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Here's the The Lowdown from DN Journal,
updated daily
to fill you in on the latest buzz going around the domain name industry. 

The Lowdown is compiled by DN Journal Editor & Publisher Ron Jackson.

The New gTLD Bandwagon: Why Rick Schwartz Believes Jumping on Board Early  Could be Hazardous to Your Financial Health  

A lot of different views about new gTLDs are expressed by the 17 domain industry experts featured in our latest annual State of the Industry Cover Story that was published Friday. Some think they will do well, and perhaps even  completely upend the current pecking order ruled by .com.  However others believe the hundreds of new gTLD "bullets" just now starting to come online will have no more effect on .com dominance that slugs do on Superman

The best-known and most vocal skeptic is Rick Schwartz, the "Domain King" who has made millions buying and selling domains. Schwartz, who also co-founded the T.R.A.F.F.I.C. conference, is one of the experts featured in our new Cover Story but he had some additional comments to share with us that are not in the article.

While Schwartz thinks a few of the new TLDs have a chance to break through the clutter he thinks the best short strategy is to take a wait 

Rick Schwartz 

and see approach. "The question is do you buy the stock during the frenzy or wait until after the frenzy is over and you can buy much more for much less if that stock still has a chance?" Schwartz said. "They all need it to happen in 2014 to survive. As an investor many of us have the luxury of time and history and with a little patience we can wait before placing bets or not."

megaphone image from Bigstock

"I expect a lot of noise in 2014. I expect all types of bogus press releases and other nonsense. I expect staged sales to try and create frenzies. I expect a lot of pain for some when those renewals come due in 1 year. I expect a lot of failures. Each one that fails makes the job of the next one all that much harder and for folks not to understand the ramifications of that are likely to lose money. I expect things to unfold like I have looked at the last 18 years. I expect any success to be held up like a man just walked on the moon for the first time while minimizing all the headwinds of reality,' Schwartz said.   

"Some don't want to hear these things, but with 900 horses in a race, how many can really finish in the money and be meaningful, effective, long lasting and worthy of a business building a future on? Aren't those the first questions to ask and figure out? Handicap the race. How many will be trampled out of the gate? How many will die before they leave the gate? What does it do to a train of 900 when a .sucks shows up on the scene and a barrage of negatively with it?  Will ICANN enforce their own contracts? Will there be collisions and confusion? Will email work correctly? What type of lawsuits will begin to fly and what will the outcomes be? Will it look .good in print or confusing if there is a .typo? Will the consumer even want it? Is there really a need, want and desire or is it manufactured to lure domain investors that have already got caught holding the bag on more than one occasion? What type of studies and focus groups did these new registries do? My hunch is not much."

Rick Schwartz (right) and Frank Schilling debating new gTLDs at the October 2013 T.R.A.F.F.I.C. East conference at Fort Lauderdale Beach, Florida. - See more at: http://www.dnjournal.com/cover/2014/january.htm#sthash.05e7tBZG.dpuf
Rick Schwartz (right) and Frank Schilling debating new gTLDs at the October 2013 T.R.A.F.F.I.C. East conference at Fort Lauderdale Beach, Florida. - See more at: http://www.dnjournal.com/cover/2014/january.htm#sthash.05e7tBZG.dpuf
Rick Schwartz (right) and Frank Schilling debating new gTLDs at the October 2013 T.R.A.F.F.I.C. East conference at Fort Lauderdale Beach, Florida. - See more at: http://www.dnjournal.com/cover/2014/january.htm#sthash.05e7tBZG.dpuf
Rick Schwartz (right) and Frank Schilling debating new gTLDs at the October 2013 T.R.A.F.F.I.C. East conference at Fort Lauderdale Beach, Florida. - See more at: http://www.dnjournal.com/cover/2014/january.htm#sthash.05e7tBZG.dpuf
Rick Schwartz (right) and Frank Schilling debating new gTLDs at the October 2013 T.R.A.F.F.I.C. East conference at Fort Lauderdale Beach, Florida. - See more at: http://www.dnjournal.com/cover/2014/january.htm#sthash.05e7tBZG.dpuf

Rick Schwartz (right) and new gTLD proponent Frank Schilling of Uniregistry.com debating new gTLDs at the October 2013 T.R.A.F.F.I.C. East conference at Fort Lauderdale Beach, Florida.

"On branding, what does .Apple put left of the dot? I have yet to find one combo that even sounds normal that would be a main entrance. Now I do see it as a platform for internal or even vendor use. But we will see. And will anyone actually abandon their .com? Close it down to go to one of these? Seems unlikely. Let's see who will be first to walk the plank."

"I think 2014 is a year of questions that will be answered one by one," Schwartz continued. "Questions some folks don't want to hear asked and certainly don't have solid answers for because the answers are simply unknown at best and a repeat of history at worst. It could be very ugly and not to at least acknowledge that possibility is surprising. Making up answers that don't hold water really makes you scratch your head. Once you lose credibility, game over!"

"They talk about sales like some newbies talk about traffic as if it were a given. "Oh we're not worried about that". Well worry, because sales are not as easy as you think when there are 900 alternates. Again, some don't like to hear that, but they need to come back down to earth. The numbers will bring them and everyone else back into reality sooner or later."  

.Com image from Bigstock

"There could a place for some of these gTLD's. But they are not a replacement for .com and to me that is about the dumbest tact they can use," Schwartz said. "Why? Because they lose all credibility from the gate. What else do they say that I should not believe? In fact it shows some real desperation and they have been feeding that crap to the press. They are an aid. They are an assist. They are on on ramp. They are a side door. They are a branch. Few will ever be trees."

"Nobody can say I am on the fence about what is coming. But I am still open minded enough to weigh new information as it comes in. Either  

way. For or against. The expansion is not a threat to the Internet or the existing extensions. The abuse, confusion and unintended consequences that will come with the virtually uncontrolled expansion, is a threat. I also see it as a threat to the investors behind the scenes that have bought into hundreds of extensions looking for the 2nd coming. Many of which will be DOA. And if not DOA then completely meaningless in the scheme of things. Same result. Why? Because there are not enough meaningful strings of words left of the dot to get any oxygen or traction."   

"Everyone points to .co. But when they point, they forget to mention the differences," Schwartz noted. "First of there was a premise for testing the extension. Maybe the public would adopt ".co" for "Company". It was also shorter than .com and then there could be some mistaken typo traffic. So there were reasons to buy into that possibility."

"Put those aside. The .Co registry spent a a boatload of money for their introduction and rollout. What I see here is exactly the opposite. As business people, how much do you think each has to spend on advertising and shows and ads and all the rest to get their message out? If they are depending on the Registrars to do it for them, they are going to get a loud and ugly wake up call."

"Who do you listen to? Who do you believe? What are the actual facts? What is hype? What a tangled web we have weaved. And I continue to believe and seems to be widely supported, that it will be .web that has the single best chance of making an impact. So if you were to agree that .web is the likely winner of the 900 then there would be 2 logical questions to ask. Who is #2 and by what type margin? 5-1? 10-1? 20-1? Then #3 and the distance to #4." 

"So am I supposed to tie up my funds in an illiquid asset on the 896 runner-ups or save those dollars for a more meaningful investment should the MARKET say this is a direction it likes? Sorry, I don't have unlimited funds to gamble with especially when the likelihood of that gamble paying off is in real question,"  Schwartz said.

Place Your Bets image from Bigstock

"As domain names in general take center stage in 2014, the challenge will be can they remain there? What will the landscape look like in 2015 and 2016? Will it be a calamity or a great success? From where I sit as a largely .com domain investor, I only see an upside no matter how this all shakes out. There is no downside to a great .com domain name whatsoever in the near or distant future. None whatsoever, regardless of the noise and silly comments some are making and many will be repeating. Prices will continue to skyrocket for those that focus on dealing with buyers that have the highest and best use in mind instead of the first offer they get. However if folks invest in meaningless domains, then it does not matter because a meaningless domain does not discriminate by extension. Meaningless goes hand and hand with worthless whether .com or .whatever," Schwartz concluded.

(Posted February 3, 2014)


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