Here are three reasons it might have wanted to run .web.
Verisign bought rights to the .web top level domain name yesterday for a staggering $135 million.
Up until now, Verisign’s only interest in new top level domain names (other than running the registries for other companies) has been internationalized domain names that are transliterations of .com and .net. It has downplayed the potential of new domain names, saying they cause lots of confusion.
Yet, here it is, paying three times more than the previous record for a top level domain name.
Does this mean it suddenly believes in the future of new top level domain names? Here are a few reasons Verisign might have paid so much for .web.
It views it as competitive to .com – a handful of industry watchers and top level domain name companies have said that .web is the one domain that could unseat .com. While that’s open to debate, Verisign might have viewed this as an opportunity to take the greatest threat from the new TLD program off the table.
It views it as competitive of .net – this might sound odd, but keep in mind .net is a 9-figure-a-year business for Verisign. You can argue that .web has a similar connotation to .net. It could be a viable alternative for people who traditionally buy a .net when the .com is taken.
It views it as a high-upside opportunity – Verisign might have run the numbers and decided it can make a good business out of .web, especially with its existing reach in the domain name ecosystem.
On a side note, how asleep at the wheel were stock analysts covering Verisign on yesterday’s conference call? They keep asking about revenue potential for Verisign’s IDNs, even though it’s really small right now. Yet they missed Verisign making such a big bet on .web?
What this purchase has immediately accomplished is to increase the value of good dot-nets; because it’s going to take years, and hundreds of millions in advertising before dot-Web is perceived by the public as being on par with dot-net. So the dot-web buyers running real businesses will need to buy the identical (dot-net) name…in the meantime…or they’ll lose traffic and brand strength.
$135M is the bid, not the price. It will be about $130M, …and I believe it wasn’t paid yet.
$135 was the winning bid. The sec filing says about $130 million. It’s possible they have a deal with nu dot co so they pay less. For example, nu dot co might get royalties or the first $x million revenue. It’s also possible they made a mistake because they had to put it in at the last minute.
Andrew, the winner of ICANN auction pays the amount of the bid previous to the last. If someone bid 130 and Verisign bids 135 and wins, they pay 130.
.com may not always be in their stable. Owning .web increases the opportunity to survive/thrive in the future.
Dagger in the heart of the new gold program!
Its a smart strategic play for Verisign. Its a Win Win Win for them. ..
They will scoop up the cash from the frenzy of Registrations that will flow when it launches, they prevent leakage and they block their competitors.
Nice move.
If the ICANN/IANA “transition” really happens, then there is no guarantee in the future that both .com and .net will also be transferred outside the US to other countries, or even to other companies inside the US. With the new gTLDs, however, unless I’m a little mistaken it is my understanding that those who win them actually own them, more or less, and so there would be no risk of that happening unless perhaps they severely violating various policies or terms.
So in a worse case scenario, Verisign could be kicked to the curb for both .com and .net in the not too distant future, and I suppose some of the other minor ones they also manage, in which case they would still have .web.
I doubt that is the primary reason why they did this, but it’s a nice way of pointing out some of what could have occurred to people as well as some of what’s at stake with the looming “transition.”
(P.S. Andrew, still not getting the subscription confirmation emails for blog threads anymore, and not in spam folder.)
I think Verisign might view this as an opportunity to turn the greatest threat from the new TLD program into guaranteed profitable business. Since operation of registry for .COM is based on contract that is not guaranteed for next terms, Verisign needs to secure its business and earnings somehow. And because many Internet users, businesses and domainers see .WEB as a real competition and/or threat to .COM namespace, being a .WEB registry is the best opportunity to secure its future market share. After Sunrise period, Verisign will most likely come with matching program, allowing current .COM (and possibly after that also .NET) registrants to register matching .WEB domain names before a general availability kicks in. With $30 registration and renewal fees (what we used to pay to Network Solutions for .COM/NET 15+ years ago), it should be a reasonable business model that will not just pay the ~$130M in very short time, but will guarantee a hefty earnings for yars to come. And at some point .WEB might be the most popular domain extension as well…
“And because many Internet users, businesses and domainers see .WEB as a real competition and/or threat to .COM namespace, being a .WEB registry is the best opportunity to secure its future market share”
WHO…thinks this? You’re just guessing that they MAY…EVENTUALLY…assume that it’s a competitor.
If I was Verisign, I’d offer existing .COM Registrants the same .WEB domain name.
The day the gtld program died. Bye bye Miss American Pie.
If ever proof was needed that ICANN is total fail then I guess this would be the final word, not that one really needed to wait for this final twist to draw that conclusion.
Good points all around Andrew. To me, it seems like a very high price to pay to simply “shelf” what they perceive as their biggest threat. On the other hand, if they do see it as a big revenue + strategic opportunity, then they will have to perform one of the largest transformations in their history –> they will have to become a true marketing organization. Meaning they will need to build a brand for .web, get way more creative on registrar incentives, and get deeper into the retail market behaviors.
Under “com” they have been more of an infrastructure and policy company. So, I see the jump to true “retail” marketing, brand building, and market awareness as being very difficult for Verisign. This is not how they are structured today.
Personally, I hope they dont shelf it. I hope they make a concerted effort to build a “.web” brand and sell it. Success in “com” has been driven by many factors outside of VeriSign (monopoly status, registrar focus, etc etc). This is a real opportunity to go beyond the infrastructure story (root server operator, dns, etc) and prove they can win in a real competitive environment that has 1000s of choices.
To understand why they paid $135 million, you need only go to your bank and see what your savings earn in interest.
30 year US government bonds are yielding a mere 2.2%, and 10 year yields are at 1.48% in the USA. In other parts of the world (e.g. Japan or Germany), they’re even lower (e.g. 30 year bond yield in Germany is 0.34%, and rates for terms below 10 years are NEGATIVE).
So, can VeriSign earn more than $2 or $3 million per year in profit from that $135 million? Almost certainly yes. The net present value of the annuity stream is very high these days, with interest rates so low.
I’m sure VeriSign cares very little about new gTLDs — they’re simply making a financial decision, given the low interest rate environment.
Low interest environment is important, but it is not solely a financial decision. This TLD has the potential to affect .com brand over time in a substantial way and they moved to protect their main brand. Otherwise, I agree with you. Furthermore, the low interest rates make leverage highly affordable and can bid up prices as a result.
It will be interesting to observe how this TLD is developed and branded.
I posted this same comment earlier on TheDomains but it is very much in line with some of the thoughts I read here. Granted I posted this BEFORE markets opened:
Couldn’t have turned out better in my opinion (for premium domain investors and the domain investment community as a whole). The way I see it, Verisign’s acquisition of .WEB is basically defensive not offensive. They have made their stance on the .new TLD program quite clear. Obviously they’ll seek registrations and to make back their ROI, however, it will be operated like .NET or .TV. It will NOT be marketed as the next best thing since sliced bread and certainly won’t be pushed as being a better .COM. It will be a slightly less “IT Admin Oriented” .NET. Highly regarded by a niche set of subscribers, relatively wide adoption and recognition, but never going to be brought the forefront.
I think this will deal a massive blow to the new gTLD program (.web was to be their shining star and corner stone) and usher in a whole new wave of investment in the Domain space as a whole. .COM WON. Period. I also think this was a very strong move by Verisign which will be rewarded in its stock price (although probably not right away). Shows confidence and it solidified its long term viability, regardless of .COM contract (its not a Plan A but a good Plan B). Not just a hedge on .com (hell of a hedge though), but also doesn’t allow any of the strictly for NOT COM companies to make a front attack on .COM as the long term leader of internet marketing & branding mind share. There is not a single other new gTLD out there with the ability to serve up a true alternative to .COM. MASSIVE blow to Web.com’s business right here. I think from a 5-10 year horizon perspective this was a due or die for them.
As a Verisign shareholder, I applaud managements decision and intelligent strategy. I’ll be doubling down on Verisign today unless the stock shoots up over $90. More likely I think it will take a temporary dip, possibly into $75 territory as markets try to understand what just happened. Most analysts will probably read this as a piss poor management decision and poor allocation of capital. I hope they do. I will buy more stock. But long term there is absolutely no doubt this was a critical, bold & smart move by Verisign management and they should be recognized for it.
100% agree. What’s the average timeline from when there is a winner to when registration become available?
Hell of a comment Andrew. Well said. 🙂
Yes, very very smart and killed the entire f-in gtld movement in the process. Game, set, match…Verisign.
If you’re thinking that, you haven’t been paying attention.
Sorry, Mr. Kite. I HAVE been paying close attention and can clearly see that there now exists no reason to buy a new gtld from a third party register. Verisign is now able to keep it all under one registration roof allowing the other new gtlds and their snake oil registries to go back to the worthless ashes from whence they came. On the bright side, looks like .mobi is about to have some new neighbors.
.web as a good TLD? What doofus might have had that idea in 1995, kicking off this whole mess?
Lol… Yeah feel bad for you Chris. 🙂
http://www.domainsherpa.com/chris-ambler-domain-name-expiration/
Well since we’re on the subject, check this out too:
http://domainincite.com/20789-donuts-files-10-million-lawsuit-to-stop-web-auction/comment-page-1#comment-401761
.web = TLD for IOT – VRSN will brand it as the IOT TLD> not just a domain but an internet ecosystem service offering
Hedging bets? Sure. To some degree. Especially, if you view this as a zero-sum game. I don’t.
Despite attempts by registries and partisan domainers to characterize our choices as “nTLDs versus .COM”, a truer picture of the name space shows a fringe of nTLDs supplementing a .COM core. It’s an “and” not an “or”.
Most observers – myself included – have seen .WEB as 1 of the nTLDs likely to take a really big slice of the pie. Possibly the biggest. And .WEB will be a real rival for .COM and .NET in some cases.
Rosener’s right when he calls .WEB a “less ‘IT Admin Oriented’ .NET”. It should be quite easy to position .WEB as a fresher .NET and a go-to fallback option for a wide variety of use cases. Consumers have preconceptions where .NET is concerned – which both helps and hinders .NET. With .WEB, no received opinion gets in the way of adoption. Barring some mismanaged rollout, I fully expect .WEB to outperform any other nTLD in volume and real usage.
Rationally Verisign ought to want to operate .WEB. On every level. More recurring revenue. Bigger market share. Removing .WEB as a possible competitor. And, beyond that, their ownership of .WEB refutes, once and for all, the tired false dichotomy of nTLD versus .COM.
I don’t want to be a cheerleader for Verisign here. Actually, they could introduce .WEB in any number of damaging ways. But I’d prefer to be cautiously optimistic.
Domainers are being spared years of counterproductive warfare between .COM and a separate .WEB registry. That should support .COM valuations, while also allowing nTLDs to make a bit of headway.
Maybe now the domain industry can finally get past the nTLD versus .COM debate and make some progress promoting broader domain usage and investment.
We’re also spared what (in my opinion) would have been the very worst outcome: Google running .WEB, using all of the anticompetitive advantages at their disposal to promote their own registrar and bias search toward their own .WEB websites That’s a disaster I’ve been eager to avert – and, frankly, working to avert – for a few years. Verisign never asked for my input on .WEB, but a party connected with a different applicant once approached me and got an earful.
For the domain industry as a whole, I really think this is the best possible result. Our common interests are now a bit more common.
The winner’s of the .Web auction are the New G’s as a whole. The game is not about the New G’s taking over .Com, but rather complimenting .Com…Consider a retail mall as an analogy. The large anchor store that brings the customers in (.Com) is accompanied with many smaller retailers (New G’s), thus creating a successful customer experience for all. The entire mall thrives when filled with stores that benefit every type of customer…This notion that it has to be .Com only is like a mall with only a Macy’s….
Confused author you are, Aaron Strong. This is not a celebration of new gtlds. Rather, it is the death of them since .Web was the only new extension that was generally considered to have a snowball’s chance. Now that it is owned by Versign, it will be kept on ice in the dungeon until .Com and .Net are sucked bone dry. Not a good turn of events for the new gtld program.
Stan – Clearly we see it differently….I respect your views as we are both speculating and forming an opinion. Calling me “confused” does not show the sincerity of your opinion, rather it shows the lack of your maturity.
Rick Schwartz predicted the strength and value of a .Web extension years ago, he voiced his thoughts in his blog and on various DomainSherpa’s shows. Rick has been freely laying out the future of domain names for anyone willing to listen to him…that’s why he’s the KING.
@Omar
You’re right. Pretty sure Rich pointed out .web as the star of the GTLDs. I believe he may have also liked .club.
Verisign’s acquisition will make sure .com remains the King of extensions, as if there were any doubts.
So what happens to all those tulips in Holland when supply exceeds demand?
I didn’t think the narrow spectrum of underbidders in this auction would have the stomach to take it that high. Some of the price paid is an investment in a great extension – some is insurance against the unknown. If played right, there is a fantastic lever here to raise prices in .com .. (imagine .Web comes out at $40 and .com follows even at 50% as much). This purchase will hasten round 2 and the “price heard round the world” assures that participation in that round will be triple what it would have been. It has also reaffirmed a strong comparable value against which to measure every other GTLD. If this adds 20% to VRSN stock it has doubled the value of Donuts – Pull a 1 year chart on NAME and MMX against VRSN to see what I mean. The future will necessitate more names – not less, so this was a great day for all new GTLDs and domain names in general. On July 29th 2016, AAPL, MSFT or GOOG could have purchased every company in the naming space for about 13 Billion and have an iron-clad grip on email and naming across the Internet. Some version of that is a likely long term end-game IMO.
Frank – I’ve been wondering on this exact point. The naming space as a whole is so undervalued considering how fundamental it is to ALL things internet. It’s laughable in the end to think that you have many companies with absolutely no assets beyond what lies on the internet (on their domain name & app) which are valued at greater (in some cases far greater) than the total value of the entire naming space cumulatively which houses them!!!! WTF???
Imagine that one could purchase the entire country of the United States of America for less than the value of the companies sitting on its soil? Without America it is more than likely that those companies wouldn’t exist. Or imagine that you could purchase the City of New York for less than the value of the buildings inside the city limits!?!?!?
By the same token, without the naming space and domain name addressing system, those companies and the services & products they offer wouldn’t exist. So how could that critical infrastructure and industry at its backbone be valued at less, far less?
Google & Apple are sitting on more cash than the GDP of many developed countries. The products and services which will drive their future growth depend on the naming system. The businesses that will buy their products and services will need domains.
Domains are quickly becoming more important, and one could say more valuable, than the cumulative physical real estate that supports and houses those businesses – any and all of them. With some of the smartest people in business in Apple & Google’s stable, how can they not see this opportunity? To me it is so apparent. What am I missing? What is the missing link?
I haven’t done the math as it appears you have, but that sounds about right at $13B. Absurd that the entire name space could be purchased for HALF of what LinkedIn just sold for!!!! WTF???
@Andrew Rosener,
Every reader of this blog would acknowledge that domain names are undervalued. So, in suggesting that the name space as a whole is undervalued, you’re preaching to the choir. Nobody here will disagree with that sentiment.
At the same time, domainers often overestimate the importance of domains. You’re a smart guy and one hell of a salesman, and I won’t fault you for doing that here. It’s just interesting to examine those ideas more closely.
“Imagine that one could purchase the entire country of the United States of America for less than the value of the companies sitting on its soil”
Domains are often compared to real estate. But land is finite, whereas the name space of 1 TLD is virtually limitless; and new TLDs can be rolled out ad infinitum … printed like paper money. The name space isn’t circumscribed like national borders or the island of Manhattan. So this comparison really breaks down.
Also the domains on which companies have built websites are already owned by those companies. So it’s a mistake to count the value of that digital real estate as if it still belongs to infrastructure providers involved in the naming system. The value of those developed domains has already been counted once as part of the value of the companies themselves.
“[W]ithout the naming space and domain name addressing system, those companies and the services & products they offer wouldn’t exist. So how could that critical infrastructure and industry at its backbone be valued at less, far less?”
Without physical cables running into living rooms, cable TV would not have existed. But the value of TV networks is measured in branded shows, personnel, equipment, audience share, etc. Of course, they couldn’t broadcast without those transmission lines. But it doesn’t logically follow that the value of the wires is equal to the value of all the TV channels using the wires.
“On July 29th 2016, AAPL, MSFT or GOOG could have purchased every company in the naming space for about 13 Billion and have an iron-clad grip on email and naming across the Internet. Some version of that is a likely long term end-game IMO.”
However, as of July 29, 2016, anti-trust regulations in the USA haven’t yet been eviscerated to that extent. So those corporations must wait awhile for their lobbyists to continue dissolving and digesting the tougher bits of democracy.
Meanwhile, sensible citizens will grab what property they can and hold onto it.
110m .coms, 2% .web take rate on renewal = 2.2m .web domains = $22mm/year of high-margin revenue. Not hard to see how the spreadsheet justified $135mm. Begs the question of why VRSN hasn’t gone after some of the other portfolio players.
Consolidation is inevitable. There is an increasing number of failing TLDs , underfunded , so under marketed that are ripe low hanging fruit . Small change for VRSN to turnaround . Let see in 6 months , as TLDs are desperate to sell up and get out. Yes, $135M was cheap , more than compensated now by their mkt cap increase.
We should note that VRSN has not applied to any other gTLDs besides IDN transliterations and .comsec, not even .web; perhaps the uptake of gTLDs has been stronger than they thought, or market factors that changed since 2012 (like China) justified the new approach.
Gotta admit that I too see this as a serious threat to the other new gtlds. This new .web option will suck out the oxygen in the room and realistically limit new online players to the big four (.com, .org, .net, or now .web). No need or room for any others. RIP new gtlds. Thanks for the short-lived memories.
Best. Purchase. Ever.
RIP.NEWGTLDs