Dear Mr. Generic TLDs: Let’s Worry About the Basics Before We Push the Auctions and the Sunrise

Nov 27 2013

Sunrise this, auction that.  Over the next few months, potential domain buyers will be inundated with upcoming auctions and information about registering names with the new generic tlds.  The people and companies behind the new tlds are some of the biggest and brightest in our industry, but many of them seem to be getting ahead of themselves in a rush to generate some cash from their large investments.

While I hate to continue to pick on .XYZ , they were first out of the gate and therefore entered the limelight first.  They also put names up for auction way in advance of very important details.  I think Andrew Rosener of Media Options summed it up best with his questions and comments over at Morgan’s recent post regarding .XYZ

Not to be cynical here, but actually you missed the biggest point of contention entirely. Only idiots and trolls believed that someone was breaking rules or any of the other complaints you mentioned.

The most critical factor and piece of information which is missing from this equation is PRICING & TERMS! We as consumers and investors still have no indication of how the registry will price their domains for registration and renewal. Without that information you are taking a HUGE risk to buy any .xyz or .college prior to Sunrise (or buy an option for those names I should say).

Take .TV for instance. If .XYZ registry decides to follow the .TV original pricing model, then the person who buys an option to buy for say $1,000 on Namejet might think they got a steal until the names start being allocated and they find out that the registry will charge $10,000 per year just to register and renew the domain. Don’t think that won’t happen because it has happened before and it already appears that is how Donuts will be handling many of their own premium strings. So I would say there is a high likelihood or chance that .XYZ or .COLLEGE could price their names in the same way, especially the premium names and especially if these options sell cheap and they are looking for another way to cover costs and turn a profit.

Another factor involved which remains unclear is transfer rights. If you buy the option for a name on Namejet and then it gets allocated to you at a particular registrar, can you transfer that domain out to another registrar? Or will it be permanently “stuck” at the original registrar like many of the original .TV registrations (yes, many premium .tv domains can not ever be transferred away from their current registrar, which gives that registrar a monopoly on pricing for your domain and it’s renewal fee)?

In my opinion, this is a fools game. Would you sit down at a black jack table if the house didn’t tell you the rules in advance? How do you know the deck isn’t stacked?

How can you enter into a contract with someone before the terms have been set? You are buying an option to purchase something, but you don’t even know what exactly it is you’ll be getting. with a $10 registration cost and $10 renewal is worth one thing – but if it has a premium registration fee and premium renewal fee and is prevented from being transferred to other registrars – that is something else entirely and worth a whole lot less than the former.

And the answer?  Morgan had to go and ask.  It came back at $9.95 or less.  Fantastic news but this is exactly the type of information that potential bidders and owners needed.  It took a comment in a blog to bring it out.  There is a saying that “the money is in the details” and I would highly suggest to all the new tlds to make it plain and clear how everything is going to be handled. .  How many registrars are currently signed on to hold your domains?  What is the annual renewal cost going to be for the owner?  Are there any other special requirements for owners of these domains?  These types of questions should not be answered in domain blogs.  They should be upfront and official.

I was told earlier that investing in .cc was not as good as investing in a new generic tld. Especially one owned by an outgoing owner that will give it the marketing it needs.  I completely agree in the fact that marketing is the key to long term success.  But marketing starts from day one.  Giving buyers the details they need to make their purchase.  Doubt lessens value.  I somehow have been made into Mr. dot cc despite me only owning 15 or so from that tld.  But if I am going to gamble on a super cheap extension I feel more comfortable with this because it has a history.  I know all my costs.  I know that I can put all my domains in my Godaddy account.  I know that China has accepted the extension.  The generics very well may fly past in value and acceptance, but I need to know that the owner is going to spend the money to achieve those goals. If I am going to buy shit like a CC at least I know it’s shit up front and can take it from there.  Renewal costs and important detailss need to be up front.   Very few people are willing to buy something before they know what the complete cost of ownership involves.

These generic tlds can be very profitable even if there is no resale value in any of the domains. The amount of registered domains needed to make money each year is not a big number.  Some of the biggest money initially will be the 100 held back domains that they are allowed to auction. Making it even more important that these auctions go well. Especially if they are early.  Once sold they will not get a do over.  I realize that over the course of things that a few thousand dollars lost won’t matter but setting precedents and sales comparisons do.  If big keywords go for nothing at auctions it will only hurt subsequent auctions and put in that doubt I spoke of earlier.

Finally, I want to point out that I want ALL of the generics to succeed.  I am a domain seller.  I want markets to buy and sell.  Its how I make a living (or at least part of it).  The more things I have to sell the better it is for me.  Why would I want to trade 5 stocks as opposed to 100 stocks?  I want some risk to be involved because there is good money in risk but I want confidence and history in the Gtld as well.  That needs to be created. It is not in my best interest to see any of these guys fail.  I care more about them creating a good tld than they do in seeing me make money flipping their product.  That’s why I am so critical in how some of them handle their coming out parties.  If they screw it up it takes away a potential market and that’s not a good thing for us resellers.

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Outsmarting the Dumb, Outworking the Smart

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  1. Robbie

    Morgan Linton is bidding on a large majority of current .xyz auctions… while pumping it in articles. Shane you are right, this reminds me of all the rules in place with IPO’s, to protect the public from getting burned. Nice article…

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