"To be modern is to find ourselves in an environment that promises us adventure, power, joy, growth, transformation of ourselves and the world - and at the same time that threatens to destroy everything we have, everything we know, everything we are" Marshall Berman.
The new gTLD program broke a new record recently when Google, or to be more precise, the Charleston Road Registry paid a whopping $25,000,001 to secure the right to run the .app TLD. This was one of the most keenly contested in the whole program, with 13 parties making an initial application to run the Top Level Domain, including Amazon and new gTLD Giants Donuts and Afilias.
Interestingly, one name missing from the list of applications was Apple. The global technology giants have kept their new gTLD powder dry, putting all their resources and attention behind their .apple application (and subsequent purchase of Dr Beats and their dotBrand). Whilst one of their rivals will now run the .app TLD, the fact that Apple's user base interact within a closed community of smartphone apps rather than URL's mean that it's irrelevant who runs the TLD.
Apple launched its App Store in July 2008 and can now boast a library of over 1.2 million apps and over 75 billion downloads. They have built the iPhone and iPad family around the concept of apps. They've even tried to trademark the term "App Store" and sued Amazon in 2011 for using the term, so in the face on it it may be a surprise that they didn't initially apply for the TLD.
However, is the $25 million price tag too much for one TLD? Let's break this down a bit further. The agreement with ICANN is for 10 years, so that means Google has to look at a return on investment of $2.5m per annum. It can look at two revenue models.
1. Sell .app domains. If we look at the most successful new gTLDs so far in the program, they have either had specific appeal such as the geographies of dotLondon or dotNyc or they have been relatively cheap such as dotClub and .dotXyx. If they offer a similar cost price to registrars as dotClub then they will need to have 500,000 domains under registration every year. DotClub launched a year ago and has 184,000 names registered currently - in fact only dotXyz has over 500,000 registrations although their renewal figures are likely to be significantly less assuming they charge clients for the domains (unlike many of the initial registrations).
2. Increase the commission they take for apps on their Google Play store. Currently Google take 30% of any sale price. Whilst Google Play offers slightly more apps currently than the Apple App Store, the revenues earned are significantly less. Back in 2013, Apple's revenues were approximately $10 billion for apps, whilst Google share is around 13% of that. Recent estimations suggest that revenues by 2017 could reach $5.2 billion which means that they could cover the $2.5 million annual cost by a small increase in commission percentage.
Whatever way you look at it, it is a huge investment into the unknown. Google have yet to make their mark in the new gTLD program, and with over 350 TLDs already launched, the market is becoming very crowded. Apple's strategy may well prove to be the best approach in the long-term although I wouldn't bet against them investing in securing the domain app.store when it becomes available in the next few months.