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I've seen a number of news stories over the past few months that speculate that .com registrations are on the decline and the industry will see a shift away from the traditional ".com" to both country code registrations such as .ca (Canada), .uk (United Kingdom) and .cn (China) as well as a number of new generic top level domain names (gTLDs). For years the industry only had country codes, .com and a few others such as .net, .org and .edu. However, in 2012 ICANN had received requests for thousands of other gTLDs that would create many more options for businesses. The new gTLDs are currently in the process of being handed out and we should expect to see anywhere from 300-1000 new gTLDs each year for the next few years.

If the above is true, then that would certainly be a negative trend for VeriSign (NASDAQ:VRSN), the company that handles 100% of the .com and .net registrations. Every time any company out there registers a .com, VeriSign makes money, which is why the company has been one of the most stable growth companies over the past five years. Sure, the stock has had a few bounces along the way but those have always proven to be good buying opportunities for long-term investors.

The bear case on VeriSign is that the addition of the new gTLDs each year combined with the perceived scarcity of .com's means new registrations may move away from .com to one of the new gTLDs such as .travel, .web or .car. Alternatively a company may choose to register its own gTLD such as truck.chevy and car.chevy for their different products.

However, I believe that the alternative top-level domain names will augment the web strategy of companies, not replace the interest in .com. The fact is that almost all organizations want a .com web address to legitimize their business. While it's true that all of the short .com domain names have been taken up, there are plenty of opportunities for companies to use longer names with a little creativity. One strategy a company could take is to find a valid URL and then name the company based on that. As a small business owner, I wanted to have my own .com so I tried various other domain names before I settled on ZKResearch.com. The domain name was actually part of my thought process when I started the company up.

Another strategy could be to use an alternative top level domain name and then augment it with a different .com. For example, juniper.com was Juniper Bank, which was later acquired by Barclays. Barclays still owns juniper.com and it redirects you to "barclaycardus.com." So what does Juniper (NYSE:JNPR) Networks do for its website? Well they solved the problem by registering both juniper.net as well as junipernetworks.com. An easy to remember .net and then a longer, but still acceptable .com address.

Now don't get me wrong, I do believe that the new gTLDs will attract companies and we'll see things like "mikes.pizza" or "chevy.cars" but I also think these organizations will invest in traditional .com domain names. To me, the market for registrations of .otherstuff only is more for niche use cases such as a small organization or private use cases, like a family or club. Any company that wants to have a public presence on the Internet can still use an alternative but should still have a viable .com.

For VeriSign, I really don't see the revenue stream associated with .com registration being threatened at all and the new top level domain names will create a new, albeit initially small revenue stream.

Source: New Generic Top Level Domain Names Pose No Threat To VeriSign