Friday, August 18, 2017

Are new gTLDs profitable?

A Registry to operate its own Registrar (or a Registrar to operate its own Registry) is a good solution to lower down the price to maintain a domain name and the reason for this is simple: tech costs are split and most of the money stays in...
Who's who
It is even better when the Registry owns its own Backend Registry and its Registrar.

In simple words: a Registry makes more money when the money paid to mandatory service providers are the same people.

The example that I like to give here is based on Afilias: a Backend Registry provider, also applicant (Registry) for five of the six existing colors. Afilias is not a Registrar.

What when registration volumes drop?
Since 2016, Jovenet Consulting tracked weekly, then monthly, domain name registration volumes from various groups and industries and this post will focus on new gTLDs that have the name of a color.

There are six of them and one is a Trademark so we won't pay much attention to it since it does not sell domain names to end users:
  1. .RED (€11/year)
  2. .BLUE (€11/year)
  3. .PINK (€11/year)
  4. .BLACK (€31/year)
  5. .GREEN (€54/year)
  6. .ORANGE (a dotBrand new gTLD = no price)
(there's .GOLD too but does it count as a color?)

I went to retail registrar Uniregistry and extracted prices that you can see above. The first three are acceptable prices but I find .BLACK and .GREEN quite expensive and since Uniregistry is a cheap Registrar, you can easily expect that these domain names will probably cost much more at other service providers.

When looking at the new gTLD report entitled "New gTLDs related to COLORS", you will note that almost ALL registration volumes continue to drop starting January 2017 and if you look at May 2017, something strange even happens.

So: profitable?
Does it mean that such extensions are not profitable? I don't think so.

I heard a story which said that "red" was a special color in some countries in Asia and this was the reason why ".red" domain names were so successful...until May 2017 apparently. I won't count .GREEN here because this TLD was acquired lately by Afilias and you will note that registration figures are quite different from the first four TLDs.

The .RED new gTLD is now below the 50,000 registrations so it does not pay ICANN the $0.25 fee per domain anymore. Even if the curve is dramatically going down, it still has 48,000 domains with a probable majority being paid by Registrants. Since Afilias is Registry and Backend Registry for its TLDs, it pays the minimum to maintain its own domain names: below $5 per year? Less than $1 maybe?

Let's imagine that these 48,000 domains are paid by Registrars at the price of less than $10. It still means quite a lot of money for the Registry in the end. A lot less for .PINK and .BLACK.

What about "strategy"?
In 2016, and during a period of 7 months, the .RED Registry had between 308,000 and 318,000 domains on the market. I have no idea how nor why these numbers were so high but I believe that the only question to have today is: "was it worth it?"

If it takes so much domains to end up with so few: it is still 48,000 domain names on the market. Let's assume that these domains are paid, and hopefully renewed, I consider that such strategy is a good one because all Registries want to have 48,000 domains names renewed on the market. Should Afilias have adopted the same strategy for it other "colored TLDs"? The question remains.

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