A further $13m was spent yesterday on auctions for the ownership rights to three new soul-sapping dot-word domains: .spot, .salon and .realty.
Amazon outbid Google and gTLD powerhouse Donuts to pay $2.2m for the rights to sell dot-spot addresses; Donuts beat L'Oreal and two others for dot-salon at $5.1m; and top of the heap, domain investor and entrepreneur Jay Westerdal beat Donuts to dot-realty, paying $5.6m for the rights to sell web domains ending in the word "realty".
We spoke to Westerdal about the decision to pay so much for a generic top-level domain in a market that is seemingly already well served. In addition to dot-realty, there is dot-realestate and dot-realtor (both owned by the National Association of Realtors), dot-immo (for the European real estate market), dot-mls (for the US market) and dot-property.
And that's not forgetting: .apartments, .casa, .condos, .estate, .haus, .home, .house, .maison, .properties, .property, .rentals, .rent and .villas. Does $5.6m really make sense in such a crowded market?
"It looks like a good buy to me," Westerdal told The Register. "I don't see 'mls' and 'immo' as competition, and both 'realtor' and 'realestate' are owned by the NAR. If you offend them, they can literally take your domain away – I don't think that's the best model for someone in real estate. Better for agents to have an independent organization where they can register and keep their domains."
Asked about what size market he expected in order to get a decent return on his investment, he claimed: "Big enough, I guess. I haven't really looked at it that closely." Which is about as likely as persuading a realtor to waive their sales commission.
What can be said is that all of the auction winners will be hoping to get at least 50,000 registrations under their registry in order to get a decent return.
In an analysis of auction prices, Dot-tba founder Christa Taylor blogged that even if a new registry were to make it into the top tier of new top-level domains (which average 60,000 domains), a $6m price tag would take nearly two years to recoup if domains were priced at the new norm of $50 per domain. If the registry is less successful, it would take anywhere from five years up to get a return.
The other thing to come out of this round of auctions is that a very small group of companies are seizing control of large chunks of the generic namespace for internet domains. The internet registry market of the future is increasingly looking like a few very big players and a large number of very small ones. ®