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Advantages of gTLD Portfolio Ownership

The essay outlines the advantages to owners of managing a portfolio of gTLDs. The advantages can lead to concentrations of ownership in a few hands, which is unavoidable but not necessarily harmful to consumers. Moreover, some of the advantages can lead to profitable complementary business models.

Beyond the obvious advantage of economies of scale that lead to reductions in operating costs, there are a number of other sources of advantage.

First, additional value can be created by using “big data,” whereby data analyzed in mass quantities yields competitive advantage. It’s combed from the gTLDs in a company’s portfolio and combined with external data, either publicly available or purchased. Besides using the data for internal consumption, gTLD portfolio owners may be able to create a complementary business model by selling data to noncompetitors, provided that customers agree to having their information sold. Here’s another source of advantage: the ability to experiment with various business models and pricing structures. And there’s size, which can lead to higher risk tolerance and thereby enable a company to bid for future gTLD expansions. With higher risk, they expect to generate higher returns.

Finally, the owner of a big portfolio can use profitable gTLDs to offset not-so-profitable gTLDs, such as the ones that are losing some money now to drive a competitor out of business later.

Given these advantages, the owner of a big portfolio can keep making it bigger, adding more gTLDs and businesses. Network effects tend to result in efficient monopoly businesses. The effect isn’t necessarily bad for consumers, as only unique value-creating gTLD signals can survive.

By Alex Tajirian, CEO at DomainMart

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