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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