A $35 Million Investment Gone Awry: Telnic
Luck seems to be running out for investors in .tel registry. And it hasn’t even launched yet.
A fresh top level domain, .tel, is getting ready to rollout in the first part of next year. The registry behind the domain — Telnic — has raised a stunning $35 million in outside capital ahead of even launching the domain name.
.Tel isn’t a traditional domain name where you register it and then put up a parking page or web site. Instead, your .tel domain name is sort of like an online business card with your contact information. You don’t create a web site; it’s all hosted on the DNS. Essentially, .tel will be a yellow pages and white pages.
Here’s the problem. The concept behind .tel was created regarding a decade ago. That’s ahead of MySpace, Facebook, and a myriad of other social networking technologies made it big. Telnic applied for .tel from ICANN back in 2000, as stated by a recent BusinessWeek article.
The top level domain finally got approved and now it has been rendered pointless.
Why ought to people pay to have a “business card on the web” when they can get a free one through a number of other sites?
There’s a network affect here. If everyone has a .tel domain name, the scheme will work. But right now no one has one, and the odds of more people signing up (and paying) for .tel than Facebook is minuscule. If I want to get in touch with someone, odds are better that I’ll find them searching on Facebook than going to someone.tel. (Incidentally, .mobi faces a similar challenge in trying to change behavior. It has to get to a critical mass — quickly — to succeed.)
The fact that your information is managed in the DNS is cool, but end users don’t care. They can’t tell the difference between someone setting up an online address book in the DNS versus on a web site.
Betting $35 million on Telnic is like saying “We’re going to create another cool social network. It will be limited in interaction, but we still need to get tens of millions of people to sign up. Invest $35 million in us on the outside chance we pull it off.”
But that obviously wasn’t the original pitch. Back in 2000 this was novel. But the TLD approval process at ICANN didn’t help Telnic’s chances. By taking so long to approve the application, time passed Telnic by. Now the fresh top level domain name process is launching, which means that anyone could launch a competing top level domain and launch it in a couple years’ time. And that TLD could be a lot cooler than a short hand term for an antiquated work like “telephone”.
There is a chance — still slight — that .tel will succeed. Telnic will have to do a few things perfectly to get this to work. First, make .tel integrate into third party applications better than Plaxo, LinkedIn, Facebook, and MySpace right now do. Second, it ought to give away .tel domains to individuals and hope to make money on businesses instead. It must get to critical mass quickly, so that I have a reasonable belief that typing in myfriend.tel will get me what I want. Third, it needs to pray that Facebook doesn’t kill it overnight by creating some sort of online vcard.
