How will the domain name industry look in 5 years?

Blog on domain industry

After attending the 46th ICANN Beijing as a neutral observer, I personally think there are three big possible scenarios that the domain name industry can be headed towards.

Firstly, what is main factor that will determine the outcome of the nGTLD process? The amount of resources and aggressiveness in the auctions that Google puts into the ngTLD auction process. If you want to see the big picture, forget about the GAC, forget about the auction process and forget about pretty much everything except for Google’s position in this process. This is what will determine how things will go down. Allow me to explain why I think so:

Scenario 1 - Google is not aggressive in the ngTLD process

The spoils go to many different companies, and a thriving and competitive domain name market will arise, where fierce competition for sales, registrar placement, positioning and marketing will be the norm. We will se billboards promoting .XYZ, and retargeting campaigns for a custom domain + X new service and/or product for our companies/blogs/families/friends/etc will be following us around the internet.

Most domain name investors and companies involved in the process expect this scenario and are playing by it. They consider that they have a reasonable chance of ending up with competed extensions, in which Google and other big players have key interests in. Just go around ICANN and see the booth giveaways for extensions which have 5 or more contestants - in some cases it almost seems as if they’ve lost track of reality.

This would be an interesting result, since it would give rise to a bunch of different (costly) consumer based services and options, but also generate a large amout of cybersquatting, increase user confusion when looking for a website. Most ngTLD applicants are for profits, so these cool and new domains and services will be expensive and there will be a war for consumers.

Should things go this way, the domain name market will boom and grow, and quickly go from the 200+ million domains now, to over a billion in a short period of time.

Will all the new and established entrants in the domain name industry keep control? and will Google let this oppotunity pass by?

Scenario 2 - Google makes a big bet for gTLDs and starts giving them for free or at a very low cost

Google is a very, very, very big company. They have a very large payroll to cover; and 93% of their revenue comes from search. Whenever somebody heads over to to search for a nearby coffee shop, a flight to another city, or anything, a search results pops up, and the top 3 promoted results are displayed. When they are displayed, Google makes some cents, and if the person searching clicks on it or on any of the sidelinks, Google makes some dollars.

Google’s latest earning call summary

Google has disrupted hundreds of industries. Mapping, education, enciclopedias, email, ISP’s, blogs, online video, GPS and right now eyewear makers are shaking with Google glass, and rumour has it that next year it will be the watchmakers turn. But out of all the new and crazy products, the one that covers the payroll, keeps Google ticking and is front and center, is search. Google depends on billions of search queries every day to keep running.

What better way to keep people searching, if not by making the webspace bigger, denser and much more option filled. The more content, the more searches. Make a large bet, win all the auctions and use boatloads of cash to bully their way into winning all the applications, and then give out free domains alongside Google Apps and a range of Google products and services - and then market them aggressively like they do with any new Google product/service. Millions of new websites and web services will be born and people will be again driven to search, and search from Google, within Google supervised product.

A strategy that makes a lot of sense, completely disrupts the domain name industry, which some consider outdated and ugly, and puts them at a very powerful position ahead of FB and other web companies which are driving away searches from Google.

The big questions here, how does this integrate with mobile? and who will ultimately be calling the shots at Google when auction time comes? will ICANN and the entire internet comminuty and governments let this happen?

Scenario 3 - Google makes a big bet for gTLDs and keeps them highly restricted or to itself

This would be a strange one, but nonetheless possible and very diplomatic. Google makes a big bet on ngTLDs and ends up with a large number (if not all) of their applications, but keeps them fairly restricted, closed and/or expensive. This way most applicants get some of the spoils and no big problems lie in this scenario.

A very boring scenario nonetheless. No big change, no gigantic consumer targeted innovations or investments, and just a slow change in the offer of domain names and in the structure of registrars and registries.

Undoubtedly, the ngTLD process is a big scary poker game. And most probably - in my opinion - the result will be closer to the 3rd scenario. Most things in this world are never black and white, and everybody is afraid of chaos and change. Have you seen the crowd at ICANN, I would guess the age of the average assistant is over 40 years old. A 40 year old doesn’t want his life being turned around from one day to another; our brains are programmed to follow a routine and the older, the stronger that brain connections become.

So what to expect?

GTLD applicants, like investors in any business, can make it or break it big time.

Brands in general will probably suffer since they will have to protect themselves in many new extensions and invest in domains/consultants/employee time to monitor the process or legal fees - in exchange for a reduced number of them getting some really cool web addresses and emails.

ICANN will grown as an organization and gain power internationally; but with this heightened visibility, it will also attract attention from bigger fish, who will supervising, looming and meddling in its operations.

Ultimately, I think that all the scenarios will be pretty good for consumers in the long run, even if the amount of TLDs available is daunting at launch.

April 20, 2013