But lately, a libyan domain seems to be practically a requirement for trendy startups. Don't know what to call your company? Just tack on a .ly.

Invoice.ly; Post.ly; Embed.ly; Status.ly ... etc.ly

The problem with these domains is that they make terrible trademarks and business names. A good trademark generally doesn't directly describe the actual services, because descriptive terms are not registrable without secondary meaning. See http://en.wikipedia.org/wiki/Trademark_distinctiveness

Assume for a moment that .com scarcity doesn't apply. It might be just my opinion, but CheapAirlineTickets.com doesn't become more desirable if you just change it to CheapAirlineTickets.ly.

The biggest question in my mind for .ly entrepreneurs is what (if any) plans have been made for your brand 2,5, and 10 years out? Perhaps all the .ly domain registrants expect to have made an exit before the domain becomes stale, but isn't that just pushing the problem onto the prospective buyer?

When I think about the "big dogs" that command the lion's share of traffic today such as Google(.com) or Amazon(.com), I see quality names that can stand alone from their domain suffix. Those brands have staying power.

Can you really say the same for GenericServiceName.ly ?