Social Media vs. Domain names

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Social Media vs. Domain names

  1. 1. Navigation Nightmare: The Deadly Danger of Proprietary Platforms By Tim SchumacherPossessing a memorable domain name is still considered essential to any successful business, especially a success-ful online business. Just do the “billboard test” almost anywhere around the world: look at a billboard or othercompany advertisement. Most likely you will see the company’s or product’s domain name - either a .com, or a localtop-level-domain such as .de in Germany or .co.uk in the United Kingdom.In recent months, however, an interesting development has happened around the globe: very often, especially withcompanies which consider themselves trendsetters, domain names are starting to disappear or move into the back-ground. Instead, companies advertise Facebook or Twitter addresses, their iPhone applications, or even searches ata search engines like Google. Furthermore, those advertisements aren’t limited to drawing new customers; instead,existing web sites and communications are used to promote those new media channels. I’ve caught myself encouraging that same behavior at my own com- pany, Sedo – why shouldn’t we use those channels, since we consider ourselves trendsetters in our industry? Besides promoting our web site (the domain name Sedo.com, which we purchased for the great price of $80,000 in 2003), we promote our Twitter account (twitter.com/ sedo) and our Facebook page (facebook.com/sedo). We advertise for the term “Sedo” on Google, Yahoo! and Bing, and our own iPhone application is slated to arrive soon. So entrenched are we in those efforts, that we, much like any company out there, have lost sight of the extreme long-term danger looming on the horizon: the “Navigation Nightmare.” Above: Crandon, WI, advertises their Chamber of Commerce’s Facebook page, rather than their website. Right: Facebook recently made it so that from your profile you can’t link institutions (universities, schools, companies) to external URLs any- more.You instead have to link them to the respective Facebook pages. In this way they’re trying to completely internalize the normal link/structure of the web. Want info? www.Sedo.com :: Need help? support.Sedo.com
  2. 2. Here’s the problem: while it’s smart – and very “web 2.0” – to use all of the above channels as additional meansof advertising and customer interaction, it’s inherently wrong and dangerous to use them as means of navigationand therefore as “providers.” It means lost control, potentially huge costs in the future (possibly wiping out all ofa company’s profits), and a giving up of one’s own fate. In all four examples – Facebook, Twitter, Google and theiPhone - businesses put their fates into the hands of each of those providers. As a result, three things can happen: 1. Providers can kick out any business or entire industry, with or without reason. Consider Apple’s adult ban – while the pros and cons of the act itself are debatable, it certainly shows how an entire industry is at the mercy of a giant. 2. Providers can go out of business, and there is no regulative environment in place. Seems unlikely? Do you remember FortuneCity or Geocities, the much-hyped early predecessors of social communities combined with easy site hosting? If not, think Facebook without the “six degrees of separation” concept of linking people, but with much smaller Internet penetration. Nevertheless, Yahoo! recently terminated Geocities in 2009, after having bought it for a whopping $2.87 billion in 1999. 3. The biggest threat: Providers can and will maximize profits, once lock-in is sufficient, and profitability goals will follow growth goals. If your company has a million Facebook or Twitter followers, how good is your ne- gotiation position if the provider suddenly starts charging hefty fees? If you have tons of happy iPhone users on your app, how good is your negotiation position if Apple suddenly wants a slice of all your transactions? If you get all your business through Google’s ad network, how good is your negotiation position if suddenly you won’t be listed in organic search results anymore, but Google offers you the opportunity to appear on top of the results for a fee? All of the above threats are very real and still seem to be very much ignored in all the hype. The domain name system, on the other hand, can avoid all of these pitfalls, even with its problems with continued cyber-squatting and a somewhat cumbersome governing body called ICANN (though one must give ICANN credit for being, at least, the best possible example of a truly multi-national and somewhat democratic Internet organization). Pricing of new domains is regulated so that domain name RegistriesSearch term advertising is used in many Asian countries to make cannot charge prices aimed at maximizing theirit possible to display Asian characters. own profits.
  3. 3. Turn these examples around, and imagine for one second how wrong it would seem if Facebook had to pay a $50million yearly registration fee for its very own .com domain name (Facebook.com). They could certainly afford it, andit would be the right business decision for them to spend that money as opposed to losing their key domain name.Facebook has built its company through being innovative, so it would be wrong and would stifle future innovation ifa monopolistic Domain Registry could charge arbitrary amounts. For this reason – a good reason – they can’t. Indi-vidual proponents for the openness of the Internet, and governments around the world alike, have ensured that thiswon’t happen, making the domain name system safe for the future.Comparatively, Facebook, Twitter, Google’s Ad Network, and iPhone apps are proprietary walled-garden approach-es; they are not what the Internet needs, and they present a danger for any business relying on such channels over-extensively as navigation and addressing mechanisms.The open alternatives to walled-garden proprietary platforms: open proprietary Navigation Domains Google / Search Communication Email Facebook / Social Platforms Information RSS Twitter Operating Platform HTML (plus PHP and MySQL) iPhone AppsBuilding an online business primarily on Facebook, Twitter, Google, or iPhone apps is like building a house on rent-ed ground, with the landlord having complete control. You might one day hear, “Thanks for building that beautifulvilla, now your rent is increasing from $1 to $100,000 per year!” Don’t let this happen to you.While Facebook and Twitter are excellent networking tools that can have a tremendously positive effects on yourbusiness, they should not be the central hub of your communications efforts. In order to put the control back in yourhands and eliminate any potential threats to your business, your domain should be the one location to which allother channels should link.Tim Schumacher is the CEO of Sedo Holding AG – operating the world’s largest domain market place under Sedo.comand Europe’s leading affiliate platform under Affili.net – with a combined $200 million in revenue this year. Tim holds anMBA from the University of Cologne, Germany, and a Major in Finance from the Stockholm School of Economics, Sweden.In 2000, he wrote his master thesis on pricing mechanisms of Internet domain names, extensively studying the history andfuture of addressing systems. Want info? www.Sedo.com :: Need help? support.Sedo.com

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