Company has spent $52 million acquiring new names, but its net cost is much lower.
We’ve all seen some shockingly high auction results for new top level domain name auctions. How can companies make a profit on these domains?
One thing to keep in mind is that for each private auction, all of the losers win. The winner’s payment is paid out to the losers (less administrative fees). This changes the dynamic of the entire program.
Take a look at Rightside (NASDAQ:NAME) to put this in perspective. The company has spent $52 million to acquire its 39 top level domain names. At first glance, it appears that the company spent about $1.33 million per TLD.
But the company has received $36 million from withdrawing applications. This lowers the net cost to $16 million, or just over $400,000 per string.
While some of the company’s domains are languishing, others are off to a good start. .News generated $1 million in wholesale cash sales within about a month of launch.