News and Insights

The Domain Name Game

Thalia Kalodimos, Sr. Writer
March 05, 2014

June, 2012, marked a milestone in the internet’s addressing system. That’s when the 22 or so generic domain names we’ve come to know (like .com, .org, .edu) met literally thousands of new suffixes from around the world.

(ICANN) The Internet Corporation for Assigned Names and Numbers, says ‘There are now almost five times more generic Top-Level Domains (gTLDs, for those in the know) than there were only a few months ago …”

Amazon made 76 applications for new domain names, including .cloud .drive .shop .store & .mail, Microsoft made 11 applications, mainly based on their existing product names such as .hotmail .azure .bing .docs .skype .office  & .xbox. Google put in an eyebrow-raising 101 applications, including .gmail .google .gmbh .web .shop .search & .youtube.

Some of the new gTLDs, such as .guru and .sexy, fan owners’ egos. Others, such as .clothing and .photography, will be used by firms to hawk their wares. There’s actually a .web, written in Arabic script, and scripts such as Chinese and Russian will soon follow.

The new name game is a lot more complicated than simply contacting GoDaddy with a wish list. As Roger Kay at Forbes.com cautions, “With all this fresh territory opening up, business owners might be tempted by the expanding set of choices to stake out a beachhead, either to extend their reach or as a defense against someone else squatting on what should be their virtual real estate.” (In this edited excerpt from Forbes.com) Kay gives companies seven points to consider before jumping in with both feet:

1. Customer trust — Consumers have grown used to the existing set of domains, and with that familiarity comes trust. The new domains are unknown and may cause potential customers to hesitate before clicking on to an unfamiliar gTLD. A recent study found that consumers are, in fact, wary of the new domains. Businesses planning to make use of the new suffixes should develop a clear program to transfer the trust they’ve already established with customers to the new site.

2. Investment protection — Although it’s not entirely clear that domain age matters, even Google’s own search engineer seems to think so.

Visibility that has been built up over time in one domain may not easily transfer to a new one. So, if a business depends on retail traffic coming in the virtual door, it should tread cautiously before adopting a new domain, even one with a catchy suffix.

3. Cost control — Existing domains like .com and .org, available from hundreds of registrars, typically cost about $10 per year to maintain. New domains may cost a lot more. But there’s more: for trademark holders, pre-registration pricing for new domains starts around $200 and rises to as high as $25,000. Choosing “priority” pre-registration for a “sought-after” domain can run as high as $13,000 per name. And even paying this sum is no guarantee of obtaining the name. When more than one party pre-registers the same name, it goes to auction, with an unknown (and potentially very expensive) outcome. Before stepping up to buy one of these new domains, businesses should read all the fine print carefully. Note: after the initial hype dies down, inflated domain prices should come down, perhaps in a year or two.

4. Partner motivation — Many of the new gTLDs will be operated by new registry operators. Although most are legitimate, some may not have much substance behind the fancy front. In certain cases, a registry may be focused on making a quick buck from initial registrations in order to flip its gTLD for a profit. Businesses expecting to enter into a long-term partnership with a registry operator should choose one with a track record.

5. Partner reliability — Even with the best of motivations, new entrants in the domain business can make a number of mistakes that lead to failure. At the moment, even though lots of registry contracts have been signed, many of the new domains aren’t ready to do business. In addition, inexperienced operators may have issues with reliability, suffering downtime due to cyber attacks or technical issues. Such interruptions may prevent customers from reaching their desired sites, with the resulting loss of business. Thus, it is prudent to choose a gTLD operated by a known, reliable operator.

6. Potential for hijacking — With all the new domain names, there’s going to be a lot of confusion. For example, ICANN has allowed both singular and plural forms to coexist. Thus, .hotel and .hotels as well as .hoteles and .hoteis will likely go live in 2014. Customers looking for jillsbnb.hotel may end up at jillsbnb.hotels, and Jill will lose a customer. A gTLD without this type of adjacent conflict, like jillsbnb.com, will likely result in less confusion.

7. Name length — Although short domain names may appear desirable, longer ones often work better. For example, O.co didn’t work at all for Overstock.com. People kept typing in O.com, which Overstock didn’t own. In addition, longer names can include keywords that will come up more often in search results. Keyword-rich domain names attract higher click-through rates. If used, short names should be minimally confusing and avoid conflicts with existing and new domains. Businesses choosing a new name should follow established best practices.

Morgan Linton, a domain name company founder and blogger warns, “As a domain investor I think you will absolutely lose your shirt if you decide to change your investment strategy and focus on new gTLDs. Just look at sales like TeamWork.com for $650,000 or IG.com for over $4M and it’s easy to see that .COMs are without a doubt the gold standard for investment-grade domains.”

Others counter that gTLDs are better than .com because they mean something to customers, and enhance the value of prime real estate that already exists in domain name space. Something like building hotels next to an existing beachfront hot spot.

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