From.au to.brand?

Domain names are hot property, with virtual shop fronts now more valuable than real ones, but what would it take to see big brands shift away from .au?

Looking at the growing value of domain names around the world, and the challenges facing the retail sector, it’s clear that virtual shop fronts are becoming much more valuable than many real ones. Last year Salesforce.com reportedly paid more than $US1.5 million for data.com, and $US2.6 million for social.com. 

Closer to home, the domain name creditcard.net.au set a new.net.au sales record after it sold for $18,200.

With ICANN now in the process of evaluating applications for new generic top level domains (gLTDs), the business of domains is only likely to grow. But who stands to gain the most from domain sector trends?

The consultants at Deloitte have just released a report, commissioned by .au Domain Administration (auDA) and AusRegistry that estimates the total economic contribution of the .au domain business to Australia stands around the  $475 million mark. A large part of the value is contributed by wages with the local sector employing more than 4,000 full-time staff.

There are more than two million total .au domain names on the register, growing at a rate of around 60,000 per month. The question is, when will the growth rate slow?

The Deloitte report says while the impact may not be profound, over the longer term .au domain activity may decline somewhat in response to the new options available to organisations when deciding where to locate their online presence.

Chris Disspain, CEO of .au Domain Administration (auDA) is dismissive of the suggestion some large Australian brands might move away from an .au domain and towards a new brand-based or generic domain now that ICANN has enabled it.

“Some of the banks are a laydown for this because they’d be able to get their own name and secure that space, for example .hsbc.

“But Target, or Coles or Woollies, why would they bother?...If large Australian brands did go down this path then I don’t think it’s going to mean they will no longer have their .au name.”

In the longer term however, things could change, says Disspain.

“The key to the branding thing is what happens when the public starts to get used to the fact that they can type in .qantas or .woolworths.”

The price of new gTLDs could also come down in future rounds says Disspain, prompting more activity. At the moment the cost to register a gTLD is $US185,000, with annual fees of $US25,000.

For a major brand this is not much of a problem, but the more interesting activity will be when the owner of .web takes on .com.

The future of domaining

The biggest question, says Disspain, is whether domaining – the business of monetising domain names through buying and selling - is going to die thanks to the emergence of gTLDs.

The value of a domainer’s portfolio, which he or she may have invested thousands of dollars in, could be diminished as hundreds of new options become available.

“Creditcard.com is probably a very valuable domain name. How long will it be before someone registers creditcard.web and gets creditcard.web out there...suddenly things are not worth what they used to be,” says Disspain.

Nevertheless, while some consolidation is inevitable, Disspain is still confident of a massive increase in domain names worldwide.

“And that has nothing to do with .web and everything to do with internationalised domain names and the fact that a large number of these new gTLDs will be applied for in Chinese and Chinese script, and Arabic script and Indian script and that’s where the growth is.”

The impact of mobile browsing

It’s also worth considering the major impact mobile browsing will feel as a result.

Disspain says with Chinese and Indian government investment in mobile phone access, the vast majority of their citizens will be accessing the internet via smartphones.

“Up until now they’ve been limited in their ability to understand the western alphabet and they don’t need to do that anymore.”

That’s good news for web users and even better news for those in the business of domains.