Thursday, October 30, 2014

A profitable Registry (the .LUXURY new gTLD)

Do new Registries need to sell a lot of domain names to be profitable?

They do but in very specific cases, they don’t need to. Read about the .LUXURY example.

Most of the new Registries sell at a low price to encourage Registrars (the reselling network) to promote the Registry’s new domain names. Then accredited Registrars sell these domains at a higher price to their clients: the end users (or Registrants).

I like to dig and noticed that the .LUXURY new gTLD is already very profitable with only 1,216 registered domain names. Yes…you read well: there are 1,216 .luxury domain names registered. It is very few compared to the successful .CLUB Registry who has reached 127,725 registrations.

I did not even check if there were Premium domain names or a Pioneer Program but the asked price at the Registrar level gives enough information to know about the Registry’s revenue.

Are expensive domain names the key to success?

GoDaddy sells .LUXURY domain names at the price of $799.99 and Uniregistry at even a lower price than this at $688.88. An average price for a new domain name is between $20 and $30 a year, sometimes more and sometimes it is even less than $10. Paying $700 a year is just…very different!

Looking at the presentation of the one page Registry’s official website, one thing is learnt: it looks like a family business and it is possible that most of the Registry’s activity is sub-contracted to an external service provider so costs are reduced. But whatever it costs, I made a simple calculation.

The calculation

Let’s imagine that every Registrant interested in a .LUXURY domain name bought it at the cheapest price on the market ($688 with Uniregistry), it means this would already have generated $836.608 for 1,216 domain names. How do other new Registries selling their domain names below $30 feel about this when it requires $100.000 per year to run a Registry and $25.000 in ICANN fees (when below 50,000 registrations)?

The conclusion

New .LUXURY domain names are open to all, just like the majority of all other new domains. Selling domain names is difficult, in particular when there are so many new domain name extensions launching at the same time. A good idea to make a Registry profitable in Round two of the ICANN new gTLD program could be to:
  1. Get the best community endorsement for a targeted group who is already waiting to buy these domain names, or;
  2. Follow the .CLUB example with a generic and multilingual string to submit your application and sell at a low price with a communication budget, or;
  3. Follow the .LUXURY example and sell at a high price.
To submit an application in round two of the ICANN new gTLD program (with a cheap back-end Registry who already has references), you can contact me at Jovenet Consulting.

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