ICANN is forecasting 15 million new TLD registrations during the current fiscal year.
ICANN has slashed the number of new top level domain name registrations it expects during this fiscal year for budgeting purposes, but is its picture still too rosy?
That’s a question that members of the Registrar Stakeholders group asked ICANN’s board last week in Los Angeles.
In May, ICANN set a draft proposed budget for the 2015 fiscal year, which runs from this July to June 2015. Its revenue forecast from new top level domain names included a startling number of second level registrations under new TLDs: 33 million.
It has since revised the forecast down 55% to just 15 million.
Given results so far, it hardly seems likely that 15 million new domains will be registered in new TLDs before next summer — even if you include registrations occurring before the fiscal year began. There are currently about 2.8 million registrations.
Domain registrars are concerned that they’ll get stuck holding the bag if revenue comes in below target.
New TLD registries pay ICANN a fixed fee of $6,500 per quarter ($25,000 per year). If they have more than 50,000 “transactions” in a year, they pay 25 cents per domain. Transactions are actually domain-years, not registrations, but ICANN’s budget refers to a number of domains registered as an assumption in its forecast. I’m not sure how ICANN calculates this in the budget; they must be assuming a certain number of TLDs cross this threshold.
Should domain registrations come in below forecast, then ICANN will have a revenue shortfall. The easiest place to make that up, the registrars fear, is by increasing the variable registrar fee on domain name registrations. That’s the 18 cent “ICANN Tax” you usually see passed on to the customer.
ICANN’s latest FY2015 budget cites the number of new TLD registrations as a risk factor. In fact, it mentions the risk of a “lower number of transactions per registry” as “high”, and lists the likelihood of a “higher number of transactions per registry” as low.
It certainly seems that ICANN should be planning for a lot fewer registrations than are in its budget.
Jim Prendergast says
Registrars won’t make any money when Google starts giving away domains to their customers but ICANN certainly will. They must be banking on that type of activity to help fill the coffers. .gmail was delegated August 27.
Andrew Allemann says
Jim, I hope they are not forecasting based on a moonshot.
It is worth noting that the variable fees at play here are no more than a few million, so the world won’t end if they don’t hit the target.
George Kirikos says
The new gTLDs boondoggle should not cause .com/net/org registrants to pay one penny more to support ICANN’s excessive spending.
The solutions to any budget woes should be limited to: (1) cutting ICANN spending (e.g. excessive executive salaries, number of staff, spending on ‘consultants’, etc.), (2) increasing fees on new gTLD registries, (3) diverting the excessive new gTLD application fees and auction proceeds into the budget, or (4) a combination of the above.
Those who didn’t register new gTLDs shouldn’t be subsidizing those who did, nor should we support the ICANN spending that was associated with those grandiose projections that are now failing to materialize.
BTW, the ICANN Board voted themselves an increase in compensation on July 30, 2014 (see board resolutions resolutions on ICANN’s minutes of that date, agenda item 2.b) to $45,000/yr each. Perhaps they should be taking pay cuts at the Board level too (and indeed, going back to being unpaid volunteers, just like everybody else), rather than slurping at the quasi-public trough. When one “gets it wrong”, where is the accountability at ICANN?
John says
ICANN knew the new TLDs would fail but they released them anyhow just to make sure there were enough new problems created to necessitate their existence in cleaning it up, of which can never be done now.
They came out with the 15,000,000 number down from 33,000,000 when they knew darn good and well they would never get 15,000,000. They are just trying to hide the carnage and release the new bad news in stages so everyone absorbs it better.
Also we know that many.XYZ domain names were given away for free. Over a half 500,000, right? Wait until 99.999% of those get dropped for the numbers to adjust down again, and that is just .XYZ.
ICANN is about as bad as a Ponzi scheme and the new TLDs are failures already. This shows it.
Konstantinos Zournas says
ICANN is spending a lot of money left and right. All they are good at is spending.
But there will always be money to be spend at ICANN either they get 15,000,000 or 5,000,000 domains.
The point is that they should do something constructive with it or even better: reduce the ICANN fee. This is a non-profit. It is not a “we have to spend all the money we get or else”.
Here is an idea: reduce ICANN meetings to 2 per year or even better 1.
A lot of talking and no substance.
Rubens Kuhl says
ICANN meetings represent large expenditures to the meeting host, not to ICANN. Exceptionally ICANN hosted itself two meetings in a row, London and LA, also hosted ICANN London a few months before. But usually that bill goes to whoever wants ICANN at their place.
ICANN has not been expending on new gTLDs more than it gets, and all budget info hints otherwise (although the budget is not enough categorised to fully affirm one thing or the other).
The largest unusual expenditure by far is ICANN presence in the Internet Governance arena. All others seem anchored in revenues.
Mont Blanc says
.yawn
.whybother
.allwillfailanyways
Ernie Jr. says
Seriously, did any of you not see this dismal gtld failure coming from a million miles away?
Andy Morley says
Is it surprising that there is such a shortfall when you see how long the process takes?? Once the gTLDs are delegated and finally released, awareness will grow and sales will increase.
Andrew Allemann says
The surprising thing is that ICANN would set a budget based on the idea that 15 million new TLDs will be registered over the 12 month period ending next June. Could happen if a bunch of registries give domains away for free, but it’s highly unlikely.
Thurston Howell iii says
Andy,
You really think that awareness will grow? I see the interest in gtlds dropping faster than a ton of bricks. In my opinion, only a small handful of biased people and bloggers want them, but certainly not the end users or domainers. Seems obvious to me that the gtlds will be gone soon and it will be back to .com basics.
Konstantinos Zournas says
Where exactly will the new gtlds go?
Most are not out yet.
Species says
The companies behind them will fold. Donuts has setup one subsidiary per tld so it looks like they’ve planned for this eventuality. If a tld fails to catch on you fold that subsidiary without affecting the parent company (too much).
Andrew Allemann says
I suspect the key reason for doing that was partnership and selling registries.
Konstantinos Zournas says
Could be. But New gTLD aren’t going away. ICANN will keep even the failed ones alive.
Some of the single New gTLD registries will fold. But don’t expect a lot of the Donuts strings to fold. They spend the least amount per string.
Myron says
Seems pretty clear that the gtlds are not meeting expectations after just a few weeks. Surprise, surprise, surprise! It was a half baked idea that just 5 minutes of research would have shown that failure is in the cards and was to be expected.
Bob says
I don’t know a single person who registered or even wanted a gtld. I know I didn’t. They seem assbackwards to me.
Ian says
To give a little balance here, aren’t a number of the best new gTLDs still waiting in the wings and not yet ready to launch?
It might not change things to the degree that ICANN predicts but I’d suggest there will be some impact from some better new gTLDs.
Andrew Allemann says
Ian – yes, the best are still to come, but keep in mind we’re talking about registrations through June of next year. Most of these best domains will not be out by then. If they have, they will not have been out for long.
BT says
The new Gtlds are killing it. The registries are raking cash in and will continue to grow. The only people who think this is a bust are vested com/net holders and outsiders who have visibility inside the machine that is minting money like Rumple Stiltskin’s spinning wheel. ICANN’s budget and all that doesn’t matter.. they have had auction winnings that far and away eclipse estimates so they are cash rich and won’t worry. Fees will never go down (for anything) imo. It’s like talking a shark out of eating after its tasted the smell of blood in the water