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New.net’s Impossible Dream: Can The Alternate TLD Company Reach the Unreachable Star?

By Ron Jackson
Editor/Publisher 
Archived 1-1-04

 

It seemed as if anything was possible during the Internet bubble era but even in those heady days New.net’s business plan went beyond simply shooting for the moon. Rather than orbit around ICANN like other domain registries, the Pasadena, California company decided they could create their own parallel universe.

 

As the last Internet company launched by the legendary web business incubator Idealab, it was fitting that New.net would try to reach even higher than the inveterate risk-takers that went before them. A quick flameout seemed assured and in the eyes of domain speculators that is exactly what happened. Most now view the company as a scorched cinder that flew too close to the sun and paid the price.


But wait…what is that mysterious object hurtling back into view? It looks a lot like New.net but it can’t be! The propulsion system has changed and there is now black ink on the fuselage where red ink used to reside. How could this purveyor of  “novelty” domains possibly be among the fortunate few that survived the Internet’s version of the Big Bang?   

 

Some things are stranger than fiction (even stranger than science fiction) but New.net, the alternate TLD company, is not only still breathing - they are turning a profit! Some people are apparently still registering those names ending with .travel, .shop, .game (or one of dozens of New.net’s other alternate extensions) and other revenue streams seem to have appeared out of nowhere. As you are about to see, there are more than two sides to this unusual story and the ending most expected may have to be rewritten.

 

New.net was born in March 2001  because the founders believed ICANN was dragging their feet on meeting the demand for more meaningful web addresses. Their solution was to go around ICANN and offer dozens of their own extensions without the governing body’s blessing. Most of the extensions they chose were prime terms that others had tried (and failed) to get approved by ICANN.

 

That move quickly populated one opposition camp that thinks New.net and their users should suffer the consequences if ICANN ever does an about face and decides to claim those extensions for their own use. In a lengthy thread about New.net at the DomainState forum, member Safesys said “they simply did a unilateral land grab, ignoring the existing framework for financial gain. To reward that activity would cause more harm than confusing the handful of people who use the New.net novelty namespace. If New.net wanted to play in the big game they should have done what other companies did and play by the rules and wait. By choosing not to do that they gave up their seat at the high stakes tables in my opinion”.

 

However another veteran forum member ILikeInfo, voiced an opposing view. “New.Net grabbed the very TLD's that ICANN had refused to issue to those who applied. I personally thought this was a very smart move on their part. The times were very different then and there was much interest in expanding the TLD space. I just feel that one needs to be very sensitive about history on this one. Innovation should never be rejected, though unfortunately New.Net's innovation has not worked.”

In still another corner, New.net President & CEO Dan Sheehy claims that to the contrary, the company’s plan has worked for them and is working for many of their customers today. Sheehy made his case in a recent interview with Domain Name Journal, but before we plunge into that end of the pool, it is important to understand the enormous obstacles that stand in the company’s way.  For those not already familiar with New.net, the obvious question is “how can they make their extensions work when they are not part of the official Internet framework”? 

Dan Sheehy
 President & CEO
New.net

When you bring a new computer home from the store and log onto the Internet you will not be able to see New.net domains unless your service provider has installed the company’s software. This lack of universal connectivity is the company’s Achilles heel but New.net thinks they are close to a cure.

 

To solve the problem, they have taken a two-pronged approach. First they try to convince all Internet Service Providers (ISP's) that they should support New.net domains (normally in exchange for financial considerations). Second they have lined up distributors of popular software programs to include a New.net plug-in on their CD-ROM’s and downloads that makes their domains visible on the enabled computers.   

 

 

The company has made some progress on both fronts. ISP’s such as Earthlink, Prodigy and Juno are on board along with software companies like Imesh and MetaMachine (Kazaa recently departed). Today New.net claims that 175 million Internet users worldwide can view their domains. As impressive as that may sound, it is still only about 25% of the entire Internet audience. Other users will not be able to view New.net domains unless they type in a long form address (the company’s domains are actually sub-domains of new.net). For example if the New.net domain is world.travel, those who do not have enabled browsers won’t see anything unless they type in world.travel.new.net. With that handicap and limited awareness among surfers worldwide, only a small percentage of Internet users ever see a New.net domain.

Even so, New.net insists that the slice of the Internet pie they have is already large enough to profit their customers. Sheehy told DNJ,  In addition to providing the end customer with a descriptive web address, we're adding value to the product through a search service that we launched in 2002 that includes an exclusive section just for New.net domain holders”. Sheehy said “That search service (known as Quick!) is driving millions of visits to New.net domains and many of the customers that take advantage of it report that it provides a tangible return for them that is many multiples of the domain registration fees.” 

Sheehy won’t give out the exact number of New.net domains that have been registered but says it is in six figures which would be comparable to some of the country code TLD’s like .WS that are being marketed globally.

The  Quick! search service is one of the primary reasons (possible the primary reason) the company now operates in the black. When New.net-enabled users mis-type any web address (New.net or otherwise) in their browser they land on a Quick! Page with an array of Pay Per Click (PPC) advertiser links. When visitors click on those links the cash register rings at New.net.

In many ways it is like Verisign’s recently suspended Sitefinder service (which cashed in on .com and .net address errors before it was pressured to shut down by ICANN). New.net will not disclose what percentage of their revenues come from the search service but Sheehy does say that there are fundamental differences between Quick! and Sitefinder. “Though there is a similarity between them, Quick! is really more analogous to the way Microsoft uses Internet Explorer to direct people to MSN Search,” Sheehy said.  “While we certainly support innovation in web navigation, we question whether Verisign has the right to profit from the .com and .net registry operation in this way.  It's a bit like a concessionaire at a national park discovering gold under their popcorn stand and claiming that they should be allowed to keep it for themselves.”

Since Sitefinder showed the world just how valuable errant traffic can be, one might expect that New.net’s partners would try to hold them up for a larger piece of the action. If that is going to happen, Sheehy says he hasn’t seen any evidence of it yet.  “We haven't seen any meaningful impact, positive or negative, from Verisign's Sitefinder implementation,” he told us. 

Quick! has worked out so well that some now wonder if New.net is a domain registration company or a PPC company. Sheehy doesn’t want to be pigeonholed in either category. He said “We've always considered ourselves to be Internet innovators and have and will always continue to be a company focused on ways to improve Internet navigation – whether it’s via solutions that also drive revenue to the company, such as Quick!, or free services that we offer such as our .movie TLD (where users can type anyname.movie instead of having to remember long or cumbersome URLs to find their favorite movies online). Sheehy added, “In many ways the two services (search and domain names) complement each other, but in other ways they are very different businesses. As a relatively small company we're able to make it all work harmoniously without anyone suffering a job identity crisis”. 

Sheehy asserts that listings in the search service are just one feature that makes New.net domains worthwhile to his customers (even if they are viewed as worthless by domain speculators).  He said  “Clearly there’s a direct correlation between the resolution network behind New.net domain names and the perceived value of the names for domain name speculators, but there’s already great inherent value for a large portion of domain name registrants who are using the names for individual or business purposes – regardless if we’re reaching 25% of Internet users (as is the case today) or the entire lot”.   

“In the case of some New.net extensions, the percentage of worldwide resolution has no bearing on its utility,” Sheehy said. “For instance, the .family extension has been one of our most popular names among individuals and families and the domain receives a disproportionately high amount of total traffic compared to the number of names registered. I think the reason for this is obvious when you consider that a family website doesn't need everyone in the world to access it, just their group of friends and family and that is easily handled with our simple plug-in software for any of them that is not on an enabled ISP”.   

Niches like that lead Sheehy to believe there is still plenty of room for New.net despite the abundance of new namespace that became available with ICANN’s launch of .biz and .info and the opening of .us to general registration in America. 

Sheehy says New.net will continue to grow thanks to new partnerships with registrars like Easyspace.com, BulkRegister.com and Registerfly.com (who just came on board) that allow customers to buy New.net domains on those sites, right along side the established ICANN extensions. In fact the company now sells more domains via reseller partners than through its own site. Some have questioned whether or not buyers on those affiliated sites understand that their domains will not enjoy universal resolution. 

Though New.net can only deliver a fraction of the Internet audience today, Sheehy said the company is still committed to reaching 100% of the market and he believes all ISP’s will eventually be on board. “There is no technical or operational reason that an ISP should not update their network with our solution, so when we hit that tipping point we think we will see the entire world become enabled rather quickly. I would hope that would occur within the next 24 months, but in the meantime we are continuing to work hard to drive adoption.”  

“We recognized from the beginning that this was going to take some time,” Sheehy said. “We're encouraged at the number of registrations that have occurred and we probably have about the same percentage of "active" domains pointing to content as the domain name industry in general. Our renewal rates are also on par with the Industry in general.”  Sheehy added, “A cursory look at recent traffic activity showed over 2.7 million queries per month to New.net Web addresses were being facilitated – and this is a conservative estimate. We still have a long way to go, but we're encouraged at the accomplishments so far as we approach our third anniversary.” 

Sheehy understands that many will remain unimpressed by anything short of universal resolution for New.net domains. But he believes the critics are missing an important point. “Other viable naming systems have been introduced into the market that don’t reach a universal audience, yet still remain very much a part of the business and marketing landscape - AOL’s Keywords for instance, which reaches significantly less users than New.net.  Although AOL Keywords only reach a subset of the total Internet population, have Keyword registrants and customers found utility in the names?  Unquestionably yes.Sheehy said. 

You would think that New.net would have very strained relations with ICANN since the company circumvented the ICANN process. Certainly they are not bosom buddies but Sheehy said they are on speaking terms. “We would like to have a stronger relationship, or at least a healthy open dialog with ICANN. We're working hard to foster that communication and I had some informal conversations with some of the board members in Tunisia (where the last ICANN quarterly meeting was held in October),” he said. New.net attends those ICANN meetings to advance their own agenda and foster additional business relationships such as those with other registrars.  

ICANN could still throw New.net a hard curve by usurping one or more of the extensions the company currently uses. Many will recall that .biz was once operated by an alternative registry and that the original .biz holders were left out in the cold when ICANN took that extension for their own use. Despite this, Sheehy does not believe his customers are likely to face the same problem.  

“We think it would be highly unlikely that a new registry or ICANN would introduce a new TLD that conflicts with one of ours given our massive resolution network, and the thousands of customers that are using our products, as well as growing support for our products from ICANN's own accredited registrars,” Sheehy said. “It would be a highly flawed business decision for any for-profit corporation to launch a TLD that already had a 175,000,000 user hole (the total number of current users with access to our names).  With all the words in all the languages that could be used as a new TLD through ICANN, I think a registry operator trying to launch a new service would want to think long and hard before choosing a name that New.net has been operating and nurturing for nearly three years now.” 

Some think Internationalized domains (domains that use character sets other than those in English) will provide New.net with a path for further growth. Sheehy said it could happen but it’s now on the front burner. “This is an area of continued interest for us, but not a primary focus given our current efforts to continue improving upon our core product of Roman character-based domain name extensions and Internet search tools”, he said. “Without a clear market or technical standards for IDN’s our decision at this point is to participate in some of the testbed projects that are underway and to introduce our own offering when both the standards and the market are ready”. 

A common domain speculator complaint against all registries is that they don’t do enough to promote their extensions. Sheehy says you will see the New.net name more in 2004. “I expect us to embark upon some very compelling promotions in the New Year. We ran some interesting marketing campaigns this year, including a charitable program that benefited Make-A-Wish Foundation and helped raise money for children with unmet travel wishes, and a special promotion for travel agents and travel-related companies that promoted awareness for .travel via a car decal program.  Both generated considerable awareness and sales for the company, our customers & partners”. Sheehy said.    

New.net will undoubtedly continue to face criticism from skeptics (especially among domain speculators) but Sheehy says the company’s attention is focused elsewhere today. “Where in years past the company might’ve been overly consumed at times with issues that bubbled out of ICANN and inside the Beltway, today we’re taking a more practical look at our business and asking ourselves, “How can WE control our future success?”  

Sheehy said “We’ve already demonstrated over the last several years that there’s a viable role for a business like New.net within the Internet landscape, so now I feel all we have to do is continue innovating and maintain that same entrepreneurial spirit that got us where we are today.  I’m confident that if we stick to our knitting, we have a bright future ahead” 

* * * * *

Editor’s Note: For those who would like to comment on the New.net story, we invite you to make use of our Letters to the Editor feature (write to editor@dnjournal.com) or join the thread at DomainState to make your own observations.


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

The Full Monte: Why an Industry Pioneer's One Stop Shop Kept Expanding Long After the Bubble Burst
 


All other previous Cover Stories are available in our Archive

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Domain Name Journal
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