A Different Take on New TLDs from the CEO of a Well Established Company With a Big Footprint in Both .Com AND New TLD Camps

Source: DN Journal May/June Newsletter
http://www.dnjournal.com/newsletters/2012/may-june.htm

DN Journal

ICANN's plans to roll out an unlimited number of new TLDs has, for the most part, divided people into two distinct camps. On one side there are the traditionalists who believe the original extensions, led by the undisputed king, .com, will continue to reign while hundreds of new gTLDs die on the vine. On the other side are those who believe the introduction of so many new gTLDs at once will finally break .com's stranglehold on the public's consciousness and lead to widespread use of alternate extensions.

We have heard all of the arguments from both sides of the fence, so we went looking for someone who might have a more balanced view - someone with a stake in both .coms and new TLDs who could weigh in on the pros and cons of new TLDs for both camps. That led us to Ben Crawford, the CEO at CentralNIC, a company that owns the world's best portfolio of two-letter .com domain names, including such geographically oriented gems as US.com, UK.com, EU.com and NO.com. CentralNIC will also be very involved with new TLDs as you will learn in our interview.

Years ago CentralNic began using their top tier .com domains as the foundation for a new sub-domain based namespace of their own, selling names like newyork.us.com, london.uk.com, etc. So, alternative naming conventions are ingrained in their DNA, just as .com is. Here is what Ben had to say about the hottest topic on the Internet today.

DNJournal: As CEO of a company that came up with its an innovative way to expand name space, we were wondering how you felt about the introduction of an unlimited number of new TLDs and how you think those will impact CentralNic's business of selling sub-domains of premium .coms. Do you think the new alternatives will be more attractive than the .com options CentralNic currently offers or do you think the long-established .com extension will insulate you from that new competition?

Ben Crawford: You're right that CentralNic has been an innovator for sixteen years. Starting from an initial insight that domains ending .uk.com are a viable alternative to domains ending .co.uk, we have built a portfolio of 27 geographic domain extensions, such as .US.COM, .EU.COM for Europe and .CN.COM for China, as well as .LA for Los Angeles.

We expect our domain extensions to stand their ground against the new TLDs. In many cases our extensions are simply better than the proposed alternatives. For example, I believe that .com.de and .de.com are better extensions for Germany than any of the proposed German province or city name TLDs, because they cover the whole country and they combine the worlds' two most successful domain extensions. And obviously when TLDs like .nyc, .miami and .paris begin to educate consumers about city TLDs, our .LA domain will benefit enormously (as no-one applied for any Los Angeles-related new TLDs).

DNJournal: To expand on that question, who do you see as the likely overall winners and losers in the domain industry as a result of the introduction of so many new TLDs?

Ben Crawford: The main losers are the people who missed out on the new gTLD round because, unlike successful domain investors like Frank Schilling, they couldn't understand the value of TLDs, or unlike Google themselves, they believed that new TLDs wouldn't rank on search engines. Other losers will include anyone who entered the round with inadequate funding and patience – as there will be a much greater investment of time and money required before anyone sees a commercial return. I'm happy to say that winners will include owners of premium .com domains, as an expansion of the domain market will continue driving up values.

One challenge the entire domain industry will need to contend with is the potential that Google will win a large number of their 101 applied-for TLDs and start giving the second level domains away for free. They already give away free third (and fourth) level domains and site-building software through their Get Business Online programs around the world, so we have every reason to believe they will do the same with their new TLDs. After all, a world where every small business has a website is the perfect world for a company that derives 96% of its revenues from online advertising.

In my view, it will actually benefit the domain industry to have the resources of Google supporting businesses in obtaining their own domain names and websites rather than relying on Facebook pages. As we've seen with the email market, Google and other huge providers of free email services haven't stopped companies investing billions in paid email services, and I believe the same holds true for domains.

On a side note, CentralNic has been developing an upmarket email service using our premium .com domains, selling the best email addresses in the world to people who value quality and can afford to pay for it. So for instance my email address ben@us.com is not only a hugely valuable networking tool (because nobody ever forgets it), but also quite the status symbol. Someone once asked me if I'd been awarded my email address by the President!

DNJournal: While CentralNic is heavily invested in .com I know that the company is also positioned to benefit from new TLDs by providing backend services to new registry operators. I understand that you have already signed agreements to do so with some operators. What can you tell us about that business?

Ben Crawford: "Backend services" is really only the tip of the iceberg of what CentralNic provides. We have developed and operate our own registry engine which already supports 27 domain extensions and is above-ICANN specification in every way, We also provide global domain distribution and cash collection via 1,500 integrated registrars and their 100,000 resellers. And we offer in-house strategic advice, sales and marketing services, as well as financing, and we are the world's only certified carbon neutral registry.

We expect to experience a very high rate of growth thanks to new TLDs. CentralNic is the registry service provider for 60 new TLD applications – which I'm proud to say is more than any other company headquartered in Europe. Our clients fall into two categories – our widely-copied DotBrand Solutions offering brought us clients from across three continents applying to get their own brands as TLDs - including several multi-billion dollar businesses like Saudi Telecom and Kuwait Finance House. Plus, we are the registry services partner for a number of very savvy entrepreneurs applying for about 40 different domains to be sold through our registrar channel.

DNJournal: Did CentralNic give much thought to applying for their own new TLDs to augment the many great .com domains you hold? What were the pros and cons in your mind of taking the company in that direction?

Ben Crawford: Of course we gave the subject a great deal of thought. Many of the applications we are supporting are on a close partnership or revenue share basis with our clients. But with regard to making cash investments, we decided it would be wiser for us to come into the next round of funding for TLD applicants, when it will be clear what the competitive landscape looks like. I am pleased that we made that decision and confident that we will be hugely value-adding investors in some very successful TLDs. So if there are any Applicants reading this looking for some additional investment, give me a call.

DNJournal: With so many new TLDs coming on line it look likes getting "shelf space" is going to be one of the biggest challenges that new registry operators will have to overcome. How do you think they can get the visibility they need and what are the other key hurdles they will have to overcome to become profitable?

Ben Crawford: Obviously the actual string is only a small part of what makes a TLD succeed or fail. Most of the TLDs applied for by people who aren't CentralNic clients will be unprofitable, even domains that achieve millions of registrations. The main reasons will be because they are paying too much for registry services. Also anyone using a back-end company that isn't already fully integrated with registrars and selling domains globally will suffer a massive disadvantage. Many will also find out they have to pay much more than they budgeted on sales and marketing to achieve their desired sales figures from registrars – because in a highly competitive wholesale market, the retailers call the shots.

So, if you want profits from your TLD, I would advise you to bring it to CentralNic. We could turn a profit on every single non-brand domain applied for with ICANN, as our marginal cost for launching new domains is very low compared to anyone else's. We launched four new extensions in the last two years, so we also have more recent launch experience that any other company.

DNJournal: In closing, are there any final thoughts you would like to share?

Ben Crawford: I guess I would add that CentralNic is a strong advocate of and believer in the future of .com – after all, we are owners of an amazing portfolio of .com domains ourselves, but we are also very aware of the great value companies find in our alternative domains, like ACTIVIA.US.COM, AVON.UK.COM, and PALMOLIVE.EU.COM. And registrants will also find terrific value in new TLDs like .WIKI, .INK, .FEEDBACK, .CONTACT and so on.

One of the main benefits our alternative domains and new TLDs offer is availability. Compared to .com and the major country codes, we have millions more premium-quality domain names available at retail prices, and millions more coming. Which means our customers can get the names they want – whether it's their business name, keywords that their target audience searches for, or just the name they want.

And getting the name you actually want is not just a "nice-to-have" in business. In fact, Dennis Engel, the CEO of the UK's leading SEO consultancy, Web Marketing Group, recently announced their conclusion that CentralNic's extensions "represent just about the only remaining opportunity to get your target phrase into the domain, which can really help shorten the SEO process."

The way we look at it, .com is like the world's best restaurant, but they've sold out of every dish on the menu. So come and try one of our restaurants instead – we'll serve you exactly what you want!