2014-06-25

Clueless ICANN, Little Demand for New Domain Names, Rivers of Red Ink

Clueless ICANN: Only morons think increasing supply increases demand. GoDaddy, the most dominant (37.17% Market Share) domain name registrar with 57+ million domains registered, has not generated a profit since 2009 and in the last two years has reported combined losses of $480 million according to  CNN.com*. [Sounds like a good time to do an IPO in the stock market!] 

So what does ICANN do? Massively increase supply and flood the market with more than 1000 new domain name extensions, up from just 22 domain extensions (.com, .net, .org et al). Add the fact that over 75% of all registered domain names are not used for "active websites" -- they either do not resolve at all or are "parked" or similar -- and what you have is massive oversupply and rivers of red ink.

And here's another depressing FACT for ICANN and all the new gTLD believers: increasing numbers of internet users do NOT equate to, or correlate with, an increase in domain name registrations. Domain name registrations equate to (or correlate with) high gross national income per capita, absence of government censorship, fast and cheap internet, and high numbers of web content creators. Unfortunately, these same factors therefore exclude most people in the world as potential domain name registrants--including those whose only access to the internet is via a cheap phone or phablet (i.e., most of Asia, Africa, and Latin America). This is why almost 4 out of every 5 domain name registrations in the world (gTLDs + ccTLDs) are in Europe or North America. And unfortunately, Europe and North America are now mature, slow growth markets for domain name registrations. In the US alone, there was (long before the first new gTLD launched) already one domain name registered for every 3 internet users!  And while mobile internet use is growing, it looks increasingly like a mobile app world -- not a mobile website world!

And now, as if the money-losing domain name industry didn't have enough to worry about, the technology giant Google decides to enter the domain name industry as registrar and registry, competing with GoDaddy et al. No wonder the domain registrar stocks are dropping! Pretty soon Google will be giving away domain names (I know, they are late to that game -- .berlin or .xyz anyone?) to get businesses to buy (or "subscribe" to) Google services, Google advertising, etc. Adding insult to injury, Google probably doesn't even expect to make a profit off their registry/registrar businesses--they just want to make it convenient and easy for content creators and businesses to use Google platforms and services--so Google can likewise increase Google advertising revenues. At this point, Google is a one-stop shop--advertising network, search engine, cloud engine, content delivery network, platforms (YouTube, Blogger, Google Sites, Google Cloud, Google Play, etc.) and endless other Google services (e.g., Google maps, Google voice, etc.). My guess is Amazon and Microsoft (and maybe Apple, Yahoo, or Facebook) are not far behind. Here's part of an email I received from Amazon Web Services today:
"AWS [Amazon Web Services] is focused on continually lowering your overall IT costs.  We recently announced our 42nd price drop, making the AWS Total Cost of Ownership (TCO) even better when compared to on-premises or colocation hosting environments.  You can save a significant amount by running both your fixed and variable workloads on AWS."
Say you have a dotCom domain name -- the one domain name extension that is recognized and used everywhere in the world. Unlike new gTLDs, every browser will resolve a dot Com domain name to your website -- try that on an Apple device with some of the new gTLDs! And which domain name extension is more cost competitive in annual registration fees -- your recognized and trusted dot Com domain name or a new, unrecognized, unreachable new gTLD? In almost every case, new gTLDs cost more in renewal registration fees, sometimes much more.

All of this is why the new gTLDs will mostly fail. I personally know a manager for a US company with hundreds of domain name registrations (most under WHOIS privacy) -- only one new gTLD -- a 5 letter .xyz that matches a .com, .net, and .org in the portfolio (yes, $-0- acquisition cost via Network Solutions). That is not unusual -- look at the data, all of the new gTLD domain names (after you subtract the freebie give aways, the cybersquatters, and domain name speculators) have either stalled or failed out of the gate. 

You don't hear them talking about any of this at ICANN 50. Clueless.

It's pretty easy to see where all of this is going. Most global companies (and most companies with global aspirations) are going to lock onto their "dot Com" and forget about acquiring any other domain names. Part of the money saved will be spent on trademark registrations and defense, including selective UDRP and URS actions.

Look, I'm all for innovation, but saying something is "innovation" doesn't make it so. You remember what Steve Jobs said about innovation don't you? "Innovation is saying 'no' to 1,000 things." Too bad ICANN and all the dumb money chasing new gTLD domain names never learned that.

John Poole
Domain Mondo
June 24, 2014

*Update: erroneous data from CNN deleted/corrected 6/26/2014




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