Is the market ready for new gTLDs?

A recent and controversial topic among industry insiders is ICANN's announcement that they will be opening up the market for new gTLDs (ICANN). On both sides of the coin there are pros and cons. The following is my unbiased view on this important issue:

Having managed and headed various large registrars over the past eight years, my answer to this question is an emphatic some "yes" and many "no". I come to this conclusion based on two fundamental principles: First, I do not believe registrars have the will nor money to implement a flood of new TLDs. Second, the common buyer of domain names is already in a state of confusion with the handful of TLDs that exist today; therefore, it makes no sense to think that greater confusion will lead to greater market acceptance.

Principle 1: Registrar Business and Operational Fundamentals

From a pure business standpoint, the idea of more TLDs is a no-brainer. More TLDs = more products = more revenue = more profit. That is, assuming that registrars can quickly and cost-effectively integrate, automate, and fund TLD expansion. Hmmmm...can we really assume registrars can integrate, automate, and fund TLD expansion quickly and cost-effectively?

How about, more products = more development = more support = much more costs. My experience points to the fact that registrars require a lot of resources and time to implement and support new TLDs. So what would happen if thirty new TLDs were launched in one year? I am convinced that not too many registrars will be able to keep up the pace. As a result, registrars will end up picking and choosing some to implement and forgo many, depending on which TLDs they believe can produce the highest return on investment. From a business operations perspective, not more than a handful of TLDs releases, in any given year, is feasible.

Principle 2: Domain Buyer Knowledge, Sophistication, and Desire

After hearing, "we have only scratched the surface of the Internet", repeatedly at conference after conference, I am convinced that the statement is true. If we take this phrase apart a little further, what does it mean? The masses are still just beginning to understand the Internet and its uses. Outside of domain industry circles, how often do you come across people who still don't know what a domain is or what it is used for? Even the basics that we take for granted like SMTP, IMAP, POP, HTML, and DNS are often a foreign language to most. The idea here is that as users slowly understand and educate themselves, they will in turn participate further in this wonderful thing called the Internet. They may even, possibly, buy a domain name! The key word here is "slowly"!

To further support my point on the word "slowly", or, to make it simple, take a look at some interesting moves in the hosting industry: Many are going back to basics, offering very simple products that allow users to create websites in three simple steps. Blogging for example has exploded because creating and maintaining a blog is relatively easy. What is the lesson here? The mass market wants simple and they move much slower than how we want them to move.

With the number of possible new TLDs being tossed around in the 20 - 400 range, can the average Internet user really understand and desire such a roll out of new TLDs? Introducing too many TLDs at once or in a short time frame will only confuse the market. Moreover, given the state of the economy, users with set budgets will be picky and are likely to spend their hard-earned dollars on the handful of domains they think will provide the best ROI. I personally prefer and believe a gradual introduction of new TLDs to the market provides the needed time to educate users, thus allowing for a strong end-user desire to hatch.

Survey

To investigate my points further, I would be extremely interested in doing a general survey of target users. Honestly, I think many in our industry (especially ICANN) would be intrigued to hear the answers to these simple set of questions:

a. What is a Top-Level-Domain and which ones do you know?

b. Did you know that other gTLDs exist besides com, net, org, biz, info, name, asia, mobi, and pro? If yes, name a few?

c. Have you heard any mention of the following TLD extensions before?

.aero - [Yes] [No]

.museum - [Yes] [No]

.coop - [Yes] [No]

.travel - [Yes] [No]

.jobs - [Yes] [No]

d. Do you know if these TLDs exist? (i.e., TLDs that are not yet applied)

.family - [Yes] [No]

.usa - [Yes] [No]

.blog - [Yes] [No]

.shop - [Yes] [No]

Stay tuned for more information to follow.