Applicants with low overhead or a smart growth strategy are poised to make a healthy return.
There are a lot of new top level domain names I’d like to own as a business right now. Many of them.
Consider .guru, which has about 57,000 domains registered and is growing by 100-200 names a day.
There’s a decent chance that this growth will continue. It should get a small lift when name collisions get resolved, despite having a low number of domains on the list. It might also get a lift as general awareness of new TLDs grows and as people start using .guru domain names.
Let’s assume there’s no huge lift to new TLD registrations in the first couple years as awareness grows. Let’s say .guru averages 100 new registrations per day through the end of its first year. That would put the registration base at around 82,000 at the end of January 2015, one year after launch.
Let’s also assume that renewal rates are in range with previous TLD launches and .guru retains 60% of its domains on the drop.
Simplify things further and assume there’s no zone growth after year one. The domain drops 40% in its second year that aren’t replaced, and new registrations just cover rolling deletions going forward.
That would give you an annuity of revenue on roughly 50,000 domain names. I’m not sure how much Donuts is charging for .guru, but let’s assume it’s 50% of what most registrars are charging, making the wholesale $15. (I’m ignoring premium prices and EAP revenue.)
50,000 * 15 = $750,000.
Donuts’ business model has very little overhead per domain name. Take out ICANN’s annual fees, some legal and monitoring fees and a bit of overhead and you’re left with a very nice business. Especially when you multiply it by 100.
To be sure, .guru is Donuts’ outlier so far. Many of its domains are struggling to get 5,000 or 10,000 domains. But it also has domains like .photography and .email that should be at least half as good as .guru.
Even at 5,000 domains a top level domain can be profitable if your costs are low.
It’s a different story if you have lots of overhead.
.Club isn’t a great business at .guru’s numbers. It needs hundreds of thousands of registrations to make a go at it.
.Build isn’t going to survive with just 2,000 registrations, even at a retail price of $99.
Even portfolio applicants need more than the 571 registrations that .pink has.
Nevertheless, I believe many new TLD applicants are going to do really well financially.
Tik Took says
Only the new TLD applicants will really make any money.
It is a total sham and will be a bloodbath for everyone else. Time will prove this.
Photographers are generally poor. It is a low pay profession.
Clubs usually don’t make money. A dead, non-commerical domain really.
Gurus are usually scammers, snake oil salesmen, etc…. good luck with your domain. Only direct sales will work with these mostly.
Domenclature.com says
Donuts’ Venture has to be taken as a whole; they raised hundred’s of millions of dollars for this. You can’t parse it out like that. Besides, we need more transparency regarding the Registrants of these names, the Reserved names, the Collision names, before these data can even begin to be taken seriously.
We know that Shilling was upfront about reg’ing his own names, such as dot link etc, but allegations has been made about bogus Trademark holders gaming the donuts’ system, and they seem unperturbed by it.
Therefore, we need more research to draw any conclusion. I was asking if you can put up a Countdown clock to Renewals on the earlier new gTLDs…
Andrew Allemann says
Trademark holders gamed just a few domains.
If you want to poke holes I’d focus on if renewal rates will be lower with the higher prices or added competition in the future.
Robbie says
Andrew, the TOS of the GTLD’s have no cap on going forward renewals, very dangerous territory with unregulated operators in the space.
The TM’s are still being gamed in .foundation, and others launching this week, mostly in some of the highly sought after keywords. The face the registries cannot regulate such meager acts of aggression against their registry is very dangerous going forward. Donuts has been using past sold prices, which many are unverified for putting premium renewals going forward they may turn to expected financial, and given funding rates to price premium renewals.
Andrew Allemann says
Robbie, it’s true that new TLDs have much more liberty to raise prices going forward. Wouldn’t this be an argument in favor of TLD operators doing well and making money? I’m not sure why you bring this up on this particular article.
Robbie says
Sure, looks like Donuts has dropped the price of Football.Experts down from $5500 a year to $3600 now, and still no takers. You need rules, and regulations to gain trust with your clients. The GTLD’s have none of this, why do you think .com would demand a premium. Because .com even on it’s highest price day will most likely still cost $10. The GTLD’s the sky is the limit, I am sure we will see some $10,000 renewals splashed around shortly. Let’s face it, many of the people we sell domains to, most likely end up failing in their ventures, or are just forwarding it to another site.
Do you really think terms like BollywoodClub.Club are going to be renewed for years going forward.
Many of the registries said what they needed to get ICANN to approve GTLD’s, then many said what they needed to get ICANN to fast track GTLD’s, than many said what they needed to get registrants to pre-order GTLD;s, and so on…
The first for approval, all the good names are taken, and come at a very expensive cost to the consumer, having new domains at reg free prices will given consumer more choices, LIE
Second, skipping key steps to avoid total launch day failures, we have seen how bad this is gone, ECO.whatever, Google’s Chinese Extensions etc…
Pre-orders to .tattoo, .link, .buzz were all a waste as these names were all reserved by registries, money sat tied up for months, only for the week of launch to say sorry your name is not available.
So how has the experience been for you so far, we are not even half way there yet?
Domenclature.com says
That’s true.
But because of the nature of the roll outs, the inordinate price structure, and the unreasonable premium withholding, we are forever precluded from ruling anything out.
todd says
Can all of the bloggers please get together and choose one day, just one day that all we talk about is dot com. All this gTLD talk makes me nauseous.
Andrew Allemann says
I’ve already coordinated this with Michael, Elliot, and Kevin. .Com only day is February 29.
todd says
I have to wait until 2016. That sucks! 🙂
Robbie says
Todd, I think Andrew runs a solid blog which tells both sides of the gtld space, and much of the .com space.
There are bloggers that give more exposure to GTLD’s now, due to the fact they are consultants, or sponsors as the GTLD’s are using much of the registration, and raised funds for ad spending, mainly to domainers who are buying these on speculation.
Nobody to this day has really given an answer why .mobi, .us, .biz have failed, and are starting to lose registrations. If they were to be released today, they would be one of the top talked about extensions. Given any chance of hope, the second time around, along with a credit card, and an online checkout you will have people take a stab at the chances of a gold rush, not until word gets out that it is fool’s gold, will they start to see the reversal of fortunes.
Andrew Allemann says
Robbie, you bring up some good points about new TLDs. I’m going to disagree with you on the “failure” of .mobi, .us, .biz et al.
They have failed from the perspective of “toppling .com”, but are rather nice businesses to own.
I’d love to own .biz and its 2.64M domains registered. At $8.63 per year that’s about $23M in annual revenue. They don’t spent squat marketing it, either.
It’s a great business for Neustar even if many of us consider small.
Robbie says
Yes, you are correct, on a cashflow business, this is something you would have liked to own. But investors want to invest in growth, and companies which are gaining customers, and not losing them going forward. GTLD’s are here to stay, they will chip away at some of these customers. I do not know the percentage of domainers on these extensions, but they will be dropping them for sexy marketed new gtld’s that is for sure. They always run to the new bling.
Domenclature.com says
I will like to associate myself to all of Robbie’s comments.
First of all, it is unbelievable that Domain Bloggers have no outrage at the way these new gTLd Registries,a and Registrars have treated everyone who considers himself/herself as a member of the domaining industry, be you a blogger, or just a domain investor.
The total lack of respect; hanging of a door poster that says “domainers not welcome here”, retailing names as premium up to 4 figures, withholding premium names, basically calling all of us fools.
So, no blogger will get my respect unless they defend our honor. I don’t care how else you conduct your blog, if you sit there and let these Registries do this to us, SHAME ON YOU!
The Registries, and ICANN have to be fair. First of all, some rules need to be made to make sure these Registries don’t charge such huge, (excessive, prohibitive, outrageous, unreasonable, inflated, unconscionable) premium Registration fees and Renewals, some reaching extortionate levels, especially on unsuspecting Companies. I’ll be damned if I’m gonna sit here, and sing praises to any blogger that doesn’t start pushing these Registries back to their senses.
So far, Allemann has been balanced, but balanced in light of what’s going on isn’t good enough. I still feel that he should be screaming at these people. Having friends on both sides is a difficult position to be in, but when you look at what’s going on, how can you maintain such friendships? Therefore I give Allemann a 30 out of 100. Berkens gets 0 out 100, and so does Elliot and the rest of them.
Rubens Kuhl says
So you are outraged that someone sells a name for its real value instead of a reg-fee and letting a domainer sells that same name for that same amount ? Not liking new gTLD for the lack of arbitrage opportunities is OK, because that’s how it really is. But it’s not something domainers were entitled to have, and not something that deserves outrage or protest. Don’t like them ? Don’t buy them. Let end-users buy them. Prefer .com ? Buy as many as you wish, sell as many as you can. Just move on.
Domenclature.com says
I would have taken your advice if there weren’t fiduciary responsibilities involved on the part of ICANN, and the Registries; There are. It’s not purely a market play, or personal matter.
ICANN is a trustee of government, (to whom property or power is entrusted for the benefit of another), and by extension, the Registries. Neither is acting properly.
Rubens Kuhl says
I recommend going deeper into Internet Governance enough so to know there is no government property or government license in gTLDs except for .com. Not even legacy TLDs like .net or new gTLDs like .guru have anything to do with US Government or any other country government, and the little tidbit of the IANA function is more of a diplomatic turf war than actual public control. Registries only have fiduciary responsibilities to their shareholders, and ICANN is not there to protect domainers interests but to protect end-users interests.
But if like most domainers you believe new gTLDs will flop, why bother ? This way you save money by not buying into something that would only drag money.
Domenclature.com says
Ultimately, ICANN is responsible for whatever these Registries do; having responsibility is the obligation to act.
No, Kuhl, the internet is not a no-man’s land. There are authorities, and consequences. So, far nobody is really paying any mind to the manufacture of sand, sorry gTLDs, if the public finds out that Registries went to ICANN to expand the name space, ICANN went to appropriate bodies with same excuse, and instead turned it into a money grab, there will be hearings, and outcry.
todd says
@Domenclature
They will never bite the hand that feeds them. Never. Domain blogs are not about having a voice but all about making money.
Domenclature.com says
@Todd
You are right, unfortunately. I still can’t believe these Registries have the nerve, effrontery, cheek, and impertinence to plot this, and carry it right in front of us, with the indulgence of these bloggers. Unbelievable!
MichaelBlend says
Andrew, nice post. I would add that a subscription business like .guru should be valued at 8-12x, so .guru alone should be worth ~$7.5mm if it doesn’t grow at all (which it will). .Build, a smaller gTLD you mentioned, is growing by 25-30 names/day. At that rate it will be at 10k names. At $50/domain * 10k names * 10x multiple, that will be a $5mm business in itself
Andrew Allemann says
.co set a nice valuation point for rolling up TLDs. Not sure how that market will look a few years from now, but still a nice data point in 2014.
John says
You can register .club under $10 but I will not register it even if it cost $0.99 to register it