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Don’t Rely on Initial TLD Registration Volumes

When deciding to register a given domain name under any of the new ICANN-proposed top-level domains (TLDs), remember that a relatively high initial registration volume does not necessarily imply that the domain names will command high market value or that demand for them will grow. Below are some of the reasons:

1. If a domain name has an unclear or diffused TLD signaling message, high initial demand still doesn’t mean the name will command high market value. The more such initial registrations there are, the more likely it is that a name with a blurry TLD message will become lost in the crowd and see its demand and value reduced. Thus, such registrations would be highly speculative.

2. When a single group of early adopters generates high initial demand for a product, odds are that what you’re looking at is a fad, not a product with legs. So it is with TLDs.

3. Despite the conventional wisdom, studies show that reduced cumulative adoption can still be a real danger after a smashing debut.

Thus, you should be suspicious of correlation-based registration volume studies of existing TLDs if the studies don’t take into account signaling and demand sources. Finding relationships between the volume of initial registrations (say, first month) and registrations under a TLD at a point in time is like comparing apples and oranges. Second, such correlations do not imply causality, even when they are disguised in an R2 measure, as on p. 18 of the KPMG report commissioned by ICANN. (Why KPMG bothered reporting this measure is unclear. That ICANN accepted the measure as part of the report shows, at best, ignorance regarding analytics.) Third, we don’t have access to the models used by registries to project demand for the expanded TLDs; thus, to put it mildly, the registries are better equipped to identify problems with the models. Fourth, it is in a registry’s business interest to project high demand for a new TLD that it is sponsoring.

To echo advice from Geoffrey Moore’s Crossing the Chasm: Don’t uncork the champagne until your new product passes a sales threshold that reflects something besides purchases by early adopters. It’s up to applicants and registrants of a new TLD to determine what that threshold registration volume should be.

By Alex Tajirian, CEO at DomainMart

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I partially agree with you... Pragmatism in projections is wise Jothan Frakes  –  May 27, 2010 9:27 PM

Alex, I agree with you about the timing before the cork is popped on the champagne bottle. 

That is if one equates the volume of registrations with the direct success of the TLD.

I believe, though, that your article has specifically focused in on a classical “.com neighbor” TLD.  There are a number of new TLDs that will have wild success with little or no effort.

There are brands, existing communities, and combinations of the two that have large existing user bases that a TLD works well for. 

For example, .facebook could have more registrations in a short span of time than most all of the non-com TLDs with nearly no effort, simply by the sheer force of their user base.

Additionally, registration volume will not be the absolute measure of success for many TLDs.  Take the launch of a movie or a product for example.  A movie studio or a publicly traded company, for whom the creation of a domain name in near real time to a product announcement allows for better market position and reduces the impacts of competitive intelligence gathering from zone files. 

Just the simple fact of having a good, memorable domain name or 20 or 200 available that match the launch, without either modifying the product to meet an available domain name, purchasing a good domain in the aftermarket, or having to settle for domain name that is counter-intuitive, easily mistyped or fails to be memorable.  That’s valuable.

A community like the Zulu nation who want to expand the attraction and awareness of their rich culture and community values are not primarily concerned with how many .zulu domains they’d register.

.CAT, an example of what I would call a very well executed and elegant cultural and linguistic TLD for the Catalan community, is not yet at 50k registrations, but they have been a massive success.  They are a strong success because of the adoption by the community, and the widespread natural use of the extension.

Certainly many are looking to profit from the launch of new TLDs, but registration volume is not the primary variable in the profit equation.

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