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Study reveals new gTLD usage patterns - but treat figures with caution

New research from Verisign has revealed that only 3% of the second-level domains registered in new gTLDs contain business websites, with pay-per-click (PPC) usage dwarfing that level. However, there are some caveats to consider.  

In previous blogs we have looked at overall registration levels in the new gTLD space (1,875,612 at time of writing) but haven’t drilled down to look at how these sites are being used. Verisign’s study analysed all second-level domains registered in new gTLDs according to the published zone files on June 29 2014. Using the definition of ‘business’ as a website that shows commercial activity, the research found that just 3% of domain names registered in new gTLDs contain business websites. As a comparison, a recent study conducted by EURid and the Leuven Statistics Research Centre analysed eight established TLDs - ‘.com’, ‘.net’, ‘.org’, ‘.biz’, ‘.info’, ‘.pro’, ‘.mobi’ and ‘.eu’ - and found that 30.5% of domain names on these established gTLDs contained business websites (the definition of ‘business’ being more specific, identifying websites that clearly shows commercial activity and are designed for customer interaction).

Exceeding all other uses in the new gTLD space was PPC, with around 41% of all new gTLD domain names serving up PPC websites. This compares to an average of 11.8% across the eight established TLDs analysed by EURid.

While a small percentage of this difference can be accounted for by nuances in the classifications used by EURid and Verisign, the near 20% difference is marked. However, in some respects the level of PPC is inevitably going to be higher. As Verisign’s Andy Simpson writes in his analysis of the findings, at this stage in the cycle heightened speculation is to be expected. He also points to “the practice of several new gTLD registries to register their own domains which are still technically available at premium retail pricing, and several campaigns that provide domains from the new gTLDs at little or no cost to end users (some reportedly without their prior consent), and at least one campaign which automatically creates PPC websites on those provided domain names” as contributing to higher levels of PPC.

With the latter, he specifically cites the example of ‘.xyz’. On launch, the string quickly rose to the mantle of ‘top gTLD’ in terms of registrations – a position it still occupies. However, as we previously reported, speculation quickly followed about how this level was achieved, with reports that existing customers of registrar Network Solutions (which itself has been propelled to the top of the registrar list in terms of domain numbers registered across the available new gTLDs) were being offered a complimentary ‘.xyz’ domain (on an opt-out basis) that mirrored individual registrants’ previous ‘.com’ registration with the company. Simpson expands: “XYZ.COM LLC (‘.xyz’) has a high concentration of PPC websites as a result of a campaign that reportedly automatically registered XYZ domains to domain registrants in other TLDs unless they opted out of receiving the free domain name. After registration, these free names forward to a PPC site unless reconfigured by the end user registrant.”

For brand owners and trademark counsel monitoring the gTLD space in a bid to ascertain both levels of take-up and how registrations are being used, Verisign’s data provides an interesting snapshot as to gTLD usage at the end of June and is worth reporting. However, there are limitations, such as the skewing of PPCs levels as discussed above. Additionally, with new strings becoming available on a regular basis, the picture could already be different seven weeks later.

Ultimately, it is still too early to draw definitive conclusions about how usage patterns will play out over the coming years given that the rollout is continuing and gTLDs haven’t yet captured the imagination of the public. Hopefully Verisign’s research will not be a one-off. In the meantime, it remains a case of ‘watch this (gTLD) space’.