Giving Away Domain Names; Does it Help?
Publisher’s Note: After learning about the .Berlin free domain name offer (now discontinued), I reached out to 101Domain’s Joe Alagna to discuss the strategy of giving gTLD domain names for free. Some people speculate that it is a bad sign for the gTLD program, and I asked Joe to share his insight.
The .berlin registry rocketed to near the top in new gTLDs this week by offering their domain names for free for a limited time. .Berlin was already off to a good start. They went into General Availability in March, 2014. Over thirty thousand were registered within the first few days and then registrations leveled off to an average of fifty or one-hundred per day. With the free offer in place, they added close to seventy-thousand registrations, bringing their total Domains Under Management (DUM) to over 138,000 and making them the second most popular new gTLD to be released in the past year. I’ve been asked, “does this help?” I think the answer depends on who one is thinking of. Let me start by talking about registrants.
Do TLD Give-aways Help Registrants?
Of course they can. Domain Name Wire reported that Sedo registered over thirty-thousand of those free domains. How can they lose? They will now list them on the aftermarket and get an entire year to sell them for a profit. For Sedo and any savvy domain investor, this is likely to become a winning situation. Sure there’s some work involved to get them listed and make the sales but they’re surely going to make some money on this.
The publicity may even help those who have paid for .berlin domains because all new gTLDs need publicity. That said, there are likely some registrants who feel a bit cheated by the free offer after they’ve already paid for their domains.
Do Give-aways Help Registrars?
As a registrar offering .berlin, we (101domain.com) chose to participate in the offer and pass along the savings. Along with our trustee service, it helped many registrants not located in Berlin to be able to participate. Our hope is that many of these free registrations will be happy with their “purchase” and renew them next year. My experience however, is that renewals of free registrations is much lower than normal (likely less than 40%). Even that could be a good deal for a registrar.
That said, I worry about “the race to the bottom.” I can say from experience that registrars have a much more difficult job than registries. We have to manage multiple vendor relationships as well as customer care for a vast range of clients. A good registry will have several hundred registrars to deal with . Registrars, on the other hand, must manage a base of several hundred thousand clients or more, each with their own needs. Registrars also have a higher “cost of goods.” In addition to the wholesale cost to buy domains, they need more staff to develop registry interfaces, deal with independent registry policies, and handle that larger client base. Registrars and registrants will both suffer if there isn’t a way for registrars to make a reasonable profit in this very competitive industry.
Do Give-aways Help a Registry?
I think there are a few problems with TLD give-aways for registries. The first is that it has the potential of turning your valuable TLD into a new spam zone. Surely there will be legitimate opportunists like Sedo and in-the-know domainers who will take advantage of your give-away. But TLD give-aways also offer opportunities to spammers, phishers, and con artists who will exploit anything that is free. I’m not sure that .info has ever recovered from its reputation as a zone for spammers based on the ultra-low pricing strategy they espoused for so long. A low price strategy hasn’t made .info more valuable in the aftermarket either. My observation indicates that a low/no price strategy doesn’t help a registry in the long term.
That said, this offer has now placed .berlin in the top tier of new gTLDs in terms of number of registrations. For the uninitiated, this indicates a perception of success and popularity so it’s possible that this move can turn out OK for them. I certainly hope for this registry’s success and hope that the registry is prepared for a low renewal rate one year from now.