[CPWG] Need Advise: Tokenization of Domain Names

Thu Sep 28 20:34:22 UTC 2023

Hi John,

Very well written, great! You are right, I might have not expressed myself clear enough: 
"Brand Ambassadors" can be split into classes - and not all must be premium ambassadors like mta.info (the official NYC public transportation authority website) or spain.info (Spain's official tourism website) but actually ANY .info domain that creates any measurable "visibility" for the gTLD brand of .info: via email, www or whatever. A domain (and the website it is routing to) doesn't create automatically TLD brand visibility - unless the domain is seen by others.

And the .eu folks HAVE been warned: I remember at the Argentinian ICANN meeting I had a few of the top brass in my bus back to Buenos Aires - and I tried to explain exactly how their ccTLD will die in the dust - but they wouldn't even listen.

Btw: Is it to late to get into the Sub-Pro IRT group?

Danke,

Mit freundlichen Grüßen,

Alexander Schubert
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Alexander Schubert
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Germany +49(030)8643-7863

-----Original Message-----
From: CPWG <cpwg-bounces at icann.org> On Behalf Of John McCormac via CPWG
Sent: Thursday, September 28, 2023 6:53 PM
To: cpwg at icann.org
Subject: Re: [CPWG] Need Advise: Tokenization of Domain Names

On 28/09/2023 12:44, alexander--- via CPWG wrote:
> And that's what happened first to .info in 2001, then to almost all 
> new gTLDs in the 2012 round:

The .INFO is where a some of the landrush mentality started, Alexander, Growth had stalled and the registry, Afilias, decided to give away free domain names. That almost doubled the size of the zone in a few weeks.

> All premium space (generic keywords, 1, 2 and 3 letters versions, etc) 
> snooped up by "domain investors, rendering the brand new gTLD brand 
> ".info" void of any "brand ambassadors" with impact. A Dubai where all 
> hotels, bars, restaurants, malls, etc have not yet been built, no 
> apartments or office space is for lease - because the property owners 
> haven't built buildings (just have all billboards erected with advertising).

There were some brand ambassadors for .INFO but the increase in the number of .INFO domain names created its own problems. There are also a few missing points in the timeline.

When Google launched Adsense and the low cost of of .INFO worked to its advantage in that a lot of people set up micro-sites of a few webpages on a topic and put Adsense on those sites. The people who did this initially made money.  Eventually, Google and other search engines deemphasised these .INFO websites in search results.

The registry frequently ran discounting offers that reduced the registration fee. This created a boom and bust cycle. However, a small percentage of these discounted registrations renewed at full renewal fee.

After the .EU fiasco (The European Commission was advised by people who were unaware of what what happening in the industry and selected an application from an applicant that had never run a large TLD active in multiple countries. It didn't turn out well and it killed .EU as an alternative to .COM in the European Union.), the next gTLD to launch was the .MOBI and this is where things really changed. Potentially high value domain names were reserved by the registry and auctioned off. The domainers effectively just got the crumbs from the table.

The .MOBI was a great idea but the launch of the Apple iPhone, and the Android smartphones killed it. During that time, large-scale Domain Tasting (where registrars would register tens of millions of domain names in the legacy gTLDs, test them with PPC advertising, and drop those that did not make money within the five day Add Grace Period at no cost to themselves) was beginning to get out of control. That problem was solved with legal action, Google stopping monetising new registrations and ICANN eventually introducing a cost to the AGP deletions. That removed the artificial scarcity in the legacy gTLDs and people were able to register deleted domain names again. These effects combined stopped the development of .MOBI as a mainstream gTLD.

The registry auctions model of high value generics was established by the .MOBI launch and .ASIA and .CO also used it. It made money for the registry and got publicity but the changing market conditions for the legacy gTLDs and ccTLDs on various markets would cause problems for some of the 2012 round gTLDs.

Domain Tasting created a shift to the ccTLDs because people found they could get a domain name in their local ccTLD that was long gone in .COM/NET/ORG. That helped some ccTLDs, which had been struggling against the legacy gTLDs in their markets, begin to dominate their markets.

In many countries, .COM was no longer king. The local ccTLD was the first choice TLD for new registrants. It was also a very different economic situation. With the first round of new gTLDs in the early 2000s, the Internet was much smaller and a lot of countries had no major presence. The growth of broadband and Internet access meant that more people were getting online and many were from countries that did not have strong economies.

Some of the new gTLD registries held back the high value and short domain names for auction but this did not have a major effect for many of the new gTLDs.

The problems for most new gTLDs were demand, marketing and timing. 
Large-scale Domain Tasting had created an artificial scarcity of domain names. In that artifical scarcity, a new round of gTLDs made a lot of commercial sense. Taking away that artifical scarcity switched a lot of the demand back to the legacy gTLDs and ccTLDs.

The roll-out of the 2012 round wasn't helped by ICANN's launch strategy. 
There were too many new gTLDs rolling out in too short a time. That meant that newly launched gTLDs did not have a chance to establish themselves in the market before another gTLD was launched. That created confusion for potential registrants.

> Dubai solved the problem elegantly:

Perhaps for Dubai but there is something missing when it comes to driving gTLD adoption. Brand ambassadors might be good in the launch phase of a TLD but it is the adoption by ordinary businesses and people that makes a gTLD a success. They are the ones that give a gTLD a bedrock of development. They, not the brand ambassadors, create a sense of community for the gTLD. A use it or lose it appoach (Dubai), is a potentially dangerous one for a gTLD because it takes time to build websites. And even if someone does not have a website, they may be using the domain name for e-mail. It can take up to three years before ordinary registrants make their hold'em or fold'em decision on a domain name in a new TLD.

> In new gTLD namespaces the mass-grabbing of all generic namespace 
> results in a catastrophe: that gTLD brand is only being promoted by 
> domains that are visible and cerate real benefit for the Internet user.

This did not happen in all new gTLDs. Some of the Uniregistry gTLDs were good examples of it but other gTLDs did not have a large number of domain names taken out of circulation like that. What happened in some of the Uniregistry gTLDs was that the registry reserved a lot of domain names that would have been valuable in .COM using its own registrar. 
That killed growth and development in these gTLDs but the reason is not immediately obvious. There was no landrush in these gTLDs.

Every new TLD aimed at the public has a landrush phase. This is where potential registrants try to register a "good" domain name. There is competition and it creates demand for the TLD. It lasts about six months and it is essential for a newly launched TLD. It is free advertising for the TLD. There is speculation but many of the highly speculative registrations will be deleted on the anniversary of the landrush (the Junk Dump). This landrush also sparks development in the TLD with small businesses and people developing websites on the TLD. This critical mass of development did not happen in many new gTLDs.

Without a landrush, the registries had to invest a lot more in marketing. Some of them had competely underestimated the cost of marketing. What happened can be summed up like this:

Less marketing results in lower visibility which results in fewer registrations which results in fewer websites.

> If all generic names are held by speculators – who then shall promote 
> the TLD brand? I mean: promote the brand to the common Internet user?

Generics are a distraction for a new TLD. Real promotion comes from usage. It is the people, the community, that builds websites on the TLD and uses it for e-mail that promote it.

Forget the brand ambassadors. They are just background noise. It is the ordinary registrant who builds a website or uses the TLD for their e-mail address. It takes time.

Focusing purely on the generic domain names is wrong because they effectively exclude themselves from the awareness of the ordinary users of a TLD. When people see their friends and the businesses they know using the TLD for everyday purposes, that's when things begin to change for the better for a TLD. The market for a TLD isn't just a set of numbers. It is people. Successful TLDs, especially the ccTLDs have the registrants identifying with the TLD as being *their* TLD.

> It’s a Dubai where ALL the land is owned by speculators – and not used 
> for anything. On top: most domainers won’t even sell their loot for 5 
> to
> 10 years in a new gTLD – they are “waiting” that “others” create brand 
> awareness for the gTLD brand.

It is not a Dubai situation because the land in Dubai is not ultimately owned by the property developers. Registrants in successful TLDs have a sense of "ownership".

The masterclass in disaster is the .EU ccTLD. What happened was almost exactly what you describe above and it wasn't helped by politicians and their situationally unaware advisors, and an understaffed registry. 
Those conditions combined to allowed the ccTLD to be plundered. It killed the ccTLD as an alternative to .COM in the European Union and the speculators lost millions and dumped most of their registrations within the following five years. The echo of the .EU landrush is still visible in the graphs for .EU seventeen years later.

The .EU registry has worked hard to try to recover from the this disaster and the web usage rate is jst over half that of most real EU ccTLDs. (The CENTR methodology on attempting to measure web usage is not
reliable.)  It has also become a kind of truck-stop TLD where people go before being redirected to the registrant's primary website in another TLD.

What happened to the .EU did not happen to most of the 2012 round new gTLDs. The .EU situation was one where the registrants decided the outcome. With some of the new gTLDs, it was the registries deciding to withhold the "valuable" domain names from the market that affected the outcome of their launches.

> In new gTLDs mass domain-grabbing is the death dagger for that entire 
> namespace.

It is not. Many new gTLDs were created with a "Field Of Dreams" attitude to marketing in that some registries thought if they launched it, the registrants would appear. They didn't. These registries competely underestimated the amount of marketing and time that is required to get a new gTLD established in the market.

> of for example .info: Many domains registered – zero brand awareness – 
> zero real life impact – nothing there for the Internet user. .info had 
> the chance to be what .net or .org are now. It could have been a real 
> .com-hunter. Instead, it is a Dubai without any development: just sand 
> and a few roads. And lot’s of sold property – undeveloped. And many, 
> many “for sale” signs and billboards. Hurra!

No. The .INFO had stalled before it added the free domain names. What stopped it being a .COM competitor was the bursting of the DotCOM bubble in 2000. At the time, most of the registrations in the legacy gTLDs were two year registrations and over the years 2000 to 2004, many of the domain names that had been registered in .COM were deleted as DotCOM bubble companies went bust and did not renew their domain names. This, combined with the launch of Google Adsense for domains, kicked off large-scale Domain Tasting.

It is similar to the artificial scarcity problem created by large-scale Domain Tasting where "all of the good names are gone" panic took hold. 
Once these domain names (often previously registered by failed DotCOM bubble companies) became available for registration again, the prospects for .INFO were in trouble. It also killed the .PRO's plans. The .PRO registry thought its market was in the millions and ended up with only a few thousand registrations. That also happened with some of the 2012 new gTLDs.

History, in the domain name business, does repeat. For every boom in the TLD markets there is a bust. The only things that change are the names and the bank balances of those who get it wrong.

Perhaps that is the liquidity that really matters?

Regards...jmcc
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