.TEL for New Domainers: Golden Opportunity or Minefield?

Posted on January 30th, 2009 by admin in Domain News | 1 Comment »

The following post was written and provided by webnames.ca. If you are looking for an answer to why .TEL might be worth investing in, it is definitely worth a read!

If you’re new to the game of domain investing and wishing you’d started your portfolio ten years ago, you probably want to know whether the new .TEL extension could be a chance to make some money.

The general consensus in the established domaining communities with respect to .TEL falls somewhere between “wait and see” and “give it a wide berth”. And that’s fair enough. Many domainers focus almost exclusively on .COM and one of the established domaining strategies is click through advertising, which for the foreseeable future is not a possibility with .TEL.

.TEL is in many ways more like an uber-telephone number or business card than it is a domain name. You get a .TEL , attach contact information to it and use it as a convenient way to give someone all of your contact information with a single name. The .TEL can be used with any number of internet enabled communication devices, but when viewed through a web browser, all .TEL’s look exactly the same – and that doesn’t include ad words or any other form of advertising that capitalizes on traffic.

At the end of the day, however, the underlying goal of domaining is to make money and the other key strategy of domaining is buy low, sell high. And while this could apply to .TEL, just as it has with other recent new extensions, there are no guarantees.

As with any open market, price is determined by supply and demand. There are hundreds of ccTLDs and dozens of viable TLD’s that domainers could choose from already, but the saturated market of .COM limits the number of good available names and drives up price.

The primary risk with any new TLD, including .TEL is that if there’s a lot of product (in the form of available names) and no established market (no one to buy your domains), how will anyone sell their domains?

Not only are the market forces against .TEL, there’s no apparent means to monetize on the domain (advertising) while you’re holding it. And to put the final nail in the coffin, there’s a vibrant .COM marketplace that’s thriving while your money is tied up in .TEL.

So by conventional wisdom, .TEL is not a TLD domainers should be placing their bets on – unless there is some way to mitigate the risks.

Risk Mitigation Technique 1: Manage supply and demand

There are an infinite number of names but a finite number premium names and an even smaller number of names that have sold for more than $1 million in the .COM world. For example, if you managed to get business.tel and sex.tel, (most recently sold for $238m and $12m respectively in the .COM space) you would probably find sufficient demand for those names to make a tidy profit . Incidentally, both or these names are in the Sunrise queue awaiting trademark validation, but there are plenty of others to choose from. With a conservatively estimated 20,000-50,000 .TEL pre-bookings at the time of writing, there is a clear market, albeit small by comparison to .COM.

Risk Mitigation Technique 2: Manage spend

The cost of a .TEL at Landrush is normally between $300 and $375 depending on volume and the registrar you choose. General Availability is $10 to $20 based on the same criteria. Landrush gets you in the door a month early (starts February 3, 2009) for choice domains but GA is a fraction of the cost.

If most seasoned domainers are truly going to pass on .TEL, it means a lot more premium names will filter down to GA. If you think you could sell wine.tel, autos.tel or casino.tel for $40, then pop them into your GA pre-booking list. If you think that you could get more than $400 (or $4,000 or $40,000), then put one or two in your Landrush list. (Each of the .COM equivalents of these names have sold for more than $1 million).

.TEL may not yet be a worthwhile pursuit for domainers dealing in portfolio sales in the hundreds of thousands, but if you want to turn $1000 into $2000 or just put $20 down on a name that might turn out to be worth a small fortune one day, some might see the risk as relatively small.

Risk Mitigation Technique 3: Get the domains you want

If you decide to invest in .TEL, the risk then becomes “what if I don’t get the domain I want?” Here are a few pointers:
• Decide whether to register for Landrush or for General Availability (see above) based on how popular you think the name will be, how much money you’re willing to risk and your assessment of the potential value.
• Pre-book early. Pre-booked domains are submitted as soon as the registry opens, so they’re submitted in the first seconds (actually milliseconds) of the registration phase. Registrars normally submit from their pre-book queues in strict order of when the pre-booking was placed.
• Book the same name with as many registrars as you can that a) fall within the price range that’s acceptable to you and b) only charge for successful registrations.

If you haven’t participated in a new TLD offering before, let me explain that last point a bit more.

Each TLD offering can be a bit different. For example, .ASIA operated a bidding system for any Landrush bookings that had more than one application. .TEL is simply first come, first served. Registrars that accept pre-bookings, hold them in a queue and when the registry opens, begin submitting them immediately. Each registrar has (say) 15 connections to the registry and submissions take almost no time, so each registrar submits thousands of names within a few seconds on the registration period starting.

As a registrant, you want to be as high in the pre-booking queue as possible. You also want to be with a registrar that has the fastest executing systems and the least latency to the registry. The easiest way to mitigate these and a whole series of other factors is to place your domain in the queues of every registrar that meet your criteria for price, charge policy and experience. And if you keep it to registrars that charge only for successful registrations, there’s no financial risk.

A Few Final Thoughts

The characteristics of .TEL make it a unique. The vast majority of domainers either don’t fully understand it, have dismissed it, or have decided to wait and see. But it is here and someone will register the premium names. At best, it’s a good opportunity to make some money. At worst, it’s a niche market.

It is impossible to say for sure if .TEL will take off. The underlying technology and architecture is sound, but cost, integration by major manufacturers and rate of adoption are all factors. On the flip side, .TEL offers a simple to use, unified point of contact that excels in a mobile environment. With 150 million smart phone sales annually, there are plausible scenarios under which .TEL could one day dominate .COM.

About Webnames.ca for Domainers

If you do choose to register .TEL names, Webnames.ca offers the best volume pricing we’ve seen anywhere for .TEL names. We offer risk free pre-booking (no charge unless your name is registered) for both Landrush and General Availability and invoicing options for approved accounts. Historically we’re best known as a leader in .CA domains and for working with major corporations and resellers managing portfolios of thousands or tens of thousands of domains. More recently we’ve leveraged our expertise and domain management systems to meet the needs of domainers and have attracted many large portfolio holders – as well as many new domainers.

Please contact us at 1-866-221-7878 ext 182 or sales@webnames.ca to set up your volume pricing discounts.