Q: You are CEO of Top Level Domain Holdings, CEO and founder of Minds + Machines, CEO of dotNYC, and Principal of Names@Work. Are there any other companies or organizations that you are currently a part of, which I failed to mention?
A: That’s about it, although I also act as an advisor to DomainsBot, which is a very cool domain technology company that I’ve been involved with since its early days. Names@Work is not really operative any more, since I don’t do independent consulting. I leave it up there because some of the commentary I made about new gTLDs is still pertinent. Minds + Machines is wholly owned by Top Level Domain Holdings, so they’re just different parts of the same company. DotNYC LLC is an aspirant for the City of New York’s approval to go after .NYC, which is still pending. So really my work is all connected — it’s not as if I have four jobs.
Q: In your abovementioned roles, you clearly have your finger on the pulse of the new gTLD program. When do you expect the first new gTLDs to be approved? When would you expect .NYC domains to be available for public registration?
A: Given the fully support that city TLDs have from governments, from ICANN, from just about everyone, and because it’s highly unlikely to see any contention or significant objections, I expect that .NYC will sail through the ICANN evaluation process. That said, I think setting up the Sunrise and Landrush periods, particularly the latter, will take some time. So I’m guessing we’ll start seeing .NYC domains in mid-2013. There may be some .brand TLDs that happen more quickly, but I doubt you’ll see any new gTLD second-level domains before the first quarter of 2013.
Q: What do you think the biggest obstacle is to the new gTLD program’s progress? What do you make of Bob Liodice’s recent statements opposing the new gTLD program in his role as President and CEO of the Association of National Advertisers (“ANA”)?
A: I just wrote a long blog post about the ANA and its efforts to torpedo the new gTLD program (see http://www.mindsandmachines.com/2011/11/new-gtlds-and-the-1/). It’s not going to happen, for a lot of reasons that I explain. I think Mr. Liodice is the mouthpiece for an industry that’s really threatened by the new gTLD program because it will change how things work on the Internet. It will have a lot of consequences for navigation, search, and branding, and this means that advertising professionals will have to really get their heads around Internet naming, a field that they’re really ignored up until now. It’s threatening to how they do business today. To me, the opposition to the new gTLD program from entrenched industries is an excellent indication of how disruptive this change in the Internet will be.
I think the biggest obstacles are behind us. Going forward, I’m more worried about ICANN being on top of their game and handling the applications smoothly. I don’t expect it to be entirely clear sailing, it’s a brand new thing and all the processes are untested. I’m more worried that there is unfairness, or perceived unfairness, in the evaluation process — it’s pretty opaque, and there isn’t really any appeal of a bad decision. That’s something that ICANN will (I hope) repair as the evaluation process unfolds.
Q: How do you think new gTLDs will affect the value of .COM domains and ccTLDs? In particular, as there will be more options for registrants to choose from, will the resale value of .COM’s be diluted?
A: As soon as Americans lose the habit of attaching a .com to the end of any string to the left of the dot, that’s going to affect the resale value of .com — it will no longer be an unquestioned universal. That will happen as soon as one of the new gTLDs is a hit and people begin to wonder “what do I type on the end?” — which I think happen soon after the new gTLD hit the market. The .com TLD will be very dominant for a long time, but if you have to think about what extension a domain name falls under, you are less likely to just type in a name on a guess, and that means that typo traffic will lessen. A great .com name will still command a very good price, but typo names will be worth less. I don’t think you’re going to see a precipitous fall in values, but if I owned a bunch of second-rate .com names, I’d be trying to sell them now.
Q: Do you expect dotECO to be a commercial success? Who do you expect to buy names under this extension?
A: A new gTLD is a business, and like any business it has to be run well and imaginatively to succeed. There are two .eco efforts, one run by our client, the other by a group in Canada. We think we have a better concept, that ours will do more good for the environment, and that we’ll run it better, but we’ll have to see who wins in the end. Certainly there is a great deal of interest in saving our planet, and a lot of people want to associate themselves with that aspiration, as do businesses. We see many individuals wanting to fly the eco flag, and a lot of businesses wanting to highlight their environmental initiatives.
Q: What are some of the most commercially promising new gTLD applications that you are aware of?
A: I’ll start by noting that given a choice between .com and a copy of .com, people will choose .com every time. So I think that applicants who are lining up for “blockbuster” general-interest TLDs are going to be sorry if they pay any significant amount of money for it. There are a lot of new gTLDs though that are great because they offer a choice. First, regional and city TLDs will do well, especially in places like New York and Bavaria (Germany), where people are really proud of where they live and want to display it — and don’t forget that unlike .com, local residents will likely have a lot to say in how the TLD is run, which increases a sense of pride and ownership. Beyond that, clearly IDNs can have a great impact just because they’ll be a label in the local language, which means a lot to people. Any TLD that targets a fairly large audience with group feelings, or professional associations — dentists, CPAs, and so on — has an excellent chance of doing well, because marketing to them is not so hard, and they get a lot of value from announcing their credentials with every email they send. Finally there are going to be some surprises due to great marketing, or a bundled application that makes the most out of the TLD, or simply because someone is able to create a sense of scarcity and demand.
Q: Are you aware of any applications for any new gTLDs that are IDNs? If so, what are they?
A: I know of several but I’m not allowed to discuss them.
Q: What is your view on the value and potential of IDNs, and IDN.com’s in particular?
A: I like IDNs a lot, but I’m less bullish on IDN.com names because of the necessity to switch between scripts — and because they’re second-level names. Second-level names have a lot to recommend them as investments, as I’m sure your readers are aware, but personally I like the value of the top level. There’s just a lot more you can do with a top-level domain. With the explosion of the .RF (Cyrillic) TLD, it’s clear that there’s demand out there. In any situation where you’re selling to the public, the major factors of success are GDP and Internet penetration among your target audience, along with policies that make for easy registrations and clear rules of ownership. That’s the same whether it’s an IDN or a Latin-script name. What IDNs really have going for them is the expansion of the Internet itself, which continues at a fast pace, and the fact that most of this expansion is now taking place in areas where non-Latin scripts are predominant.
Q: Do you believe that a version of IDN.com aliasing (as discussed here: http://idnblog.com/2009/12/03/exclusive-qa-chuck-gomes-verisign/) is likely to be implemented soon via the new gTLD program?
A: No. It took them nearly 10 years to figure out IDNs generally, and aliasing presents a much harder if not completely intractable problem. There are some super-smart people at VeriSign, but I’ve had enough experience with translation difficulties to understand that aliasing between languages is a very very tough problem. I remember when .CN started doing IDNs, and all my corporate customers were going through conniptions trying to translate their brands into Chinese. It’s not a simple problem. Take Amazon.com for example. Do you want a phonetic transliteration, A-mah-zohn? Or do you want to use the Chinese name for the river? Or do you want something that evokes the same reaction that the name does in English: big, mighty, wide, long, flowing? I will be very interested to see how VeriSign handles these issues.
Q: What are the typical costs for applying for a new gTLD?
A: You’ve got $185K to ICANN as an application fee. You’ve got to pay someone to help you with your application, even if it’s only to supply you with the technical questions. You’ve definitely got to count some time, even if that cost is hidden. ICANN also wants you to guarantee that you’ll have enough money for core registry functions in case you fail and someone else needs to pick up the pieces — this isn’t money you have to spend, but you do have to have it available in case it’s needed. For a small-to-medium-sized TLD, I think you should set aside about $1M, although your actual costs will be more like $300 – $500K, depending on how complicated your application is. For some reason, our competitors keep their pricing hidden, but with Minds + Machines you can pay us as little as $10K for the application phase, and then when you get to operations we different plans to choose from, ranging from a flat fee with unlimited names to a cheaper per-name option that will cost you more if you register a lot of names.
Q: What are the typical yearly costs for running a new gTLD?
A: You need to pay ICANN at least $25K annually (more if you have over 100K names in your zone), and you’ll need also to pay your registry service provider. We charge as little as $25K / yr or $1.50 per name in volume.
Q: Do you have any general advice for entrepreneurs contemplating a new gTLD application?
A: Yes. Know your market and know how to market to them. If you think registrars are going to do your marketing for you, you’ll be in for a nasty shock.
Q: Do you have any general advice for domain investors/developers regarding the value of registering new gTLDs?
A: Well, that’s one of the reasons why we formed Top Level Domain Holdings, which is publicly traded on the London Stock Exchange (AIM: TLDH.L). Investing in any particular TLD is expensive, as I’ve outlined above. We will be applying for a basket of names, and we are working with a variety of clients with different business models as well. So we will have a pretty diverse set of TLDs that we’ll be generating revenue from. As far as I know, we’re the only publicly traded company with a singular focus on new gTLDs. So that’s certainly one way to invest, and maybe the only way if you don’t have the money to start one yourself. If you’re planning to start a new gTLD, the best thing you can do is find a registry service provider that you know and can trust, because they are going to be very important to the success of your business. Finally, as I said above, know your market. A lot of people call me up and say, “Hey, I’ve got this great idea for a TLD — you should invest and then we’ll split the profits, whaddya say?” And I ask them if they have more than a word, because guess what, I have a dictionary too. I’m really interested in talking to people who have privileged access — either from experience, or some other “in” — to a market that they understand very well. Otherwise, what value are they adding?
Q: Is there anything that I didn’t ask that you would like to add?
A: New gTLDs are going to create a lot of value and will transform how we think about getting around on the Internet. They will create a lot of opportunity for those who take the trouble to understand the rather complicated regulatory/policy framework they inhabit, and for people who think they’ll just buy a word and be the next .com — well, they’ll get eaten alive. The good news is that there are quite a few competent people out there — ourselves and some of our competitors — who really do know what it takes to manage and operate a gTLD. If you can bring a complementary expertise to the table, there’s a good chance you can profit from this, and help the Internet and the people who use it while you’re at it.
Q: Thank you for your time.
