This is why Frank Schilling is dropping 230,000 New gTLD domains…

First of all Frank Schilling is not REALLY dropping 230,000 domain names. These are his registry’s domains. Everyone that registers one will pay Uniregistry a fee. Frank Schilling is expanding his sales channel from just a parked page to hundreds of registrars and also reducing his overhead cost. You can’t beat that.

He is actually moving from one (failed?) registry model to another. If you say he is dropping the domains it is like saying the Donuts registry dropped all their domain names. They didn’t. They just released all domains and put a premium registration/renewal price on them.

New gTLD registries are allowed by ICANN to reserve as many domains as they want. But a registry can’t have more than 100 domains registered on their name at any time. So a few registries including Uniregistry and Minds + Machines created shell companies and registered all their reserved domains under these companies. When Frank was launching his New gTLDs he registered all his reserved names under North Sound Names.

He thought that the .com model (domains resolving to a parked page where you could make an offer to buy the domain) would work for New gTLDs as well. But apparently, from news that I have heard lately from Uniregistry and Minds + Machines, this model didn’t work.

These 230,000 domains will be available for anyone to register but not at the regular registration/renewal fee. All these names will have premium registrations/renewals of about $50 to $300 per year. So Uniregistry is not really dropping these domains.

Most of the people interested in New gTLDs visit a registrar, type in a domain name and if it shows up as registered they don’t bother visiting the domain or checking the whois. Most New gTLD buyers are looking for something cheap and friction-less. So New gTLDs don’t get much type-in traffic from potential buyers and hence inquiries are on the lower side.

And these buyers are more likely to make a $50-$100 (per year) purchase than to make a $1,500 one off purchase after talking to brokers, negotiating, etc. They can test if the domain name works for them and then drop it. And of course a $50-$100 impulse purchase is far easier than a $1,500 one.

Which takes us to probably the most important reason. By this move Frank is lifting all the New gTLD related work (which on 230,000 domains can be daunting) from its brokers and let them focus selling his .com portfolio that has higher margins. Registrars are far better at selling $50 per year domain names and Frank doesn’t have to pay anything. So Uniregistry’s distribution channel expands while reducing the labor cost. You can’t beat hundreds of registrars around the world working for you for free.

One last reason for this move is the cost. Many people don’t realize that Uniregistry has to pay an ICANN fee of $0.25 for each of their reserved domains that are registered. (other registries also have to pay their backend provider if they do something similar) That is $57,500 per year for these domains Frank is “dropping”. That is $575,000 over 10 years. Maybe it seems small but costs do add up.

Do you think there are other reasons too? Let me know what you think.

Are New gTLDs dead or not?

They are certainly not dead meaning they are not going away any time soon. Of course a few extensions will fail and the registries will have to resell the rights or simply close shop.

Will New gTLDs be as successful as .com and some other extensions (mainly ccTLDs)? Maybe never. This doesn’t mean that New gTLDs can’t find some room between “dead” and “.com” to be successful. The verdict is still out as to what end of the domain name spectrum New gTLDs are going to live closer to. We probably have to wait a few years to know the answer to that.

And of course New gTLD (registry) success and domain investing success might not be aligned!

*Update*

I forgot to mention another minor(?) problem and cost of the registry. When a domain name is registered it could be subject to a UDRP and a URS complaint. When a domain name is reserved there is no such risk. North Sound Names has received 4 URS complaints so far and lost 1 of them. Now Uniregistry will have one less thing to worry about.

Sold.Domains

About Konstantinos Zournas

Konstantinos studied Computer Engineering and Computer Science in London and lives in Athens, Greece. He works on domain names, websites and software development. Has been online since 1995 & domaining since 2002.

43 comments

  1. Excellent description of what’s going on. I was preparing a similar post but you did a great job explaining the facts of the game.

    Now then, is there a list of those dropped domains?

    Back in the day, I ran into North Sound Names when querying gTLD domains I wanted to register, and I’m sure I’m not the only one.

    If Uniregistry releases that list it’d generate revenue – a win-win situation. 😀

  2. If the net increase of the new GTLD domains is more than that of .COM domains as evidenced during the 2nd Q 2016 (Correct me if I wrongly understand it), and if this trend continues in the future, then who will be pessimistic about the future success of many of the new GTLDS?

    • New products can get a fast start. Even if the trend continues for a while and new gtlds grow faster than .com again that doesn’t say much. .Com is millions ahead. You can’t expect it to grow at the pace of entirely new extensions.
      And it doesn’t say much about the aftermarket. This period also had .xyz selling millions of domains at 1 or 22 cents.

      A main concern is what happens if the Chinese stop buying New gTLDs. They could loose half their registration numbers.

      • Yes, I understand your point. But, when the net increase is in actual numbers, this has some different meaning from a simple % increase which normally shows a big figure at an early stage.

        As for the aftermarket, isn’ it too early to talk about it? It is my humble guess that a meaningful aftermarket for the new GTLDS may be formed in 10 years from now.

        Yes, I agree that the Chinese may be a critical factor ifor the destiny of the new GTLDS.

        Thanks.

      • With this kind of gaming of the system with almost free domains (that the registry looses money on every single one) I am not so sure what the actual number is.
        .XYZ sold millions of free domains.

        Yes, the aftermarket is not mature because New gTLDs are fairly new. But this is not the early .com era. People have paid and are paying a lot of money for domains.
        Some of that money should have been directed to the New gTLDs. Some is. But I have this feeling that the aftermarket is not where it should be.

      • Sorry for the misspelled name for the above comment of mine. I am not good at typing on a mobile.

      • What is going to happen in the next 6 months when the Chinese don’t renew their new Gs, along with the millions of 5/6L, 6/7/8N .com’s

        The negative trend is coming, put your .com’s in a safe place, they will get you thru the storm, gtlds will get you $5 – $500 offers all day long for good premium domains, but you are losing money, or just working for the registry at such levels

      • If the Chinese don’t renew than New gTLDs will loose 50% of their registrations and .com will loose maybe 2%.

  3. The bottom line is the bottom line$$$$

    I care more about my bottom line than his reasoning.

  4. Konstantinos,

    Can you do an updated article on your own GTLD experiences so far…owning, selling, inquiries, etc?

    I know you shared a few sales early on and some purchases…..what’s happening now?

    Thanks,
    Paul

    • I can tell you that I have not made a lot of purchases except a few .group domains.
      And not a lot of sales. More like none until today! Just sold a .media. (that is if I get paid)
      Inquiries are a whole different story!

      • The issue is people who are looking, are looking for a cheap alternative at reg fee.

        If they have to pay end user retail for the gtld, well then they will go buy the .com off the parking page.

        GTLD’s were supposed to be a ready alternative for the .com which was taken, and in strong hands.

        They gamed the system, and we are back to square 1.

        Yes, if you want to register RentCars.LOL by all means, or RentCars.Mother go for it, only a few dollars, maybe you sell for $20, this is the dream machine they are selling newbies.

  5. Bottom line though.
    These domains were not worth premium pricing.
    Me thinks they aren’t even worth 10 dollar reg.
    The perceived value has dropped.
    Most are pigeon crapola.

  6. Thanks, for breaking that down he is basically avoiding paying ICANN $575K, dumb idiots didn’t put in backdoors for such things to happen at ICANN.

    This is the issue with GTLD’s way to many loop holes.

    I like my .com, and the security, and the framework I get with them, no nonsense, $8 renewal, no premium BS!

  7. He registered his own domains for $0.25/domain per year because he wanted to try to resell them in the aftermarket at a premium. These didn’t sell, and by his actions he is saying that these domains are not worth $0.25/domain in order to attempt to resell them. So if Frank isn’t willing to pay $0.25/domain for these domains then only a fool would buy them now.

    Has Frank ever dropped 100,000+ .com domains? I’d guess not, and those are $8/domain per year, but he sees value there in trying to resell them. His actions here speak to what he thinks the value of his gTLDS are.

  8. Getting back to the core issues, i.e., whether gTLDs are dead/worthless…

    The vast majority of these extensions are pretty worthless, but there are definitely exceptions. And the litmus test simply boils down to whether a particular name + extension adds value for a particular online site. Nothing more.

    Domainers get too caught-up on the question of “how quickly can I flip this name?” Everyone has bills to pay – noted. But every time a ‘quick flip’ occurs, the market for quality names gets incrementally depressed, because we lose the concept of “scarcity” – which is what drives demand for any commodity.

    Who’s going to argue that something like Shaving.Club (which I don’t own), or HipHop.VIP (which I do own) are worthless? These are just examples, but to make a generalization that gTLDs are all dying/dead/worthless is downright stupid, regardless of what some registry has decided to do with its inventory of names.

    Every domain name is a UNIQUE asset (as Rick used to say), so to lump them together in any way at all is like making a statement that “Artwork no longer has any value.” Some of it NEVER had any value, while plenty more of it will always be worth more than the average person can afford.

    • I don’t do quick flips. Many (new?) domainers do it and it hurts them in the long run. And the industry.

      I agree 100% with your artwork reference.

      Some extensions have too few premium domains to survive. But that is not the domainers problem.

  9. Let the market decide what is a premium and what is not.———

    Release all the domains and let the market decides.

    Konstanitos- you have a master degree from the London school of Economics–no need an advanced degree to know that the law of demand and supply dictates the value of the goods and services.

    Economics 101

    Release all the domains and see what is value and what is not.

    • My masters degree is from King’s college London from the university of London and was on computer science.
      Never went to LSE although I have some friends that did and I used to hang around the school. Even attended a couple of classes. 🙂

  10. I think the dead or not question is very debatable, but the notion that these are good investments for domainers has been dead a very long time. All the good domains have ridiculous renewal prices, the ones without ridiculous renewal prices won’t fetch much money with the exception the one in a million lottery ticket.

    • The actual lottery ticket was finding the good domains that were falling through the cracks and had low renewal prices.
      Especially in the early days this was not so rare.
      Nowadays the registries just make everything a premium.

  11. The headline should read: Frank Schilling can’t get a return on investment from cherry-picked new gTLDs at 25 cents each.

    That’s all anyone needs to know. It’s game over.

  12. Ok so at least but honest

    Donuts registry never REGISTERED a domain, they reserved domains but that is different

    Donuts did not REGISTER any domain names

    They reserved domains but the DNS sales for new G’s failed at Uniregistry and failed at Minds + Machines

    Life is life and numbers are numbers

    • “Donuts registry never REGISTERED a domain, they reserved domains but that is different
      Donuts did not REGISTER any domain names”

      No one said they did.

      • @Konstantinos Z.

        “Donuts registry never Registered a domain, they reserved domains but that is different” “Donuts did not Register any domains names” No one said they did”

        Question: what’s the difference between did not registered a domain, but reserved domains?
        When you registered a domain you will have it in your possession? And when you have a domain reserved you still have it in your possession? Only separates these two activities is that when you registered a domain you pay for the domain? And when you have domains reserved, you don’t pay for the domains?. Uniregistry should have just reserved domains? If they can still make profits doing this way.

      • Registered domains resolve to a webpage. In this case they resolved to a DNS parked and for sale lander.
        Registered or not the domains belong to the registry. (or the shell company of the registry)
        When a registry registers a domain it has to pay 25c of ICANN fee.
        Uniregistry chose to register the domains. The plan failed so now they will try the registrar channel.

  13. This is why Frank Schilling is dropping 230,000 New gTLD domains…

    Your Headline does,t fit…

  14. *Update*
    I forgot to mention another minor(?) problem and cost of the registry. When a domain name is registered it could be subject to a UDRP and a URS complaint. When a domain name is reserved there is no such risk. North Sound Names has received 4 URS complaints so far and lost 1 of them. Now Uniregistry will have one less thing to worry about.

  15. Donuts was making deals on reserved domains before the reserve release, I know of one that was done for california.solar

    As .solar came out in april of 2014, california was reserved, yet it has a creation date of Dates Created on 2014-12-15

    If you made them a good offer, they were willing to sell the reserved names, how is this any different, they are just using different terms, if you threw some money there way they weren’t going to look the other way

    • Registries could register a few names before launch for their use or for pioneers.

      Of course they would sell the reserved domains. Why wouldn’t they? That is why they reserved them. The difference with uniregistry is that uniregistry reserved millions of domains and registered 230,000 more.
      Donuts reserved just a few and probably the best and released all others at higher prices.

  16. Maybe the only way would be to price all ngtlds at $10 ( and renewal at $10 ).

  17. Hello Konstantinos,

    Lets all get Real, for a moment and reflect on this mass manipulation perpetrated by Franky Schilling. He is a Master of Deception, as is his cohort Google. This whole new TLD Ruse and its manipulating co-founders are being revealed as the Imposters that they are.

    Frank Schilling, Google, Donuts, ICANN and the supporting cast are Dumping New TLDs before they are no longer even being plausible as Sucker Bait. Will there be Collateral Damage? They do not give a shit as long as they pump and dump their positions, leaving waste to those who swallowed their Bait. We have been warning of this eventuality for some time now. Rick Schwartz and our group think in parallels, and its not like there have been other glaring Red Flags along the way in support. Those who eat of the coming release of All New HOT New TLD fireside sales will suffer, ESPECIALLY END USER START-UPS. GURANTEED JAS 9/20/16

    Gratefully, Jeff Schneider (Contact Group) (Metal Tiger) (Former Rockefeller IBEC Marketing Analyst/Strategist) (Licensed CBOE Commodity Hedge Strategist) (Domain Master ) (UseBiz.com)

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