Domain Spotlight:

You’re On The Wrong Side of the Profitability Business Model

My Mom never told me to count my eggs or what basket to place them, she told me to I better learn to raise chickens if I wanted to always ensure that I had eggs.   The new gTLD owners and the registrars own the chickens. And they’ve let you either pay more to get in line first, or they’ve kept the best eggs for themselves.  Not even telling you they’ve kept the eggs and let you go on a hunt for a prize that doesn’t even exist.

I realize it is going to take time to perfect the rollout of the newest domains but I truly feel that this is not going to be profitable for most buyers and will take many many years for the new domain owners to realize any gains.  There WILL be winners and profitability.  In 3 years if I list the top 100 people that have made the most money from the new domain rollout how many do you think were people that bought the names themselves.  I will guess 1, maybe two.  Everyone else will be on the other side of the model.

I am going to buy some of the new names.  Names that I believe others will want.  Evidently Frank and I agree on good names because he kept every damn one I wanted from his tld for himself.  For marketing he said.  Wrong.  It’s to sell for more later.  That’s not marketing, that’s good business.  For him.  Frank Schilling has not gotten where he is by giving things away.  He knows what people are willing to pay for and plans accordingly.  The only thing I disagree with is not giving me that list of names that I can’t buy.  I wasted way too much time trying to buy names that I had zero chance buying.  My time is valuable and I absolutely hated wasting it the way I did. I could have used it in a more productive manner which brings me to another point.

The biggest thing the pumpers of the new gTLDs are missing is opportunity cost.  It’s not just about whether you are going to make an overall profit in your purchases, it’s how much more did you make than all the other investments available with that money.  Would you have been better putting that money in Google or Tesla Stock?  Maybe bought a few bitcoins.  How about just putting that same amount of money into a few nice dot coms. What if you put all your money and time that you would have chased down names into a website?  There are a lot of things to put your money into that you have to weigh the returns against.   Everyone has different methods to their investment strategy. Some say diversify, but my domains ARE my diversification.  I have land, real estate, stocks, bonds, a business.  Domains represent a small percentage of what I do so I have no need to diversify even further.  I am here to kill it.  I have had the best luck in my investments by finding a niche I can study and learn better than anyone and hit it hard.  Domains are a lottery ticket.  Even better analogy, a sports bet.  Every single purchase contains risk above your control.  Your wins and losses will be based upon your good choices but in reality you have no idea which domains are going to sell.  If I made most domain owners choose 20 of their best 300 names that they thought would sell first I’m pretty sure they’d be wrong.  It comes down to that end user that happens to need that name. I figure the better names I have the better chances of a sale.  No guarantee, just higher odds.  I don’t need everyone to believe my domains are worth paying a good price for, I just need one.  It just helps the price if it’s more than one.   And domain buyers often come out of the blue.  There will be LESS out of the blue people coming for your new domains

It absolutely will be harder to make money with the new names. Unlike the dot com, this isn’t a case of getting there before everyone else.  The owners aren’t going to let you have them for having a fast finger.  Frank especially, he invented the fast finger and the programs that gave him that ability.  He’s not going to allow someone else to have that same strategy.  Those days are over.  And the names that you found before everyone else?  They let you have them.  If they thought they could make good money on them they’d be tied up for “marketing” as well. Sure, a few will slide through.  Early buyers are going to make some money.  But just like the sports betters, there will be winners, and they will tell everyone about their winnings.  But back at the sportsbook the casino and their owners are raking it in.  If you think this is any different then I look forward to selling you some eggs and the baskets to put them in.


Domain Spotlight:

21 Replies to “You’re On The Wrong Side of the Profitability Business Model”

  1. I bought a few (not anything from Uniregistry because, like you said, the registry kept the best ones for itself).

    But I’m having second thoughts and think I’ll put the brakes on buying any more.

    The initial sales numbers are disappointing, suggesting that even domainers are staying away.


  2. Good and balanced post. Much better than that other blog about grandmothers and baskets and putting all your eggs in the new tlds.

  3. I would agree that even before any of the new TLDs came out, it seemed overwhelming to see the hundreds of options which would become available. True, for many new TLDs there are a limited number of keywords which make sense. But I don’t have $100 million to speculate on every keyword/TLD option which might make sense. And of course the most logical combinations are going to be either reserved, premium priced or sought after by others. So thus far I have not registered even one new TLD domain. Perhaps when .WEB comes out I might reconsider. But even then I view .WEB as kind of like .INFO and how easy is it to sell a .INFO? And how much does a .Info typically sell for? So how much can you afford to pay upfront and in renewals to justify the risk?

    You mentioned how it is difficult to predict which domains will sell – totally agree. What I view as my best domains never sell. Normally the domains which do sell are decent quality but not spectacular names priced $250 to $799. That seems to be the price range where I see the most sales volume at SEDO and Godaddy.

  4. Probably the best blog post I’ve read lately about what is actually going on with these new gtld rollouts. There will be a few winners plucked, the great keyword matches will be gone quick so that in a year when Joe Blow hears about a new gtld that suits his business, it will be long gone and being used, or for sale in the aftermarket. I am really beginning to wonder if all these new gtlds will meet the needs into the future of all the people who want a truly ‘great’ keyword/extension match. The registration numbers that have been posted seem to be dismal, after the initial spike at launch it seems to go pretty flat. But…. let’s wait a year and see. Also, Rick Schwartz hasn’t posted on his blog in a month, I can almost feel him taking in all the info coming out on the new gtld launches and trying to process it!

  5. Great Post Shane. At Least it’s now easier to pick up names at auctions. Since the capital is being diverted. Keep going guys few more releasing next week.

  6. So basically you are saying the guys that got rich on the first gold rush, have flipped the tables, and found another way to get rich the second time around selling the picks, and shovels to the miners, but this time around, they have to stake their claim upfront.

  7. I live in Las Vegas and like the analogy you used with sportsbooks. Adding my 2cents to your post: watch out for the Fools Gold.

  8. This is a very good rebuttal to the careless.

    The truth is that these “Registries” are turning out to be their own worst enemy. The mistakes, if you can call them that, they are inflicting on their nascent enterprises is truly stunning; and that is before the market makes a call.

    I was just reading an article put out by Verisign, where they cry “Our concern, rather, is that domain names on the SLD block lists were delegated at all, given ICANN’s clear direction to the contrary. As Pat Kane and I have noted in a broader-ranging letter to NTIA on operational miscues in the new gTLD delegation process, a policy that’s unenforced is worse than no policy at all.

    If this is the state of affairs when the answer is “no” – effectively, a state of “uncontrolled interruption” – what happens when the answer changes to “wait 120 days”?

    Apparently, Verisign is waxing hot at total disregard of ICANN rules by certain new gTLD Registries. So, expect them to do something about this. This is a very strong Accusation/statement, from a conservative Verisign.

  9. Nice post Shane. In your list of investments don’t forget about your Vending Machines…or have you given that up?

    Mike Maillet –

  10. Wow, what a refreshing post to read! So glad to see someone finally cut right to the chase of what REALLY is going on with all these crazy new extensions. Watching certain people kiss a certain someone’s…well, you know…nonstop for weeks has been nauseating to say the least.

    Don’t just count the eggs, instead learn to raise the chickens so you always have eggs..oh yeah, good stuff!

  11. Yep. IMO individuals are just buying Jan 2024 GTLD calls @ ??? and just hoping. If your looking at current numbers .co is even doing better than all the new current ones based upon real numbers. And look how much they spent to get where they are.

    I would rather take the preferred stock which is the .com any day. It has real value and is very liquid.

    1. Donny,

      Nice analogy. Not sure everyone will understand it but us option traders do. I remember holding LEAPS and getting frustrated at the opportunity missed as I waited for expiration

  12. Great post Shane.

    I would have done the same thing that Frank did but transparency is key here. He is a domainer but because he is people trusted him to be transparent. People wasted their time and money with this and they are not coming back for more.

    These new gtlds are a “you snooze, you lose” game. On to the next round: TODAY.

    From the whole .sexy and .tattoo roll out I got 1 domain and that may be 1 too many.
    I refuse to buy pigeon shit.

  13. “Watching certain people kiss a certain someone’s…well, you know…nonstop for weeks has been nauseating to say the least.”

    Same here, I finally got around to blocking Acro’s blogs from the feed. It’s like he wants to be adopted by Frank or wants a free trip the Islands.

    1. Cindy,
      The voice we have as bloggers can be used for many different things. We all shill for someone. I do it for Namejet, Escrow, and Godaddy. I believe in these companies and feel they are the best in their class. I get passed over every day for advertising because I don’t write enough, have too many list, or because of what I write. But I refuse to say or pretend like a company is awesome unless I really think they are. I can’t stand to read the mindless drivel that wastes my time that is written purely for promotion and pretends to be a real article. Again, we all do it and our articles will always be influenced by money but there is a line of how often and true motive. I would love to Uniregistry advertise with me. I am going to be all over .gardening, It is perfect for my niche. But if I can’t write articles like this or openly question or criticize then I might as well shut the thing down and start it over as a marketing blog. I’ve always felt that as an advertiser I want to buy advertisement on sites that attract the best and most potential clients. Those clients block or don’t visit sites that shill

  14. This post is right on the money. I think most people in the industry know this already but it’s always informative to hear it discussed and analyzed. Basically, domainers are at the bottom of the domain industry pyramid. At the top are companies like Godaddy and Donuts. Donuts raised a heckuva lot of money and now are in a commanding position in the next phase of the domain industry. Domainers may make a few thousand here and there on these extensions or may eventually lose out as they get squeezed by high gtld renewal prices and declining values for “legacy” extensions such as .net due to new competition/oversupply of extensions.

    Also interesting that the registries are keeping some of the future profits for themselves on valuable keywords through premium renewal pricing and high regular renewal pricing. After all, why get $8 per year in renewals the way VeriSign does when you can get a recurring annual revenue stream of $400 for a domain. As a domainer that eats deeply into your profits if you have to hold the domain for more than a year, so the financial feasibility of investing in even decent new gtlds is entirely in question.

    Maybe some of us domainers should band together and form a registry ourselves, surely not every potentially profitable new gtld is spoken for…

  15. I used Domain Tools to check the WhoIs on a list of gTLD names. Many were reserved by the registries. That does not preclude one from getting some great names if you are willing to put the time and effort into doing so. (*edited for listing names) I found some great new gTLDS. All it took was some work on my part.

    I don’t mind the registries holding back some of the good names, because that will give them some assets to turn into cash or use in a financing deal if they run into a liquidity crisis. I would rather have the registry be able to dig themselves out of a hole than to go belly up.

  16. I second that on blocking that Acro guy’s blog, he just keep posting useless stories to keep his name at the top, and valid articles to the bottom.

  17. I agree with Righto, the renewal fees play a major role in all of this. Its so confusing, even unpredictable. I am a businessman and an opportunist, when the liquidity is here, I’ll jump on the bandwagon….until then I’ll keep ‘killing it’ with the dot coms.

    Mike Maillet

  18. I see all these new gTLDs as new movies and if they can’t survive the first week collection in the form of registration then they are unlikely to succeed any further. The interest seems to be going down with each release.

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