A New Quality gTLD Can Compete with .Com
Alex Tajirian
August 12, 2011
If you choose a
new generic top-level domain (gTLD), will it be able to
compete with .com? A recent academic paper indicates that
the answer is yes if your new gTLD is of outstanding
quality.
“How
Quality Drives the Rise and Fall of High-Tech Products”
by professors Tellus, Yin, and Niraj in the Sloan
Management Review provides evidence that new products
can beat out established rivals, even those with a
first-mover advantage, if the new products are especially
good. That’s contrary to traditional economic analysis,
which holds that early entrants will dominate a market where
value increases with the number of participants (i.e.,
markets where network effects are present.
I have elsewhere used economic arguments to point out that
multiple viable domain name marketplaces can co-exist.).
By way of answer, the professors point out that Word beat
WordPerfect and that the iPod beat Sony’s MP3 player. Their
explanation: Consumers hesitating between an established
product and a newcomer will look for relevant information,
most notably product reviews and/or signs that other
consumers are buying the newcomer. Exceptional quality is a
tested way of generating such information.
The implication for new gTLD registries is to focus on
creating high-quality gTLDs from the outset. The finding can
also explain the dominance of .com as a brand whose volume
of registrations surpassed those of co-existing gTLDs such
as .net and .org.
The new analysis supports my view,
explained here, on the importance of quality in
competing with .com. As I argued, a would-be rival to .com
should target businesses that are passionate about being
content-quality leaders. And it should make sure that its
high quality generates the information that can sway
hesitating consumers. The new registry needs to generate
positive word of mouth, i.e., actively market the gTLD
instead of the traditional thinking of “If we build it,
customers will come.”
Not everyone should try to tackle .com. Most applicants
should focus on
niche strategies
in gTLD markets where they have the necessary competencies.
But a quality gTLD can indeed trump the established .com,
especially with an effective word-of-mouth marketing
campaign.