Rod Beckstrom, President and CEO of ICANN sat down with the with LiveMint.com aka WallStreetJournal and answered a few questions about the domain industry and of course, touching on the new .tld domains coming to market. I thought he had a few interesting things to say but the main focus for us domain investors may be this question and answer
You have said opening up gTLDs will increase competition and reduce prices. Is that the idea behind the move?
Web rules: Beckstrom says there is a set of rules to determine which applications could go through and the qualifications for applicants. Photo: Ramesh Pathania/Mint
We think it should reduce prices (of domain names) because there will be more choices and because the new operators can choose their prices where they wish to. We also think there could be very significant innovations coming out, and it’s hard to forecast where those are going to go. But every time in the history of technology you create a new opening, you have innovations. People use technology in the most creative way and this is the most significant opening at the top level in the history (of the Internet). So, how it is going to mix with media, how it is going to mix with IPv6 (Internet Protocol version 6), and having so many devices of different types, it would be very interesting.
It’s hard to disagree with his statement for domains in general. It would be hard to imagine the prices of dot net and other tlds not slowly decreasing in value. If you can’t have the dot com then there will be a whole new world of choices from which to choose. I once again refer to the beach property. Once you can’t have the beach then there are a million other places to choose from. In today’s housing market if you don’t like a house you build another one similar with the feautures you do like. The alternate tlds will provide the same choices. There will continue to be premier names in .me, .tv, .co and dot .net but anything in the non premium market will most certainly take a hit. As for dot coms. They best names become even more valuable. Friend.ly is nice but friendly.com is better. Peanut.butter is nice but peanutbutter will continue to grow in value. If you own domains that are an alternative to dot com for an end user the you are going to have much more competition. They are also going to offer an alternative to dot com. If you own a beach house then you compete against other beach houses. If someone wants to buy their alternative is to buy another beach house or not have a beach house. All most all the beachfront property in the US is taken. If they want a house in the suburbs then things open up quite a bit more. If they don’t like your house they can build one similar with the features they like. That’s what you are facing if you own alternative tlds right now. Yes there are premium .tv, .me, and others that will continue to increase in value but for the non premium I think Beckstram is right. The will decrease in value. It doesn’t take an economist to figure this out.
There was one other question and answer that I found amusing:
Do you agree that there will be increased litigation and cyber squatting?
There have been disputes over domain names ever since they appeared on the Internet. So the disputes won’t stop. Domain names are unique names, and in being unique, they are scarce. And in being scarce, parties have different economic interests. So that’s what so many protections have been put in place for. Having said that, there will always be disputes and different opinions. Our job is to make sure we do the best job at the protection of interests.
I realize he can’t just come out and say yes but it’s comical to think that the number of lawsuits and cybersquatting cases won’t skyrocket. Being a domain lawyer is going to be a nice business to be in when these names come out. I also laughed at the scarce part. He states above that the proliferation of new names is going to decrease the value but they will continue to be scarce. Last time I checked scarce is synonymous with increased pricing. I guess they could still be scarce just less scarce than they were before.
To read more of the interview go to LiveMint.com
Photo and interview portions courtesy of LiveMint
Interesting article.
Note: His last name is spelled Beckstrom.
Thanks David,
I guess I’m too used to writing emails to my best friend David Beckham.
Using the real estate analogy, I would agree that the megapremium .COMs will still hold their value even with the introduction of additional TLDs. However, I believe that long, light search volume and i/eKeywordKeyword .COM domains could take a hit. RealEstate.com is unique and priceless but what is so unique about TheRealEstateSite.com? I would much prefer RealEstate.net or .tv over a four-word .COM that does not sound like an authoritative brand. Just because a domain is a .COM doesn’t it inherently make it worth four or five figures.
.com is also a broadcast channel classification- am, fm, uhf, tv .com=internet
As TV moves online .com will mean television- 6 month old GBTV.com already generating $20 million a year in subscription revenue is a case in point
If you are MACYS customers assumption and expectation is to visit you online just add .com
You don’t have to worry where you’ll rank in search because everyone already knows where and how to find you
.com also means global
Polar opposite of the logic offered above many cctlds are buying .coms claiming being known as a London brand was limiting their opportunities
You see many .nets .biz. info upgrading to .com- finally bellying up to the bar because their business suffered without it- it is a mission critical asset
Beckstrom is excited because he created a lot of new revenue streams for a lot of business men. All of which has no impact on dot com, user behavior or the ability for any business to find a great aftermarket dot com that instantly improve their outlook as no other extension can.
I can’t see stretched IT departments managing .com. .nyc changes for each, stationary signs etc- mobile versions iPhone app launch and pr to rebrand– all at a cost far exceeding buying a great dot com just so the mayor can impose a new tax on businesses who are running on fumes. If Mayor Bloomberg took his $20 million to a partnership with NewYork.com…. who wouldn’t want an official NY address?
My advice to Castellos an Geos is get ahead of this. Leverage this pr to get the governments to work with you To become your salesforce. Beckstrom has opened the door.
One more example. Citrix spent $250 million for Cloud.com. Yes it came with technology but according to business week it instantly made them the defacto leader in the biggest money grab in IT since the launch of the PC. Said the press, ‘This acquisition makes Citrix a credible player in the space and gives them an opportunity to take a lead over VMware in the cloud infrastructure segment (yeah, it is far fetched but a realistic possibility). After struggling a lot in their earlier quest to make a credible cloud play, Citrix can now move ahead with a considerable momentum.”
The stock price, which true to all the major cloud competitors doubled in the year then soared even higher after this announcement. Adding 10x the market cap of the cost of domain.
Could you do this with .cloud? How long would it take till you get it to market. The opportunity will have passed by then.
Businesses are looking for results- and acquisitions/investments that have immediate impact. Not even a $250 million TV campaign can have that kind of impact or instant return to investors.
New TLDs are not technology nor are they innovation. They are addresses. Raw land that needs to be cleared, pipes and power installed, houses built, people being sold on moving or living there….
There is no threat. The whole thing is as dumb as everyone buying up .Mobi because billions of new users were coming online in China. Ok is your name in Chinese? Can you operate such a thing in a communist country? Domainers don’t stop to question logic- everyone runs with the hype.
Owen Frager@ Tried tested and absolutely right.
PS
http://www.thedomains.com/2011/10/13/google-reports-revenue-up-33-adsense-up-18paid-clicks-up-28-cpc-up-5-stock-up-43-a-share/