DN Journal celebrated its 10th anniversary on January 1, 2013 and every January since our 1st anniversary year in 2004 we have kicked off the new year with a special  State of the Industry overview. For 2013 with have once again brought together a select group of domain business leaders and asked them what they considered to be the most important developments in the past year as well as what key trends they expect to see shaping this ever changing industry in 2013.

15 well-known company founders, executives, investors, developers and attorneys responded to our invitation to share their thoughts with you. As always, this year's panel includes a blend of proven experts that we have called on in the past and new contributors who bring their fresh perspectives to the mix. 

You will hear from successful individual domain investors, developers and 

Predictions image from Bigstock

Paul Stahura, Co-Founder, Donuts Inc. 

There is little debate about what the most talked about issue of the past year has been - ICANN's new gTLD program that is expected to produce 1,900 new domain extensions with the first of those likely arriving before this year is out. Obviously, the influx of that many new TLDs will have major ramifications for the domain business, so to kick off this year's State of the Industry Cover Story we called on one of the biggest players in the new gTLD arena, Donuts Inc. Co-Founder Paul Stahura. Donuts.co attracted $100 million in venture capital to use in bids to run hundreds of new TLDs. Donuts is led by a team of industry veterans who all have impressive track records. Stahura, who founded popular registrar eNom.com (and eventually sold it to Demand Media) is one of the most respective pioneers in our space.

"You will see new gTLDs enter the root in 2013. We've seen new names before, but not at the scale we will when the gates open later this year. There will be a time - a relatively short one, when you think about the reach and lifespan of the Internet - where users will need to adapt to so many naming options coming at them at one time. But after a period of transition, the utility of new gTLDs will be readily apparent as registrants more precisely present the goods and services they're trying to market, and users can better find the information and data they're looking for," Stahura predicted.

Rick Schwartz, Co-Founder, T.R.A.F.F.I.C. and JointVentures.com

While companies involved in launching new gTLDs are optimistic about how their extensions will be received, many veteran domain investors are not convinced that any number of new gTLDs will change .com's current dominance of  mind share among the web surfing public. Domain pioneer Rick Schwartz, who co-founded the industry's ground breaking T.R.A.F.F.I.C. conference, is one of the skeptics but he also acknowledged that new gTLDs have already had an impact on the marketplace. 

"What can be proven beyond a shadow of a doubt is that when ANYONE builds a great success on a non .com, the .com owner does very well in a number of ways and the non .com owner is leaking valuable business," Schwartz declared. "The ONLY way to do it and be fully successful is start with a .com domain they already own and THEN use any .whatever they choose. Then at least the leak goes back to them and therefore there is no leak. Now they can promote the .whatever, stand out and not worry. THAT is the way that is smart and could be effective. So there is a way.  But few do that," Schwartz said.  

"Nothing would make me happier than a new .com to do this all over againnow that I am armed with years of knowledge. So I don’t see a threat in any form whatsoever. I just see opportunity because BILLIONS of dollars are coming into our tiny little industry. The focus of the media is now on us. It does not matter the form. Eventually they will figure it out because water runs downhill," Schwartz added. 

"What they are attempting to do is going to be most difficult to achieve and with as many as 20 new extensions PER WEEK, will make it all the more difficult. What would it have looked like if .mobi, .travel, .xxx, .co, .info, .me, .biz, .tv, .us, .eu all came out on the same day? And that is only 10 extensions. After a few weeks of that nonsense they will be tripping all over themselves and they will have created pure confusion!"  

"Leasing IS the future and it was the future the day I started investing in domains. The only challenge was trying to figure out how to survive that 20 year period when leasing would become an acceptable alternative. Although I have leased a number of adult domains between 1998-2003 and made many millions doing so, mainstream has been much more reluctant until recently. The time is now right. I see the new extensions as being the catalyst for this to happen. It will be the reason why leasing will become widespread.  Just watch how the industry changes into this direction and it is cool to be in the forefront once again. Timing IS everything," Schwartz concluded.

Simonetta Batteiger, Head of Product Management, Sedo.com

On the sell side, Ms. Batteiger said a moved to fixed prices (rather than Make an Offer) are helping more owners close sales. "End users want to know the price of a name while having the information available that they need to make a purchasing decision," Simonetta said. "We improved our pricing algorithm to help sellers set better prices on their domain assets."

"Also, end users often buy a name through their registrar, which is why we expanded our SedoMLS network into a global registrar distribution network of more than 80 partners. This has resulted in significant growth of domain sales in 2012 and we will continue to expand this in 2013. The revamp of our website to target end user buyers (this has launched in Germany already) is making it easier for first time domain buyers to understand why they should purchase the right domain name for their business and why that domain name costs more than a low registration fee," she added. 

"We will likely also see some impact on existing TLDs, however at this point we don’t expect a major shift from existing extensions such as .com/.net/.org. These are primary extensions in use by businesses around the world; no serious business will give up the name of their successful online presence."

Ms. Batteiger expects to see one other major trend in 2013 - more consolidation. "We have already seen consolidation in the past few years and I believe we will continue to see companies in our space merge, be acquired and also potentially go out of business," she said. "It’s nice to know Sedo is in a strong financial position, backed by United Internet Group." 

Ian Andrew, Founder, DotcomAgency.com

Englands's Ian Andrew, an industry veteran who founded DotcomAgency.com, a sales venue with a long record of success, gave us the view from the other side of the pond, starting with new gTLDs. "They have received varying degrees of press coverage which I think is generally good for the awareness of our space," Andrew said. However, it also continues to drain industry funds that would, I believe, have otherwise been partly used in aftermarket purchasing. Therefore there has been less trade buying of generic dotcom domains in 2012."

Looking ahead to 2013 Andrew noted, "As some of the new generic gTLDs roll out there will initially be a significant flurry of activity in the best generic versions. Some domainers will probably be buying to flip quickly. There will be short term money to be made from these early gTLDs, but probably only by those at the top of the “tree”. In the medium and longer term we can not see the vast majority of names with these extensions being anything other than a liability (renewal fees and little liquidity)," Andrew said.

"I see that generic dotcom prices are relatively low right now with some real bargains appearing specifically noted in the 5 figure range, if I had a spare million or two, I know what I would be buying in 2013." 

"I also see a gap in the market for a new marketplace specifically for end users that doesn’t overwhelm interested parties with thousands of domains – with varying extensions, qualities and unrealistic pricing. To this end we are just finalizing a complete revamp of Dotcom Agency in partnership with an industry leading marketplace to simply sell exclusively dotcom names – and not just our own, as the site currently stands. More on this soon."

Andrew closed with an observation on domain development. "It is difficult for us to see how it pays to invest in website development right now. However we do it anyway! These include games and free website utilities like our latest one - www.DeadLinkChecker.com. It is going to be an interesting year and we will probably be a little more vocal than we have been so far!," Andrew smiled.

Ari Goldberger, Attorney and Founder at ESQwire.com

On another topic, Goldberger said, "PPC continued its decline in 2012.  But, despite the drop in PPC revenue, domain name sales were strong in 2012, as quality domains continued to be needed by mature Internet players, as well as new companies sprouting up every day. I am aware of several unreported private deals and offers in the 7-figure range."

"As the economy improves in 2013, and the Internet continues to grow, we can expect the value of domains to continue to increase. What’s clear, however, is that domainers cannot see things as business as usual.  In order to extract maximum value from their portfolios, domainers will need to develop the full potential of their domains, or sell, lease or partner with those who can do it. I am working with a team to develop a number of premium domains, and I can say development is as difficult and unpredictable as parking was easy and reliable in the heyday. I believe the rewards are there, and see development as a major trend for 2013.  I expect to see various industry players competing to develop and partner with premium domain name owners, just as parking companies fought it out in the past," Goldberger said.

"As for legal, the gTLD space has the potential to create lots of conflict between domain owners and trademark holders in the coming months. With the addition of URS (Uniform Rapid Suspension System) to the UDRP, we are likely to see an uptick in domain disputes.  As of 2013, domain name disputes have pretty much stabilized, and we have a solid body of law, from which trademark owners and domain owners can draw to provide guidance as we move forward into the new gTLD frontier," Goldberger concluded.

*****