The March of Tech
Cloud computing, the idea of data and processes autonomously roaming the net, scaling-on-demand the numbers we crunch and the users we service. All clever stuff but it’s precursor, the Domain Name System, has a trick or two up it’s sleeve; simplicity and ubiquity. But can DNS adapt fast enough to meet our needs for organising and finding resources on the net, or are there better ways? In this article I hope to give you a quick overview of the DNS landscape and how investing in domain names fits into your overall investment strategy.
The Business of Risk
When we deal with domain names as an investment, it’s very important we consider how we manage risk. The investment process should be taken with the same attention and depth we apply to all our other investments. Here are some common adages which I’m sure you’ve seen many times before:
- You may not get back the original amount you invested
- The value of your investment may go up or down
- Past performance is not necessarily a guide to future performance
- Prices may be subject to significant volatility
- Future revenue may go down
- With indecision, stop, consider professional advice
It’s a complete disclaimer of course, but they’re not just there to cover liability. To understand risk you need to take those words to heart. Sometimes we get excited about our future prospects and it can cloud our judgement. So, however repetitive those words seem, try to keep fresh in your mind that investing in domains is just one part of your overall investment strategy. It’s good to diversify and it’s healthy to limit potential damages. To that end, we take a look at some of the functions and markets of domain names. So, let’s try and understand something about domain names, let’s talk about the Domain Name System.
The DNA of DNS
DNS has many functions but right now one of it’s more important roles is to act as a beacon on the Internet; a domain name can direct us to the correct location of a resource such as an email or a website. And one of the reason why DNS works so well is because most of us choose to use the same system… it’s a shared experience… google.com in one location is operated and delivered in a similar and coherent fashion to google.com in a different location. In this respect, domain names are like telephone numbers with connections between different networks across the globe and arriving at one predetermined destination. Domain names are unlike closed networks such as Skype and Yahoo Messenger whose peers are carefully chosen, or not.
Another reason why DNS works so well is because the power of authority is distributed; it literally functions from the bottom up. A Top Level Domain (TLD), the right most portion (.com etc) is managed by a registry. For example, .com and .uk are managed by different registries with different objectives and policies. In the case of .uk, the delegation of objectives and policies are handed down; .co.uk and .gov.uk are just two examples. This distribution of power may be better viewed as a table; the centres of authority are the columns and all the hosts sit on the rows going down.
All very interesting but it doesn’t tell us much about risk. What we need is a better grasp of competing systems; their history, their possible role in the future and the various pros and cons.
Dot-Myth
The ubiquity of domain names leads many people to think that new Top Level Domains such as .cars or .shoes can only exist with the blessing of ICANN. In fact, the way in which DNS works means that a parallel system can be readily setup to either compliment or compete with ICANN.
When a device tries to resolve a domain name, the search first starts locally; first on the device, then it searches your local network and then it asks your Internet provider. The search works it way up through the network. Some end users may be surprised to hear that a quick modification to a local file can direct any domain name to any device on the net. Another quick modification on the host side can fully render that site… no licences, no purchases and no registrations. The modification can also be done quickly with a one click application.
Realistically, however, for your bespoke DNS to work you’re going to need everyone on board. How are you going to get all your users and potential users to modify their DNS? As it happens, there are several third party DNS providers that can resolve any domain name or TLD. To date, however, few of these third party providers can claim widespread adoption. When they finally hit the big time it’s going to rock the domain industry in a big way and there is evidence to suggest they will face isolation from ICANN. Now tell me, does someone like google have the infrastructure, the minds and the motivation to extend DNS? And why do we ever bother with all those extensions like .com, .net, .info when we could just type the first few words? Which leads us onto search…
Reaching for Results
For being found on the net, history has given us plenty of ideas. For example, AOL had keywords to access various resources and websites. In fact, for a long time, many AOL users were domain name shy; one keyword simply took them to the place they wanted. These days, a lot of advertising money goes to keywords on search engines, yet our basic behaviour remains, we are still driven by results. As with AOL, it’s not uncommon for advertisers to direct us to search engines in order to be found. And the search engines do a great job of helping us. They compensate for bad spelling. They study our habits, our preferences and our relationships. They know our location and they know about current events. When we do a search, they try to second guess what we want. Those keywords are little more than a short term fix to a long term problem; search engines are actually in the game of Artificial Intelligence. Of course, the results from a search engine are not pre-determined as they are for domain names, but it should be clear that the race for results, to some degree, distorts the value of domain names.
Now hold those thoughts while I remind you how search engines have sewn themselves into the fabric of our browsers and operating systems. A much tighter system, not least that just one box is used for domain names and search. If search engines have taken on and enhanced some of the characteristics of domain names, can we say the reverse is also true?
Masters of the Domainirverse
As noted earlier, different registries apply their own objectives and policies. An example of this is .aero which is exclusively reserved for members of the aviation community, incorporating airlines, airports, companies, organisations, associations, government agencies and qualified individuals. Two letter codes are reserved for airlines and three letter codes are reserved for IATA airport codes. Such policies brings some creditability to the aviation industry and thus confidence to it’s users.
Another example of how policies can be implemented is the .nu registry. The .nu registry provides a service which can guarantee that similar names to yours can not be registered; a very attractive proposition for trademark holders. Some problems could potentially arise from very short names but it’s positively workable.
New Names and New Games
As you can see, registries enjoy a sense of ownership. Given the importance of a registry then, why is their TLD tacked to the end, would it make more sense at the front, like the folders of your computer? Would it make more sense to say travel.bangkok and tv.bollywood?
Instead of physically typing a domain name, let’s wave our hand - okay, so let’s register a unique hand gesture in DNS too. Endless possibilities.
As previously stated, DNS is a simple system. It’s success is undoubtedly due to it’s ubiquity and ability to delegate authority. However superficial it seems, individuals, networks and regions around the world can adapt, represent and take control of their identity. In this respect, a replacement for DNS only has to demonstrate a marginal improvement to be accepted by it’s users.
Both DNS and the search industry have borrowed ideas and evolved. It is easy to sell the benefits of a better DNS and clearly the two are converging. The question is, are we approaching a critical mass where the old makes way for the new?
Let’s dream up an example:
We’ll start by creating a google TLD and call it “g”, so instead of going to “bbc.com” we can go to “bbc.g”.
Now let’s reverse the order of the domain name, “bbc.g” becomes “g.bbc”. Short and logical.
Want a subdomain? - no problem, “g.bbc.sports”.
Want to go to google’s main page? - “g.www” or simply “g.” for short.
Want to search using google? - how about Twitter style using #, “g#taxis #London”.
Let’s add some trademark protection. “g.youtube” or “g.yootube” are both valid.
A “g” TLD would not be surprising as we are on the verge of seeing many new TLDs. And in the examples above I didn’t really change much from what we have now. I’m not even sure we need global TLDs (.com .net .info etc) or if they will survive. To some, the death of “.com” is inconceivable but for me it’s hard to imagine a future without “.g”. Likewise, it’s entirely possible the BBC would get their own TLD, so we might end up typing “bbc.news”, “bbc.sports” or “bbc#london”.
DNS has been with us for more than 25 years, a tribute to it’s intended design; to be fast and survivable. Traditionally, DNS evolves at a slow pace and given the influence of trademark holders, it maybe fair to say they will try to keep it that way. We can also find comfort in the stability and universal acceptance of telephone numbers. Is this true for domain names too?
Going the other way, it’s entirely possible new software and trends will emerge which further dilute the function and usefulness of domain names. As cloud computing matures, as data is distributed and reorganised by roaming search agents, is it really conceivable that domain names are going to be around in 10 or 20 years from now?
Domain investors often liken their investments to “real estate” and as a “scarce resource”. True to some extent, but as we’ve seen above, the value of domains can be skewed by outside influences beyond our control. Unlike real estate, we can re-invent our houses and landscape.
Despite all this, the key to maintaining the value of your investment is relatively simple. Your first option is to rent instead of buy, thus freeing up some of your capital without long term commitment. Alternatively, if you buy, take an active an interest in your investment. A domain name is an intangible asset but significant value can come from goodwill. Keep the value of your investment under review and stay focused by following new trends, diversifying and experimenting with new media and communications. Build your assets out, keep your options open and enjoy the ride!
Alternative DNS’s
The following services are a free drop-in replacement for your existing DNS. From one central point you can manage the DNS for both individual computers or entire networks. You are likely to find them more reliable than your existing Internet provider and thus keeping you more productive.
OpenDNS has customisable settings to help protect against malware, phishing, pornography, worms and more. Also includes custom blacklists / whitelists, usage stats, type correction and a SmartCache technology for when other DNS’s fail.
DNS Advantage operates in a similar manner to OpenDNS; offering their users a “reliable, faster, safer” net experience.
Nothing will ever be attempted, if all possible objections must be first overcome
— Samuel Johnson, Rasselas, 1759
Listening
Grapevine
