[CPWG] Reminder: ACTION/CPWG by Today 23:59 UTC: Comment on Metrics

[John McCormac]

On 26/09/2020 08:26, Olivier MJ Crépin-Leblond wrote:
> 
> 
> On 25/09/2020 18:40, John McCormac wrote:
>> A whole industry has developed around reselling previously deleted 
>> domain names and many of these drop caught domain names have sold for 
>> high prices. A domain name that might cost about $10 to register could 
>> resell for $10,000 or more. 
> 
> Not a great thing for an end user registrant to beef-up prices like 
> this. Some would say that this whole "industry" has a taste of "ticket 
> tout/scalper". But I guess that's what happens in an unregulated market 
> where the scarcity of names made it a seller's market. But now with the 
> new gTLDs and the vast variety of choice in other TLDs, are we likely to 
> see an end to this phenomenon?

It is basic supply and demand, Olivier,
The valuable domain names are valuable because they are in well 
developed and used TLDs. Their value is very much a function of the 
overall development and recognition of the TLD. When the momentum 
shifted to ccTLDs, these ccTLDs also became more valuable because people 
used them and developed websites on them at a greater rate than before. 
In some respects, real estate/property rather than ticket touting is a 
better comparison. The price of property in a large city is going to be 
higher than the price of property in relatively undeveloped and 
unpopulated areas.

The new gTLDs have a problem with development and with registration 
volume. But a problem of a kind of regulatory capture damaged some of 
them. In allowing the registries to own registrars, the natural 
development of some of the new gTLDs was disrupted. Some of the 
registries held back large amounts of what were considered "premium" 
domain names. These were typically generic single keyword domain names 
and short domain names. It killed the landrush boost (the flurry of new 
registrations that occur over the first six months when a new TLD goes 
into general availability). That's when people will register domain 
names in a new TLD in the hope of either striking it rich or getting a 
"good" domain name on which they can build a business.

The domainers almost completely ignored these new gTLDs as a result and 
very few people developed websites on them. In some respects, the 
registries were acting like domainers in a mature TLD rather than 
registries. Many of these reserved premium domain names were either 
deleted or released in a drip-feed manner. With some of these new gTLDs 
struggling to get a few thousand (or even hundred) new registrations a 
month, the opportunity to grow the TLD was gone.

Covid has altered the dynamics of the secondary market and the primary 
markets for most mainstream TLDs (.COM and the ccTLDs). There was a 
boost in some of the ccTLDs earlier this year as people who had lost 
their jobs decided to try building online businesses. That was mainly in 
the ccTLDs. The Eurid, the.EU ccTLD registry, made a rather poor 
decision to discount registrations in Portugal and that massively 
inflated the number of Portugese .EU domain names. Most of those will 
probaby be deleted next year. Eurid has also been heavily discounting 
registrations in an attempt to stave off a natural decline that is 
affecting all non-core TLDs. Covid in most countries with strong ccTLDs 
is increasing focus on the .ccTLD/.COM axis and registrations on the 
other TLDs in those markets has slowed. There was a similar spike on 
.COM earlier this year.

A rule of thumb for the health of a TLD would be to watch the number of 
domain names on sale and the number of domain name sales. This is a far 
better indicator than the awareness opinion polls used by CCT.

The .COM sale prices are linked to the US market. That's one where the 
local ccTLD has been unable to compete with .COM and .COM has become the 
de-facto US ccTLD.

The new gTLDs have been in decline for the last few months and there is 
a massive drop of a few million heavily discounted registrations that 
will occur over the next six months.

The .UK ccTLD has seen a block of deletions of the .uk domain names that 
had been "reserved" by large registrars for their clients. The .uk 
second level registrations did not really take off and was a management 
reaction to the launch of the new gTLDs. Some of the high value 
keyword/short .uk domain names are being drop caught and reregistered.

The ccTLDs with strong local markets and development are likely to see 
the secondary market value increase. The .COM might remain relatively 
stable as long as the US market does not adopt the .US ccTLD in large 
nubmers. (That is something that could occur over a ten year timeframe 
as Godaddy is now the .US registry and it has significant market power.)

Many of the non-portfolio operator new gTLD registries are going to find 
the next year or so quite difficult. The portfolio operators may benefit 
from having their risk spread over a number of new gTLDs in different 
markets. The wildcard is the .WEB gTLD. If it ever manages to launch, it 
will take a lot of the optional registration money away from the new 
gTLDs and some of the legacy gTLDs.

The Covid effect on domain name markets, if it continues, is likely to 
accelerate the shift to ccTLDs. (More business being local and selling 
locally.) That means that some ccTLD domain names will increase in 
value. However, ccTLD resale dynamics are quite different to that of 
.COM because people identify with their local ccTLD in that it is 
"their" TLD. The right of the dot becomes invisible because people 
assume that a new website or domain name is in the local ccTLD.

Based on the statistics, the new gTLDs are not competing with the 
.ccTLD/.COM axis in most markets and unless a lot of development and 
usage occurs, they are unlikely to compete in terms of secondary market 
prices and sales.

I included a chapter in the Domnomics book on the "all of the good 
domain names are taken" fallacy (Chapter 9) along with estimated 
regregistration percentages for .COM/NET/ORG over 2004 to 2019. The 
scarcity argument only really applies to a very small set of domain 
domain names in any TLD. When some of these domain names are sold for 
large prices, they make headlines and convince people that there is a 
problem with domain names being held back from ordinary registrants. The 
vast majority of domain names are registered and will delete without 
ever being reregistered.

Regards...jmcc
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