Do you think investing in domain names from New Top Level Domains (nTLDs) is a good idea? You may want to think twice before investing, as there is a domain investment trap associated with these new TLDs. Many domain investors may not be aware that there is a potential domain investment trap associated with new TLDs. The registry can reclassify your domain from common to premium, they can also change the pricing tiers of your premium domains.

The registry can reclassify your domain as premium before renewal #

I have the painful experience that some non-dot-com domains change from common to premium. Many people who register a common nTLD domain don’t know that it could be changed to a premium domain before the renewal date. A premium domain is one that has been marked as such by a registry and has an annual renewal fee that is higher than that of a regular domain.This means that when it’s time to renew, you may have to pay a much higher fee than you originally intended. 

The most common way registries can reclassify your domain as premium before renewal is through an owner transfer or a registrar transfer. When transferring domains between registrars, some registries will automatically change your domain to a premium rate. Registries may decide to reclassify your domain as premium before renewal for a variety of reasons. For instance, they may determine that your domain name is popular or in high demand and decide that someone invested a lot of money in building a website on this domain, so they will charge a higher rate to renew it because they believe the owner will have no choice but to pay.

It’s important to note that domains can only have premium annual renewals if the registrant is told about the premium renewal upfront. In other words, registries that offer premiums with this model require registrars to tell registrants this when they register the domain. This way, you are made aware of the potential additional cost associated with renewing your domain as a premium domain before you commit to the purchase. 

Being aware of the potential risks of investing in premium domains is key. Make sure you know what the renewal rates are upfront, and if you’re considering transferring your domain between registrars, be sure to confirm that the new registry won’t increase the rate of your premium domains before you make the switch.

The ICANN policies don’t affect country code top level domains (ccTLDs), registries like .CO can reclassify your domain as premium before renewal. As a result, if you own a ccTLD, you may face this same issue. With this knowledge in hand, you can make sure to budget accordingly and not be taken by surprise with a huge premium fee at the time of renewal.

The registry can change the pricing tiers of your premium domains #

When you buy a premium domain, the registry places it in a bucket based on the renewal price they set. This is called the “Premium Tier”. Each tier has different renewal prices, and the registry can change these tiers. For example, if your premium domain is in the registry’s Premium Tier A bucket, which renews for $200 a year, the registry could decide to increase the pricing in Tier A from $200 to, say, $300.

The same applies to ccTLD domain registrations as well. The ccTLD domain also would change the pricing. For example, 2023 this year .ai registry raised the domain price from $120 to $140 before the change took effect a month ago.

Although registrars will usually notify you ahead of time if they receive notification of a change in the renewal price tier, this isn’t always the case. Some registrars may not let you know ahead of time.

ccTLDs are not always a safe investment #

It’s important to note that ccTLDs are not always a safe investment. In December 2021, the National Internet Exchange of India (NIXI) published an undated notice stating that if any entity wants to register for more than two of India’s Country Code Top Level Domain (ccTLD): .in domains, they’ll have to seek written permission from the NIXI CEO. This is an example of a policy change that could affect the investment of your premium domains, so it’s always important to stay up to date on the latest ccTLD policies and regulations to ensure you make an informed decision when investing in premium domains.

Generally, ICANN policies apply to all generic top-level domains (gTLDs) and many of their associated country-code top-level domains (ccTLDs). However, there are exceptions when it comes to ccTLDs. Because each ccTLD is operated by a different country registry, the rules and regulations may vary from countries. This means that ICANN policies do not necessarily apply to ccTLDs in the same way they do to gTLDs. For gTLDs, ICANN requires registries to adhere to certain transfer policies that allow customers to transfer domains between registrars. With ccTLDs, however, transfer processes and policies can be determined by the registry.

Why are they a domain investment trap? #

I hear some people have the good luck to own some single-word dot XYZ domains that are not reclassified as premium domains. But it is not always lucky. Due to their potential for growth, domain investors are becoming more and more interested in investing in new TLDs.If an investor purchased a premium domain at a low price, the registry could potentially increase the renewal costs dramatically, and the investor would be left with little choice but to renew at the higher cost or risk losing the domain. While certain guidelines and regulations may exist for generic TLDs such as .com or .org, the New TLD registries have more freedom when it comes to changing renewal pricing tiers or reclassifying domains as premium.

This kind of trap makes investing in new TLDs a riskier venture than one might expect. Investors should always be aware of the possibility of hidden renewal costs and should ensure that they are purchasing from reputable registries with clear renewal pricing tiers.

Is it a good idea to investing in New Top Level Domains (TLDs) and ccTLDs? #

Yes. The ccTLDs are still good investments. For new TLDs, you may need to do more research. If you believe Google to be reliable, the .app nTLD might be a safe bet.