How do you measure the success of a new domain extension?


Today announced that .XYZ is the first new domain name extension to break the 750,000 registrations barrier. It’s not secret that the domain community wasn’t a fan of the Network Solutions giveaway but looking at the numbers now it’s clear that this growth is from something else, it’s spreading, people know about .XYZ and they’re about to eclipse .MOBI for registrations.

You might look at .MOBI and say, “oh that was a huge failure” and it might have been for you if you were an investor but if you ran .MOBI you’d be saying something else since 800,000+ registrations is an incredibly profitable business.

This made me think about all the debate going on about the success of new domain extensions. I think everyone will look at it differently but I think it’s important that we’re all speaking the same language.

A new domain extension becomes a profitable business once it is making more money off of registrations and renewals than it costs to run the extension. This means that there might be new extensions that the community sees as a failure that are actually profitable businesses bringing-in 8-figures a year in profit.

There’s a reason why Donuts was able to raise $200M and it’s because investors also see how lucrative owning an extension can be with a very low threshold of registrations.

Now let’s look at the other side of the coin, the domain investor. Domain investors don’t care as much about how much money the business running the extension makes, they want two key things: liquidity for their names, profit (and often a very healthy profit).

From a Domainers point of view a new domain extension with one-word names selling in the five and six-figure range is a better business (for the Domainer) than an extension that sells hundreds of thousands of domains but doesn’t have much resale value.

Now let’s look at the end-user, a normal person who doesn’t invest in domains and doesn’t own a registry. That person really just wants to get their keyword in an extension that people can remember. They actually win if there are less domains taken, registries that completely flop could create huge wins for end-users who get their top choice name. Of course if nobody has heard of the extension that could hurt the brandability of a site.

The point here is a simple one but a really darn important one. If we’re going to talk about the success (or failure) of a new domain name extension, we have to understand how we measure the success, and most importantly, the success for who.

Now it’s your turn, how do you measure the success of a new domain name extension?

Photo Credit: C♥rm3n via Compfight cc

Morgan Linton

Morgan Linton