The New Domain Industry Landscape (.Com Vs. New gTLD) – The Franchise Effect
(Disclaimer/Reminder: Everything written in the Scorpion Agency™ journal is based on my personal perspective/research/experience/knowledge/opinion and does not reflect any stance/position of NamePros™. Thanks for understanding and enjoy the reading material below)
The below is one of many different perspectives on the domain industry. There have been comparisons in the past of the domain industry to real estate and stock markets, however, in this perspective/theory, I use the franchise effect.
The Franchise Effect
Looking from the outside in and comparing the online business landscape with the brick-n-mortar landscape, it becomes clear that the domain industry is a franchise. Each extension is playing a franchise roll for a registry and every domain registrar/reseller/investor is an extension/arm of each of those franchises. Resellers/investors get the extension’s (Franchise’s) brand in front of both, personal and business consumers to help expand the franchise.
Every time a business consumes a new domain (Extension) and develops on them, it increases the reach and value of the franchise (Extension) they supported.
There are many resellers out there that found they do better by focusing on targeted niche markets. In doing so, they also adopted strategies to monetize their business models in a way that further supports domain extension franchises.
Franchise Comparison
Brick-n-Mortar (Fast Food/Restaurant Sector):
Yum! – Owns the following Franchises under it’s umbrella Corp.
- Pizza Hut
- Taco Bell
- East Dawning
- KFC
- KFC Japan
- And More!
Online Business (Domain Industry Sector):
Uniregistry – Owns the following domain extension Franchises under it’s umbrella Corp.
- .Tattoo
- .Property
- .Help
- .Game
- .Mom
- And More!
When you broaden the scope a bit more it becomes evident that registrars are distribution centers for registries (domain extension franchises). That means that domain resellers/investors are actually the lifeblood and salesforce that power and promote the extension franchises on the frontline.
Message to Registries (Domain Franchise Umbrella Corps)
I want to personally thank each and every one of you for providing a domain extension franchise opportunity to small businesses across the globe to help them compete in a saturated and growing online business world. Furthermore, as a business owner myself and a seasoned domain industry professional, I ask that you keep the following in mind:
- Registrars are your distribution centers
- Domain resellers/investors are your extended salesforce and lifeblood
I would like to think that we can all (Registries/Registrars/Resellers/Investors) find a way to cohesively work together better so that small businesses and start-ups have a better understanding of the industry without all the smoke and mirrors. A transparent business model that everyone can digest, comprehend, and follow (Hinse the point of this article, easier digestion).
At the moment, the industry is fractured and being pulled multiple directions. If we could all just get on the same page, the business consumer could make a more educated decision when it comes to expanding their brand identity online.
To encourage this, it’s my hopes that the creative member(s) of your teams can brainstorm some ways to connect with each sector of the industry better and possibly offer more incentives to your lifeblood/Salesforce (Resellers/Investors) on the frontline, that are helping your franchise grow through a variety of outbound sales stratigies that give your franchise (Extension) exposure.
For starters, it might be nice to see some of the new gTLD’s with extremely high premiums/renewals be reconsidered. Those prices are not appealing to your lifeblood (domainers) and leave no meat on the bone for them to make a profit. I completely understand that you are trying to bypass the salesforce (Resellers/Investors) and target end-users/small businesses/start-ups directly so you can generate a higher profit margin on registrations/renewals, however, at the same time, you are alienating the very people that actively and aggressively close deals and help registry franchises like yours grow.
The more you alienate, the more lifeblood (Resellers/Investors) you lose as they switch over to a different domain extension franchise to promote, that offers a higher profit margin for resellers.
Another idea might be to offer incentives or sponsorships to influencers that are also investing into and supporting your franchises. Keeping your lifeblood and salesforce happy is always a good strategy.
With open minds, together, we can all reshape and rebuild the domain industry to accommodate for the extension franchise boom and rapid growth track on the horizon for online businesses looking to compete creatively.
Message to Registrars (Domain Extension Distribution Centers)
As distribution centers (E.g. GoDaddy) for the world of domain extension franchises, you are in direct contact with the salesforce and lifeblood (Resellers/Investors) in the industry. Your promotions and encouragement are deeply appreciated. Keep it up and maybe creatively launch a few more to help stimulate the online economy.
Message to domain investors/resellers (Salesforce and Lifeblood)
For the record, I agree 100% that .com value will continue to be higher than any other extension for a long time, however, keep in mind that new gTLD’s (not all, only a few niche combinations) still have value in their franchise. They may not be close to .com’s, but there is still value for the new age/landscape developing and gaining momentum with media exposure in our respected industry.
But what about the legacy gTLDs like Net, .Org, Etc.? – These Legacy gTLD franchises obviously still have value (For the right ones) and the new gTLD’s aren’t replacing anything. The New gTLD franchises are simply a more creative way for people to express themselves or brand their business in the digital world.
It’s fine to pitch and push legacy .com’s, but please give credit where credit is due on new gTLD franchises. One can’t deny that many investors and companies using new gTLD’s are competing and paying their bills just fine. Maybe not on the million+ level at the moment, but comfortably living life and doing business. Like with anything, lots of research is needed before you blindly pull the trigger to invest in them.
The new gTLD’s current phase has them being developed by start-ups, which many target local communities. These local communities observe the new gTLD’s being used creatively and when they eventually become a start-up themselves, they now know they have a more cost effective/memorable option to develop their business/brand on. The domino effect is inevitable, bringing the new gTLD’s out of local startup communities and more into the global landscape. A few already have.
Personally, I enjoy seeing new gTLD’s in the wild on billboards, vehicle wraps, business signage, commercials, etc… It reminds us that startups are developing them successfully. The more they do that, the more others will follow in their local communities, and the higher the investment/resale value goes. We’ll just have to speculatively guess what happens from there. Time will tell, but it’s way too early to predict failure.
Note: Keep in mind that even large corporations with budgets for the legacy .com’s can still benefit from the new gTLD franchises with more targeted (Creative) campaigns. They may also find that simply using a new gTLD as a redirect to a promotions page proves to help with tracking campaign traffic easier in the analytics, so they know which campaigns are working better than others and focus more on what works.
Have you ever heard the term “Never put all your eggs in one basket”? This applies to domain extension franchises as well. If you are only reselling/investing in one extension franchise and the basket falls, all your eggs break. However, if you diversify a little and have 2 or 3 different baskets of franchises, if 1 or 2 fall and break, the 3rd or 4th can help keep you from sinking.
Here are a few questions to ask yourself:
- What domain extension franchises do you support?
- What niches are you targeting within those franchises and are they the right ones, did you actually research?
- Are you offering a viable solution to start-up businesses with your investment assets or just looking for a quick buck from anyone willing to pay?
- If the .com is taken and the owner refuses to sell, what domain extension franchise alternatives do you offer a business to help them creatively compete with the .com to succeed?
- Do you support small business growth and genuinely want to help them or are you like some of the others (unnamed/anonymous) in the industry that say things like: “Who are you to tell anyone they should support a small businesses success?” or “Small business success isn’t our problem, we just sell domains, regardless if they help a business or not!” or “Who cares about small business, I just care if they buy something from me!”
Note: A business who trusts that you are genuinely providing them with a solution are 10x more likely to buy from you. Businesses that sense you are just looking for a quick buck and don’t care about them or if they succeed may just look elsewhere for a domain to brand/develop on, regardless how good/targeted/ideal the one you were selling was.
Message to small businesses/start-ups
First things first, let’s recap:
- Registries are umbrella corps that own domain extension franchises. These franchises (E.g. .Com, .Net, .Mom, .Service, .Agency, .Work, .Club, .Games, etc.) provide the foundation for small businesses/start-ups to build a cohesive business online that the entire world has access to. It’s up to you and the reseller/investor you work with to put a competative and creative spin on your online brand presence. Don’t be afraid to try an alternative solution when the premium solutions are no longer available or out of your budget range.
- Registrars are your distribution centers. You can go directly to a registrar (E.g. GoDaddy) to find an available domain to registrar, or you can consult with an industry reseller/investor, seasoned in online business branding to help you choose/aquire the domain that works best for your needs (E.g. Primary brand, sub-brand, product brand, service brand, redirect for marketing campaign tracking, etc.).
- Domain resellers/investors are the extended salesforce and lifeblood of the industry. It would be a good idea (If you are not familure with the online business world) to consult with a domain reseller/investor you trust or that has a solid/ethical history in the domain industry. Resellers/Investors spend countless hours every day researching and testing different business niches, they then invest into the ones they discovered would have a higher demand some day. They protect and invest into it until the right end-user (Small business/Start-up/Corp) comes along looking for a new online brand presence to develop on it. As the salesforce and lifeblood of domain extension franchises and operating as a business model themselves, it should be expected that they will charge a retail rate higher than wholesale registration costs to compensate for all the hours of research, testing, market values (How to Appraise A Domain), and renewal fee’s each year they paid to identify and secure the perfect solution (Or alternative solution) for a business like yours looking to compete online.
I don’t think we can squeeze everyone in the world into the same bottle, after all, we are all unique, just like our businesses. There are plenty of businesses that are seeing success with their (Unique/Creative) new gTLD campaigns/developments.
Businesses/startups like yourself want targeted/creative/cost effective solutions and that’s exactly what the new gTLD franchises provide right now. You’re no longer forced to pay 6 or 7 figures for the .com version and that’s If your competitor doesn’t already own it and refuses to sell it to you, since you are, in fact, their competition.
Don’t forget to check out the list of businesses that use new gTLD’s in the wild over at DNA (Domain Name Association). These new franchise domain extensions have already been developed by businesses across the globe here: http://inthewild.domains/. The new gTLD franchise phenomenon is not isolated to a specific country, it’s a global movement.
We can’t rule out the fact that competition is healthy when it comes to business. New gTLD franchises provide the ability for businesses to compete in the same markets without having to dump all their existing capital into the domain alone, leaving little to no funds to develop the domain and market it.
Smaller budgets require more creative solutions, which is where New gTLD franchises come into play. You can always buy the .com (Or acquire the company) in a few years once you dominate the market and the owner of the .com accepts defeat in your respected niche (If applicable).
It’s important for small businesses/startups to understand the franchise effect and that the domain industry is a for profit business model. With respect to franchise owners (Registries), distribution centers (Registrars), and the domain extension franchises sales force (resellers/investors), It’s vital that you identify with professionals that have been in this field for a while and seek out their help in aquiring the perfect solution (or alternative solution) for your businesses online brand presence.
In Conclusion
My perspective is based more on consumer options and consumption rather than just premium domain industry resellers/investors. One gets a clearer picture looking at multiple sides of this rather than just one. Besides, one of the reasons I’m in this business is to help smaller businesses compete with those that already own the .com and would never sell it to their competition no matter how much they offered to pay.
I know that as an industry of professionals, investors/domainers aren’t suggesting that if someone already owns the .com, that all other businesses in their niche market will fail because of it. Businesses need creative alternatives to compete and that’s exactly what New gTLD franchises are for.
This is why there is still money to be made for investors/resellers that research and specialize in such viable, competitive, creative alternatives (Not as much as .com, but still profits to be made). Keep in mind that the best business models provide solutions to everyday problems. It’s ok as a domain reseller/investor to profit off of solutions, however, it’s not very nice to push monopolizing agendas that make it more difficult for small businesses to compete and thrive. After all, aren’t we, as domain investors/resellers, at the forefront of the industry supposed to be helping businesses grow and compete with one another? (Some say, No, others say, Yes. Which one are you?)
I know that the first time I heard about a domain name or the domain industry back in the late 90’s, the person I talked to was unable to explain it in a way I could digest/comprehend.
Even after investing into my first domain in 2005 and being in the trenches with other domain investors/resellers since 2009 as a community administrator for the largest domain resellers/investors community in the world, to this day, I still see people struggling trying to translate/explain the industry to others.
It’s my hopes that I was able to translate the industry in a more creative way through my perspective/theory that’s easier to understand, looking at all sides (Inside and out).
Happy business building everyone!
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Since 1996, Eric has managed companies with 240+ employees, online communities with over 1 million members, attended numerous industry related events/conventions and has personally worked with start-ups, personalities, small mom and pop businesses, corporations, freelancers, news outlets, and a variety of domain investors one-on-one from all over the world. That equates to a lot of years behind the scenes with his fingers firmly on the pulse of multiple industries.
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