…and it’s expensive.
It costs expired domain drop catchers $8.03 for every .com domain name they catch for you. So why are they charging customers so much money?
A good place to start is by looking at how much they pay to amass the firepower necessary to be successful drop catchers.
When a domain name deletes, all of the expired domain name services interested in the domain name start pinging Verisign’s servers to try to register the domain name. Many factors go into success rates, but a lot of it has to do with how many registrars they have to ping Verisign for the massive amount of domains they’re trying to snag each day. Think of each registrar as a phone line that goes directly to Verisign. The more lines, the more domains you can catch.
I recently analyzed a list of all new domain name accreditations from February 2012 to September 2016, and the numbers are a bit shocking. Roughly 1,250 new registrars were added, and most of these are solely for drop catching purposes.
Since February 2012, Web.com (SnapNames) has added at least 186 new accreditations. This is on top of ones that it has acquired. It acquired about 100 registrars from Rightside this year for $1.3 million as part of a tie-up between NameJet and SnapNames. (SnapNames has been around longer than its competitors, so it probably has the most accreditations from before 2012.)
Pheenix added at least 180 registrars during the same period.
While the basic costs of running a registrar are fairly low, it adds up in a hurry. Application costs are currently $3,500, and there’s an additional $4,000 fee per year. Registrars also pay a quarterly variable fee that’s usually less than $1,000. Although very small registrars can get a discount on their variable fees, the discount is designed to not apply to registrars that try to catch dropping domains.
Assuming DropCatch.com’s registrars don’t qualify for the discounted variable fees, it comes out to a staggering $6 million per year in ICANN fees. Add to that servers, software, etc. and it gets very expensive.
New accreditations have slowed to a trickle this year, ignoring Web.com’s big acquisition. Have the established players built enough firepower?