Which New gTLDs Matter?

There’s no denying the power of a domain ending in .com.

When someone searches for your website, there’s no question they’re going to assume a .com domain first. Anyone who’s registered a domain before knows that .com is the preferred choice. If your .com idea is taken, it’s often too risky to purchase the same domain ending in .net or .org — you could be sending your potential visitors right to your competitors, or giving the impression that your business is cheap or unprofessional.

But ICANN is betting on just the opposite, hoping to overthrow .com’s reign over the internet by offering up more options.

TLDs besides .com have always been available, but the value of .com domains meant that there’s always been fierce competition and huge bidding wars over short, memorable domains. SEO.com was sold for $5 million in 2007, and beer.com went for $7 million in 2004 (though the domain remains unused to this day).

Hoping to diversify TLDs across the web and make more money on domain registrations, ICANN began accepting applications for new TLDs in 2013. Instead of sticking with .com, companies could now invest in creating their own branded TLDs, with URLs ending in their own trademarked names instead of .com. ICANN has also introduced hundreds of new TLDs that anyone could register, such as .online, .music, .inc., or .media.

Until 2013, there were only 23 TLDs to choose from (with .com being the prime choice).

But over the past few years, ICANN has added over 500, expecting millions in new revenue to start pouring in.

But even with all the new options out there, the reign of .com hasn’t been so easy to overthrow.

What went wrong? Check out our guide below on how the new domains generally failed to take off, and which TLDs have begun to succeed despite the odds.

Which New gTLDs Matter

Which New gTLDs Matter?

Since January 2013, the Internet Corporation for Assigned Names and Numbers (ICANN) has accepted over a thousand applications for new generic top level domains (gTLDs), like .xyz and .london. This was expected to bring in millions more in revenue. But it didn’t work out like that. Although some of the new gTLDs were very popular, others were a flop. What happened to ICANN’s plans and why didn’t the new domains take off?

ICANN and gTLDs

  • ICANN is the international organization responsible for keeping the domain name system stable
    • It does so by creating contracts with registries who manage top level domains and accrediting registrars who sell the domains
  • Only eight gTLDs predate ICANN, although the organization still oversees them:
    • .com
    • .edu
    • .gov
    • .int
    • .mil
    • .net
    • .org
    • .arpa
  • Since 2000, all new gTLDs have been created by ICANN
    • Until this newest round of gTLDs in 2013, there were only 23
    • The most recent round added 522 gTLDs
      • These tend to cost about $20 per year
      • But the cheapest, like .xyz, only cost a couple dollars per year
      • And the most expensive, like .rich, cost a couple thousand.
  • There had been two previous applications for new gTLDs in 2000 and 2004, but never before has this many been approved
  • This round is the first time that non-English characters will be allowed as gTLDs

ICANN’s High Expectations for Transaction Fees

  • ICANN expected $1.2 million in revenue from the new gTLD transaction fees:
    • ICANN now expects to see only 25% of its initial revenue prediction — just $300,000 per year.
  • Transaction fees are paid for new registrations, renewals, and transfers. This primarily comes from registries with over 50,000 billable gTLD related transactions per year
    • Only 14 of the 522 new gTLDs have added more than 50,000 names
    • According to ICANN, only 17 registries are currently paying transaction fees

Some new gTLDs that are selling well

  • .berlin
    • Number of Domains Sold First Year: 156,532
    • First Day Sales: 31,950
    • Sales per Day (First Month): 1,531
    • Average Cost: $51/year
    • Other information:
      • Some of the first .berlin websites were:
        • A dog blogger
        • A model train club
        • A swimming BBQ donut manufacturer (a combination boat/grill)
      • .berlin is the most popular geo-located new gTLD
  • .club
    • Number of Domains Sold First Year: 215,066
    • First Day Sales: 27,030
    • Sales per Day (First Month): 2,184
    • Average Cost: $11/year
    • Other information:
      • Some websites that use the new gTLD include:
        • 50 Cent’s 50InDa.Club
        • Demi Lovato’s Lovato.Club
        • TheDudes.Club
        • RoswellRotary.Club
      • .club was the first of the new gTLDs to reach 100,000 domain names sold
  • .xyz
    • Number of Domains Sold First Year: 940,340
    • First Day Sales: 19,664
    • Sales per Day (First Month): 7,862
    • Average Cost: $3.5/year
    • Other information:
      • The most popular of the new gTLDs is .xyz. But its status is disputed by several sources that point to the large number of TLDs that were registered to users without their explicit consent

Some new gTLDs that are selling poorly

  • .airforce
    • Total First Year Sales: 244
    • First Day Sales: 65
    • Sales per Day (First Month): 3.5
    • Average Cost: $34/year
  • .rodeo
    • Total First Year Sales: 267
    • First Day Sales: 2
    • Sales per Day (First Month): 1.8
    • Average Cost: $34/year
  • .gripe
    • Total First Year Sales: 863
    • First Day Sales: 6
    • Sales per Day (First Month): 1.1
    • Average Cost: $39/year

Various Revenue Problems

  • Registry Fees Also Fall Short for ICANN
    • ICANN says the fixed registry fees for new gTLDs are disappointing, too:
      • Each registry must pay $6,250 per quarter regardless of volume
      • They got just $12.7 million from fixed registry fees in FY15
      • This is down 24% from the $16.7 million in its adopted FY15 budget
      • This is because of larger than anticipated numbers of wanna-be registries withdrawing or waiting too long to delegate
  • Registrar Transaction Fee Fails
    • The numbers are down on registrar transaction fees, too:
      • ICANN predicted that registrar transaction fees would total between $2 and $3.2 million.
      • They are now expected to be just $1.1 million
  • A Three-Pronged Problem
    • ICANN now expects the revenue from all three new gTLD sources to:
      • Contribute only $14.1 million to its fiscal 2015 revenue
        • 29% lower than forecasted in their adopted budget
        • 43% lower than forecasted in the original draft budget
      • Not come from the predicted 33 million domains in the draft FY15 budget, but rather just 15 million, a number they don’t even expect to reach

There were high expectations for the new gTLDs, but the demand for them turned out to be much less than expected. As a result, ICANN has taken a more conservative view going forward.

Sources: icann.org, newgtlds.icann.org, ntldstats.com, blog.europeandomaincentre.com, internetsociety.org, blog.searchmetrics.com, domainincite.com

Sources

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