The question here is: what happens to a registry, who sells domain names to accredited registrars, when his backend registry solution provider is too expensive?
Creating your backend registry solution
In 2008, I remember going to a .BRAND meeting with Stephane Van Gelder and a technical guy told us: "we don't need a backend registry, we have enough resources to do it ourselves". Well...one can try to do it so for the next round of the ICANN new gTLD program - and there are tools for this - but I would certainly not recommend it for three reasons:
- It requires serious skills to develop a backend registry platform;
- It requires to pass the ICANN tests;
- It's awfully expensive.
How to lower the expenses
There are less than 10 solution providers that I would work with worldwide, and the reason why I would not create my own backend registry solution is simple: the more your new gTLD project costs you, the more you will be tempted to increase the price of your domain names. Accredited Registrars, the ones Registries sell their domain names to, will have to take a margin so they will increase the price too, and here is what happens next:
- The final price at the Registrant level (the person who buys the domain name) will be higher than a ".com"; it may be be a bad sign sent to new consumers: "hey, why should I pay more for a domain name?". Remember that the average price known by consumers for a domain name is between $10 and $12;
- It will make your registry more difficult to develop in volume of domain names if your target is the general public. For domain names to meet with adoption: "use" is needed but "volume" is needed too to increase its visibility on Internet.
Think twice about creating your own backend registry solution: it will drastically increase the price of your new gTLD project.
Note that 500 registries have less than 10,000 domain names registered but is this what a new registry wants when creating a new domain name extension? I stopped counting at 200 domain names registered (June 2018) to exclude .BRAND new gTLDs from this approximate calculation.
Less than $2 per domain
Backend registry service providers offer different range of services but there is now stronger competition between them and offers should change for the next round of the ICANN new gTLD program. Prices should change too and there are three parameters that I will focus on when selecting a backend registry provider:
- One price per domain name "only" should constitute the offer: a registry which wants to gain recognition cannot be blocked from lowering the price of his domain names because the annual financial commitment with his backend registry is too high: let's not forget that the more domain names a registry puts on the market, the more it benefits the backend registry.
- No leaving fee: the knowledge to operate a registry relies a lot on the backend registry solution provider but it has now become easier and, for example, one might be tempted to change to a Chinese solution provider to access the profitable Chinese market with a MIIT licence. Once you're blocked with an important leaving fee, it blocks you from spending this money to find a better solution: a Chinese backend registry solution provider will be very efficient combining complementary solutions for you: the backend registry solution + the MIIT licence for example.
- A "minimum annual commitment"? I read this fee at a service provider (...) With the number of registries to have launched at the same time in 2012, how can a niche TLD survive when it sells less than 1,000 domains a year (also because its retail price is already too high)? Added to a leaving fee, it makes it almost impossible to develop. For some, it means going "bankrupt".
By the way: a backend registry asking for a minimum annual commitment does not care about the success of your project.
Note that such offers already exist: some providers have adapted to the market. It costs less than $1 for certain registries to create a domain name: "the lower the price is at the backend, the lower it will be for your clients".
If the backend registry is too expensive...it will impact the final price of your domain names and it is unlikely that new consumers will want to pay more than $12 to buy them. Registration volumes seem to confirm this: when new gTLD registration volumes are low, it is also because the price of domain names is often too high, the reason is that.