AFNIC 50-50 rule article on Land Rush in new gTLDs

AFNIC, the French ccTLD registry, published an article on applying the 50:50 law to new gTLD launches. Basically the law has to do with the number of registrations that a new TLD gains on the first day of Land rush being 50% of the domains that the TLD will achieve in the first month of Landrush and that the number of regstrations that a new TLD has at the end of the first month of Land rush will be 50% of that number of registrations of the first year. It is a very important observation.

The Land rush phase of a new TLD is where a TLD gains its critical mass of domain name registrations. It decides whether the TLD explodes into public awareness or fizzles on the extremity of non-core TLDs. The registrations are a mix of speculative registrations, registrations that people intend to develop into websites or services and brand protection registrations. The latter is more complex than simple trademark and intellectual property rights domain name registrations.

The big brand owners will register their trademarks in the Sunrise Phase of a a new TLD’s rollout. They have to provide proof that they own or have licences for these trademarks. But what happens when a new TLD begins to explode in terms of public awareness is that small and medium businesses that do not necessarily have trademarks or other intellectual property rights protections will begin to register their brand in the new TLD. While they may never be developed as active and unique websites, they form an important part of a new TLD’s zone at a country level. It is not uncommon to see the same domain registered in the local ccTLD and .COM and .NET (and .EU for EU based registrants) by the same registrant. It raises awareness of the new TLD among small business owners, the Mom and Pop businesses that actually do develop the many websites in TLDs and give TLDs their credibility and visibility. It does not matter how many big, high profile businesses that a new TLD gains – most people only see the brand and not the TLD. As these small and medium businesses begin to register domain names in the newly launched TLDs, this attention attracts new registrants.

The problem with many of the new gTLDs is that they are not typical new TLD launches. For a start, they are not what one would consider to be generic TLDs. They are often highly focused, niche TLD strings which act as a limiting factor on registrations. Rather than a globally recognised term like ‘.COM’, many of the new gTLDs are English language words. (There are other non-Latin script new gTLDs and geographical new gTLDs). The registration numbers in some of the new gTLDs also are not the product of natural registration trends.

Some domain names are valuable because they are high value generic keywords or phrases (poker, insurance, cars etc). When .EU ccTLD launched the Sunrise phase was plundered by domain speculation using iffy Benelux deposit trademarks (these are trademarks that have not been published for opposition) in obscure classes. Some of the large new TLD registries subsequently reserved a list of high value domain names for auction to the highest bidder. Some of the new gTLD registries have continued that pattern of reserving high value keyword domains or preselling them to a registry associated company. Large numbers of domain names that might have encouraged a domain name speculation frenzy were missing from the launch of some of these new gTLDs.

There has also been a shift from Brand Protection to Brand Enforcement by trademark and intellectual property rights owners. This is due to the cost of maintaining registrations for brands across a multitude of TLDs. A lot of the registration volume in new TLDs is due to brand owners registering their brand in the new TLD. But with the shift from protection to enforcement, that revenuestream for new gTLD operators has been greatly diminished.

Without the domain name speculation frenzy and the revenue stream from Brand Protection registrations, the Land rush phase of some new gTLDs has become highly compressed. Instead of lasting approximately six months, some new gTLDs are seeing their registration patterns settle down to post-Land rush patterns within a few weeks. For some, it happens within a few days. The growth patterns in some of these new gTLDs resemble those of small ccTLDs of small countries rather than mass market, global TLDs.

Some of the new gTLDs as the top of the market have resorted to free domain name registrations in order to boost registration volume. The two new gTLDs that have done this are .XYZ and .BERLIN. However the ways that their registries went about it are quite different. The .XYZ new gTLD has been the beneficiary, or victim, of an opt-out promotion by Network Solutions. The domains have been given away free to Network Solutions customers. And rather than the customer having confirm their interest in getting a .XYZ domain name, the customer had to opt out of being given a .XYZ domain name. The majority (over 85%) of these opt-out registrations are parked on PPC registration in the Virgin Islands. The .BERLIN registry ran a free registration offer that was supposed to last for five days. It boosted .BERLIN numbers but it was abused by a few large commercial cyberwarehousers. The registry cancelled it after two days. However the .BERLIN registry has a clause in the registrant agreement (section 5.2) that may act as a safeguard against such abuse. It has already deleted some of the .BERLIN domain names registered during the offer.

Rather than becoming the large players that .EU, .MOBI and .CO became within their first year of operation, the new gTLDs face an uphill struggle for acceptance and registrations. The 50:50 rule in AFNIC’s article is a very interesting one because it is statistically verifiable. The inclusion of registry registrations, robot registrations, free registrations and the reduced numbers of brand protection registrations in these new gTLDs means that these new gTLDs are not like ordinary massmarket TLDs. It will be interesting to see how this 50:50 rule plays out in these new gTLDs. The first year’s operation of any new TLD is always unusual and full of registration spikes. The Land rush anniversary is when a lot of speculative registrations that could not be sold on and domain names that could not be developed are dropped. That’s something that some new gTLDs anxiously await.