The problem with the .Melbourne domains is it appears they're probably owned by the government and as a result the State governments appear to be profiteering and charging much more than other domains. Unfortunately quite a few people will get with the 'I don't want to miss out' or 'I need to protect my domain names' bug, and that plays into the hands of the State governments.
Do keep in mind domains are currently around $69 per year on sale, but when you come to renew the non-sale price is over $90 per year. That's quite costly.
Currently .Melbourne is classed as a generic Top Level Domain which means it really has no geographic meaning, and in theory, no inherent advantage, but in fact it may be a disadvantage.
My approach is to test a couple of domains for the first year and if they don't perform to dump them. This really just feels like another tax.
Kelvin Eldridge
www.JustLocal.com.au
Helping local businesses to be found in their area.
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