Uncertainty Could Doom the New Domain Names | DomainInvesting.com
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Uncertainty Could Doom the New Domain Names

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Based on what I have read and heard, it seems like operators of the new domain name extensions can basically charge whatever they want for their domain names. I think most people assumed that the market would help dictate the price, but as one can see by observing the Uniregistry pricing changes, a registry can seemingly charge whatever it wants for its domain names.

I think this is problematic and could doom the new gTLD program. There is a risk that a company could build a website on a new domain name extension and in a matter of years, the registry could theoretically charge whatever it wants for a renewal. A small business, who likely chose a new domain extension in lieu of spending extra money on a previously registered .com domain name, would then have to deal with the same issue of an expensive domain name.

Several operators of the new domain names tried to assuage the concerns of customers by stating various forms of “we have no plans to increase pricing.” You can see comments from representatives of Rightside, Donuts, Radix, and .Club. I know many of these people, and I believe they are all well intentioned and truly do not have plans to increase prices. Likewise, I don’t think Frank Schilling from Uniregistry thought the prices would increase by so much just a few years ago.

Unfortunately, the price increase from Uniregistry shows registrants and even domain registrars that the prices may increase by whatever the registry determines is necessary for the health of the registry. While this may make a solid internal business case for registry operators, it adds uncertainty to domain registrants who could bear the burden of such a price increase.

As I said before, I do not believe many registries have plans to follow suit and raise their pricing by exorbitant amounts of money. As we have seen from their statements though, nobody can promise that the prices won’t ever increase significantly in the long-term. If the model of high prices is more economically feasible in the long term, we could see other companies pivot to this model. I don’t think anyone has plans to make this shift, but the economics might dictate it in the future.

From what I understand, consumers who own domain names in the new extensions don’t seem to be protected from price increases of any amount. As much as I think there are good uses for the new domain names, it would be difficult for me to recommend one to a friend or associate knowing that future prices aren’t certain. I don’t blame Frank Schilling for making a business decision, but it highlights the uncertainty with owning the new domain names.


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (47)

    STRIKER

    I’d say this week’s news from Uniregistry pulled the life-support plug on the patient (the patient being the gTLD program).

    Who in their right mind would now put their company website on a gTLD, or invest in gTLD’s for that matter? When there is NO LIMIT to how high registration costs could go?

    What if the gTLD registries decided to figure renewal fees based on how much traffic your site is estimated to receive? Since the gTLD registries OWN the domains and have ZERO restrictions on how high they can prices these domains and are not restrained by HOW they calculate pricing, this whole adventure is proving itself to be nothing more than a money-grab by people who are for the most part, ethically-challenged at best. Never, never, never, never trust a “domainer” – especially the successful ones…domains as “investments” are this generation’s version of snake-oil.

    gTLD’s? Meh…put a fork in ’em.

    March 10th, 2017 at 10:37 am

    Ryan

    The premise of what uniregistry did is very dangerous. Effectively poor management outcomes could have consequential affects on residents of their extensions.

    The premise of what they have indicated of how they can wipe out an entire extension by grossly outpricing them out of renewing, or not even informing them of a price increase in many states is simply illegal, and against the law.

    When you try to raise the price of anything 3110% you become the poster child for greed, look what happend to Martin Skerlli.

    Who wants to touch this company, or these extensions knowing that at anytime their investment, their marketing, their brand could be wiped out by the fact that ICANN dropped the ball on the legal framework, and the registries are using the loopholes to exploit paying customers.

    I think the outrage comes as you expect this kind of stuff from Mind & Machines, but not Uniregistry & Frank Schilling, it basically put people on alert. I know many people who are looking at Epik, Godaddy, and Efty much closer now.

    Sometimes principals are more important than money. I think Uniregistry really hurt their brand with their core audience, and many of their registry partners such as Godaddy. Godaddy has to deal with the small business owner who got a $300 renewal bill, on a $20 domain they bought, and are asking them in what world do they live in, I am taking my business somewhere else, even though Godaddy’s only fault is doing business with Uniregistry.

    March 10th, 2017 at 11:26 am

      Mark

      I think any registry can raise prices to unreachable levels but why would they if there is a big base of registrants? It looks like the biggest price increases are on extensions that don’t matter or have few registrants. As a registrar I like Uniregistry compared to my other choices as for the new gtld side I think this is just the beginning of a long trip for the new gtld names

      In reply to Ryan | March 10th, 2017 at 4:30 pm

      Snoopy

      i think big tlds will see large changes if the data points to more revenue for the smaller tlds. What we see now is testing the waters by the first mover and every registry will by analyzing those Uniregistry numbers. Uniregistry has done small moves on big tlds and big moves on small ones, that is a good approach in my view in terms of their revenue.

      In reply to Mark | March 10th, 2017 at 5:26 pm

      John

      Agree.

      If Frank’s new plan works then there will be many copycats because after all they have to compete with Uniregistry.

      It’s always compete or die in any business and they can’t let Frank make all the money and get stronger than them. They will have to adapt or die unless they can sell domains cheaply as fast as Coca-Cola sells cokes.

      In reply to Snoopy | March 10th, 2017 at 5:47 pm

    Brad

    Could you please write an article that talks about the ramifications if a registry decides that a particular extension is no longer worth it and decides to drop it? What happens to the domain owners? If there is an extension with only 100 registrations, why would another registry pick that up if they would just lose money? Thanks!

    March 10th, 2017 at 11:43 am

      Elliot Silver

      I presume there would always be some company that thinks the renewal stream is worth it.

      If that assumption is not correct, I really don’t know so I couldn’t write about it.

      In reply to Brad | March 10th, 2017 at 11:45 am

      ThcNames.com

      That’s the uncertainty right there Elliott.

      A professional domain journalist doesn’t even know. :)

      In reply to Elliot Silver | March 10th, 2017 at 11:51 am

      Brad

      Andrew or Ron? This seems like it’s worth looking into.

      In reply to Elliot Silver | March 10th, 2017 at 12:01 pm

      Ryan

      Brad if you are truly concerned, you can find the info yourself, don’t expect others to do your research, time is money.

      In reply to Brad | March 10th, 2017 at 12:17 pm

      Brad

      Ryan, these guys make money off their blogs so it would hardly be wasted time for them. I haven’t wasted any money on gTLD’s so I could care less.

      In reply to Ryan | March 10th, 2017 at 1:13 pm

      Elliot Silver

      Yes, I earn revenue from writing but you need to keep in mind that sometimes the time spend isn’t worth it. Believe it or not, the revenue from my blog is a small % of my overall domain business (despite taking much more of my time than anything else).

      That being said, a quick Google search will likely give you the answer you seek:

      https://www.icann.org/resources/pages/registry-failover-2007-06-01-en

      http://webmasters.stackexchange.com/questions/64741/what-happens-to-my-domain-if-the-tld-fails

      In reply to Brad | March 10th, 2017 at 1:18 pm

      ThcNames

      So why do you care what happens if a new gTLD fails?

      In reply to Brad | March 10th, 2017 at 2:06 pm

      Brad

      Because gTLD’s affect .com’s. I simply thought it would be a good article idea. I’ve sent article ideas to Andrew in the past and he has in turn written about them.

      In reply to ThcNames | March 10th, 2017 at 2:34 pm

      John Colascione

      This is a very good question. I wounder what ‘would’ happen.

      In reply to Brad | March 14th, 2017 at 10:34 am

    DrDomainer

    Imagine if this happen with .com
    all the tree’s in the world would be gone to print all the lawyer’s letters!!

    March 10th, 2017 at 11:46 am

    Ryan

    ICANN has protections, and provisions in place for that, something to do with reassignment, registries have deposits down for such an event I believe.

    March 10th, 2017 at 11:55 am

      Meyer

      I am sure the same procedure exist for registries as there is for a defaulting registrar.

      In the case of registrars, Icann notifies all of the other registrars that a particular registrar is going out of business. And, they have xx,xxx domains in that registrar.

      The new registrar will have all of the domains in the old registrar transferred to them without increasing the expiration date.

      I am sure the registries (like the registrars) have to do a daily dump of data into the data depository created by Icann.

      In reply to Ryan | March 10th, 2017 at 1:01 pm

    Keith DeBoer

    Thanks Elliot for a timely, fair and insightful commentary.

    March 10th, 2017 at 1:55 pm

    steve

    I don’t have a dog in this fight, or a stake in the GTLD ground, or any domains registered at Uniregistry.

    But let’s face the facts. A biz owner can raise the prices or the rent or the renewal fees to whatever level the customer will pay. My guess: this was a hard decision the folks at Uniregistry made. Pretty sure they gauged the potential ramifications and reactions of this decision.

    I feel bad for the people who purchased domains in these extensions, thinking their renewal fees would remain the same.

    But that’s business and investing. Nothing personal.

    We never know the financial responsibilities of the other parties – medical emergencies, etc

    I’ve had some major wins in the domain investing arena, and my share of losses.

    Will this mean the end of the GTLDs?

    I think only a few of the extensions were doing well. Many breaking even. And most had gone or were borderline bust.

    Most likely the projections and assumptions for these extensions just didn’t meet demand — the hard decision was elevate the renewal fees, to try to keep the extension from going under and/or out.

    March 10th, 2017 at 4:05 pm

    Bernie

    I see dead people…er dead gtlds.

    They sucked. Move along.

    March 10th, 2017 at 4:58 pm

    Allan

    Simple demonstration of Darwin’s Survival of the Fittest theory in play here. The New G’s, as Frank affectionately called them, were simply not able to compete in today’s .com marketplace and will soon be laid to rest as a result. Remember the class TRAFFIC debates on their viability a few years back? A shame Lonnie Borck is not here to see his bang-on prediction of a barren gtld wasteland come true. RIP, my visionary friend.

    March 10th, 2017 at 5:11 pm

    Snoopy

    The next major Ntld auction will be pretty interesting, I’d guess that aftermarket values would have already tanked.

    March 10th, 2017 at 5:29 pm

    John

    If you think about it this is really like a legalized mafia.

    What I mean is if they raise the prices enough that might come straight out your business and therefore they by defacto become unwanted “partners” of your company. They could keep raising the prices and keep sucking out even more and more from your company as a see you having some success.

    Some domains are going for thousands and thousands per year.

    March 10th, 2017 at 5:52 pm

    Kevin

    how come know one is chiming in on ICANN’s complete lack of promotion of nTLDs?

    sitting on huge coffers from this program, yet sitting idle

    essentially zero promotion from their side to help drive overall consumer awareness

    March 10th, 2017 at 7:22 pm

      Reality

      ICANN know they’re going to need every cent of that money to untangle the mess and manage dead registries when the whole charade collapses.

      In reply to Kevin | March 10th, 2017 at 7:27 pm

    Reality

    On one hand Frank tells us that new gTLDs are the best thing since sliced bread. On the other hand he’s telling us that he needs to raise prices so they can survive. Which is it?

    March 10th, 2017 at 7:24 pm

    Jamie

    BURN THEM ALL!!!

    March 10th, 2017 at 7:55 pm

    Josh

    I think the price increase will clearly affect large holders of said domains BUT and here is the question…

    What percentage of gtld holders on multiple domains?

    In other words, I doubt any one who owns one or two gtld domains will care about the price bump enough to drop it, be it for speculation or use for their business (a stretch using use for business but stay with me).

    So we need to know the math, for example…

    If a domain is suddenly $100 from $X how many domains will you likely lose from large holders vs the number of individual holders renewing at the new much higher price?

    You could lose thousands but if thousands more single owners renew the math works and you make more.

    Not sure if my reasoning is clear, maybe someone has data to help.

    March 10th, 2017 at 9:03 pm

    John

    THE MONEY-GRAB MODEL IS DEEPLY FLAWED.

    I posted that just recently.

    I find this unacceptable personally.

    My positive feelings about the small number of new ones I have is considerably diminished by this REALITY CHECK.

    Perhaps we should even thank Frank for that.

    What should we do?

    We should never shut up about it. Never let people forget. Tell every prospective customer that is what they and we are facing.

    There should have been price regulation from the start.

    March 10th, 2017 at 10:21 pm

    John

    AND CONSIDER THE FOLLOWING SCENARIO:

    You invest time, money and resources in a new gTLD that you like very much as an end user, and perhaps experience success. MAYBE EVEN YEARS.

    WHAT’S TO STOP THEM FROM CHANGING YOUR RENEWAL RATE WITHOUT REFERENCE TO NORMAL REGISTRATION PRICING? DECLARING YOUR DOMAIN IS “PREMIUM” OR SOME SUCH NONSENSE?

    Nothing, it seems.

    SO IT BECOMES BLACKMAIL, EXTORTION.

    The person who used the “Mafia” analogy and everyone else who raised this basic point were DEAD ON.

    March 10th, 2017 at 10:30 pm

    Tasha Kidd

    I recently went against my .com grain and bought a couple hundred gtlds, and that is only because of the immediate push that certain ones of them are getting by Google when they are developed. That’s all I”m going to say publicly, but in all tech businesses, if there’s a wave to catch, don’t just stand there holding your board and checking the weather.

    That being said, if you aren’t developing and ranking your domains into nice sites, then I believe in .com all the way.

    March 11th, 2017 at 9:26 am

      Tasha Kidd

      (Also, if you are developing and ranking your domains into nice sites, I still believe in .com all the way). But some nice upticks from some of the gtlds that Google is testing now, is a great way to rank quicker in the near term (only on certain gtlds they favor). But long term for my markets. which are predominantly corporate, .com is king and will likely always dominate, in the same way that the Kleenex brand dominates mind space for tissues, no matter who comes along later.

      In reply to Tasha Kidd | March 11th, 2017 at 10:00 am

      John

      That’s a strange announcement in light of this news and the overall pricing realities and lack of protection discussed.

      I’m going in the opposite direction and that’s that.

      In reply to Tasha Kidd | March 11th, 2017 at 2:09 pm

      John

      P.S. And yes I am an end user as well as someone who occasionally sells.

      In reply to Tasha Kidd | March 11th, 2017 at 2:09 pm

    Joseph Peterson

    When someone chooses a brand name and buys a domain, they’re accustomed to stable renewal pricing. 30+ years of the world’s cumulative web experience with .COM, .NET, .ORG, .INFO, as well as local ccTLDS lead consumers to expect this.

    In fact, hardly ANY industry would raise the subscription cost by a factor of 6.5 or 10.0 or 31.0 overnight. In the rare occasions when a company must do this, they generally grandfather in earlier rates for pre-existing customers. At the very least, they provide advance warning and phase in the cost increase gradually. Doubling the price every year for 5 years would be bad enough. Packing that whole 2^5 = 31-fold price hike into the next renewal is OBSCENELY EXPLOITATIVE.

    It’s taken for granted that, if you’ve been a loyal customer paying €12 every year, you won’t suddenly be billed €350 per year merely to continue using your domain for email or a website.

    People build businesses and reputations on domain names. Frank Schilling knows this perfectly well. If someone is forced to abandon their domain, including their website, their back links, their email address, their name recognition, it’s a costly process and a real loss to that person’s business. Effectively, those domain owners are being extorted. Pay us 6.5 or 31.0 times what you’ve always paid before, or els suffer the consequences!

    Domain investors, to whom Frank Schilling aggressively pitched his nTLD wares for years, are completely blindsided here. A domainer who kept renewing 10 domains at €12 per year, would have paid Uniregistry €360 by this point. Now, with renewals jumping up to €350 per year, he’ll be facing an ANNUAL bill of €3,500 merely to keep what Frank Schilling sold him.

    Some people want to let Schilling off the hook here, commiserating with him on the hard uphill battle faced by the nTLD program, patting him on the shoulder (as it were) and saying, “There, there, you glorious entrepreneur, you. Dreamers and innovators arrive too early. You’re perfectly right to raise prices in order to keep going.” Nonsense! If Schilling’s business model is broken, then he should raise prices to make it sustainable. But, in doing so, he ought to safeguard his pre-existing customers, rather than forcing them to pay the consequences of his misguided strategy.

    March 11th, 2017 at 9:36 pm

      Snoopy

      Given many new tlds are already in decline I’d say raising prices and grandfathering existing registrants won’t do much for their financial health.

      I would say the blame rests with ICANN, they wrote the contract. Even then the ultimate issue is lack of govt oversight, there is no protection with new tlds or any alt extensions either such as .tv, .io or .co. Nobody cares about them. Ultimately registratants would be better off seeking safer pastures than complaining about what registries are doing or what the may be planning. Verisign would do the same with .com but for US government oversight.

      In reply to Joseph Peterson | March 11th, 2017 at 10:14 pm

      Joseph Peterson

      @Snoopy,

      “Verisign would do the same with .com but for US government oversight.”

      Agreed. Every registry is tempted to raise prices faster than inflation. As long as they can profit thereby. Some CEOs would resist the temptation on ethical grounds. But even setting aside personal greed or ambition, how many CEOs would stand up to shareholder pressure?

      Even with TLD competition, the business model of any domain registry is partly monopolistic. To the extent that end users are committed to their own brand name and website, and to the degree that domainers are invested to their own investments, registrants are predisposed to endure price hikes. We’ll stay in the pot as the water comes to a boil, even though (as outsiders) we’d never climb in anymore.

      “I would say the blame rests with ICANN, they wrote the contract. Even then the ultimate issue is lack of govt oversight, there is no protection with new tlds or any alt extensions either …”

      Spot on.

      “Given many new tlds are already in decline I’d say raising prices and grandfathering existing registrants won’t do much for their financial health.”

      Grandfathering isn’t for the registry’s financial health; it’s for the customer. Uniregistry anticipated more domains would be registered by now. So they ought to be trying to make up for their monetary shortfalls by marketing this VAST number of unsold domains. Not raising prices by a factor of 31 on the small number of pre-existing customers.

      If Uniregistry can’t treat its customers fairly while simultaneously running a sustainable business, then the company OUGHT to go under. Not Uniregistry as a whole but underperforming nTLD registries definitely. Or Uniregistry could stick to a long-term strategy with a higher pricing model and maintain its name space in the weaker nTLDs, operating at a loss for another few years, based on profits from the stronger nTLDs.

      Put it this way: My favorite coffee shop in Santa Fe closed a year ago, despite great food and service. Bad location. Not enough foot traffic. Not enough parking. There’s no shame in that. They gave it a go. If they wanted to raise prices on future customers, FINE. But they didn’t go chasing after the people who’d already bought coffee and croissants demanding that they pay 31 times what they’d already paid or else confiscating the food and drink.

      In reply to Snoopy | March 11th, 2017 at 10:49 pm

      Snoopy

      I think registries will do whatever they legally can to make more money just like most domainers would do. Just look at Verisign’s history with Sitefinder and price increases on an already vastly profitable .com register. The day the CEO does stuff that is in the customers interests and not the company is the day the CEO gets fired.

      In reply to Joseph Peterson | March 12th, 2017 at 12:50 am

      Joseph Peterson

      @Snoopy,

      I wouldn’t go that far. Companies and customers aren’t necessarily adversaries. When consumers have choices and the flexibility to move about, companies face competition. Then companies are always vying to offer more and charge less in order to keep clients and gain market share.

      That free market model doesn’t work in the domain industry, however. Because customers don’t have the same flexibility to change a brand name / domain as they have in choosing where to buy shoes or eat dinner, they’re stuck like serfs on a feudal lord’s estate. Domain owners are like Irish peasants, with the registries acting as aristocratic landlords.

      There’s no changing this situation. We can’t rely on free-market forces to curb price hikes from registries. Regulation is essential.

      In reply to Snoopy | March 12th, 2017 at 5:41 am

      Joseph Peterson

      Correction: The free market model works very well, actually, for registrars because domain transfers are painless and (beyond the renewal we’d pay anyway) cost nothing. So registrars offer competitive pricing without any regulatory oversight.

      Where the free market fails is in regulating registries. Only because changing a brand name / domain (not to mention abandoning the old domain) is FAR harder and costlier than a simple domain transfer.

      In reply to Joseph Peterson | March 12th, 2017 at 5:45 am

      John Colascione

      Joseph is right. In the event that things are not as good as anticipated, such as gTLD performance being far less than expected, then the right business decision is to raise prices going ‘forward’ – grandfather-in your current customers, and bring profits to or near where they need to be via new agreements and new registrations. To take advantage of the current customer base is not the way it should be done, especially in this case. Cut your loses now, call it what it is, and stop the bleeding ASAP, by raising prices across the board on all new activity, but DO NOT screw over the current customer base. You have to hand it to Frank though for coming clean and really sitting on the hot seat with Andrew, that is exactly what it was, the hot seat.

      In reply to Joseph Peterson | March 14th, 2017 at 10:49 am

    Snoopy

    In other words in makes financial sense to raise prices without grathfathering, most of the potential would be with existing registrants.

    March 11th, 2017 at 10:16 pm

    Scrivener

    When it becomes clear no end users are going to actually use your gTLD, you up the renewal price to get some money from price insensitive fortune 500 companies with a fistfull of defensive registrations.

    Eventually the fortune 500 companies are going to realize they don’t need to defensively register their trademarks and names because no one uses the new gTLD’s or is aware of them. I’ll bet domaininvesting has not registered domaininvesting.domains and that lack of registration hurts the .com holder not one wit. There is an obligation to defend trade names etc of you may loose them, but a simple form lawyer’s letter to anyone who registers your name in a new gtld is probably sufficient. If someone says you didn’t follow up the letter you say you did a cost benefit analysis and the dilution of your mark is so minimal that doing more is wasteful. It would be like trying to prevent kids from using the Ferrari logo on homemade t-shirts.

    March 12th, 2017 at 12:46 pm

    John

    If you want a few people at the top of the pyramid to benefit and get rich and richer, then “regulation” is a dirty word.

    If you want all of society to benefit in potentially enormous world changing and improving ways – SUCH AS WE HAVE ALREADY WITNESSED in our lifetime – then “regulation” is essential.

    March 12th, 2017 at 1:36 pm

      John

      p.s. And those few people at the top of the pyramid can still get rich and richer, that’s fine, just not in a way that’s at the expense of the rest of society.

      In fact, this would be a good time to recommend this really excellent and fascinating video. It’s about the situation is the US, but I’m confident it applies more broadly in principle for the world in general, and more broadly still to the situation of our industry:

      “Wealth Inequality in America”

      https://www.youtube.com/watch?v=QPKKQnijnsM

      In reply to John | March 12th, 2017 at 1:43 pm

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