Back to Cover Story Archive

Main Archive

Home Page

 

 

 







The Great Three-Letter .Info/.Biz Buyout: Elequa Alters the New Extension Landscape 

By Ron Jackson
Editor/Publisher

 

Decades ago radio and television adopted a system using three and four letter names to identify individual broadcast stations. They worked well because they were short and easy to remember. In broadcasting that wise early architectural decision has remained in place to this day. When the Internet came along names using up to 63 letters were allowed but only businesses with a death wish even approached the outer limits of that range. On the web, just as it is for those on the airwaves, shorter is usually better.


For that reason, three-letter domains have always been among the most prized possessions in all domain extensions. Every one of the 17,576 possible combinations all disappeared in .com, .net and .org long ago. Because of their popularity, the threes have been like a "canary in the coal mine" for the new global extensions, .info  and .biz

Miners used to place a canary in the shaft and as long as the canary was alive, they knew there were no poisonous gases around and it was safe to go about their business. In the domain industry, many of those evaluating the prospects for the new extensions felt comfortable ignoring them as long as three-letter domains were still around and available for a cheap registration fee. After all, if such a desirable domain category was still untapped why get excited about the rest of the namespace? Alarm bells are going off now because the domain canary just died.

Heading into the last week of February 2004, there were still thousands of threes available in .info and .biz (the best combinations were gone but as long as any lingered their very availability was a stigma for the entire extension as far as many investors were concerned). Then things literally changed overnight. On Monday, Feb. 23, the last available three-letter .info domains suddenly disappeared. 48 hours later, the buyer who was responsible for closing out the .info category registered more than 4,600 domains in one day to wipe out the entire remaining stock of three-letter .biz domains. Who was that masked man?!

As it turns out he was no stranger. It was Thunayan K. AL-Ghanim, widely known as Elequa, owner of one of the world’s largest and highest quality domain portfolios (encompassing approximately 35,000 domains). His moves sent shockwaves through the industry but it probably should not have come as such a surprise. He already held thousands of three-letter .coms, .nets and .orgs before claiming about 2,500 three-letter .infos and the 4,600 .biz. Adding those .biz domains to the 200 three-letter names he already had from the 2001 land rush gives him close to 30% of the world supply!. Elequa told DNJournal.com “three letter domains are the best investment, They generally get more traffic than even rare two-letter domains and who doesn’t type three characters even by mistake from time to time?” 

Though he characterizes three-letter domains as a good long-term investment, making an “investment” was among the last of the many reasons why Elequa made those massive purchases. Since his reasoning has thoroughly flummoxed observers on both sides of the new extension debate, we will address that riddle first. Those who believe in a bright future for .info and .biz were completely surprised (but delighted) to see such a big name .com investor entering their space. They believe he made a bold move that will pay off in a big way down the line. Those who see value only in .com believe that he wasted his money. After all, since .biz and .info are so new there may be no type-in traffic for years to come, thus no way to recoup his investment with pay per click (PPC) revenue…and since Elequa has often stated publicly that he does not sell domains, he won't be getting his money back by selling them for a profit either. So what was he thinking?! 

That brings us to the crux of the matter. Elequa does not think like you and I! We think about how to maximize PPC return on our investment or the likelihood of a profitable resale, or perhaps suitability of the domain for a commerce project that would generate revenue from a website. In short we think like accountants. He thinks like an artist (which he is – both a painter and a sculptor). Elequa sees the Internet as one big canvas and domains are his paintbrushes - the tools used to apply a rainbow of colors (well-designed content) to his web canvas. He just stocked his artistic supply closet with thousands of unique new brushes!

Elequa told us “for the record this is not my source of income, it is rather a hobby that has turned into a passion! People who think I am planning to eventually sell don’t know how much time I have spent in front of my PC putting together the pieces I want for what I plan to do. I am on track to a final destination and I will get there!”  The metrics we apply in search of a paycheck are meaningless to someone who has a vision in mind and the resources to turn that vision into a reality.

Elequa's grand plan involves the eventual transformation of his Future Media Architects (FMA) into the Internet equivalent of  one of today’s major television networks. The difference is that NBC-TV, for example, produces programming that is then distributed by hundreds of affiliated stations around the country. Elequa wants to own the network and all of the affiliates as well. That is why he is stockpiling so many domains (and so many easy to remember three-letter names). “I am constantly coming up with new ideas and I want to always have a wide range of domains on hand so I can immediately select one that suits my purposes,”  he said.

It really shouldn’t come as such a shock that Elequa would eventually add new extensions like .biz and .info to his palette. After all one of his first big developments was MP3.TV, using the Tuvalu country code that is much despised among domain investors as a “phony” global TLD (Top Level Domain). Despite their disdain, he has done well indeed with a site that has become a magnet for music fans. 

It proves once again that beauty is in the eye of the beholder. Many also view .biz as an “ugly” extension, a slangy term not suited for serious business. Elequa looks at the same term and sees something “abstract” rather than ugly, an unusual hue that can be used to make an attention-getting statement. Interestingly enough, as you will see later in this article, some large businesses are starting to look at it in that way too.

OK, so let’s say you can learn to live with .biz. What about the “quality” of a lot of those letter combinations he bought – all those Q’s, Y’s, X’s and Z’s? While people in English speaking countries see those as a lost cause, those who want to get on the net in the rapidly emerging Asian markets would have a different view. Q, X, Y & Z are commonly used letters there. Elequa has always taken a global view of domains and that is why he took all of the avilable threes in only the Global TLD’s while leaving the diminishing supply of three-letter combos in the .US country code untouched.

Anyone who has visited an FMA site like DJ.net or FMA.com knows they are are uncommonly artistic developments. But for those still struggling to get past the dollars and cents aspect of his three-letter buying binge, this might help put things into perspective. He registered about 7,000 .biz/.info domains for a total outlay of around $40,000. As those who follow his frequent purchases in our weekly Domain Sales column know, it is not at all uncommon for him to spend that much on a single domain. 

This time the expenditure allowed him to do something he loves more than anything else – create. In this case he instantly created a market by removing supply from the 3-letter .biz/.info supply and demand equation. Even though as new extensions the demand is currently relatively low, there is enough demand that when you pair it with zero supply, prices start rising. Average high bids on three-letter .infos have roughly quadrupled at Namewinner in recent days (Namewinner does not chase .biz drops). 

Where other tycoons have tried to create and corner markets to make a financial killing, Elequa had different motives. “I saw a market could be created  - so I created it!” he said. At the same time he created a windfall for current holders of  similar domains and annoyed a small cadre of .com aficionados who see any .biz/.info success as a threat to the value of their domains. In our opinion, new extension success will have little impact on .com values. We see a tiered market developing, just as there is in virtually every other product category. There are luxury cars, mid-range automobiles and low-end models. All can succeed because there are people in the market at each level. As more and more businesses and individuals go online they will want an option that matches their needs and budget. 

We have all seen what Elequa did, now we can try to figure out what it means for the market as a whole. Many are convinced that it will be looked back on as an event of historic significance for the domain industry. Richard Meyer of Washington, D.C. suburb Ellicott City, Maryland has a respectable portfolio of his own (more than 5,000 domains in all major extensions). He told us “this is a landmark situation and we were all sitting in the front row watching it. It is something I will remember for many years to come. For this industry, it compares to Nixon taking the U.S. off of the gold standard. Most people don't realize what that meant but it affects us to this day. It’s the same thing with the three-letter names. It doesn't affect most people but it does affect the domain business. I think this is the best thing that has happened for .info and .biz since they went public”.

Certainly the .info registry, Afilias, and the .biz registry, Neulevel, both welcomed Elequa’s interest in their extensions. They will be even happier when they see live sites on some of his new domains as both believe development is the key to long-term health for their TLDs. Representatives from the two companies told us that just over two years after their debut things are going very well. Of course they would be crazy to say anything else publicly but they do have some stats to back up their sunny dispositions.

.Info got out of the gate first, debuting to the general public in September 2001. Heather Carle, the Afilias Director of Communications said “since then .info has grown to become the sixth largest TLD in the world with well over 1 million registrations. It was the the first generic, unrestricted TLD to be launched since .com and it is being accepted worldwide.”  The weekly DNJournal.com sales reports show especially high interest in .info in Germany and the registry’s stats back that up. Carle said “ Germany has over 22% of the total .info registrations and a third of the 400,000 live sites currently online”.

Overall, 52% of .info registrations have been made in Europe with 39% in North America. Carle said “.info's have been registered for many purposes, however a large majority of sites are dedicated to information resources such as transportation, travel, media, causes, as well as teams and events. Some examples are  La Société de Transport de Montréal at STM.info, the Spanish Tourism Board site at Spain.info, Stanislaus County's media relations site for the Scott Peterson trial at PressUpdate.info, the Sanitation and Social Services Department of Québec site on West Nile virus at VirusDuNil.info and the 2003 American Football World Cup site at WorldCup2003.info.

Since continuing development is part of Elequa’s big plan, Afilias is happy to have him onboard the .info bandwagon. Though development is the registry’s #1 priority, they can’t help but reveal a bit of pride over the rising tide of .info prices in the aftermarket. Carle said “We are pleased to see that individuals are placing a significant value on .info and look forward to it's continual development as the information destination on the Web”. 

Of course we can’t let the registry have the only word on the products they sell, so we contacted one of .info’s pioneering developers, Dr. Robert Connor, to get his thoughts on where .info has been and where it is headed. As a professor at the University of Minnesota who has done a great deal of research on a variety topics, we knew Connor would give us both sides of the story. Connor, whose sites include Minnesota.info and HealthInsurance.info said “I was attracted to .info because it has meaning in many different languages and  providing information is a key function of the internet. It is also a genuine generic TLD approved by ICANN with no restrictions on registrant use and of course the .com namespace was pretty crowded.”

Connor added, “The progress of .info is not as good as it could have been, but it is a lot better than many people thought it would be. There are some negatives. There was a rocky rollout with many bogus trademark registrations. My August 2001 research estimated that 15-25% of .info sunrise registrations were not for genuine trademarks. This range was later confirmed by the magnitude of the actions taken by Afilias to address the problem. Another problem, perhaps related, is that many people are holding prime names without developing them. They hope to get a free ride on increased .info values from other people who do develop .info names. This holds back the progress of the namespace.”


”However, there are also many positive signs,” Connor said. "One is the growth in active .info pages. In July of 2002, I did a Google search for .info pages and it yielded around 750,000 .info pages, which was 1% of the number of .com pages. In February of 2004, this same search yielded around 4,500,000 .info pages, which is around 4% of .com pages - a 400% increase. These overall stats are supplemented by anecdotal evidence of .info use - for example, MTA.info in New York, DontTrashCalifornia.info in California, and Stop-Discrimination.info in Europe. Another positive sign is the results of my poll of 133 domain investors from 34 different countries that shows strong interest in .info, especially in Northern Europe. A third positive sign is the upsurge in .info sales prices as documented by the Domain Name Journal.

Connor concluded “On balance, I don’t think that .info will ever replace .com, but that its future as a viable namespace looks pretty good. The registration of all three-letter .info domains is newsworthy and will probably spark attention from people who buy domains for resale. I also think that it is likely to yield a positive return on the registrant's investment. However, I do not think that it will be anywhere near as important to the future progress of the .info namespace as the continued development and public advertising of active .info sites.”

In November 2001, two months after the .info rollout, .biz took center stage. Domain name investors have not greeted .biz warmly with a number of reasons stated for their negativity. Most don’t like the term itself. The .biz registry, Neulevel, also has usage rules aimed at preventing outright speculation in the names and encouraging development. While the view among some industry insiders is pessimistic, there is evidence that the real world marketplace may have a different take on things.

We just saw the most impressive display of .biz advertising we have ever seen in the March 2004 issue of PC World magazine. The huge web hosting company 1And1 has a 16-page full-color section in the middle of the magazine with the URL 1And1.biz plastered in huge letters at the bottom of every single page. A call to 1And1 offices connected us with company public relations representative Rob Halpin. He said the company felt that the .biz extension would help catch the eye of their target business audience and also help them stand out from the crowd. In fact, Richard Tindal, VP Registry at Neulevel/Neustar, says many clients have told registry officials that a desire to break out of the advertising clutter is a primary reason they adopted .biz.

Tindal also said that “in the last quarter of 2003 and the first quarter of this year, the rate of new registrations is up 60% over the previous quarters in 2003 and 2002.”  When .biz hit its two-year anniversary late last year many names dropped, temporarily pushing overall registrations back under the one million mark, but Tindal says they have now risen back above that level. He also said that the overall renewal rates for .biz are comparable to .com. 

As for who is using .biz domains Tindal said “the overwhelming majority of users are small businesses (less than 50 employees). Over 35% of the registered sites are being used and that is growing each quarter.” Tindal added that half of .biz registrants are in North America (a considerably higher percentage than .info) with 35% in Europe and 15% in the Asia-Pacific region. 

We increasingly see anecdotal evidence of small business use of .biz in our own neighborhood. An air conditioning company truck goes by with a .biz URL painted on the side or we drive by a small business with a .biz web address painted on the window. They are small steps, but final destinations are reached one step at a time. 

One early .biz investor/developer we know is so convinced the extension is headed for the big time that he goes to extraordinary lengths to keep people from knowing what he is up to in the namespace. He sees publicity as a surefire way to attract competitors. He agreed to share his thoughts only if he could remain anonymous. We think he may have read one too many Tom Clancy novels, but we agreed. He said “I participated in the .biz land rush because I was already very familiar with the day-to-day usage of 'biz' in my industry and could see the extension's instant connection with and relevance for specialist B2B sites. Nestle.biz is a good example of this.”

He went on to say “developer interest in the .biz extension has been encouraging. Do a Google search on “site:.biz biz” and you will see what I mean. .Biz has held up surprisingly well so far despite all the doom-and-gloom criticisms leveled on it by domain speculators. Mainstream exposure by sites like Billboard.biz are kicking in to the surprise of these every same critics. In my mind, the issue for .biz is not whether it will become a respected extension embraced by the business community en masse, but when. It is definitely looking like sooner rather than later.” 

Regarding Elequa’s buys our undercover .biz developer expressed the hope that he will one day see those domains go live. In any case he  said “the fact that a big player has "endorsed" the extension shows there is glitter in the haze after all.”  Elequa probably couldn’t have put it in a more artistic way himself.

* * * * *

Editor’s Note: For those who would like to comment on this story, we invite you to make use of our Letters to the Editor feature (write to editor@dnjournal.com).


If you missed our previous Cover Story click on the headline below: 

Rick Schwartz: Domain King or Royal Pain?
 

All other previous Cover Stories are available in our Archive

Return to Domain Name Journal Home Page 


Copyright 2003
Domain Name Journal
A Division of
Internet Edge, Inc.

Hit Counter