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China loves .Com

by — Uncategorized 6 Comments

Kassey Lee examines the market for .com domain names in China.

In my series of articles to study the Chinese domain market, I have already covered the big picture and. Today, let’s look at .com. This analysis is based on data I have collected from China Internet Network Information Center reports published since 1997.

Pie chart showing selection of top level domains in China

The chart shows a breakdown of domains registered in China as of December, 2018. However, do not be misled by the numbers and conclude that .com is less important than .cn. It’s actually the opposite. Although smaller in number, .com is king in corporate China and has achieved the highest prices in domain sale. A small sample is listed below.

  1. Voice.com was sold for $30 million to Hong Kong-based block.one in 2019.
  2. 360.com was sold for $17 million to Beijing-based Qihoo 360 in 2015.
  3. Le.com was sold for $10 million to Beijing-based Le TV in 2015.
  4. We.com was sold for $8 million to Beijing-based Ren Ren Dai in 2015.
  5. Vivo.com was sold for $2.1 million to Guangdong-based Vivo in 2015.

Chart showing the number of .com domains registered to people in China

The chart shows that .com is generally on the up trend. The number of .com domains registered as of December 2018 was 12.8 million. However, note that there are still many Chinese owned domains located overseas. For example, Voice.com, Baidu.com, Tencent.com, JD.com, and DJI.com are all registered in the US. Therefore, the actual number should be much higher.

A particular event needs to be mentioned. In 2015, someone invented an investment theme called “chips” ([Chi]nese + [P]remium in plural form). It refers to a domain not containing the aeiouv letters — which was soon expanded to include numbers not having 0 and 4. Such domains were promoted as being more valuable. Speculators flocked in and registered a lot of random .com domains in 5L, 6N, 7N, and other types. The “chips” boom ended in 2017 with a dip. Nevertheless, growth returned in 2018.

Long term, I see a very solid .com domain segment in China. The love for .com is deep rooted in corporate China and will likely remain so unless there is drastic change in the regulations to disfavor .com. On the other hand, note that Chinese love speculation, so let me end by speculating that new investment themes will pop up and many more speculative booms will appear. The 2015 “chips” boom is only a preview of what is to come.

Verisign .com/.net domain base increases by 1.34 million

by — Services 1 Comment

More cash in the coffers for .com registry Verisign.

Verisign (NASDAQ: VRSN) reported earnings for Q2 2019 yesterday.

The company had $306 million in revenue and $148 in net income. The operating margin was 65.9%, up from 63.8% in the same quarter last year.

.Com and .net domains increased by 1.34 million during the quarter, bringing the combined domain base to 156.1 million. 10.3 million new .com/.net domains were registered during the quarter, up from 9.6 million in the same quarter of 2018.

Renewal rates are trending slightly down, however.

Verisign narrowed its guidance for the year by shaving off the low end of its previous guidance.

On the investor conference call yesterday, analysts inquired about three things:

1. The status of .web – Afilias’ Independent Review continues to work through the process, and Verisign would like to participate despite not being a party to it. Verisign won .web in an auction through a deal with one of the applicants. Afilias was the runner-up.

2. .Com price increases – Verisign continues to negotiate with ICANN to try to incorporate the price increases the U.S. government granted into its existing .com contract.

3. .Org price increases – This was an interesting one. An analyst asked if ICANN’s approach to lifting price caps signals that it might relieve pricing controls further on Verisign. Verisign CEO Bidzos noted that he can’t speculate on what this means when .net comes up for renewal. He also noted that .com is a different animal because of the Cooperative Agreement with the U.S. government.

.Com dominates North America. What about the ROW?

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Country code domains are still the majority outside of North America.

Chart showing dominance of .com in North America and ccTLDs in other regions

Take a look at the chart above. What do you notice?

While .com dominates North America, it is secondary in ICANN’s other four regions.

It’s easy to be United States-centric, but the reality of domain name demand is very different around the world.

Afnic, which operates the French country code domain name .Fr, released a report detailing the domain name market in 2018 that included this chart. It’s a great look at the market and required reading for anyone interested in the current mechanics of the domain name market.

If you travel or live outside the United States, you have undoubtedly seen the importance of country code domains in other regions of the world.

Of course, regions are large and the dominance of .com vs. ccTLDs varies by country. And .com is still quite common in most countries, even those in which the country code domain is the most used.

ccTLDs are, by their nature, limiting. Afnic notes:

These data highlight the difficulty for new entrants to impose themselves faced with “cultural prisms” in one case prioritizing the notions of region and proximity, and in the other case a global approach that overrides any reductive specific feature implied by the TLD chosen.

The report has many other takeaways. Here’s a good one about the registry/registrar dynamic and how some registries need to follow a different strategy:

As we already noted in 2018, the fact remains that the registry – registrar system will no doubt have to change in the future, by increasingly favoring the emergence of specialized or “proximity” resellers, who will take care of marketing nTLDs to the relevant niche markets. The transformation is not an obvious one for every player and remains slow to enter the mores, registrars often considering themselves as wholesalers whose role is not to build and facilitate dealer networks optimized for this or that target. Current and future nTLDs cannot, however, be successful without the changing of the retail system.

Afnic also notes that 50% of new top level domains are potentially “loss-making” if they sell domains for less than $20 wholesale, and 83% if they sell below $10.

The full report is available online.

The .Com memorability factor

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Study shows that people remember domain names as having .com on the end.

One of the problems with using a top level domain name other than .com is memorability. While it might stand out to people as new or unique, many people will remember your domain name as a .com.

This is especially the case when people can’t see it, such as hearing a radio commercial for a website. But it’s even a factor when people do see the domain name, and that’s clear in a clever study performed by Kyle Byers of GrowthBadger.

Kyle surveyed 1,500 people and didn’t tell them the study was about domain names. He asked them how trustworthy a site was and the only information he gave them was a domain name. It ended in .com or one of seven other domain name extensions.

Overall, the ones that ended in .com had the highest trustworthiness score.

But the most intriguing thing to me was quantifying recall. After asking about the website, Kyle threw in a bunch of other questions to create some time between reviewing the domain and a final question: what was the domain name they saw on the first screen?

People were more likely to remember the domain if it was a .com. And if they misremembered the domain extension? They almost always misremembered it as .com:

Graph showing people who misremember domain names and which top level domain they choose

If they misremember the TLD, most remember it as .com. Graphic courtesy GrowthBadger.

This doesn’t surprise me but quantifies the effect.

Kyle has an interesting takeaway that domain investors will like:

The domain he tested was MattressRankings.TLD. The .com is on the aftermarket for about $4,000; the others can be hand registered. Kyle asks, isn’t it worth paying extra for the aftermarket domain in light of the findings?

ICA to hold public update for domain owners

by — Policy & Law 3 Comments

Domain investor advocacy group will make its next member call public.

Internet Commerce Association logoThe Internet Commerce Association (ICA), a group that advocates for domain name owners, is holding a public webcast on Friday to update domain investors on policy issues. This is ICA’s first public call; previous updates have been for members only.

The webcast is scheduled for April 12 at 1 PM EDT. Registration is now open.

Among the topics ICA will cover:

  • NTIA permitting Verisign to seek price increases from ICANN for .com
  • ICANN’s failure to recognize the difference between the legacy domain extensions which were originally created by the US Government for the public benefit and the new gTLD extensions
  • Potential unrestricted price increases for .org, .biz and .info
  • ICANN staff independently pushing significant policies that were not approved by the ICANN community
  • The move by the Australian .au Domain Administration to abolish domain investing in .au domains and to delete long-standing domain portfolios held by .au investors
  • Whois information in the wake of GDPR
  • Bad UDRP decisions
  • The effort by trademark interests at ICANN to create a special “UDRP” for Intergovernmental Organizations

The webinar is structured as an update to the ICA’s membership from the Executive Director, Kamila Sekiewicz, and General Counsel, Zak Muscovitch, as well as the ICA’s Leadership Team.

“Because the issues at stake are of importance to the domain community at large, we are opening up the call so that everyone with an interest can watch and listen as well,” said Sekiewicz.