DOTZON and dotBERLIN at newdomain org

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Investing in New generic Top-Level-Domains - A guide for new gTLD entrepreneurs and investors on the new opportunities created by ICANN

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DOTZON and dotBERLIN at newdomain org

  1. 1. Investing in <br />New generic Top-Level-Domains<br />27 September 2011, Munich<br />newdomains.org conference<br />Dirk Krischenowski Founder & CEO dotBERLIN GmbH & Co. KGPartner at DOTZON GmbH<br />
  2. 2. This Session isfor …<br />
  3. 3.
  4. 4.
  5. 5.
  6. 6. … andfor …<br />
  7. 7.
  8. 8.
  9. 9. What‘sthe Market?<br />
  10. 10. The Market ishuge!<br />215 miodomainnames<br />130 miogTLDdomainnames<br />85 mioccTLDdomainnames<br />Source: Verisign Domain Name Industry Brief<br />
  11. 11. Domain Names - A stable Growth Story<br />Source: Zooknic<br />
  12. 12. Domain Names = $5-10 Billion Market Size<br />Verisign (> 110 mio. domain names) <br />has a market value of $4,52 billion<br />
  13. 13. Domain Names = $5-10 Billion Market Size<br />Neustar (> 5 mio. domain names) has a market value of $1,35 billion (mixed with other business)<br />
  14. 14. Domain Names = $5-10 Billion Market Size<br />Silver Lake Partners and KKR & Co bought registrar GoDaddy(manages > 48 mio. domain names) for between $1 billion and $2.5 billion<br />
  15. 15. Domain Names = $5-10 Billion Market Size<br />Sedo sells annually ca. 50,000 domain names (value > $ 100 mio), market value $ 90 mio<br />
  16. 16. Domain Names = $5-10 Billion Market Size<br />NBT agrees to $236m buy-outby HgCapital<br />
  17. 17. The Domain Industryhas an own Index<br />
  18. 18. Internet Domain Name Index (IDNX)<br />
  19. 19. Internet Domain Name Index (IDNX)<br />
  20. 20. Domain Developers Fund DDF (Domains)<br />
  21. 21. Top Level Domain Holdings (Domains + TLDs)<br />
  22. 22. Tucows (Domains +)<br />
  23. 23. Sedo Holding (Domain Aftermarket)<br />
  24. 24. Group NBT (Domains +)<br />
  25. 25. Group NBT (Domain Names)<br />
  26. 26. Some Market Players<br />Google / Yahoo! / Baidu<br />QuinStreet<br />Sedo<br />Verisign<br />Web.com<br />Demand Media<br />Neustar / Verisign<br />Marchex<br />Banks.com<br />IAC<br />Tucows<br />Live Current<br />
  27. 27. Whatarethesenew [geeteeeldees]?<br />
  28. 28. .Anythingrightofthedot<br />
  29. 29. The string left of the dot.(the root dot)<br />
  30. 30. Which new Top-Level-Domains?<br />
  31. 31. Ideas 1996<br />
  32. 32. Ideas 2011<br />
  33. 33. gTLD‘sbeor not tobe<br />Everything with 3 to 63 letters (a-z) in Latin characters<br />and strings with at least 2 non-Latin characters such as<br />.监督 or . তদারক করা<br />
  34. 34. gTLD‘sbeor not tobe<br />No TLDs similartoexisting TLDs such as.KOM or.DEU<br />No 1 or 2 character TLDs such as.VW or.HP<br />Nonumber TLDs such as.123<br />No extra characterslike in .A-B or.H&M<br />Nostrings such as.NAZI, .GOD, .TIBET, .PORN<br />Nocountrynameslike.RUSSIA<br />No ISO-3166-3 nameslike.MAC<br />…<br />
  35. 35. Investors View on the Market Landscape<br />
  36. 36. (g)TLDs – Unknown Territory for Investors<br />The existingmarketlandscape<br />Small setof powerful marketplayers (incumbents)<br />Registries (ccTLDs + gTLDs)<br />Registrars<br />The large Internet communityaswatchdog<br />Tests andreportseverything<br />
  37. 37. (g)TLDs – Unknown Territory for Investors<br />Medievalcontractualconditions<br />Monopoly licencesetting<br />Mandatorywaysofsalesbyregistrars<br />Change ofControlclauses in gTLDcontracts<br />Cross-ownershipissuesahead<br />…<br />
  38. 38. (g)TLDs – Unknown Territory for Investors<br />The forceiswith<br />ICANN<br />Governments<br />
  39. 39. (g)TLDs – Unknown Territory for Investors<br />Success in not guaranteed<br />No TLD launchrolemodel<br />No TLD marketingbestpractice<br />
  40. 40.
  41. 41.
  42. 42.
  43. 43.
  44. 44.
  45. 45.
  46. 46. New gTLD Market Expectations<br />
  47. 47. Most ofthe 14 gTLDsintroducedfrom 2001 to 2011havefailedinitialExpectations<br />
  48. 48. 45 mio .namedomains?<br />
  49. 49. .infoand .bizare an ecomomicSuccess<br />
  50. 50. New gTLDsareexpectedto do better<br />Weaponsofmasscommunication<br />New gTLDsthat will beusedby 100‘s ofmillionsof Internet users:<br />.facebook<br />.google<br />.yahoo<br />.ebay<br />…<br />
  51. 51. New gTLDsareexpectedto do better<br />Intuitive domain names ending with .geo, .brand and .branch will become self-evident<br />
  52. 52. New gTLDsareexpectedto do better<br />Search engines will lovethem!<br />www.ifriends.xxxsurpassedwww.ifriends.comin Google after veryshort time<br />
  53. 53. But!<br />
  54. 54. New gTLDs open up a generalQuestion<br />second-level domain<br />vs.<br />TOP-Level-Domain<br />
  55. 55. New gTLDs open up a generalQuestion<br />insurance.com<br />vs.<br />.insurance<br />
  56. 56. Costs to Aquisistion<br />US$ 10,000,000<br />vs.<br />US$ 1,000,000<br />
  57. 57. Annual Turnover<br />US$ 1,000,000?<br />vs.<br />US$ 10,000,000?<br />
  58. 58. New gTLDs – How many?<br />No. ofexpectedapplications:<br />some 100‘s<br />-<br />some 1,000‘s <br />
  59. 59. Fearless new gTLD Projection next 5 Years<br />
  60. 60. HowtomakemoneywithnewgTLDs<br />
  61. 61.
  62. 62. Less Money in GeoTLDs?<br />.berlin .florida .gal .nyc .tokyo<br />Limited market<br />Strictregistrationrules<br />Legislative andregulatoryissues<br />Change ofcontrolissues<br />Scaleofeconomieslimited byverylocalissues<br />
  63. 63. .brand – A Successonlyforthe Brands<br />.att .canon .nokia .siemens .unicef<br />Cheap global IP super power<br />Striking online tool<br />Strong brandprotection<br />Adds Brand Value<br />The brand‘s private Internet<br />Business model<br />
  64. 64. .generic – The Hope<br />.app .blog .music .inc .wine<br />No .comsuccessor in sight<br />
  65. 65. Somegeneric Strings mightbevery profitable<br />Google searchresults (.bar)<br />Value ofKeyword in AdSense e.g. (.insurance)<br />Alreadypartof a domainname (.llc)<br />Large community (.sport)<br />Domain namepenetration (GDP)<br />Identity<br />Solvesproblem / isneeded (.pay)<br />Innovation (.car)<br />
  66. 66. The bigChallengesfornewgTLD Operators<br />HowtoentertheRegistar‘sshelfspace<br />Do I getenoughregistrationstomaintainmy Registry?<br />StableandsecureoperationsofmygTLD, fendingattacs<br />Fightingcybersquatting, domaingrabbingandfraudulentuse in yougTLD<br />Alternative salespathwaysfordomains<br />Acquisitionofmanpower<br />…<br />
  67. 67. Someofthe promising Role Modelstoearn Money in thegTLD Space<br />
  68. 68. 1. Run a high volumegTLD<br />.shop / .web<br />.comlikeprice, high volume<br />Couldbe a successlike .info<br />Cave auction!<br />
  69. 69. 2. Run a Boutique Community gTLD<br />.gay / .golf / .blog<br />High upfrontinvesttobuildcommunity<br />High domainprice, moderate volume<br />
  70. 70. 3. Monetize a KeywordgTLD<br />.insurance / .realestate / .casino<br />Auctioningof premium domains<br />Offermonetizationprograms<br />…<br />
  71. 71. 4. Find an uncontesteduniquegTLD<br />.???<br />
  72. 72. 5. Bundle yourgTLDs<br />KeywordgTLDs / Geo TLDs<br />Same Registry Services Provider<br />Same policies<br />Same owner<br />…<br />
  73. 73. 6. ProvideConsultancy, DNS, SRS, …<br />New gTLDapplicantsneedhelpanyway<br />Income not primarilydepended on gTLDsuccess<br />
  74. 74. 7. Buy-me-out orBuy-me-in<br />The speculators choice<br />Works in limited contention sets (1-2 competitors)<br />Withdraw your TLD application in exchange of particial ownership of competitor<br />Competitor withdraws application in exchange of partical ownership in your TLD<br />Cave „ Change of Control“ clause <br />
  75. 75. 7. Buy-me-out orBuy-me-in<br />The speculators choice<br />Works in limited contention sets (1-2 competitors)<br />Withdraw your TLD application in exchange of particial ownership of competitor<br />Competitor withdraws application in exchange of partical ownership in your TLD<br />Cave „ Change of Control“ clause <br />Very Bad Idea!<br />
  76. 76. SomeSuccessFactors<br />
  77. 77. SuccessFactor Community<br />Applyingfor a community-based TLD cansecurethecompetitiveadvantage.<br />Support fromrecognizedauthorities & institutions<br />Outreachwithinthecommunity<br />Advisory Board<br />SuitablePolicies<br />
  78. 78. Success Factor Intellectual Property<br />IP does not helpyoutogetapproved, but itmayprotectyou in thebid. Different trademarkrightsregimesfornewgTLDs:<br />Examples (wordmarks)<br />.FOX, .NOW, .CLAAS, .BANK, .FREE, …<br />PUNTOPEOPLE, SHOPPINGDOMAIN, DOTCLAAS, …<br />Examples (picturemarks)<br />.MUSIC, .SPORT, …<br />DOTSPORT, …<br />
  79. 79. Howmuch do I needtoinvest?<br />
  80. 80. Howmuch do I needtostart a gTLD?<br />Minimum €/$ 500,000<br />Medium €/$ 500,000 to 1,500,000<br />Maximum uptosomemillion €/$<br />
  81. 81. Value ofnewgTLDs<br />
  82. 82. What‘s the Value of a new gTLD?<br />Market drivenapproach<br />.namesoldfor US$ 11,000,000<br />.mobisoldfor ~ US$ 8,000,000<br />Dot Eco LLC sold 10% for US$ 200,000<br />DotNyc LLC sold 23.5% for US$ 180,000<br />
  83. 83. What‘s the Value of a new gTLD?<br />Measuring a futuregTLDvalue<br />Discounted Cash Flow<br />Turnover x Growth<br /><ul><li>Further discussionatthepanel</li></li></ul><li>Howtoraise Funds fornewgTLDs<br />
  84. 84. How to raise Funds for your gTLD<br />Friends & Family<br />
  85. 85. Crowdfunding/Crowdsourcing: Works in communityprojectsorkeywordgTLDs.<br />Ask all Smith‘stogiveyouupfrontfundstosecuretheir individual martin.smith, tim.smith etc.<br />Askpeople in yourcitytosignupfor a .citydomainupfront<br />Sell domainreservationsupfronttothecommunity<br />Fixed pricesandauctionmodelspossible<br />Example: .APP<br />
  86. 86. How to raise Funds for your gTLD<br />Business Angels<br />
  87. 87. How to raise Funds for your gTLD<br />Venture Capital<br />
  88. 88. LetyourGovernmentinvest<br />Examples: .paris, .nyc<br />
  89. 89. Exit Strategies<br />
  90. 90. Exit Strategies in newgTLDs<br />Saleofthe Registry toits Registry Service Provider<br />Examples: .name, .mobiandothers<br />Saleofthe Registry to an industryplayer<br />Examples: .music, .shop, .blog<br />Saleofthe Registry to an another Registry<br />Scaleofeconomieseffect<br />Saleofthe Registry tothepublic (IPO)<br />
  91. 91. New gTLDHurdles?<br />
  92. 92. A possibleHurdle: NOFI<br />
  93. 93. NOFI – Notice of further Inquiry<br />Governmentsrequesttheabilityto<br /><ul><li>Observe
  94. 94. Object
  95. 95. Sink</li></ul>any New gTLD.<br />Public interestclausebefore IANA entry!?„… if a large number of countries have a problem with a particular string …”<br />
  96. 96. Another Hurdle: Competition Law<br />
  97. 97. Cross Ownership<br />What will US, EU andother legislative sayif<br />Verisignbuys a bigregistrar<br />All US-basedgeoTLDsareoperatedbyNeuStar<br />.TOKYO will beownedbyoneregistrar<br />…<br />
  98. 98. Domain Ownersfight a Battle overnewgTLDs<br />„.tld will diminish the value of tld.com/.net/.de etc.“<br />
  99. 99. Summary <br />New gTLDsare an interestingnewinvestmentopportunitywithspecialconditions<br />Thereisbigmoneytoearn … andtoloose<br />Let‘sgo!<br />

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