Maybe I’m getting old. Perhaps as a business owner I judge too many things based on profits alone. But the more I think about it, the more I don’t get all this concern over the tactics of .XYZ. My original thoughts were quite the opposite. I wrote some misguided articles myself about how the business plan of .xyz bothered me. Over the past few months I’ve changed my mind. WHY do I care how .XYZ gets their registrations? For every argument against their model I can present another major Internet company doing the exact same thing daily.
The biggest complaint I hear is the numbers are skewed. And? We in the domain community are the ones that are judging success by registrations. Yet some are $10 and some are $30. Movie theaters don’t use the number of tickets sold to judge. No, they use dollars brought in. But we don’t have the numbers so we just use what we have. We have to judge, we have to measure. It’s what we do in today’s society. We judge popularity and success through numbers of likes, Instagram and Facebook friends. Those are gamed every single day. Instagram proved the other day that up to 20% of all Instagram users were fake as they dumped them all. There is only one parameter that truly measures the success of all these new ventures. Profit. Even if they are valued like Snapchat and new startups that have no profits, they are still valued by potential. Potential profit.
I see nothing unethical about giving free registrations to people to drive up numbers. As a business owner, if I am being judged on a metric then I am going to try and drive up that metric. People seem to have a problem with this because the numbers aren’t all paying customers. All that does is prove that the industry has come up with a poor measurement of success. Don’t like it? Then come up with a better metric . “But we have to measure them some how”. That’s a media thing, a people thing. We need statistics to judge others. A quarterbacks completion rate, touchdowns, and interceptions aren’t easy enough to measure. Too hard to compare with all that data. So we come up with a QBR rating so that its one simple number. But then quarterbacks who are on a contract year start refusing to throw a hail mary because the interceptions mess up the ratings and their next contract is based on those ratings.
On the other hand the publicity has been incredible. Good or bad, .xyz has been discussed on an almost daily basis. Uniregistry has spent their money by advertising heavily on domain blogs. .XYZ gives away domains. Both marketing cost. Only .xyz knows if the model is profitable and judging by their actions, it is. “But he got it in an unethical way”. No, he took advantage of our flawed measure of success. There is no fair or not fair, no right or wrong, when it comes to what you want to charge for a domain.
I got most upset when he didn’t answer about how many names he gave away in the beginning. But as the months roll on I realized he had no reason to answer those questions. There was nothing to be gained by giving away details. Godaddy gives out $1.99 domain and 99 cent transfers every day. They are purposely underpricing everyone because they have a bigger cash hoard than everyone else. You don’t hear people complaining about getting dot coms for 99 cents from Godaddy. The XYZ tactic is not that much different. He is merely using the misguided analysis tool of number of registrations against the public. He’s not lying. He’s just giving them away. Again, not illegal. Not talking publicly about it doesn’t make it unethical. He’s simply playing on the lack of information about what makes a domain valuable. Using it as a marketing cost. At this point all we have is the sheep metrics. If all these people have registered then it must be good.
And why do we use these misguided metrics in the new gTLDs? Because we don’t have any others. There are only a handful of real companies using the names for daily business. There have been very few resales in the aftermarket. There are no big domain investors telling of how good this one or that one is. We all sit there and look for something that tells us that buying this gTLD is better than that that one. There is no authority figures guiding the way. Daniel knows this. You don’t like it because it’s shady, its unethical, its misleading. I think what you don’t like is you just don’t know. You have no idea where to put your money. You don’t want to miss out if this turns out to be the next great millionaire maker yet the market is so big you don’t know how to take advantage. But I do
I bought Rightside. They are a publicly traded company so they HAVE to disclose almost everything. Yes I don’t have a clue which names to buy either and feel the real money is in being owners of the new gTLDs. But there are a limited amount of public companies out there that are selling gTLDs. Raymond at TLDinvestors has a nice wrapup of the domain stocks that are publicly traded. After a little research I thought it was better for me to invest in a company rather than the domains themselves. I chose Rightside because they own several gTLDs. But that is not the real reason I bought. I bought because they are diversified. I bought because they own several new gTLDs AND they own Enom and Namejet. It was largely overlooked in the public paperwork but Namejet has quite a portfolio of domains it has acquired. We all know Namejet as one of if not THE best domain aftermarket platforms in the industry. They sell the expiring names of dozens of registrars. What many didn’t know is they get first dibs on the expiring names of their registrars and partnering registrars and often choose to hold them and keep them in their portfolio instead of auctioning them off now. Making them assets. There are still plenty of great names coming through but they have acquired “300,000 names through the expiration and bulk acquisition process” . That is HUGE. It also means if they every come up short of cash, short on profits, need to make numbers, they can simply move some of their own names into the system and sell them off. With a market cap of 153 million dollars those names are are worth at least 5% of market cap. It could be dramatically higher than that depending on quality of names. You have to assume they aren’t junk if they were picked to be some of the better names. Because some great expiring names come through. (EDIT: I have no idea if they are left over names that received no bids and they deemed quality or names chosen before auction, would be a question for the next investors meeting, regardless they’ve built up a hand chosen portfolio)
In short, there is no way I can judge how .xyz is doing. I think their business model is solid. Them and dot club are the only two gTLDs that the general market is talking about. That’s half the goal. Domains are not shares of stocks. You don’t get a piece of the pie. Sure you want to buy a domain from a company that runs their company well. That drives profits and sales so they can continue to market the gTLD. How can you argue that .XYZ is not doing that? What you are really relying on is the masses. You need people to want to own that name, that new gTLD. THAT is the goal of the owners. Daniel is doing that in my opinion regardless if how he’s doing that is wrong in your eyes. Again, just because he’s messing with your metrics doesn’t mean he’s wrong. It means you have the wrong metrics. It means you don’t have the ability to measure because you don’t get to see profits. You’re just guessing……….Unless you buy a public company and then you will know. Then you can judge. Then you can profit…or lose. If you just sit there are throw darts at the new names coming out and bitching about .XYZ I can guarantee you more likely to lose.
DISCLOSURE: I own shares of Rightside and I plan on adding more in the next 30 days
DISCLOSURE: I don’t know Daniel Negari and have never spoken one word to him or anyone involved in .xyz