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The State of the Industry 2019: 21 Experts from Across the Industry Assess 2018 and Predict What Lies Ahead - Page 2

By Ron Jackson

Domain Investors

Registries and Registrars


Sandeep Ramchandani

CEO,  Radix (part of the Directi Group) 

At this time last year Sandeep Ramchandani completed a 15-year rise through the ranks to become CEO at Radix Registry, the operator of nine new gTLDs and one re-purposed ccTLD and part of industry giant Directi Group. Radix now has millions of domains under management.

Sandeep Ramchandani
CEO, Radix Registry

In the industry, in 2018 it was GDPR. The EU regulation shook up the entire industry, globally. Registries, Registrars, Domainers, Brands; the GDPR roll-out impacted all players in the ecosystem. With privacy concerns growing across the world, we expect this regulation to be a template for many other regions to follow. As the industry still looks to find a permanent solution to the loss of a transparent and publicly available WHOIS, 2018 won't be the last weíve heard of it. 

In another important trend, Site builders were developing a strong domains play. Squarespace, Weebly, Wix, WordPress are the prime examples of an emerging trend where sitebuilding SaaS platforms have rolled out enhanced iterations of their domain name product. Understanding the importance of domain names as the gateway to the more profitable sitebuilder sales, we even saw some of them spend marketing budgets to promote themselves as a superior domain buying source.   

New Domains from registrars outside China crossed 10 million new registrations in 2018. This is up from 8 million in 2017, thatís 25% yoy growth. While we place significantly higher weightage to the quality metrics such as usage,

average price and renewal probability over registration volumes, it's hard to not celebrate this as an important milestone in the evolution of new TLDs. The numbers, after excluding China, also helps eliminate much of the speculative frenzy which add only registration numbers and nothing else. 

Looking ahead to 2019...

In the industry:

The battle to claim the No. 2 spot  in the registry business will intensify. Lured by the stability, strong cash-flows and predictability of the business, many private equity players have already entered the fray. Most of those will look to take some significant strides to Ďroll-upí strong TLD assets and improve scale. Verisign has been a darling of Wall Street, enjoying sky-high valuations. A stable no. 2 in the registry business which can successfully position themselves as a strong challenger brand, can make for another Wall Street blockbuster success.  

New Domains:

For nTLD operators, 2019 will be the year of rationalization. Since most TLDs have been active for around 2-3 years, they have received sufficient customer and market feedback on vital facets of their business; including pricing, most receptive customer segments, most important  geographic markets to focus on etc. It's time for registries to move past the phase of running a variety of different experiments, to a time where they develop and deploy a long-term strategy.

Hopefully, the industry will also move past the irrational race to sell as many names as possible, and instead focus on strategies which enable sustainable growth. As a natural result of time, customer acceptance levels will continue to grow and weíll see an increased number of nTLD sightings Ďin the wildí. Registries can do more to accelerate this pace of acceptance, by investing  meaningful budgets towards developing awareness and communicating their value proposition. 


Robbie Birkner

Chief Strategy Officer, HEXONET.com

Since 1999, domain registrar HEXONET has been a leading developer and service provider of reseller technologies for the domain industry. Their rock solid customer service has made them a popular choice among domain investors and thousands of resellers, startups and service providers from across the world rely on HEXONET as their domain platform provider. Their stated goal is to provide resellers with additional revenue generating products from a single source.

Robbie Birkner
Chief Strategy Officer
HEXONET.com

GDPR tremendously impacted workload and mind-share for registrars, ultimately causing more support issues since ICANN didn't (and still doesn't) have a finalized model. Registrants were also trying to understand and familiarize themselves with the policy. These disruptions are not isolated to 2018 and the industry, and its participants, will be see more GDPR issues in the years to come.

Consolidation of both registrars and registries, together with registries switching platform operators, have created new challenges. KeyDrive's acquisition by CentralNic, Square purchasing Weebly, acquisition of .XXX by MMX are but a few examples, with more to come in 2019.  Add that registries moving to new platforms like .AU to Afilias, .IN to Neustar, allow for the buying/consolidating of TLDs to potentially drive down prices due to efficiency gains. So in 2019, with more TLDs expected to change hands, registrars have a tremendous amount of work to do: work that includes redoing implementations and migrations completely out of pocket, as registries don't pay registrars to migrate.

Consolidation is at tipping point for the domain industry, it is now extremely difficult for smaller 

registrars to operate and compete. Throw in more policy and regulation, and the registrar business is fast becoming profitable for only the big players. Even at the registry level, smaller registries underestimated the path to success and many are now being gobbled up by the larger registries.

The biggest opportunity is still in making the web and having an online presence simple. Weebly, Wix and Shopify, to name a few, are continuing to grow rapidly as more and more people are getting online. All these new users need to create solid web and mobile sites. Enabling individuals to easily, quickly and securely to get an email address, blog, or website is a top priority for registrars.

Frank Michlick
Domain Registrar Consultant, DomainCocoon.com

Frank Michlick, an Internet Specialist combining 20 years of business & technology experience, is known as a bridge builder between technology, business and policy. Frank has a solid understanding of the domain name, registration (registrar/registry), monetization, DNS, hosting, web development and ISP businesses and is a believer in open source based development. If you manage a registrar, a registry, a portfolio of domains, a hosting company or are planning to set up a registry for the new gTLDs and need any assistance he's a guy you will want to talk to!

Frank Michlick
Domain Registar Consultant
DomainCocoon.com

One of the most significant topics in our industry in 2018 was the introduction of new penalties and details in privacy rules in the European Union, GDPR. It impacted our industry all over and continued to do so today. We saw the public Whois that we've gotten used to disappear and domainers were concerned about not being contacted by buyers anymore, as brokers were concerned about not being able to contact domain owners. I think that privacy is essential and while users need to be given a choice whether they want their data to be public or private, we should revisit which data is collected and how it is used. Data should be used sparingly and only where needed - which provides a nice segue to the next topic:

2018 was also the year of big hacks and data breaches, which underlines the importance of the protection of data and the need for companies to only keep the data that they actually need and for them to archive it as soon as possible. Aadhar in India, Marriott/Starwood, Quora, MyHeritage, Facebook, Google, T-Mobile, Saks are only a few companies that reported breaches this year. Consumers should also think about which data they share with whom. I expect data breaches to continue and increase over the coming years.

The amount of domains seized by governments worldwide has reached over 1 million domains. I wonder if they included those in the count that they accidentally took and then handed back to the owners after a while. Seizing domain names has developed as a go-to method for many countries when it comes to suspected copyright infringement.

New gTLDs continued to mark their territory in the domain space, along with some notable premium sales. Verisign is regaining the right for price increases for .COM as of 2020 - which will then be another topic in next year's review.

Sales of premium domains have grown everywhere and continue to gain acceptance and understanding. With the release of new gTLDs, registrants have started to understand that domains may cost more. This helps networks such as SedoMLS and registrars to offer their customers what they need

Looking ahead to 2019...

The impact of the GDPR discussion will continue. An ICANN working group just met Toronto to figure out how the rules for registrars need to be adjusted once the temporary specification runs out in May. The Expedited Policy Development Process (EPDP) is making slow progress in bringing stakeholders together, and the registrars will need time to implement any changes resulting from this process. I believe this is a discussion that we will see continue well into the year.

As premium domains continue to increase in acceptance by the public with the help of registrars and the new forced Whois privacy, sales networks like SedoMLS gain more importance to get domains in front of the eyes of buyers. I expect more registrars to be implementing SedoMLS and existing partners to expand their relationship as more features and inventory, such as for example auctions & expiring domains, become available.

Domains will remain important, as it is what people remember; the brand. But where sites start has changed. What used to often start with a domain, can now as easily start with a website builder. I believe that in 2019, the hosting and domain industry will continue to improve on the path that helps a business or an individual to get to their website, away from a feature and technical data based sales approach.

New gTLDs will also continue in this year - and the questions as to when the next round will get louder towards the end of the year, as critics will continue to ask if this is necessary at all. While .COM and ccTLDs remain king, there are more and more active websites on new gTLDs. I'm looking forward to seeing what will be launched this year and if there will be a resolution to the disputes about .WEB, .MUSIC and .AMAZON, to name just a few.

The year starts off with what looks to be the last NamesCon conference in Las Vegas. Unfortunately, I'll be skipping this year, but I wish all of the attendees a great event. I hope to see many of you at the ICANN meeting in November, here in my hometown of Montreal and maybe some other conferences or events. Have a great 2019!

Domain Investors & Developers

Braden Pollock
Angel Investor and Owner of Legal Brand Marketing

Braden Pollock (who was profiled in the November 2011 DNJournal Cover Story) has found success both as an investor in premium domains and as a developer who has turned many of those assets into popular websites. He is also frequently called upon to serve as a moderator at domain conferences staged around the world. 

Braden Pollock
Angel Investor
Owner, Legal Brand Marketing

Single word domains continue to increase in value - both .com and .net. Additionally, generic two-word .com names have gotten more popular. Deep pocketed companies and well funded startups are continually increasing their budgets for solid one-word .com names. For those businesses that don't have the budget for their .com of choice, I see them increasingly opting for the .net or choosing a two word .com name instead. 

CHiPs really took a beating in 2018. Both, short number and letter names dramatically decreased in value leaving a lot of investors (who bought at the top of the market) with inventory they can't move. We're all hoping for a rebound.

With few exceptions, I did not do well selling new TLDs to end users. That said, I see the registries selling lots of names, I assume to investors. I keep reminding myself that it's a marathon not a sprint. So I'll keep waiting for this aftermarket to develop.

They say "Whatever goes up, must come down" but that doesn't seem to apply to real estate nor premium domains. The big names will increase in value in 2019 and beyond. At least until the internet and email radically changes.

In 2019 the new gTLD registries will continue to consolidate, especially as their sales decline. And I can't image that parking will ever improve as long as Google controls the ad feed. Someone needs to build a better mousetrap. Any takers?


Michael Castello

Domain Investor/Developer, CEO, Castello Cities Internet Network

In addition to being a pioneering and highly successful domain investor (with sales including Whisky.com at $3.1 million), Michael Castello is also a legendary figure in the geodomain space with multiple developed city domain website businesses including PalmSprings.com and Nashville.com. He also holds many generic one-word domains and developed websites, including DayCare.com. Michael and his brother David were profiled in our December 2006 Cover Story.

Michael Castello
Domain Investor
CEO, Castello Cities Internet Network

The most important event last year was the downward value of crypto-currencies. The perception of crypto is very similar to domain names. While both have importance in the future of technological advances and adaptation, .com, ccTLDs and nGTLDs have a better hierarchy in their use, sustainability and valuation. What is now more obvious is that generic and brandable .com have been consistent in their use and that is evident on a global scale. Crypto is still trying to find its legitimacy in day to day commerce and those challenges are growing. That could change. I would like to see its continued growth, but I have still not invested in it.

With respect to 2019, what was once old is once again a new beginning. Those that study history knows that there are cycles that repeat themselves. The Internet's foundation and functionality are based on addresses or IPs. Domain names are basically addresses that are easy to remember, market and navigate. It is what makes the internet grow and function. Itís simple and easy to understand once we strip away the manipulation and confusion.  

192.155.81.178 is an IP that creates no emotion

or action, but Daycare.com does. Both will bring you to the same destination if you type it in your browser address bar. That is simply what makes the internet functional and profitable. Invest in it for the future. It will continue to grow.  

The internet now functions on IPv6. On scale-that allows for every blade of grass on earth to have an IP. Thatís a lot of IPs that are going to need a domain name.  

The top money-makers and influencers in the world like Google, Apple, Amazon, Facebook, AT&T, Twitter, etc., would not function without their Internet address. They all just happen use .com. These billion-dollar companies use the 5 tenets of the internet (WWW, FTP, E-Mail, Gopher-Search and Telnet) to dominate the field. With a simple domain name, everyone has the same advantages and abilities as these companies.  

Creating your own place on the web, using a domain name, is like having a homestead in the 1800ís. Back then, those with very little money took the opportunity and learned how to use that land and create independence and success for their families. Over the years that property was worth much more.  

Right now, the domain industry is a very small part of our overall industry. I would like to see it promote what has worked since 1993. Here is what works for me:  

.COM and ccTLDs have the best path forward if you can afford to purchase a great name. All the generics are owned, but new ideas and advances allow for new names to be registered for just a few dollars. A generic that is purchased can be flipped for a great profit in a short amount of time. Better yet, a business built on a generic is the best investment for your greatest return. They still generate about 30% of direct navigational traffic. I live solely off of generics.  

.ORG, .NET, .TV area valued around 10-30% of their top tier .com and ccTLD counterparts.  They are still trusted and developing a website with great content can offer a good return on investment.  

Michael Castello speaking at the final 
T.R.A.F.F.I.C. conference in Miami Beach, Florida

New GTLDs still has a pulse. They, like the others, are an address that is searchable and can offer products and services to those that navigate to them. They can be branded but will cost much more to do so. Some of these new extensions have a bad reputation from their use by spammers and hackers. The registries and registrars are free to charge whatever renewal rates they choose.  

Whether you are creating a portfolio of names or creating a business on a domain name, there is a wealth of information at your fingertips. I am currently receiving a lot if interest in my domain names and my online businesses are continuing to make a good profit again. My company has taken the time to adapt to the monopolies that are taking huge market share of previously profitable verticals. Iíve invested in VR and educating myself on how it may change the geographical landscape of commerce on the internet. Whether its in choosing the right name of developing a website and business, you must be prepared to put in the time to find out what works. Eventually you will make money and even enjoy working at it every day. Good luck in 2019!


Mike Mann

Founder, DomainMarket.com

Mike Mann
Founder, DomainMarket.com

Mike Mann is one of pioneers of the domain investment and sales business. The outspoken original founder of BuyDomains.com now operates the DomainMarket.com sales platform. Mike has also been involved in some of the biggest domain acquisitions and sales of all time and he has been the subject of two DNJournal Cover Stories - the first in our first year of operation back in 2003 and the second in 2007. 

.Com locks in permanent status, while gTLDs are a permanent failure. Endless monopolies and scammers and racketeers in the industry need to be flushed. Also every decent .Com domain needs a professional appraisal. Can you imagine for example if Godaddy owned millions of used cars, or pieces of fine used jewelry, or art, wouldnít their shareholders be concerned of the actual market values of their assets vs. what they are going out the door for, and the cost to maintain them and overhead?  There is no such thing as a

valid automated domain appraisal, not even remotely close, itís a terrible joke since its so costly to asset holders and amounts to fraud. Follow me on social for the full scoop!


Deepak Daftari

CEO, eSiksha.com

Veteran domain investor/developer Deepak Daftari has been operating one of the oldest education portals in India (eSiksha.com) since 1999 with a 1 Million plus user base. As a broker/consultant he has helped a wide range of corporate buyers acquire strategic domain assets while closing multiple six-figure sales for both clients and his own portfolio. Deepak is also an active Angel Investor in SaaS, Product, Health Tech and Food Tech Companies.

Deepak Daftari
CEO, eSiksha.com

A major trend in 2018 was the change in perception/mindset of the End user at the lower end of the chain. End users in that segment are mostly wary and scared to spend a good amount of money to acquire an exact match Domain Name for their businesses but thatís changing significantly now, especially in the Asian and European markets. More and more 1 word and 2 word .comís are going into the hands of end users for actual usage rather than sitting in the portfolios of Domain Investors. 

The 5N.com market has crashed and has lost a majority of its peak prices but at the same time 4N.comís are getting pricier and rarer to buy. Prices crashed similarly for the LLLL.com market especially the ones traded among the Chinese domain investors but quality LLLL.comís are still priced well, increasing in value and are in constant demand.  

A significant change was the continued movement of LL.com names from US portfolios to Chinese portfolios and quite a few names changing hands this year too. Chinese and other Asian companies

are paying big money to acquire their exact match names and the thirst for acquiring similar names will only get more competitive from here on. 

Lastly the demand for CCTLDs like .IN's is increasing at a rapid pace and hundreds of transactions are happening on a regular basis without the majority sales data getting reported.

Looking ahead to 2019...

  • Continued consolidation of bigger portfolios

  • More portfolios getting into fewer hands

  • More names being cornered by their respective registries e.g. the .CO registry

  • 1 word .comís, 4N.comís getting out of the reach of the smaller Domain Investors

  • Continued consolidation of the LL.comís and NN.comís, towards the Chinese Market

  • Continued rise in 6 and 7 figure sales by end users

  • More sales being reported for CCTLDs especially .INís

  • Newer products to be offered by the varied market places

Legal Experts

Howard Neu
Domain Attorney, NeusNews.com

Howard Neu was one of the first attorneys in the world to become a specialist in the area of domain investor/developer rights. Neu also co-founded the pioneering T.R.A.F.F.I.C. Domain Conference with Rick Schwartz and, after its 10-year run concluded in 2014, co-founded THE Domain Conference with Ray Dillman Neu and Barbara Neu, an event held annually from 2015-2018 (the last two years as part of the MERGE! conference that brought multiple Internet related events together under one roof).

Howard Neu
Domain Attorney

As a Domain Defense Attorney, I find that there are more and more decisions by WIPO Panels finding Reverse Domain Name Hijacking or, as they say, abuse of the process.  Even the Forum is grudgingly finding RDNH in more cases than ever before.  Also, I have been very busy this past year litigating under the AntiCybersquatting Consumer Protection Act (ACPA) in 3 different Federal Courts.  In one of those cases, the Judge determined that Sovereign Immunity does not apply to a Government Agency which has submitted to the jurisdiction of the Federal Court in a UDRP action.  Additionally, my fellow domain defense attorneys have been successful in 17 cases in the past 6 months in getting Panels to deny spurious complaints.  Please see my latest polls of WIPO and FORUM Panelists who have denied complaints in the past 6 months at NeusNews.com.

The domain investment "industry" has historically been a small niche industry since its start, and fortunately, or unfortunately, depending upon how you look at it, the "industry" hasn't really grown that much in the last 20 years.  Yes, new investors, traders and developers have come in to the industry, but they are offset by the old ones

who are no longer actively involved.  This is best exemplified by the domain shows that continue to operate, but have had to diversify to ancillary fields in order to keep attendance and interest up.  Take a look at the Namescon schedule for this year and compare it with previous years and you will find less and less domain investment content.  MERGE!'s success has been more due to interest in Joomla, bitcoin, blockchain, subscription boxes and other ancillary functions than in investing, trading and developing domains.  This is not necessarily bad for the industry, but is a necessity of the reality of the business that we are in. 

The Internet Commerce Association (ICA) has done a tremendous job representing our interests in Washington and at ICANN, thanks to Zak Muscovitch and Kamila Sekiewicz. But getting mainstream recognition of the legitimacy of domaining is still an uphill battle.  Membership has increased and that is extremely helpful for the ICA to be recognized as the spokes group for the "industry".

We have come a long way since the very first T.R.A.F.F.I.C. Conference that Rick Schwartz and I put together in 2004, but we still have a long way to go.  The most important recognition that I believe that we have accomplished, even to a small extent, is for the general public to understand the difference between an internet domain investor and a cybersquatter.  However, with the vast majority of the cases at both WIPO and the FORUM granting complaints to transfer domains, there are still a lot of cybersquatters trading on the good names of trademark holders.  Until those numbers come down, we will always have that stigma attached to the industry. As Pogo used to say, "we have found the enemy and it is us!"

Karen Bernstein
Domain Attorney, Bernstein IP

Karen Bernstein
Bernstein IP

Karen Bernstein is a seasoned Intellectual Property Attorney and Principal of Manhattan based Bernstein IP, which counsels and represents both transaction ally and in litigation matters on patent, trademark, copyright, Internet, First Amendment, defamation, and right of publicity matters. 

In 2018 it was GDPR. No doubt that the European General Data Protection Law has made it much harder to find out who owns a domain name for not only lawyers but for potential domain name buyers to find owners of domain names. 

As for the new year - I said it in 2015 in DN Journalís State of the Industry and still believe there will be more consolidation in the industry. Particularly, for gTLDs. Some companies didnít realize what a challenge it is to launch a gTLD and to keep registrations from not renewing. Other more experienced and savvy players will continue to acquire these types of gTLD operators.

*****

With that we want to thank all of the contributors to this year's State of the Industry report and wish them as well as all of our readers a happy and prosperous new year!

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