A lack of supply of high-quality DNS “real estate” could be stifling demand by 25 percent, or 73 million domains, according to Dr. Thies Lindenthal of the University of Cambridge. Dr. Lindenthal’s study Monocentric Cyberspace: The Primary Market for Internet Domain Names, published in the Journal of Real Estate Finance and Economics on Monday, suggests that basic characteristics of language could drive huge growth among new gTLDs, or “not-coms,” as untapped demand moves online.
The research shows resale prices of registered domain names rose 63 percent between 2006 and 2012, indicating that competition was driving prices up as demand outstripped supply. The release of 1,400 new gTLDs by ICANN is meant to address this shortage, and as much as $350 million was invested in application fees for new domains by 2013, suggesting a significant level of corporate trust in the “not-coms.” Google famously selected abc.xyz as the domain name for its parent company Alphabet in August.
In the report, Lindenthal looks at “the determinants of domain registrations using an adaptation of the bedrock of Urban Economics, the classic monocentric city model…a city is located in a featureless plain and all employment is located in the central business district (CBD), to which all residents commute regularly.”
“Cyberspace is no different from traditional cities, at least in economic terms. In a basic city model, you have a business district to which all residents commute, and property value is determined by proximity to that hub,” said Lindenthal, from Cambridge’s Department of Land Economy. “It’s similar in cyberspace. The commute to, and consequent value of, virtual locations depend on linguistic attributes: familiarity, memorability and importantly length. A virtual commute is about the ease with which a domain name is remembered and the time it takes to type.”
“It is too early to tell whether the new space will be accepted as a viable alternative to the established space,” he writes in the report. “The set of catchy keywords that appeal to humans is still bound by the way we process language, even if we had unlimited choice in top level domains.”
The research shows that the number of domain names featuring a given surname registered increase at a much lower rate than the number of people with that surname, so a one percent difference in the commonality of a surname is only reflected by a 0.74 percent increase in domains. Common names like “Smith,” in other words, do not have their proportional representation in domain names.
The length of domain names significantly determines their use, as well. The number of surname registrations declines by 24 percent from six to seven characters. Likewise, city name extensions for Berlin and Miami have been snapped up, while San Francisco remains available, despite the latter’s status as a global center for Internet technology.
Lindenthal said that more research is “needed to understand the determinants of domain registrations in time.”
“Additionally, it would be interesting to investigate where unsuccessful registrants turn after not having found a suitable name,” he said in the report.
Research released by VeriSign in December indicates strong but not overwhelming growth in registration of new TLDs. The final step in unlocking a wave of registrations could be convincing the public of nTLDs legitimacy, as US and UK web users expressed concern over their security in a survey in April.