With the possible introduction of direct registrations in Australia, a lot of Australian domain investors and registrants (including myself) have highlighted a lot of the negative experiences of countries like New Zealand and the UK when they did something similar.
Back on the 30th August, I wrote this article entitled “A Quick And Easy Way To Grow .AU”. This provoked a lot of comments – some of which were particularly critical of what transpired in the NZ market.
Jay Daley is the Chief Executive of NZRS (they operate and manage the registration of .nz domain names and the operation of the .nz Domain Name System), and he rejected a lot of the criticism. A healthy debate ensued!
Jay then offered to write a guest article on their experiences of opening up .nz, and how he went from being against the idea, to thinking it’s been a great success. I always like to try and understand both sides of the argument, so I accepted. Whilst I don’t have a closed mind, I think he’s got a challenge on his hands to convince people on this side of the ditch!
Of course, it’s important to bear in mind that he runs the shop that sells the goods, so of course he’s going to back it come what may! 😉
Here is his article.
“Opening The Second Level in NZ” – by Jay Daley – Chief Executive of NZRS
The Why
For a long time, I was strongly against opening the second level of .nz. While it was clear that the existing second levels of .co.nz, .org.nz etc were not suitable for everybody, I argued that this could best be addressed by a huge increase in the number of second levels. The analogy I made was to the root, which for many years had limited choice with a small number of gTLDs, but was soon to change with the addition of hundreds of new TLDs. So, I argued, why not take that same approach to .nz and increase the number of second levels by a hundred or more and see if we can find a niche for everybody? Sure, we might end up with second levels that only have ten registrations, but there’s no cost difference in that for a registry, and the recognition problem mirrors the new gTLD recognition problem and so can coat tail off the publicity around that.
What I failed to spot and what I’ve learnt now that .nz has been opened up, is that this whole concept of classifying domains into second levels is irrelevant because people don’t think that way about domains. What people are actually concerned about is brand and the credibility of a brand and while classification is part of that, it’s not what defines it, nor is it the primary factor. When you see it that way, it becomes clear that the TLD brand can’t be split into two parts, the second level and the TLD, it has to be seen as one whole.
So the brands our customers now choose from are primarily .co.nz or .nz. Most importantly, .co.nz is not seen as a sub-brand of .nz, it is a distinct brand in itself. But, as a brand it has a very specific focus on companies and, despite being a strong brand, can never go beyond that. The brand of .nz is entirely different, its sole connection is to .nz, and so it suits everyone and everything NZ related.
In other words:
- .co.nz is the brand for companies based in NZ
- .nz is the brand for NZ
Seeing things this way also explains why opening up the second level doesn’t weaken the brand of the existing second levels at all. If an existing second level withers once the second level is opened up then what that actually means is that the brand of that second level was never compelling and only prospered because of the limited choice available. Opening the second level exposes the already weak brands rather than weakening them.
The best summary of the impact of this change, is that the pressure is off registrants. They don’t have to ask “what kind of an entity am I?” they just pick the left-hand side to match their identity and add on the .nz by default because they’re from New Zealand. Easy.
The What
Opening up .nz has been a great success, as defined by looking at both uptake and uniqueness.
Putting aside whether or not the goal is uptake, it’s not contentious to say that the number of domains registered equates to popularity which equates to meeting the needs of customers, which equates to success. The uptake of .nz has been excellent as shown in the chart below. It was almost exactly three years ago that the second level in .nz was opened up and currently of the ~695k domains in .nz, ~129k are directly at the second level, so close to 19%. That’s excellent uptake.
This chart shows more than strong uptake of .nz, it also shows that .co.nz is growing and stronger than ever, while .org.nz, .net.nz and the other minor second levels are contracting. This just adds strength to the assertion that opening the second level doesn’t weaken the brand of existing second levels, it just exposes those that are already weak.
There’s a concern often raised that uptake is skewed by people protecting their existing .co.nz and so we assess this by looking at different forms of uniqueness: are the domains different, are the registrants different and are the domains for each registrant different.
- Of the ~129k .nz domains, ~27k do not have a corresponding .co.nz or .org.nz etc, which means that 21% of .nz or 4% or the overall register is entirely new.
- 30 days after launch, there were 11867 unique registrants with .nz domains of which 3805 (32%) were new registrants. Today that figure stands at 26%.
- Of the ~129k .nz domains, ~19k have the same registrant as a same domain under one of the second levels. So if assumed the worst, that this is all protective registration rather than transitionary registration, almost 3% of the register could be protective .nz registrations. Of course, there are protective registrations within second levels too.
The How
As we all know, not every TLD that has opened up their second level has seen such rip-roaring success and with the benefit of hindsight and comparative experiences in other TLDs, the key factors in the success of opening up .nz are clear.
The first factor is that domains under .nz are offered at exactly the same price, under exactly the same rules and through exactly the same channels as .co.nz and the other second levels. This matters for two reasons – first and most important, it’s registrars that sell domains and if adding the new second level is as simple as possible for them then their uptake and sales are maximised. (Even compared to offering it on different terms and incentivising them to sell to overcome that). The second reason is that any difference in price, rules or channels is something new for the registrant to understand and is just a barrier to sales.
The second factor is the policy for opening the second level was pretty much close to optimal. Since this is of current concern to the .au market, I’ll go into this in some depth, and please note this was developed by a separate organisation from mine and so I can’t take any credit for it.
- Existing registrants who had a unique name at the third level were given preferential rights to register or reserve the equivalent at the third level. These preferential rights had to be exercised within six months, which is long enough for the message to be thoroughly disseminated and short enough so that this didn’t become a burden.
- The reservation period was two years, which could maybe have been shorter but two years was fine. The key point though is that registrants had to specifically request a reservation, a simple process, but one that separates out those that care about this from those that don’t, and so only ~19k reservations were made.
- Where names at the third level were not unique, no preference was given to anyone and all the registrants had to enter a conflict resolution process if they wanted the third level. This lack of a preference is vital to the credibility of the process, with potentially serious consequences for getting it wrong, such as being mired in lawsuits or government intervention.
On that last point there were forceful views that the oldest registration should have had preference and forceful views that .co.nz should have had preference. While they might seem workable solutions, particularly if you have a vested interest, both fall down under closer examination.
- No registry that been around for 20+ years has good enough records to be certain who registered a domain first. It’s simply too messy.
- When looked at from the perspective of registrants, nobody can claim that all the registrants of .co.nz will always have more rights than the registrant of the corresponding .org.nz. Take a national museum for example, can anyone really claim that having registered under .org.nz their rights to the .nz name are less than those of absolutely anybody else who might have registered the .co.nz?
While the .nz conflicts process could have had a clear deadline aligned with the deadline to register/reserve, the basic principle that everyone is on an equal footing was spot on and has ensured the integrity of the process.
I know that’s hard for domainers to accept, particularly those that believe their investment should be rewarded. And don’t think I’m coming from an anti-domainer perspective – I think domainers have a vital role in the growth of a TLD by providing investment and velocity for domains. But this is one area where the nature of one registrant should not be judged against another, and an equal rights policy for conflicts is the best way to ensure that.
To finish off, the third factor, which was almost certainly part of the strategy in other TLDs, was the channel management of our registrars, providing them all the data, information and help they needed to inform registrants of the change and let them quickly take up the new second level names. All part of being a frictionless TLD.
In Conclusion
If you want to find out more about the .nz policy for opening the second level then visit https://dnc.org.nz/more-options-nz , and if you’re after our daily stats on .nz registrations then visit https://idp.nz.
Bio:
Jay Daley is the Chief Executive of NZRS Ltd the registry for the .nz top level domain, a role he has held since 2009 and a role for which he emigrated from the UK to become a New Zealand citizen. Jay has a technical background, starting as a software developer in 1986 and then moving to network management in the public sector and then to general IT management. In 2002 Jay moved into the domain name industry to take up the role of Director of IT at Nominet, the .uk registry, and so now has a fairly unique perspective across different ccTLD structures and founding principles.
Jay’s passion is how to help people leverage the power of Internet for personal, local and global social transformation, with a current focus on access to open data and data analytics. He is a strong believer that “sunlight is the best disinfectant” and actively involved in the open data and open society community.
His skill set is as a global expert in domain names and a specialist in data analytics, trusted markets and agile product development. This is reflected in his day job which has an emphasis on designing and delivering new data products both to enhance .nz and to provide new income streams to InternetNZ to use to promote the Internet in New Zealand.
Jay is an appointed member of both the ICANN SSAC (Security and Stability Advisory Committee) and ICANN CSC (Customer Standing Committee).
Disclaimer
An excellent article!
Jay is a good sport. With his stewardship, NZRS uptime has been remarkable.
Domains are brands, the address isn’t.
Brand.address or perhaps Brand.address.au
I agree that the right hand side is not as important as the left hand side to most people but because domains have to add a TLD, that TLD ends up being part of the brand whether or not people want that.
Most people choose extension first and keywords second. They may compromise on the keywords but rarely the tld.
30 years of .com.au brand destroyed for what benefit?
You obviously live in a parallel universe Jay. The decision to go for direct registrations in NZ was no more than a cynical money grab. The way it was managed was also diabolical (conflict process). Businesses were forced to cough up to protect their brand. Heaven help Australia if they do what you did.
Can’t wait for the debate .cuz.nz vs .bru.nz
AUDA once wanted to do a whole lot of new extensions also. .biz.au, .info.au. Thankfully that disaster ended up being limited to .id.au.
What these ideas does show though in a follow the leader mentality, copy ICANN, copy Nominet, even if it is obviously a bad idea to most outsiders. At one point Jay wanted to copy the whole ntld program in .nz form by the sounds of it.
Jay, since you announced .nz your growth rate has gone from 10% to 3%. The new extension hasn’t done anything other than take some registrations from the old. .uk has the exact same problem. Nearly no growth despite the change.
Which large sites use .nz? It is mostly defensive registrations, a double tax on NZ businesses.
And as we’ve discussed in a previous post, the growth rate of almost every developed world ccTLD has fallen drastically because of the impact of new gTLDs. I doubt anyone could make a convincing argument that what brought the .nz growth rate down was our opening the second level and nothing to do with the new gTLDs, as if we have some magic prophylactic against new gTLDs that nobody else has.
Jay, you seem to be finally will to admit that your growth has “fallen drastically” like everyone else, so where is the benefit from the change?
People and organisations have to justify their existence. Lots of mouths to feed obviously.
Jeff
Jay, that’s a shocking statistic when you look at the inverse of your explanation:
At least 79% of direct registrations in the .nz namespace, can be attributed to registrants in the pre-existing second level extensions (such as .co.nz).
That paints a very clear picture for me.
The result has overwhelmingly been additional cost burdens imposed on existing registrants; including SMEs, sole traders and charities.
Snoopy’s point quoted above, is also quite telling.
The introduction of direct registrations in .nz and .uk did not add value to those namespaces, it simply imposed additional costs on registrants, damaged the brands and dampened market activity.
Examples like this should be ringing alarm bells for our Australian namespace.
Err no, that’s not how the numbers work. 79% of the registrations in .nz are for the same name but that’s not the same as saying they are from the same registrant. Most of them are actually from new registrants (sorry I don’t have the exact figure to hand) who wanted that name but didn’t want what it under .org.nz or .net.nz or an alternative and yet do want it under the new .nz. (because it doesn’t add that extra label that doesn’t match their identity). It’s basically created more choice and a better choice as far as many registrants are concerned.
Jay, those people are called speculators, of course they wouldn’t bother with .net.nz or .org.nz. The other major type of registrant in your new tld is defensive registrations.
Don’t tell us defensive registrations isn’t a big chunk, you spent most of your time working out how to allocate names to them. AUDA is now doing the same thing. Its all about domainers and defensive registrations, just like every other new tld.
.au – getting ready to be sodomised with unwanted bills people.
Am dropping .uk every day now. No demand and too late to market. .co.uk entrenched for next decade.
Good of you to post Garth. No one that I know has more experience of .nz and .uk than you (as a registrant).
So if you say direct registration has been dismal in both markets, then you’re the sort of person that Australia needs to listen to.
.uk and .nz years in now don’t have the cachet these Registries had hoped for.
It just forced registrants to protect existing registrations adding to yearly renewals.
Type-in traffic remains dominant with .co.uk and .co.nz.
If someone deviates from these, traffic bleed and confusion is guaranteed.
These Registries have just devalued the original offering and strengthened .com appeal.
Agree, best thing investors can do right now is shift to .com. Whether .au happens or not the uncertainty will continue to damage the market.
Vaseline purchased.
Jeff
Ask Google’s Matt Cutts what he thinks of all the false claims about the newer extra extensions being better, needed, good for SEO and google rankings. Pure B.S. he said.
Bodies such as DNC, auDA, Ausregistry, Melbourne IT( and entities) Nominet want to make more money. They will say and do whatever they can to make the extra revenue for themselves. In many cases this is the same as some at auDA and on the auDA Board ( who represent some major supply entities).
Enough is enough of the scam and B.S. !
Very few of these people have real demand class experience themselves meaning they do not have names in various extensions globally and they have not seen the true results of real experience. I have I had names in over 20 extensions at 1 stage and most where a complete waste of money. The supply knew it but they scared people into ” defensive registrations”.
Where are the first .nz or .uk active website results out of the top UK and NZ google searches. I gave up searching. Most major companies who could easily afford it didnt even bother.
There are over 1500 domain name extensions available now. Most have failed. Only the log term ones are surviving and have more trust. .com, .com.au, .co.nz, .co.uk etc
Type these and see what happens as a real example! If google thought it was worth it wouldnt they use it at least? They don’t even bother and to them the registration money is nothing!
Google.nz
Google.uk
Google.co.nz
Google.co.uk
________
UK fact the .uk has failed, I know I had some!
https://www.nominet.uk/news/reports-statistics/uk-register-statistics-2017/
NZ fact the .nz has failed. I know I had some!
https://www.dnc.org.nz/sites/default/files/2016-08/Domain Name Commission – Annual Report – .pdf
“It appears that some registrants, having exercised their preferential registration rights, have subsequently let the shorter version of their name drop. “
New extensions allow new domainers to get into the game. It’s easy to see how this could be a threat to established investors, but this type of change is also a massive opportunity for new investors. I made a sale of a .NZ that would not have been otherwise possible and that has driven me to further invest in domains. That said I know I would have cost an established domainer a payday, and several years of wasted holding. I see this as healthy competition but no doubt it could be interpreted differently. Would having more domainers be a positive or negative long term?
How is this a massive opportunity for new investors?
Jeff
Anglais the Increasing Opportunity Cost has a long term negative affect on the investor; in time the ‘opportunity’ to invest money into new extensions only adds to the yearly cost to retain it. In almost all circumstances the investor is holding onto junk, and so most domains are abandoned because those extensions contain no exploitable arbitrage be it policy or price.
$15 plus GST wholesale for a .nz domain is up there too. When was the last price review+reduction?
$15 x 695,000 = $10,425,000 income per year. Holy shit!
….and that is wholesale…how much profit actually goes back into the New Zealand economy? very little, most registries are subsidiaries of major global corporations. So it doesn’t take a mathematician to realize that over $30+ Million per year is going missing from the local economy, and into the pockets of foreign investors.
.au numbers are worst.
Wholesale AU$19.25 x 3,137,036 = AU$60,387,943 inc GST per year.
https://www.auda.org.au/industry-information/registrars/registrar-accreditation/
The .au wholesale cost is for a 2 year registration Garth – and includes GST. So we’re down to around $30 million on an annualised basis. 😉
OK.
I pay £3.75 wholesale per year for a .co.uk and Nominet is still creaming it 🙂
Hopefully you will receive an answer from Jay Daley – Chief Executive NZRS.
The fact is these entities, some CEO’S, some Board members and related entities are keeping wholesale prices high because they are a monopoly with no proper oversight or consumer protection bodies investigating them….. YET.
Look at some definitions;
https://www.accc.gov.au/business/anti-competitive-behaviour/cartels
https://www.accc.gov.au/business/anti-competitive-behaviour/anti-competitive-agreements
https://www.accc.gov.au/business/anti-competitive-behaviour/imposing-minimum-resale-prices
https://www.accc.gov.au/business/anti-competitive-behaviour/misuse-of-market-power
Misuse of market power test
Substantial market power
Taking advantage of market power
Calling any TLD a “monopoly” is like called Coles a monopoly because only Coles can open new Coles stores and use the Coles brand. In other words, it doesn’t make sense because the good/service being sold is a domain name and a TLD is a just a brand of domain name. A domain name bought from one TLD is pretty much perfectly substitutable with a domain name from another TLD as far the service provided.
Jay, all tld’s have monopoly elements because it is very expensive/risky to shift once someone has established a business on one. This is why registries with large numbers of endusers are very keen on jacking up the price of renewals wherever they can and it needs government oversight to control that. The profit maximising price point for .com, .com.au, .co.nz is probably $300+ per year if the registries were just allowed to do whatever they like.
For .com and major cctlds a company will have no effective choice. Ok they can move to a .horse or a .top if they want to but they know they will go broke 🙂
“This lack of a preference is vital to the credibility of the process, with potentially serious consequences for getting it wrong, such as being mired in lawsuits or government intervention.”
This pretty much sums it all up for me!
No answer from Jay regarding the diabolical conflict process they put everyone through?
Conflicts can’t be avoided when a second level is opened up so there’s a choice of how to handle it:
1. Give one party a preference automatically on some attribute of the registration.
2. Give one party a preference based on something external, such as auctioning the preference off.
3. Give nobody a preference and make it a free-for-all, first come first served.
4. Give nobody a preference and have a conflict resolution process.
We choice 4 because of our principles. Now YMMV but can you be sure that a different choice would a) lead to any less pain; and b) have more external credibility?