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Are you piling into .CO domains? Good luck with that.
The big buzz throughout the domainer circles this week is the launch of the .CO domain and domainers are busy talking up a storm about, not to mention everybody is piling into it. Some specialty .co aftermarket channels like flipping.co have already emerged, and of course, there are a few blockbuster aftermarket sales announced already.
Most of the commentary about .CO I’ve seen looks at as a great new opportunity for domainers, Rick Schwartz, in his customary boisterous style, all but calls anybody who can’t make big bucks on this new terrain a loser.
I think all these bozos are about to be schooled. Yesterday EVERY domainer had the EXACT [same?] opportunity to speculate and win or lose. All the big mouths will have their jaws dropping soon as they watch folks manufacture money from thin air. This proves they have no talent and just whine. Losers in every sense of the word. While others are enjoying success and creating even more, they will still be saying the same crap or sitting on the sidelines spewing hate instead of jumping in and do what a true domainer does and have the balls to speculate. If they can’t make it in domains which is a gift from the heavens, they will make it in nothing.”
There’s a couple points above I’d like to address that I may leave for a separate post.
The important thing is a little maxim I developed for myself over the years, which I suppose is nothing new to any value investor or contrarian. But it’s just an observation that has worked for me:
Whenever you find yourself standing in a very crowded line-up, you need to ask yourself if you’re on the right side of the transaction.
Daytraders sum it up nicely by calling something a “crowded trade”. When I see a big long line-up, I ask myself “How do I get to be on the other side of that line-up?”
In the case of the .CO rollout, it’s easy. As a domain registrar I already am. When everybody else is panning for gold, the guys selling picks and shovels do well. (Having said this, I am probably one of the few, if not only registrars, who actually dissuades my customer base from piling into new TLDs, because for the most part I think they are overhyped cash-grabs.)
There are some essential key differences about .CO which any serious investor should look at before committing any capital into this space.
- The landrush pre-orders were handled differently than in the past. When .biz and .info rolled out, landrush pre-orders were awarded in a random/round-robin fashion. That basically made it a literal lottery, and made it possible for domainers to essentially grab monster keywords at the price of registration. Not so under .CO, where landrush pre-orders with multiple claims automatically go to an auction process. That will push the cost basis on many of the desirable names higher, reducing upside drastically.
- .CO domains have much higher base costs from the registry. The landrush pre-orders cost over $200 and the real time registrations have a wholesale base cost over 3X that of .com. So right there, if one is amassing a large portfolio of .CO’s, it will take more money to sustain the renewals. In this day of drastically impaired PPC revenues, this will be difficult.
- The “type-in” action on .CO will be disappointing. This much is guaranteed. Half the lift on keyword type-in on .COM is via web browsers automatically appending “.COM” and from things like the “.COM” button on iphones. There is not a device in the world that will automagically append .CO onto any keyword. The only thing that will work is when somebody tries to type “keyword.COM” into a web browser location bar and makes a typo, omitting the last “m”. That’s it.
- Which brings us to the fact that the single, most significant driving factor that puts wind under this TLDs wings is that it is a typo for “.com”. Everything else is marketing intended to gloss over this reality. Domainers go to great lengths to explain the difference between themselves and typosquatters. This entire namespace is one big typo. Face it, if Columbia’s ISO 3166 code was .CI or .CB would it have taken off the way it did? It will be really interesting to see the inevitable actions against .CO domains by their respective .COM counterparts. As an investor, it’s a pile of risk I could do without.
So far I’ve seen only one refreshingly accurate assessment of .CO which basically calls it for what it is: a speculative trap, where far more domainers will lose money over the next year than those who will make any.
The people that make REAL money from these new extensions (most of which are over-hyped), are the Registries and the Registrars. In other words, the companies that sell them to YOU. There is only ever a small number of premium generic keywords that sell upwards of $200k.
I have recommended to my customers that they register .CO domains on a defensive basis. I would not recommend “investing” in .CO, if you have some play money sitting around you don’t mind gambling with, then by all means speculate. But I wouldn’t commit any capital to .CO that you can’t afford to lose.
Excellent post!
Thanks for the tell it like it is approach to ‘gambling’ on .co
Great article and true pain for .co investors. I did not invest a dime on .co for same reasons above.
Don’t get me wrong, I’m a domainer since 2001 and every time a new cctld (converted to a gtld) or gtld comes out we see the exact hype. Look what happens to . ws, .tv, .pro, .tel, .me, .biz, .u, .mobi…. Domainers I say domainers again (not end users) are spending tremendous amount of cash on it and wait till one day it goes up in value and be the next .com
All these are just speculation then some do make money on generic but how much they invest on, not sure everyone make profits but what I’m sure registrars and the company behind that TLD do a great marketing job and great earnings.
Why should I bother with a .co, next year you’ll see a new extension so what? Seriously .com will always be king, I rather save my money for a .com or even .net rather than investing thousands on a .co portfolio. I know who’s behind that speculation as you do, he is a famous domainer.
Also people don’t and will never adopt the .co, who will type in http://www.site.co ? honestly I don’t think you will. So .co is for companies or Typo? I remember when years ago a new tld was launch .tm (dot tm) for trademarks. LOL. Don’t this reminds you Kevin Ham .cm (cameroun) domain playground witch consist of rerouting .com typo to .cm and that’s how he made $millions parking generic names with advertising links or else? Well these old days are now gone and most people do not type in but seek on search engines like Google, yahoo, bing… So in both case .co for company and .co for typo is just not worth.
Anyway if you feel as a kid in a candy store, then go for it! But brush your teeth or you’ll get tooth decay soon or later.
First, welcome in our small community of domain enthousiasts!
According the resistance I am seeing on starting to try to flip .CO names I think that most people think:
1 – They finally got the domain they never succeed or should never be able to buy in .COM due to the huge cost.
Sure it’s not the original (the .COM), but gonna explain this to the millions people who walk in Canal Sreet (NY) each year.
2 – And why the .CO should not tomorrow a success?
It’s good to dream. People play lottery when they know their sale chance is almost null, why does it should be different here. It alreday makes sense if the few dollars you spend in registration may give you hope…
3 – Many people have been registering .net, .biz, .info, … because the .com was not possible. So why not starting look now at a .co, finally it is nicer than a .net for a company.
With this idea and if domain owners don’t ask insane ammounts then a new market may born.
The best summary I’ve read so far, my sentiments exactly. It’s very true, whenever there’s a Gold Rush the only one making the real money is the guy selling the shovels and picks. I predict quite a few “Domainers” are going to need a big shovel to dig themselves out of the shit if there not careful.
Francois – Great insight. I love the “people play lottery” comparison.
Chris: I think some domainers will need a rather large shovel.
Ok, here is just a test I’ve made today, I’ve create a business card and add:
Steve S….
My adress
My phone
My email
and my website (virtual one): http://www.greatwebsite.co
Here is something funny cause when I printed out first I didn’t even notice I’ve type .com rather than .co, must be automatic
Then I re-edit my business card and printed 10.
I show to my co-worker and said this is my new website, take a look. About 5 out of 5 (100%) read it and said something like (there is a typo on my web adress) they said the “m” was missing.
So I really think that .co sucks!
[...] terms of .CO – Francois summed it up perfectly in a comment – “People play lottery when they know their sale chance is almost [...]
[...] it” in the world of domaining. In fact I’ll cite the exact same quote as I did in my earlier post about the .CO launch: I think all these bozos are about to be schooled. Yesterday EVERY domainer had the EXACT [same?] [...]
I think the .co ext is very appealing and agree if it were .ci or .cs, etc. that the appeal would not be the same.
I have bought some .co domains and do consider myself to be an investor, but look forward to building out some of my .co sites.
I find the appeal to be in the context of “company”. There are many businesses who do not have the opportunity to get the domain that they really want in the .com extension. They most likely will never get the .com domain that they would like to have.
Business continues to expand on the Internet and will only continue to do so. Many new businesses will be created on the Internet as we go into the future. The .co will be very appealing to these people and businesses in my opinion.
I think the .CO quickly has the potential to surpass .net and take place as #2. The fact that Google has said it will recognize .CO as an International Domain makes all of the difference for this ext. to have success.
Look for .CO to do well.
Mike Dew
HeadlineDomains.com