2014-10-03

Reason #2 Why New gTLD Domains Are a #FAIL

Second part of the post from yesterday --

Reason #2 new gTLD domains are a #FAIL: Increasing Supply Does Not Increase Demand

New gTLDS are to Domains what Atlantic City is to Gambling--

What happened in Atlantic City, is already happening to the new gTLDs (new generic Top-Level Domains)--see Most New gTLD Domain Names Are On Life-Support, Infecting Other gTLDs. ICANN is flooding the domain name ecosystem with over 1300 new gTLDs (from just 22)--creating market chaos, confusion, and gross oversupply. New gTLD registries had to pay an initial fee of $185,000, plus other costs, and auction fees, which in many cases total in the millions of dollars ($US) invested before the first domain name is sold!

Here's what happened in Atlantic City--"... Everyone bought into the myth that gambling would bring in needed tax revenue, and that you could attract plenty of blackjack and slot machine players no matter how many casinos you built. But the demand was not infinite, and ultimately got divided among all these sites, hurting Atlantic City perhaps the most. How did city and state leaders react? By unveiling a plan to turn Atlantic City into Las Vegas. Somehow, their response to a glut of gambling was to add more gambling, only with lots of flash and nightclubs and fine dining. Revel, the linchpin of this strategy... racked up almost $1 billion in debt during the construction phase, straining the budget right from the beginning. Revel never made a dime, and flamed out just two years after its opening...." (source)

Sound familiar? Everyone at ICANN bought into the myth that more gTLDs would bring in more registrant fees, no matter how many new gTLDs were flooded into the domain name ecosystem.

Donald Trump on Atlantic City (Bloomberg video, August 11, 2014):

Donald Trump on what happened to Atlantic City--"Too much competition"-- tremendous competition eating away at itself --Trump talks to Bloomberg's Trish Regan

Atlantic City Politicians = ICANN
Atlantic City Casinos = new gTLDs' registry operators
Atlantic City Gamblers = new gTLDs' domain name registrants

Lessons learned:
  1. Demand is NOT infinite. 
  2. Increasing supply does NOT increase demand. 
  3. Too much competition is a BAD thing.



see also: ICANN, New gTLD Domain Names, Universal Acceptance Another #FAIL

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