2013 july gac webinar for tom

1© 2013 Architelos and/or its affiliates. All rights reserved.

“TLDs and Domain Name Market Overview”

Alexa Raad, CEO

John Matson, COO

GAC Workshop

© 2012 Architelos and/or its affiliates. All rights reserved. 2

Agenda

• Introduction

• Understanding the DNS Market• Recent market trends of ccTLDs and gTLDs• Why these changes? and what does it say about the market• What are the evolving business models

• Impact of New gTLDsDe-regulation and shifting balance of power

• Security and Abuse• How much domain abuse is there now?...across all ccTLDs and gTLDs• What are the practical "best practices" that new gTLDs can employ to

minimize and mitigate abuse• Q&A


Strategy Consulting

Enabling wisdom in the service of the Internet

New gTLD Services TLD Managed Services- Business Case Builder- NameSentry™- Registry Financial Sys.

Alexa Raad, CEO John Matson, COO Michael Young, CTO Norbert Grey, CFOPIR KPMG LLP Afilias .mobi.mobi CapGemini Grocery GatewayVeriSign Ernst & YoungAT&T General Dynamics


Agenda• Introduction






Today: Top Level Domains• Original TLDs:

com, .org, .net, .edu, .gov, .mil, .int

plus others (e.g., country-code TLDs)

• 2000 Expansion: Round 1aero, .biz, .coop, .info, .pro, .name, museum

• 2004 Expansion: Round 2.mobi, .tel, .asia, .cat, .jobs, .post, .travel, .xxx

• 2012: 1930 New applications received

• Today:Over 250M Domain Names, 7% annual growth

7 gTLDs, 15 Sponsored TLDs, & 255 ccTLDs, 40 IDN TLDs

• 2014 and beyond~ 1,000s of TLDs to be addedWhen will the next expansion round occur?

Source: Verisign Domain Industry Report 4Q 2012


2012-2013 Total Market ccTLD vs. gTLD

Source: Architelos analysis of Verisign Quarterly Domain Name – 2013 estimate based upon doubling of Oct 2012 report 6 month data

250M names

ccTLDs taking market share from gTLDs

Uneven growth between mature and developing markets

Both grew strong


But by Sept. 2012… changes were evidentYear over Year % change in DUMS - 2012 versus 2011

Jan Feb Mar Apr May Jun Jul Aug Sep0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

.com .net .org

gTLDs

Verisign: Renewals holding, new-adds dropping


and growth has been declining into 2013

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

Top 10 European TLDs by Total Domain NamesJan 2012 - Apr 2013 Growth Percent Year/Year by Month

.de .uk .nl .eu .fr .it .pl .es

.be .se


And for the first time, some are shrinking


Why is the market slowing or shrinking?

• Mature market saturation - registrant’s ability to buy

• Decreased relevance of domain names for navigation

• Global economic difficulties

• Speculators slowing purchasing – awaiting new gTLDs

• Other factors…


What could change domain name and TLD market?• Internet end users

Behavioral changes in the way they browse, look/up, navigate and search

Increased desire for self-expression and communication with like-minded individuals or community (Twitter, FB, Pinterest, Tumblr)

Increased desire for “More, Better, Faster, Cheaper, Easier”

• Disruptive technologiesEliminating traditional input methods (i.e. type-in address in a browser, versus natural language search such as SIRI)

Means of access, i.e. mobile versus pc

• Regulation or de-regulation

• Change is inevitable


But what is a Domain Name? – Really… • An ASCII “label” on an IP address

• Label = Human recognizable and memorable hence some names more valuable that others

• Basic utility of a domain name is the same regardless if its a ccTLD or a gTLD

• Pointer to a resource on the Internet• Necessary for routing traffic (because linked to IP address)• Used for identity and communication

• The market value of a domain name has less to do with its functional utility and more to do with its perceived or created value

• Ultimately it the DNS and IP that matters!


The Domain Name Business Models Haven’t Changed

• Web 1.0 - $ value to VRSNwishmorepeoplecouldenjoythefunaticannn.com = $7.85

Google.com = $7.85

Gambling.com = $7.85

• Web 3.0 - $ Market Valuewishmorepeoplecouldenjoythefunaticannn.com = $9.99 at Godaddy

Gambling.com = $20M at Sedo auction in 2005

But only $2.5 Million in 2011

Google.com = $$$$$? # 1 site in terms of traffic. 2013 Market Cap = $264 Billion *

* Source: Yahoo Finance April 1, 2013

This works if a TLD has scale and longevity. But how many have or will have longevity AND scale?


Names Have value

10B appsD/L from

Apple

Large BrandsAdopt &

Enforce IP

Dom

ain

nam

e gr

owth

200M+

1999 2011

Domain Tasting

& Adwords

Beyond

Web 2.0

20092002 2005 2008Directories Google

RisesGoogle as Ad platform

Mobile TwitterFacebook &

User Generated Content

PC dominated world ends

Web 3.0

Brands usefacebook.com/brand

On ads

Community Has value

Web 1.0

Mobile /Social computing begins

Mobile apps take off

Traffic has value

Targeted traffic to

Pre-existing user

FB eclipses Google as

Most popular site

2010

Whereas the Web’s Business Models Have

2012

1930 new gTLD Apps

Google applies for 101 and Amazon for 76

new gTLDs

2013?

FB IPO

Gambling.com sells for $20M

Gambling.com sells for $2.5M

Highest secondary market sale in 2012 is $1M personalloan.com

46B appsD/L from

Apple


Names Have value

10B appsD/L from

Apple

Large BrandsAdopt &

Enforce IP

Dom

ain

nam

e gr

owth

200M+

1999 2011

Domain Tasting

& Adwords

Beyond

Web 2.0

20092002 2005 2008Directories Google

RisesGoogle as Ad platform

Mobile TwitterFacebook &

User Generated Content

PC dominated world ends

Web 3.0

Brands usefacebook.com/brand

On ads

Community Has value

Web 1.0Mobile apps

take off

Traffic has value

Targeted traffic to

Pre-existing user

What has value?Trusted, secure &

consistent communication in a defined community

FB eclipses Google as

Most popular site

2010

New Business Model for gTLDs?

2012

1930 new gTLD Apps

Google applies for 101 and Amazon for 76

new gTLDs

2013?

FB IPO

Gambling.com sells for $20M

46B appsD/L from

Apple

Mobile /Social computing begins


Distinguish the Why? From the What? Or How?• The WHY? - These human needs are long-held and immutable:

• Identify

• Inform

• Communicate

• Entertain

• The WHAT? – The means to satisfy the needs are subject to change (technology, culture/preference, economics, etc.).

• Domain Names

• Keywords

• Apps

• QR codes, etc.

• The HOW? - How the “means” are used to satisfy the need. Also subject to change • Search engines, Websites

• Email

• Social Media

Domain Names are just one of the “means” of satisfying immutable needs


URLSearch

User behavior combined with browser development has eradicated distinctions between direct navigation and search

Are there other means that could make domain names less relevant?


Source: Mary Meeker, KPCB, Internet Trends Presentation, D10 Conference, 5/30/12

Will mobile internet access render domain names less visible?


…. and less useful?


Short Codes

URL Shorteners

Sensor Network

Barcodes

Geocodes

Will other disruptive technologies reduce the value of domain names and distinctions between TLD?

Social media

Mobile apps

21© 2013 Architelos and/or its affiliates. All rights reserved.

Where have we seen this before?


Need: Inform, Communicate

Source: Mary Meeker, KPCB, Internet Trends Presentation, D10 Conference, 5/30/12

The Computing Industry has Changed…


Need: Inform, Communicate,Identify

The News Industry has Changed…


Need: Inform, Communicate, Entertain

The Book Publishing Industry has Changed….

THEN NOW


THEN NOW

The Music Industry has Changed….

Need: Entertain


THEN NOW

The Video Entertainment Industry has Changed….

Need: Entertain


So…Why Wouldn’t the Domain Name Industry Change?

Then

• 250+ million names mapped to a few Top Level Domains

“.com is a “morass of content”’

Inefficiencies and “artificial scarcity” created alternative markets (speculation and secondary market)

• Alternatives & short-cuts

• Search engines = traffic control

SEO used to “help” search engines drive traffic

• Advertising spend out of sync with online usage

NowNeed: Identify


Agenda• Introduction






New gTLD Program = De-regulation of the Domain Name Industry

?


Market Characteristics of De-regulation• Reduced barriers to entry

• Unanticipated new players

• More choice/supply for consumers

• But also more confusion, chaos

• Incumbents tend to:

React slower, focus on protecting the status quo

Resist or deny change

Underestimate the upstart competitors

• High risk, high reward business models

• Integration along the value chain (up to supplier or down to retailer)

• Balance of power shifts

• Shifting price points and profit margins along the chain

• One big success can change everything…


Registrants & End Users

Regulatory Authority

Support Services

Where We Are

Contract Holders

Registrars & Resellers

Registries

Advertisers

Controlled Supply & Artificial Scarcity

Increased Supply & Uncertain Adoption

Dynamic Demand and Supply

Models

Stage 3

FutureMarket

Stage 2

New gTLD Market

Stage 1

Current Market

Registrars & Resellers


Increasing Supply of Domain Names

1930 Applications

Voluntary Withdrawals

Fail Evaluation

1,410 Unique Strings 231 Contention1,179 Uncontested

Lose Contention Set 520 exit

15% - 290 exit

5% - 97 exit

1,023 Estimated Strings

About 600 BrandsAbout 400 Generics

Conventional wisdom: 50% fail

So far 89


…Integration along the value chain

ICANN

Regulator Registry Contract Holder Registrar Web

ServicesSearch Engine

Social Media

Apps & Platforms

Verisign

Neustar / Afilias

PIR

Demand Media

Google

Amazon

1.4B+ and growing

Internet End User

Microsoft / Yahoo

Donuts / Uniregistry

Twitter

Facebook

ChromeAndroid

Google+GoogleGmail, PicassaGoogle Docs etc

Charleston RoadRegistry

Google Google


Range of Potential Impact of New gTLDs

All New gTLDs

Fail

Significant New gTLD Successes

MarketRejection

Market Acceptance

Other Substitutes• Search• Apps• QR Codes• New Tech

Somebody got it right – value prop & distribution

channel

What are the impacts on TLDs across this spectrum of scenarios? Is there a “good” outcome?

Names are Irrelevant

Commodity Pricing to

“Free Names”

How long can Status Quo be maintained?


What About Adoption: The Diffusion Curve

To get to “critical mass” of adoption, you need to convince the innovators and the early adopters to purchase and use the TLD.

The inflection curve happens at 16%

Keep Laggards

At Risk Registrants


Adoption will be slower that most expect

• Applications and providers take time to recognize new gTLDs• So far little coordinated means to facilitate this• Can lead to end user and registrant dissatisfaction

• This will be even harder for small gTLDs (niche, closed) and therefore more problematic

• Education about availability and differentiation of new gTLDs will be costly and time consuming

IDN adoption will not be same as ASCII, and may be even slower

• Registrants will have to be educated about its current limitations (email functionality)

• Most likely to be used as a pointer to existing sites (best use case is for ads)

What About Adoption…


Agenda• Introduction and setting the stage






Will they? Or Won’t They?• Debate on whether new gTLDs will increase abuse on the Internet

But without a benchmark, how can you tell?

• How safe is it today?


Excellent4%

Good26%

Exercise Caution62%

At Risk9%

NameSentry Index Rating of Total Domains (257M)

How safe is the Internet?


NameSentry 2013 Abuse Trend Analysis

4,000PPM

@ 250M Names


The Internet as a whole? “exercise caution” (NI of 0.4%)


NameSentry implements GAC recommendations

Enables TLD registry to detect abusive registrations right awayStep 1 Step 2

And get as much info about it as soon as possible


NameSentry Automates registrar notification


NameSentry keeps audit records of all security threats identified and actions taken by the registry as a result

NameSentry automates mitigation workflows including and up to take down

2013 july gac webinar for tom

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