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August 27, 2012

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Here's the The Lowdown from DN Journal,
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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.

Sedo Predicts What the Ten Most Successful New TLDs Will Be (the Most Highly Contested Extension, .APP, Didn't Make the Cut)

When ICANN announced the 1,409 new TLDs that 1,930 applicants are chasing on Big Reveal Day last week, speculation immediately began on which proposed extensions have the best chance for success. Domain industry powerhouse Sedo put in their two cents today when they released a list of what they think are the 10 most valuable new TLDs based on an in house statistical study. The analysis was done by economist and researcher Thies Lindenthal. who is the Product Manager for Domain Pricing Strategies at Sedo, as well as the creator of IDNX, which the company describes as the first scientific-grade domain price index.

Here is the Top 10 list that Lindenthal came up with, in order of his study's take on their overall value:





















Lindenthal said, “Many factors make domains unique and difficult to compare side by side, but analyzing hundreds of thousands of domain transactions on Sedo’s marketplace – and applying real estate pricing methodologies – has

Thies Lindenthal
(Photo: courtesy of epri.eu)

provided significant insight into the factors that determine domain value. New gTLDs are actually not that new, they’re really just traditional domain names on steroids. We should evaluate their fundamental strengths in a similar way to how we traditionally price domain names.”

To predict the effectiveness of each new gTLD, Lindenthal used a formula made up of five criteria that typically affect a domain’s value, those being:

  • Number of applicants for the new gTLD

  • Number of Google searches for keywords or terms within the new gTLD

  • Expected Cost-per-Click of online advertisements that include the gTLD as a keyword

  • Number of registered .COM domains that include the gTLD at the end of the keyword (e.g. MyShop.com as compared with My.Shop)

  • Number of pre-registrations according to UnitedDomains.com

Sedo's press release about the study said, "The first indication of which factor matters the most comes simply from counting the number of applications for each gTLD. If there are a lot of investors trying to secure a particular keyword, it’s a strong indication that the word will be a valuable top level domain. For example, thirteen applicants paid at least $185,000 trying to win .APP, indicating a high valuation."  (Editor's note: Even so, .APP did not make Sedo's Top 10 list, indicating it did not score as well in their other four criteria).

Image from Bigstock

Sedo noted, "Exploratory research helped derive weights for each of the five factors by means of a regression analysis. Technically, the number of applicants per domain is explained by the TLDs’ scores along the other four dimensions. Using these weights, each new gTLD was ranked according to its fundamental strength. Using these estimates and the data collected in each category, a ranking of the intrinsic quality of each new extension is created. "

For an additional breakdown explaining how the ranking was derived, including a Top 10 list for each of the five criteria used, visit http://bit.ly/M0FpGy

Since no new gTLDs will appear on the Internet until 2013 at the earliest, it will be awhile before we will know how well Lindenthal's predictions will match real world results. At first glance, just going on my own instincts, I would guess that at least half of the names on that list will not be among the ten most successful extensions - but that is what makes a horse race. If you want to play, you can always bookmark this page, make up your own top 10 list, then come back in 2014 or so and see how you did against Sedo's analytical study.

(Posted June 18, 2012) 

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