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

[John McCormac]

On 27/09/2020 02:50, Greg Shatan wrote:
> Very thoughtful and informative.
> 
> So why are we doing another round of New gTLDs?
> 

People want to make money and justify their salaries. Others haven't 
learned from the mistakes of the 2000s and the 2012 rounds. Then there 
is the "this time it will be different" contingent who are 
well-intentioned but unaware of the dynamics that drive the domain name 
business. Domain names, for registrants and resellers, are a means to 
upsell the customer to a more expensive product.

The domain name market isn't a stable one. The 2020 market isn't the 
same as the 2019 market just as the 2019 market isn't the same as the 
2018 market.

The 2012 round was an answer to the artifical scarcity created by Domain 
Tasting and ICANN's dithering response over the years 2005 to 2008. It 
took external action from Dell (legal action against a number of 
registrars) and Google (demonetisation of PPC advertising on AGP domain 
names) to solve it. ICANN eventually got around to implementing some 
rules about AGP abuse but the legal actions and demonetisation had been 
far more effective.

ICANN was at a disadvantage because it is a reactive/stakeholder 
organisation with a long decision making process. By the time that the 
2012 round gTLDs launched in late 2013, it was a completely different 
economic landscape to that of 2005-2008. The demand that had existed in 
2005-2008 no longer existed and the fragmentation of the domain name 
market along geographic lines had accelerated.

This fragmentation meant that there was a shift away from the legacy 
gTLDs to the ccTLDs and the growth rate of the ccTLDs is still better 
than that of the legacy gTLDs. It was similar to what happened to .BIZ 
when the DotCom bubble burst. Like many of the 2012 round new gTLDs, it 
had a great model for a market where there was a scarcity of "good" 
domain names.

Then the bubble burst and all the domain names that had been registered 
and not used flooded back into the market. The .BIZ gTLD and its 
business model never recovered.

The shift to ccTLDs was the equivalent for the legacy gTLDs (apart from 
.CAT and .XXX which are not quite gTLDs). In a gTLD-only market, the new 
gTLDs of the 2012 round should, theoretically, have picked up the demand 
from those who couldn't get their domain name in the legacy gTLDs 
(really .COM). The problem was that the ICANN management was completely 
focused on the gTLDs and they missed what was happening with the ccTLDs.

One of the reports that I publish each month deals with renewal rates. 
The renewal rates for some gTLDs are quite terrifying. The use of 
discounting has led to gTLDs where as much as 80% of a zone from 
September 2019 from will have disappeared by September 2020. This Quick 
Delta metric is a way of keeping track of TLD health. The worst, apart 
from the terminated gTLDs, was .LOAN with 94.95% deleted.

This Quick Delta metric is simply comparing one zone with a subsequent 
zone. The .COM only has 18.84% deleted for Sep19/Sep20. The ironic thing 
is that the best performing gTLD with this highly simplistic metric is 
actually .XXX gTLD. It only had 1.85% deleted.

But .XXX is not so much a TLD as a brand protection operation. If the 
same model had been applied to the 2012 round (instead of the various 
trademark clearing house approaches), then the brand protection element 
might have helped some of the new gTLDs. Without a signficant level of 
brand protection registrations, many new gTLD registries were faced with 
having a small gTLD with high registration/renewal fees or indulging in 
heavy discounting with minimal renewals.

As was shown with the attempted purchase of the .ORG gTLD, there will 
always be those who think that money can be made from domain names. 
Purchasing an already successful registry/gTLD is quite different from 
starting up a new TLD.

The risks won't stop people trying and there will, as had been seen with 
the 2012 round, be people looking to make money from selling them the 
picks and shovels for the next gold rush. And there will be 
"consultants" looking to make a profit from the gullibility of 
prospective gTLD operators who think that the "Field Of Dreams" business 
model works.

To extend the domain names as real estate idea, there are people and 
companies who believe that they can build cities where people will want 
to live and work. Perhaps they will be successful but at the moment, 
there many ghost towns in the 2012 round gTLDs.

Regards...jmcc
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