WARNING: The ngTLD and ccTLD Fallacy and Trap

I’m writing this as the .VC tld is about to try to get their domain extension on the .CO and .IO bandwagon with a deep discount sale. While these are technically ccTLDs (Country Code Top-Level Domains) and not actual ngTLDs (New Generic Top-Level Domains), they, along with others like .TV, .ME, .GG, .AI and the afore mentioned .CO and .IO. have been repurposed into more generic non-geo-specific domain extensions (although some have been repurposed into very narrow specific niches not much wider than their original geo-specific intent).

Over the last year or so we’re seeing an increased number of particularly .CO, .IO and .AI domains start to sell into the 5-figures. Some even high 5-figures. A couple of weeks ago a domainer sold two .VC domains within a day at about $5,000 each and created a fairly big buzz (the likely reason the .VC registry is trying to take advantage of the publicity by doing a big discount promotion).

Whether coincidence or exploitation, this fact the .VC registry is about to start a discounted sale on new registrations of their domains in turn leads me to write this very strong warning to all domain investors not just about .VC domains, but about most of these “repurposed” ccTLDs and even ngTLDs in general …

The big problem with these extensions is that when one of their domains do sell in the 4 and 5-figure range, it becomes big news. But deceptively does not make “the news”, is the fact that it’s almost only exclusively the very strongest one-word domains that sell at these levels and frequencies.

YES .. before anyone jumps in with some examples of rare exceptions, as with all things domain related, there are indeed are exceptions, and there will continue to be. More importantly, there are some TLDs that are stronger than others in certain categories. .CO for example is more of a broad ranging domain extension, and as such it appeals to a wider range of potential buyers, which in turn means that a wider range of domains have the potential to sell at relatively decent multiples. Including compound words and even the very best of two word domains (although very rarely in the 5-figures).

What is important to note however, is the unseen reality. Which is that the vast super majority of domains in these supposedly “hot” domain extensions actually do not sell, and very likely will never sell .. and even less likely to ever sell at a multiple that would make them a worthwhile investment to domain investors. In fact, the reality is that compared to .COM, these TLDs are NOT “hot” at all .. they are simply hotter than others, as most are simply uninvestable at just about any price.

What does increasingly sell at higher prices and higher frequencies, are the very top-tier one word domains of these “hotter” extensions. Not only are the domains selling the very best, but portion of the domain left-of-the-dot (SLD) also needs to be related to the TLD and/or a great generic brand name.

For example, the .GG extension is hot for video game related websites because “GG” is a term gamers often say to each other after playing each other to mean “Good Game”. So if you have a strong single word or very strong term related to gaming, that indeed would make for a good domain to invest in *IF* you get it at the right price.

The domainer fallacy, and big problem with these extensions, is that newer domain investors think the range and scope of sellable investment-grade domains is similar to that of .COM where hundreds of longer two and three word domains sell every day into the 4+ figures (GreenRoads.com and GreenStreet.com sold for $160,000 and $100,000 in the last year). Basically Adjective+Noun type combinations like AmazingTravel.com, GreenMountain.com and CarWashPros.com indeed can often be wise investments in .COM depending on the acquisition price.

The big warning to all potential domain investors, is that these type of multi-word domains do not sell in extensions other than .COM and ccTLDs that serve countries with strong economies and large populations (like .DE, .CO.UK, .CA., etc). There certainly are exceptions, but nowhere near enough to make multi-word Adjective + Noun domains a good investment in .GG, .AI, .IO and particularly not now with .VC.

Whether domains are investable or not really depends on their potential price-markup factored with their probability of sale, compared to the acquisition price paid by the investor. As the cost goes down, the potential sales multiple goes up. So when .XYZ ran their $0.01 promotion and even when .CO ran their $1 sale (before adding premium restrictions), it actually did make sense to slightly widen the range of potential domains to buy in those extensions. Although even then we saw domain investors buy domains that simply would never have any chance of selling at any price … otherwise known as burning your money.

Even within these niche “repurposed” TLDs, there is a wide range of optimal investment strategies. But as a basic general rule, it’s best to find single words or terms that match the purpose of the TLD itself. Meaning gaming related for .GG, tech related for .AI and .IO, media related for .TV, and finance related for .VC. VC stands for Venture Capital for the people and companies buying .VC domains at the highest prices, even if technically the .VC extension is the ccTLD for Saint Vincent and the Grenadines.

The best thing to do as a potential investor in these extensions is to check to see what previously sold. For example, in the last 5 years the only .IO in the top 50 highest reported sales that was not either a one-word domain or a two-letter acronym was CoinPay.io at $22,500. Otherwise it’s VERY strong single-word domains like Swipe.io, Lucky.io Tank.io, Jackpot.io, Matrix.io, Wiz.io, Home.io, Voice.io, Studio.io, Gate.io, etc

For .VC the only reported 5-figure sale in the last 5 years was VS.vc at $10,000 exactly. Then it drops to Bond.vc at $6120, and then a bunch in the $3000 to 5000 range like Basic.vc, Apollo.vc, Fuse.vs, 12.vc, Cash.vc, Launch.vc, OI.vc, Scale.vc, TM.vc, YY.vc.

The reality is that while most of these domains actually cost more than a .COM domain, they actually sell significantly less. Most importantly, the types of domains that do sell in these extensions are extremely limited in scope.

It’s best NOT to invest in anything not very short and not specific to the niche of the TLD. Most definitely do not acquire any random Adjective + Noun domains that would usually be a good investment in .COM. Same story for one-off brandable domains with deliberate misspells like removing a vowel or replacing an “S” with a “Z”.

I will end this by agreeing that there most certainly are exceptions to the guidelines I’ve mentioned. But until you’ve researched and learned what those likely and probable exceptions are, then avoid them at all costs. In fact, while I’ve singled out some of the more popular alternate domain extensions in this article, the same theory should be applied to just about ALL repurposed ccTLDs and ngTLDs … it’s the main reason why new domainers are warned to focus on .COM domains more than anything else when they start, because while even the vast majority of .COM domains acquired by domain investors are surprisingly actually bad investments (a warning for another day), domains outside of .COM are far worse.

So buyer beware of promotional sales of various TLDs .. at the end of the day, if a domain is virtually unsellable, then you should never invest in it regardless of price!

NOTE: Domain Data for this article was obtained from NameBio.com

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