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Web.com discusses .XYZ and threat from Google

Company responds to question about .xyz giveaway and threat from Google becoming a domain name registrar.

Web.com held its quarterly conference call yesterday. Analysts asked the company about Network Solutions’ .xyz domain name giveaway and the threat from Google becoming a domain name registrar.

The answers below are from David Brown, CEO.

On. .XYZ:

And then finally on the xyz, we have a long history of offering domain names at very low price in order to attract customers. And then after a year with us, if they choose to renew, we have some additional revenue. And we’ve been testing this process for years. It has worked for us and allowed us to be very competitive in an extremely competitive and marginalized business. And so xyz could have been an example of that.

This is a peculiar response to .xyz. The domains were given to existing customers. I guess the hope is that some of them will renew.

On Google as a competitor:

So let’s just hit the Google thing head-on. We don’t see any competitive threat from Google relative to domains. Google is a fantastic company, growing at a fantastic growth rate in a number of high-priced categories, and we don’t see them shifting their focus to a commoditized, low-growth industry anytime soon. However, we do see them taking advantage of new top-level domains in specialty areas, and good news, we’re partnered with them. We’re going to be one of the registrars that helps them distribute those into the marketplace. So we’ll benefit, actually, from Google’s entry into the domain space, but we don’t see Google shifting their business model into the domain industry in any meaningful way. We, on the other hand, are one of the — already one of the most significant do-it-for-me partners for Google in our online marketing space. I commented earlier, we’re the only domain name and hosting company that’s a premier partner for Google, and we have been for years. So we think we can benefit from them working in the new gTLD space because they’re going to be possibly creating opportunities for people to grab new domain names, and that creates opportunities for us in the online marketing space and even in the DIFM website space.

Brown addressed Google in his prepared remarks but kind of beat around the bush. His answer to the analyst was more direct. Web.com doesn’t think Google is going to go all in on the registrar side of the business. They might be right.

(Transcript quotes from SeekingAlpha)

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  1. couponpages

    I think Google’s plans as a domain registrar and registry have nothing to do with them trying to compete in the domain market itself.

    More often than not, Google has motives that somehow connect to their core business.

    They are a multi-billion dollar company. Even if they can get 50 million domain registrations, the revenue from those domains would have little impact on their bottom line. Google’s plans are generally on a larger scale than just hosting domains and web sites from local hair salons.

    However, it gives them a direct connection to a larger pool to sell integrated services such as Google Apps and other cloud based services, which for them is very strategic. If they do get into hosting consumer web sites, their mission would be integrating things like online payments and integrating advertising.

  2. Acro

    “And so xyz could have been an example of that. ”

    Could have been is the keyword here.

    The real question is, how will XYZ manage the 400k drop (at this time) of registered domains a year from now. Or, them being freebies, will Web.com/Netsol keep them in dormant mode indefinitely past their expiration? 😉

    Food for thought.

  3. Luc

    I agree. I don’t think Google will change things for registrars. Their interface sucks, it looks like a gmail account but instead of emails you have domains. Google is going after everything and everyone, from thermostats to satellites to robotics to facebook, but in most cases they fail. A jack of all trades is a master of none.

  4. WQ

    The only way G is a threat is if they give their own domains away free or abnormally cheap and rank them better than any others. This will cause everyone to grab one of theirs and build out on it. This would be a major threat but also possibly bring up antitrust issues.

  5. DonnyM

    They won’t make money on domain names, they will make money you get a free 150.00 coupon to start an adwords account when you register your domain name or transfer it. That life time customer will be worth thousands.

    Also your branded domain name inside gmail account will hurt GD who charges for this and is very outdated IMO. Hosting will be free of course and work all the time.

    GD probably breaks even on domain names or losses money, what they make it on is the hosting, email and all the extras that would be my guess.This over the next 5 years will be gone in my opinion. It’s like what happened to the yellow pages.

    G-Domains + G-Adwords = more profit for Big-G
    So get your checkbook and start paying to play because unless you own a fkin great .com domain name and are doing display advertising on other networks your screwed. LOL.

  6. couponpages

    Their pricing strategy is a sign they are not seeking high volume domainers. For anyone with a lot of domains, it’s simply not worth the expense. That could the the reason it’s priced higher in the first place.

    However, I must admit, I will move a handful of select domains over, just for Gmail. I’ve got Gmail on a bunch of domains that were grandfathered in from when it was free. Now that it’s part of Google Apps, it’s $5 per month, per user.

    So for those who just want Gmail, and extra $5 per year is not a bad deal.

    One thing I’m curious to see is if they bring back their AdSense for Domains feature for people who register with them, because just about every registrar offers some kind of parked page.

    Google’s AdSense for Domains was a cash cow for me. I had some domains cranking out over 2 grand a month, just for parking. If it worked so well for me, I wondered why they discontinued it. Then I realized it was a potential conflict of interest, because it would be unethical for them to include any of those parked pages in search results, so those pages did, in fact, vanish from search results, and only generated income from type-ins and outside links.

    Chances are domains on Google’s new service will have to offer some kind of parking option, the question is, will they have AdSense. If so, they will have to face the same conflict of interest issues again if those pages are part of search results.

    If they do have some form of AdSense For Domains features, that could also be attractive, because I generated 5 – 10 times more revenue with Google’s AdSense for Domains than with GoDaddy’s “Cash Parking”.

  7. Juniper

    Quote ” …we have a long history of offering domain names at very low price in order to attract customers. And then after a year with us, if they choose to renew, we have some additional revenue.”

    Yes, but a customer who makes a conscious decision to buy a domain name at a “low price” is very different to an unsuspecting customer who has been given a domain name “FREE”.

    • couponpages

      The interesting thing is they made this an “Opt-Out” option, so it may be that the free .xyz will auto-renew unless the owner specifically asks to drop it. Assuming they even notice it’s in their account.

      My guess is many people won’t complain until they notice they were charged for it the second year. If that happens, a storm of angry people who were charged will not help the reputation of .xyz.

  8. Juniper

    For the sake of clarity, would someone like to post the text of the email from Network Solutions confirming that the .xzy domain names will not be automatically renewed as a reference when these .xyz domain names come up for renewal.

  9. couponpages

    I’m guessing in a year they will will make the owners feel like they should renew it to protect their online identity before they sell the .xyz version to a competitor.

    To me, the whole mess was never about levelling the playing field by “expanding the pie” and increasing the number of possible domain names, because every Registrar has always hammered the idea that a domain owner should own their existing domains in as many TLDs as possible.

    Their official position is that it’s no different than having more area codes, but their true intentions are black and white… get each domain owner to buy more domains… NOT to give more people access to a larger pie.

    The Network Solutions .xyz giveaway is clear evidence of this strategy. If every one of their .com customers opted-in to get a .xyz domain, what would they do with them other than simply point them to the same site.

    If they sell 100 million .xyz domains, and 99 million of them are either parked or forwarding to a .com version of the same domain, it’s a complete waste, and it only serves as a money grab.

    I’ve had a computer since the 70s. The one thing I can say about technology is that whenever you look back a decade or more, you scratch your head and laugh at how things were done then. I can’t say what the domain marketplace will look like in 10 years, but I’m sure it’ll be different. By then, the role of the domain itself may become a grey area as the line between browsers, devices and search engines continue to blur.

    In just a few years, we may reach a day when the profile of the typical web surfer is somebody sitting on the couch, talking to their TV, tablet or phone with a voice assistant like Siri and the user isn’t even aware what the domain is most of the time.

    I’ve seen this trend grow more than I would like as search boxes and address boxes are now one. It’s great business for search engines because people end up going to a search results page when they type part of the domain they were looking for in the box… then end up clicking the paid ad for the site they intended to go to. Then the site ends up paying for type in traffic.

  10. Sanjeev Tomar

    I agree. I don’t think Google will change things for registrars. Their interface sucks, it looks like a gmail account but instead of emails you have domains. Google is going after everything and everyone, from thermostats to satellites to robotics to facebook, but in most cases they fail. A jack of all trades is a master of none.

  11. Marc McCutcheon (@domainzzz)

    I disagree Sanjeev. Go sign up for google apps and see how easy it is to add a domain into the purchase. They are coming at it from a different direction and putting the tools that get businesses online first, domain second. They’ll lead the expansion into undeserved regions with this model and their name, they’ll also take a fair chunk out of Godaddy, Web.com etc. as soon as they replace google sites in my opinion. Keep an eye out for a website builder acquisition in the near future I suspect.

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