If you’re in my age demographic, you probably spent way too much time watching cheesy TV shows like “The Brady Bunch.” In the episode titled “The Wheeler-Dealer,” Greg Brady passed his driver’s test and then bought a car from his friend, Eddie. Unfortunately, Eddie tricked him into a bad transaction as the car turned out to be a lemon. The lesson for young Mr. Brady was “Caveat Emptor,” or “let the buyer beware.” Why am I telling you this? Because oftentimes things aren’t always as they seem and buyers should make purchases fully aware of all the facts.
This is the case with the new generic Top Level Domain (gTLDs) names. If you have read some of my other blogs, you are aware that I maintain a healthy skepticism about the view that these new gTLDs are viable alternatives to more established gTLDs, such as .com and .org.
More than 1,400 gTLDs are scheduled to hit the market over the next year or two. I won’t spend much time trying to argue one new gTLD string versus the other; rather, I will try in this article to raise the awareness of the economics of .com versus the new gTLDs.
One of the dirty little secrets about the new gTLDs is that they don’t have predictable pricing. While most of the established gTLDs, such as .com, .net, .biz, .org, etc., have pricing restrictions in place with regard to how much prices can be increased each year, it’s highly concerning that not one of the more than 1,400 new gTLDs coming online has similar pricing restrictions. Furthermore, as mentioned in my previous post about TLD pricing, the new gTLDs are already more expensive than .com, .net and most other established gTLDs.
For consumers and businesses alike, unfortunately, this apparent lack of oversight means the registry operator can increase prices each year without restriction as long as they provide the registrars with six months’ notice.
But wait, there’s more - it gets even trickier when it comes to renewal pricing (the price you pay after your initial pre-paid period ends). Most established gTLDs are required to have uniform renewal pricing (the price to renew a particular domain name is required to be the same as the renewal price for every other domain name). The new gTLDs have this same requirement, but with a catch: it doesn’t apply if you “expressly agree” to non-uniform pricing when you first register your new gTLD address. Check the small print of the “registration agreement” for the new gTLD you’re interested in. You may be “expressly agreeing” to a future of uncertainty about how much your new gTLD will cost. So how might this “exception that swallows the rule” work? Let’s say you come to the very reasonable conclusion that, particularly given the uncertainties regarding the success and security of new gTLDs, you opt for an initial term of one year, with both the initial registration and the first year’s renewal priced at $29.99. Let’s say, due to your hard work over the first year or so, your new gTLD address is a phenomenal success, and the traffic generated at the site becomes critical to the success of your business. As far as I can tell, there is nothing preventing the registry from capitalizing on your success by increasing the renewal price for the third year of your registration to whatever price they choose, provided that they provide you with six months’ notice.
Of course, you could hedge your bets against the potential for this type of behavior and lock in the current price for a certain number of years, let’s say 10 years in this example. This may sound like a good deal on paper, but who’s to say whether a particular new gTLD will be desirable over the long run? What if some of these new gTLDs prove to be disasters when it comes to reliability or security, and their customers want out of their contracts? If they took the deal I outlined earlier, now they have pre-paid for 10 years of service and are stuck with their contract.
Again, I have said this before and I will say it again. Until the new gTLDs are proven to be a viable alternative option, .com is likely the best choice for business. In “The Brady Bunch” episode, Greg looked for another sucker to pass his lemon of a car along to, but had a change of heart. In the world of domain names, once you buy it and bet your business on it, you’re pretty much stuck with it. Caveat Emptor.