes. They don’t understand that a king always has a target on his back. That what goes up will eventually come down. That people change. Society changes. Technology changes:

  • Horses were replaced by trains, and trains by cars
  • Radio shows in the 30s and 40s were replaced by TV shows in the 50s
  • Pay phones, home phones, and pagers were replaced by cell phones
  • Catalogs replaced by websites
  • Emails and phone calls were replaced by texts (for the younger crowd at least)
  • Record players and boom boxes were replaced by iPods/iPhones
  • VCRs were replaced by TIVO and other DVRs
  • DVDs were replaced by Netflix
  • CDs were replaced by MP3 files and streaming services
  • Facebook replaced Myspace.com and Friendster.com
  • Arcades were replaced (for the most part) by console devices such as Atari, Nintendo, and PC games
  • Junk mail was replaced by spam email
  • Stockbrokers were replaced by computers
  • Copy machines and faxes were replaced by scanners and email
  • Servers and local hard drives were replaced by The Cloud
  • Commercial real estate now competes with virtual real estate (who needs an office or store when you can have a virtual one?)
  • Travel Agencies – Dead
  • Video Stores (Blockbuster) – Gone
  • Bookstores – Dying
  • Newspapers – On Life Support

Soon To Come:

  • Delivery people replaced by drones
  • Reality replaced with augmented/virtual reality (such as Oculus Rift)
  • Console/PC video games replaced by Cloud Gaming
  • Car drivers replaced by driverless cars
  • Parts manufacturers replaced by 3D printers
  • Gas stations replaced by Tesla charging stations
  • Government money replaced by cryptocurrencies (such as Bitcoin)

My point from all of this is that any new product or technology takes time for the public to digest and get used to, and it is very hard to predict what will happen, even based on the track record for the first few months or even years. I still love .com domains, and would pay big money for a good one if I were starting a new business. But, I also prefer emails to texts, I write my appointments on a calendar hung on my wall, and I don’t tweet photos of my lunch or take selfies. History has shown that those who stand still in business get left behind. All I do know is that the winds of change are coming to the domain industry, and so prepare for a bumpy ride.

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30 thoughts on “Are .Com Domains Headed For A Fall?

  1. fatih

    Again a great article by Eric.

    When i see Impulse logo on domaining.com i always click on it and know something useful will be posted.

    Thanks Eric.

  2. Anticareer.com

    This may be true except that domainers are purchasing all the new gTLDS that make sense so cheap.flowers would already be owned. And with the increased pricing that gTLDS charge over .com I would expect the asking prices to be high because of the carrying cost of owning gTLDS. Then you will have to pay $25,000 for Cheapflowers.com or $25,000 for Cheap.flowers. This is the crossroad, which way will the person spend the $25k?

    1. Eric Borgos Post author

      Yes, Cheap.Flowers.com may at some point be worth the same high price as CheapFlowers.com, but the fact that the consumer would even be faced with that choice makes the .com version worth less because it means the buyer has more choices. The seller of CheapFlowers.com can’t try to get $50,000 if the owner of Cheap.flowers is only asking $25,000 and most people see them as of equal value. It may be that the domain market is big enough to have high prices for all premium domains no matter what the extension, and that would be a good thing, but keep in mind that without competition CheapFlowers.com might sell for $100,000, so in that example the .com is still worth less that it otherwise would have been. Overall I have been amazed though at the high prices premium domains in the new domain extensions have been selling for.

      1. Lyle

        Eric,

        This has always been the 20 year plan, as more users, and companies come online, there will be more than 2 seeking that Cheap.Flowers.

        Let’s not forget how easily a guy selling pens gamed “cloud”, and many other trademarks in gtlds. So top brass names will never compete with .com, as they will never see the light of day. Anyone who has ever bought a gtld would know cheap.flowers would be blocked, or registry reserved, or come with the new going rate of $60,000 per year renewal. How are any of the above good barriers of entry into an efficient marketplace?

        With GTLDs you cannot have 1 word keywords, always have to be dual purpose.

        Workout.com. Workout.center. Workout.hastobedotsomething

        Those options have always been on the table .biz works for many companies, so does .us, speculators will continue to recycle these domains for lower, and lower amounts.

        Just like with anything in life, we don’t all want to wear or drive, or eat generic. We are all insecure creatures of habit, and want the best to stand out from the crowd, makes .com special.

        Gtlds are FEAR… False Expectations Appearing Real

        1. Eric Borgos Post author

          Younger people like to do the opposite of older people, to stand out. A younger person might rather own Lyle.xyz than Lyle.com because it is more hip.

          1. christopher brennan

            young people become old people very quickly when they realize they are in the real world, when fear stops by to say hello.

  3. Lyle

    Eric,

    I understand where you are headed but if all the good gtlds are reserved, or blocked, and names such the ones you seek for reg fee come with $3,000 – $6,000 annual renewals where does that leave you? Flight to safety in .com.

    Do any of you realize that the new gtlds have no cap on price increases, if they see a reg fee term
    Slipped thru the cracks, and want to increase it by 1000% they can. Also with so many new companies running their own gtlds, different rules for each, more powers to take away your names.

    Gtlds may seem convienant for some, but they come with many restrictions, and conditions, and fine print. Something people avoid like the plague.

    If .biz .mobi .name were to be released on the first few rounds today, they would be highly touted, as domainers we already have this insight.

    I can buy a 3L .biz for $60, I can’t even buy a 3L.com for $6000, a 100x premium for a .com commodity.

    So when you see something like SendMe.Flowers, or SendMeFlowers.com the . Dot stands for good grammar, and cannot always be placed, it breaks up the URL phrase, and makes it sound just as dumb as Send.MeFlowers which makes no sense.

    As we saw in .mobi, it was easy to bleed investors round 1, some had bled out during year 2 renewal, and by thurs year the writing was in the wall, today it is a joke. Terms that once would have cost 5 figures can be had for $50-$200.

    Gtlds are nothing new, they are just being spun by a different machine, it can be hard to difference because many trusted domainers, are behind the marketing, and sales. Two different outcomes, and the domain investor is not part of this equation.

    1. Eric Borgos Post author

      All that makes perfect logical sense, but I am 45 years old and I am not sure how a 20 year old on a mobile phone sees all of this. They might think SendMe.Flowers is cool and SendMeFlowers.com is old school, or they just might not care, and not caring is the much bigger threat to .com domains. If consumers don’t care anymore, then I would buy 3L.biz for $60 for my next website over 3L.com for $6000 or even 3L.com for $600.

      1. Lyle

        You still have to understand the concept of buying power. The demographic with the most buying power is most likely 45-70 years old, but marketers tend to market to 18-35 year olds.

        Change is a beautiful thing, I myself drive a tesla now, as I hated going to gas stations, and never really drove to far. 5 years ago I would not have imagined this, the oil companies are not crying as they have demand from other emerging markets.

        As with anything domains are always driven by the products behind them, just having a .com has always made it easier to sell a crappier product to the masses.

  4. Lyle

    I got 3 emails on the day do far, all have discounts for whatever reason for gtlds, and cc extensions. Mind & machines and their gtlds 30 percent off etc…

    MORE SPECIALS
    .JE
    New price $75.00 old price $139.00
    .ME
    $14.00 $19.98
    .IN
    $7.00 $16.95
    .CN
    $24.95 $74.95
    .中國
    $24.95 $49.95
    .中国
    $24.95 $49.95
    .онлайн
    $19.95 $43.99
    .संगठन
    $9.95 $13.99
    .орг
    $9.95 $13.99
    .机构

    Why is this?

  5. Patrick Hipskind

    If a business wants ChicagoFlowers.com or NYCflowers.com and the owner wants $50k or more for the domain name, but the business owner can buy Flowers.Today, or Flowers.Guru, or Flowers.Tips for $10k to $20k then the business owner will take a hard look at the gTLD and the opportunity cost of paying $50k for the .com.

    1. christopher brennan

      if a business can’t afford a premium domain then it’s not really a business but rather a job for the owner

  6. BullS

    You forgot to mention the power of 3D printers, amazingly you can make food and medical devices!!

    and no need to ship parts anymore.

    1. Eric Borgos Post author

      Good idea, I added this to the list now:
      “Parts manufacturers replaced by 3D printers”

  7. Rich

    I always enjoy your post Eric.
    Thank you for your thoughts.
    I also agree with the fact that new generations will not care for .com and buy into G’s and that is why Donuts is increasing their prices on new extensions cause they see the traction.
    I did buy some very good names at $20 a pop in .Today ,.Tips,.Estate,Solutions but not anymore,now days is cheaper to get the .com version.
    Either way i kept my mind open and I’m covered each way .Com, ccTLD ,G’s

  8. Tauseef

    Good post. Future is uncertain but change often takes time and it maybe much longer for new gtlds to go mainstream.

  9. chad folk

    If your building a business thats worth less then a million dollars going with a new gtld is fine, if you want to play in he big leagues, startups and businesses know you have to have the .com to be consider in the big leaques.. This is true likely for 90% of companies growing fast. If i have cheapflowers.com, I would be thrilled that someone is going to spend any amount of money building out cheap.flowers as over time it will only increase the .com value as spill over, etc. will occur. Once, if cheap.flowers has any traction, revenues, they will want to then go spend the $100k now when they realize the fastest way to go from $1 million company valuation to $10 millilon is through distribution and the purchase price is a moot point. Go build a good company on any URL as the whole industry needs to be aware of how data flows and those current and future patterns.

    1. Kassey

      ” if you want to play in he big leagues”

      @chak, You’ve nicely captured the essence of this whole argument.

  10. Xavier Lemay

    No one knows about the .crap almost know nothing about .tv .me .co….
    They know .com. Period.

  11. Jaymes

    I only do .COM. It is what consumers expect. All others are now, and will continue to be, a total .Waste

  12. Frank Schilling

    I’m glad you’re using .flowers as an example : ))

    Chad Folk, that spillover will be less so, and I think it will be less important that people get the .com match of the span the dot (cheap.flowers) in future. I think in the future big companies may:

    -1- still pay big bucks to acquire the .com (top end prices will probably flatten or come down)
    -2- satisfy themselves with cheapflowersinc.com to show their old-school colors
    -3- if they are really big, get their own extension .cheapflowers in subsequent rounds

    There is going to be less urgency for #1 in future, #2 will seem good enough in a World with so many possibilities and #3 is likely if ICANN lowers the cost (which itself will likely happen).

    There is still money to be made trading names but the so-called “pigeon poop” names of the future will change from myflowers247.com to myflowers.world .. There are still going to be premium names, they’ll just be different. The standard of what constitutes a premium name will change over time as more names compete with what used to be considered good. Traffic patterns will change as naming convention and behavior changes.. It’s already happening now .. but really it’s just getting started.

    By the end of next year all the generic names from this round should be launched. We will have thousands of new choices and the market will change.. But it will grow the pie.. More names will be held by more people and more people will trade them.

    It’s all really exciting and Uniregistry will be here to serve all those registrants with a primary market registrar, secondary market platform and backend registry services. Good luck to all !~

    1. Eric Borgos Post author

      Whatever happens, it seems to be a good time to be a domain registrar.

  13. chad folk

    Great input frank (always selling) and thats the key question.. How fast will the end user market take to pick up while others will buy and hold on majority of whatever is considered “premium name”. Buy hold, buy build, whatever the ownership and tld, what then, wait for the market to increase the value or do something with it.. Thats where contrib/vnoc comes in to help bring a new model and technology to any tld.. .. I love new TLD”s, its movement and end of day they are all still URl’s that are part of the information exchange call the Internet. I think your #2 will be here for a good couple years and the increase in new entrepreneurs is the key to the new tld’s. Younger generations will just continue using apps/twitter/facebook, etc. and not care about URL ownership.. Time to have some fun people..

  14. John Colascione

    I like the analogies you used and the insight you’ve shared here with these new TLDs. I especially appreciate the comparison and agree to the 1-800 verses 1-888. There was indeed confusion for years until the public got used to them. Although 1-888 is still a great phone number and used by many, 1-800 will always be looked at as the premium number to have. This is probably exactly how .com will be treated. 1-800 had no meaning prior to its existence, just like .com, but these are what is acknowledged to be the premium.

  15. Ian Andrew

    Interesting that Google applies for but has just lost the new gTLDs .cloud, .live and .book.
    It would seem they have the funds to outbid the winners, but chose not to.
    Maybe after only 1503 registrations of their .soy new gTLD, maybe they now see less of an opportunity than they once did…?

  16. Chad W

    1503 registrations in .soy is quite a few to me. I wouldn’t think there would be more than 5 or 10 worth registering, if any at all.

    I think it’s a bad decision to even launch these types knowing there just isn’t many prefixes that match well with the extension. We will see many of these flop.

    I don’t think .cloud and .book are very good either.

    There could be many reasons why a company would back out and let another take the extension. I think seeing less opportunity with these new extensions would be very far down the list of reasons to pull out.

    1. Eric Borgos Post author

      I am not sure .cloud is so bad. Everything is moving to the cloud, and adding cloud to a .com domain is sometimes long and/or awkward, like if you are starting a cloud contact management company, cloudcontactmanagement.com is too long, but contactmanagement.cloud seems to get the point across better. How about servers.cloud, backups.cloud, banking.cloud, etc.? .book seems less useful, but I could still see lots of authors using it for the names of each of their books, like instead of howtogetrichbook.com it would be howtogetrich.book. It sounds a little strange now, but if book companies or authors start using it, then people will get used to it. I see very little value in .soy though, other than for people in the soy business, which seems like a very small market compared to most other extensions.

      I still like .com domains best, but I am not the king of the Internet. It is up to the public to decide which extensions will become popular, and there is certainly a chance that some of these will do well.

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