Did Frank just burst the bubble?

So there’s really no way to sugar coat it, the last 24-hours has been about as tumultuous as it gets in the domain industry. At the same time, it probably shouldn’t be that surprising to those of us who know the numbers. It costs money to run a new domain name extension and if registrations don’t take-off, the only way to keep the extension alive is to charge more for annual renewals.

new-gtlds-price-increase

Painful, yes, but realistic, well, yes as well.

Domain name blogs have been going nuts over the last 24-hours with posts likes:

Franks Schilling just killed the new gTLD program (warning!)

Schilling: big price increases needed to keep new gTLDs alive

Yowza! And I don’t think I’ve said yowza in the ten years I’ve been writing my blog so now seems like the most appropriate time to break out the term. Like I said in the first sentence of this post, there really is no way to sugar coat it, a big move has been made.

All that being said, here’s my take, for what it’s worth.

These are the early days. Sure, maybe new gTLD pioneers jumped the gun on the expected success. Maybe the marketing machines got ahead of reality. At the same time I still think it’s fair to say these are the early days of new gTLDs and none of us really know what consumer adoption is going to be like long-term.

I for one have always looked up to Frank as someone who really does have his finger on the pulse of the domain name world. Does that mean Frank will always be right? No. At the same time, does it mean he could be early? Yes.

So here’s what I’ll say. Yes, Frank increased prices on new domain name extensions because as a business owner he realized that his pricing model wouldn’t support the business he’s trying to build around new gTLDs. Still, as a pioneer, adapting to change is paramount and Frank isn’t shying away from admitting to the industry that he’s had to adapt, and he’s doing it now to preserve his business.

Yes, I’m prepared to get absolutely slammed in the comment section below…but so be it. I’m proud to stand behind people like Frank, who might make less-than-popular decisions, but do it to stand up for a cause they believe in, and a cause that very likely progresses our industry as a whole.

Sure, I agree that .COM is king, heck .COM is probably getting stronger by the day. However I think we as an industry need people like Frank to venture into unexplored territory. One of the problems early explorers face is uncovering something different than what they expected.

I’m proud to be in a part of an industry with people like Frank who aren’t afraid to forge ahead, try new things, and change course when they see something different than what they expected. These are the times that will define us as an industry, and while we all might be shocked by what’s happened in the last 24 to 48 hours…let’s give it time, learn from what we find and remember that without out pioneers, many of us wouldn’t be where we are today.

What do you think? Comment and let your voice be heard!

{ 29 comments… add one }

  • Michael March 9, 2017, 12:55 am

    What is going on ? I don’t have any new gTLDs.

    Reply
  • Mark March 9, 2017, 1:48 am

    The issue at hand for me is not that he wants to increase prices but rather he’s throwing the one’s that supported these subpar G’s with what was left available against the wall.

    What he should have done was increase the pricing if needed, although I think it’s a bad move and leave the few that’s registered grandfathered at their current rate.

    And then either fly, or crash and burn…

    Reply
  • William March 9, 2017, 1:54 am

    I’m minimally exposed to the increased prices as most of my new gtld names are in extensions that aren’t affected (for now). I do have some .plumbing names that I’ll probably max renew before the price increase takes effect and maybe a couple of .diet names.

    I understand why this decision is being made but I doubt it will have the intended effect. The new gtld’s need adoption by end users to survive and pissing off (and on) domainers will not further that goal. Having every domain name blog and story aggregator filled with stories about how “shady” extension operators jack up the prices unexpectedly for the new strings will surely dampen the enthusiasm of anyone who decides to research before buying a new gtld.

    It would be better for these strings to be sold to stronger, more stable players now instead of being run into the ground and made a laughing stock before the inevitable happens.

    There is a saying in investing that the time to buy is when there is blood in the streets. Well, Gtld Street just turned red.

    Reply
  • Bob McGough March 9, 2017, 2:08 am

    Well stated and I agree with every word, Morgan. Being a leader requires making tough decisions.

    Frank Schilling is a lot smarter than me — and he’s invested a fortune in diversifying his business and his portfolio. I’m willing to trust his judgment to experiment with a few of the better-performing extensions.

    It’s going to take some time for the new gTLDs to break through, but I’m confident that they eventually will reach their tipping point. The new gTLDs aren’t a good fit for the timid or inpatient investor.

    Reply
    • Joseph Peterson March 11, 2017, 3:58 am

      “Being a leader requires making tough decisions.”

      Without warning, a university raises the cost of tuition on students midway through their degree by a factor of 3.0 or 6.5 or 14.0 or 31.0. Would you applaud the university president for that overnight price hike, singling him out as a great leader? There’s no difference between that and what Uniregistry did here.

      From where I’m standing, it looks like Frank Schilling ducked the tough decisions, passing along the cost of his mistake onto the loyal customers who not only trusted him but who financed his project thus far.

      If Uniregistry’s pricing model was broken, then instead of overnight price hikes from €12 to €350, they ought to have phased in that cost increase. Imagine if prices doubled every year for 5 years. That’s the same overall percentage change, but Uniregistry has imposed it all at once, overnight, without any warning.

      Yes, a slower rate hike might mean lost revenue; but real leaders accept the consequences of their own bad decisions, absorbing some of the cost rather than foisting the financial loss onto others.

      A real leader would have looked out for his followers. Good business owners safeguard their customers. If they don’t even try to do that, then they don’t deserve customers. They could easily have been grandfathered in at the preexisting rate. Or else Uniregistry could have given customers advance warning with a long adjustment period. As far as I know, most registrants won’t learn about this nasty surprise until renewal day – at which point, registrars like GoDaddy will be blamed rather than Uniregistry. Tough decision? Or cop out?

      Schilling literally promised us all there would be no price hikes above inflation for the first 5 years. As a multimillionaire, he’s rich enough to keep his promises, even if it costs him. Yes, exploding prices may be the unpleasant necessity if the current business model isn’t sustainable and marketing generates little business growth. But there’s a right way to raise prices, which safeguards preexisting customers; and there’s a wrong way, making no allowances for loyal clientele whatsoever. A business owner who’s been living hand to mouth may have no choice but to harm his earliest customers financially. Frank Schilling, however, has no excuse for throwing them under the bus.

      “Tough decisions”? What tough decisions? Maximizing profits at the expense of people isn’t a tough call. Sacrificing profits for the sake of people – if Frank Schilling had done that, then he’d deserve respect. He didn’t.

      Some domainers believed in Frank Schilling’s nTLDs when nobody else did, and they poured money into his company. Now they’ll be forced to drop their domains as a total loss. Meanwhile Frank Schilling, having taken their money already, will sell their property and cash in yet again. What a tough decision!

      Reply
      • Bob McGough March 11, 2017, 2:57 pm

        @Joseph, you make some excellent points. I only have a few of the affected domains, so it really doesn’t have an immediate impact. My worry, however, is that our industry doesn’t go down the opportunistic path that Big Pharma has taken.

        If in fact, “Schilling literally promised us all there would be no price hikes above inflation for the first 5 years,” then this brings up an integrity issue. Can you cite a reference for that statement? If it was a public promise, the industry should hold him accountable.

        I spent a good chunk of my career in software product management. I have more failed products under my belt than successes, but a few of the successes more than made up for the losses incurred with the killed products. When I see that a product is withering for lack of customer demand, I kill the product ASAP and try very hard not to kill the customer base in the process.

        You’re absolutely correct in stating, “They could easily have been grandfathered in at the preexisting rate.” In fact, this is exactly what I would have done in this case. The customer set here is pretty small, so I would take a further step of polling them whether the domain is important to their business, or if it is simply a flip opportunity. About 2/3 of the new gTLDs are parked. I’d buy out those domains at a modest premium and give a significant discount on new purchases. Finally, I’d provide a clear upgrade path for customers who are using the domains. I’d stop selling those domains (kill the product) and only maintain them to a pre-specified date.

        Indeed if he made this promise, he needs to stick to it.

        I’m sure by now Uniregistry is aware that the bigger concern than price is the customer-relations nightmare. If I were in Frank’s shoes, I’d be worried about how many customers I’d lose based on the integrity issue alone.

        I don’t know Frank, but from what I’ve seen I’d expect that he’ll make good on his promise.

        Reply
        • Nick March 11, 2017, 5:35 pm

          Reply
        • Joseph Peterson March 11, 2017, 7:36 pm

          @Bob McGough,

          What you’ve described is a smart, responsible way to handle pre-exisiting customers during a steep price increase.

          “I don’t know Frank, but from what I’ve seen I’d expect that he’ll make good on his promise.”

          Part of the reason I’m criticizing his actions so severely in public is to signal what he could have done and might still do. Awkward backtracking is better than going forward with a bad plan.

          Whether Uniregistry keeps Frank’s promise or not, it’s crucial that other registries see negative consequences for Uniregistry as a result Uniregistry’s bad move. If Uniregistry really does turn a profit by betraying early customers, then other registries would logically consider following suit with steep price hikes of their own. No, Uniregistry needs to lose money by losing customers. Otherwise registrants everywhere are screwed.

          Reply
  • kd March 9, 2017, 2:32 am

    No he did not burst a bubble. It is impossible to burst a bubble that never existed.

    Reply
  • John M March 9, 2017, 3:03 am

    Morgan I understand what he did and why. In the process he just strengthened .com in the eyes of most investors and proved guys like Mike Mann and others correct.

    Reply
  • joe March 9, 2017, 3:41 am

    First of all, let’s leave this to the pioneers because the only pioneering extension is and will always be .COM and the thousands of arrivals of new extensions gTLD have been a problem from the beginning many of us have believed that with a maximum of 10 well chosen It would have been enough and left over, right now what Frabnk could not do.
    Frank has been found for months with domains XYZ, CLUB, WIN, TOP, ETC. Without buying more or less $ 5000 and also renovations to $ 5000 more than 1 Million put to register in a window to the left of our monitor.

    Now does not come out this window who bought all these premium domains without registering a Chinese investor or else have to make a reduction to 0.99 cents of dollar to be able to sell and not go missing something that was impossible to pay and renew, how many times many Write on your blog and post.

    Now it has patented the market of Uniregistry to change its system, if it is for better I continue with Uniregistry why you should never lose hope a bad year anyone can have.

    But this rise in gTLD prices to many experts has left with bad taste in its portfolio of registered and unregistered, a stampede to save this news that has caught many in this market.

    Even if gTLD prices go up, I did not plan to register more than I have, for months I thought that .COM is the best.

    Reply
  • Kevin Fink March 9, 2017, 4:22 am

    Well said, Morgan — and agreed.

    Reply
  • Darko March 9, 2017, 5:13 am

    A product price in a saturated market in which we can also count the “domain market” always will be defined by the paying buyer (wholesale and retail). That said the market will decide were the money will be spent. It’s like water, it will find the way down the hill between all the obstacles.
    In my opinion the new gTLDs are only one of many steps in the Internet evolution. I strongly believe that sometime in the future there will be the possibility to register any combination of strings left and right of the dot.

    Reply
  • Nick March 9, 2017, 5:37 am

    .COM wins!

    Reply
  • Suresh Raghavan March 9, 2017, 6:05 am

    Oh there are many questions that had popped even before these were released.

    Why do we need these? was the biggest question that never had a real answer. Domainers believing that consumers need shorter domains, nobody asked the consumers if they are willing to change on where they put the DOT (between words).

    If you run a business, you want to ask what the extension can do for me and not the other way around, why would want to promote an extension , have enough issues handling my business

    Will it work for a few combinations, possibly 1000 for each tlds. So its essentialy a Registry to Consumer direct play, why were domainers all excited for crumbs that were left

    Not to mention, no pricing protection. There is an old Sam Walton story on how he lost his first store, for not owning a long term lease. In the same token, when you build anything , you need to be sure of the land (domain name and extension)

    I can go on and on. Sure, its good to push the envelope, but there are many issues from the get to. Whats the next shoe to fall, I am sure there will be many more

    Reply
  • RaTHeaD March 9, 2017, 7:56 am

    i always figured frank’s interest in the new gtld’s was simply his way of taking insurance on his 400,000 dotcom domains. and wow! getting other people to pay for that insurance well that’s just the icing on the cake. the new tld’s never made any sense to me and i don’t think they ever will.

    Reply
  • Mark Thorpe March 9, 2017, 8:22 am

    Why doesn’t Frank ever talk about all the .Com domain names he keeps buying?
    .Com, the same domain extension that made him rich.

    Frank has been buying .Com names in record numbers lately!
    Maybe, he needs to increase the prices of his non-selling new gTLD’s, so he can keep buying .Com’s.

    Reply
  • Amy March 9, 2017, 8:58 am

    “a cause they believe in” , give me a break. It’s not a “cause”, he’s not saving starving children. it is not something noble he’s doing. he is conducting business.

    you will always be a cheerleader I suppose Morgan no matter what happens to the new tlds. can’t you ever call it for what it really is

    Reply
  • Eric Lyon March 9, 2017, 11:49 am

    It’s a dog eat dog world out there when it comes to business sometimes. One has to try and compensate for all the overhead costs of staying in business. Sometimes, that means price increases. And sometimes the result of increasing prices is that a percentage of customers find a cheaper solution. I’m sure he weighed the loss factor thoroughly prior to making the final decision and found that it was worth the risk.

    Reply
    • brand March 9, 2017, 4:48 pm

      EXACTLY……

      Reply
  • Dale March 9, 2017, 2:54 pm

    Morgan, I know people say that you are a nice guy and that you wouldn’t say “boo! to a ghost” but not everyone is like that, I’m not like that. Its almost criminal behaviour what Frank is doing. Over 3000% price increases! C’mon. Things like that in other industries get regulated and penalised like Wonga pay day loans did in the UK. This industry is still definitely the Wild West

    Reply
  • Kevin Fink March 9, 2017, 4:20 pm

    Well said, Morgan – and: agreed.

    Reply
  • Joe March 9, 2017, 5:02 pm

    The real percentages of the upcoming Uniregistry domain extension price increases (5% to 3115%) source https://onlinedomain.com/2017/03/09/domain-name-news/real-percentages-upcoming-uniregistry-domain-extension -price-increases-5-3115 /

    Reply
  • Morgan March 10, 2017, 1:19 am

    Great comments everyone, it’s clear this is a hot topic for all of us!

    @Amy – I wouldn’t say I’m a cheerleader (although I might just have to buy some pom poms now), I would just say I can understand when a business makes a business decision, it’s as simple as that.

    Reply
  • Andrew Rosener March 13, 2017, 11:22 am

    Amen. Well said Morgan. I couldn’t agree more. I think people should be ashamed of taking business and making it personal.

    Frank is doing what he needs to do and that is his prerogative. Vote with your wallet if you don’t like it.

    Reply
    • Joseph Peterson March 13, 2017, 9:09 pm

      @Andrew Rosener,

      Would you be applauding Verisign if this were an overnight price hike on .COM from $9 to $279 per year?

      I think not.

      Reply
      • Andrew Rosener March 14, 2017, 9:20 am

        @Joseph Petersion – I’m not applauding Uniregistry. I’m applauding Morgan for standing up for Frank, a person I’ve considered a leader, ambassador, a picture of success to strive for, someone who blazed a path that I followed and has provided well for my family for a decade now…and also a friend.

        I don’t agree with Uniregistry’s decision and it will more than likely cause me to think twice before buying domains in those strings with a history of price hikes or uncertain future pricing. But that doesn’t change the way I feel about Frank Schilling and anyone else in this industry who has blazed the way for all of us to have the privilege of making our living in the greatest industry on Earth. I couldn’t have done it with out him and all those incredible folks that came before.

        If there was no risk in domain investing, there would also be far less reward.

        What I would like to point out is that I have been EXTREMELY outspoken about my distrust and distaste for nearly all of the new gTLD’s since the onset of the program. But most of the people who are crying over spilt milk, are the very same people who would send me hate mail and make threatening comments on the blogs because of my position on the new gTLD’s. Perhaps many of you should have heeded my warning?

        Reality is a bitch. It has a funny way of punching you in the face once in a while. If you thought that it was Frank Schilling’s responsibility to deliver you to the promise land of success and tremendous wealth, you failed before you started.

        I recognize many of the names of commentors on this and other blogs, writing about this subject, and they are the very same people who called me an “idiot” because I refused to list their new gTLD domain in MediaOptions newsletter at 10X the price that the .com could be purchased for. How that work out for you?

        There is no such thing as easy money. People entered an unknown market, a tremendous open field, with complete and absolute faith that everything they bought was built on a rock solid foundation and was gold from day one. The reality is, the first pioneers just made it to California and its the Wild West. It will be years before the rest of the World knows about or wants to pay a visit to California. Until then, the dust is still settling and there is no such thing as bedrock. Fortunes will be made. Fortunes will be lost.

        Reply
        • Joseph Peterson March 14, 2017, 10:09 am

          @Andrew Rosener,

          “Perhaps many of you should have heeded my warning?”

          No, Drew. This isn’t a verdict on the nTLD program as a whole, even though you and many others are crowing about the demise of the new domain endings. Just because Frank Schilling raised his prices from €12 to €350 doesn’t mean that nTLD domains – even Uniregistry nTLDs – were a bad investment for domainers who bought them. It only means Uniregistry has managed ITS business badly.

          This price hike WASN’T foreseeable or inevitable. On the contrary, it violates Frank Schilling’s explicit promises. So it’s rather obnoxious to blame the domainers who purchased Uniregistry products for an unanticipated and inexcusable price increase on pre-existing customers.

          These domains themselves can be profitable investments – or at least they were. I’ve sold Uniregistry domains for a profit as recently as last week. And I’ve turned down profitable offers on some I still own but am now forced to drop. What makes many of these domain investments unprofitable from this point onward ISN’T based on their intrinsic merits, as you imply, but rather Uniregistry’s unethical decision to increase renewal rates suddenly by a factor of 31. My own exposure to this price hike is minimal. And I’m not “crying over spilt milk”, as you put it. What I and others are doing is condemning unscrupulous price hikes by Uniregistry or ANY registry. If we don’t call out a registry that does this, then they all will.

          “If you thought that it was Frank Schilling’s responsibility to deliver you to the promise land of success and tremendous wealth, you failed before you started.”

          No, it was Frank Schilling’s responsibility to keep his promises. Simple. Right? When a guy announces prices won’t go up faster than inflation for 5 years, then he imposes a 3100% price hike overnight, he ought, at the very least, to grandfather the old rate for pre-existing customers. That’s not asking for Schilling to make anybody rich. Just not to screw over his customers.

          “If there was no risk in domain investing, there would also be far less reward.”

          Speculative investment risk, sure. But registry misbehavior? That’s not acceptable, and we’re right to criticize it.

          “But that doesn’t change the way I feel about Frank Schilling …”

          OK. Fine. I’ve defended Frank Schilling online in the past. Don’t think he deserves special treatment in this instance, whatever his glorious trailblazing. Let’s not make mountains out of molehills. This isn’t a referendum on whether Frank’s soul belongs in Heaven or Hell. He’s a nice guy. But he made a shortsighted decision to profit at the expense of his customers. Let’s praise a man when he does right. And censure him when he does wrong. He can take it.

          Reply
  • Joe March 13, 2017, 3:52 pm

    Thanks Morgan at least I can respond to @Andrew as long as you do not cancel this comment.

    @Andrew your comment is very accurate since only this you write to Morgan, Amen surely you should save it to pray for others who have commented on your professional criteria we all left our money in this market more than others and this Is good if you know to lose, ask to lost you on occasion as Broker?

    Reply

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