As we all know, VeriSign has reported growth in each of the last many years for the number of .com registrations.
My thoughts is that 2009 may mark the first year in a net loss of .com and .net domain registrations.
In 2008 Verisign reported that at the end of the second quarter there were 87.3 million registration representing a 20% increase over the previous year. However “new” registrations for .com and .net in the second quarter of 2008 actually decreased by 3% from the first quarter of 2008. (However for the second quarter of 2008 new registration were still 7% ahead of 2007.)
I think we will see a net decline in new .com and .net registrations in 2009 for several reasons.
First there is the 14.5% price increase over the past 2 years.
Second, the economy of parking is down. No matter how much VeriSign and ICANN wants to say they hate domainers and the whole world of PPC, substantial number of domains have been registered for the sole purpose of putting ads on them. In its report VeriSign evn admits 8.5% of all new .com and .net registration are “registered with the intent of generating online advertising revenue”.
As the economics of parking continue to deteriorate, and the price of .com’s increase, there will be less domains being registered by the domainer community.
Third, the end of domain tasting. We were always against the practice as it lead to too many obvious trademark problems. However no doubt the imposition of the new fees will greatly curtail the practice leading to less “New” domain registrations.
Maybe knowing all of this, ICANN has been pushing hard for all those new extensions (gTLD’s) which are expected to arrive in late 2009 or 2010. As you know ICANN get $.20 for each domain. However if new registrations decline so will ICANN’s revenue.
By opening up the domain space, ICANN’s revenue can continue to rise dramatically, even if VeriSign revenue decline due to less “New” registrations.
In the next post we will look at domain renewals and what we can expect in 2009.
Good point.
Agree.
Hand regs and renewals will be down.
Speculation is out of the market for now anyway. Speculation is a high risk bet on price appreciation in the future.
Although I am bullish on quality domains, Internet traffic and the domain industry in general, there is just waaaaaay too much shit out there and too many people in this business that shouldn’t be.
Sure, it’s the American way to speculate and all are welcome but the days of hand reg and flip are pretty much over for a while.
” Competition is a by-product of productive work, not its goal. A creative man is motivated by the desire to achieve, not by the desire to beat others.”
Ayn Rand
If Verisign gets their sh!t together with .IDN in regards to .com/.net, they will experience huge registration numbers.
The possibility of .com going into negative growth may be nearer than people realise. Without the domain tasting element obscuring .com growth, the net change (new-deleted) is falling back towards 2004/2003 levels. The crackdown on domain tasting can be seen from June onwards in the graph/stats page below. (The sample dates are on the first of each month.)
http://www.hosterstats.com/Detailed-com-Statistics-2008.php
Much of the growth in .com was definitely fuelled by easy credit and easier PPC revenue. The recession will hit the easy credit element but Google and the others are definitely hitting the PPC revenue side of things. The problem with tracking these trends is that they are long term trends and many of the domains registered in the last few months won’t expire until this time next year so the effect of that credit drying up has yet to really hit the domain market. The other aspect is that ccTLDs are also going to hit .com/.net though this is due to the broadband/hosting infrastructures in countries improving. This generally changes the domain ownership model towards there being more ccTLD than .com domains owned in countries, other than the US, where there is a mature market.
The size of .com TLD, and to a lesser extent that of .net TLD, has been sustained by the aftermarket for domains. This means that domains that would have been dropped are often auctioned and traded for their PPC value. But even those value decline as links decay and are updated. I wonder if the possibility of .com going negative is a factor in ICANN’s decision to open up the TLD market?
Rob,
I disagree with you that the days of hand reg’ing and flipping are over. Because of the economic downturn and all the other factors mentioned above, there are pretty good domains that have been dropped that are available for hand reg’ging now. For the discerning domainer, this is another 2002-level opportunity – maybe even better.
Examples of my hand reg’s that can easily be flipped:
lungfunctiontests.com (reg’ed today)
pulmonarytests.com (reg’ed today)
domainfreebie.com (reg’ed yesterday)
Those are better than most names I see going for 2-5k on afternic each week and I can easily unload for $500 apiece right now.
P.S. Domainmodern.com is availabe for hand reg. if anyone is interested. Great address for domain blog or news site.
Okay.
I guess value is in the eye of the beholder.
Are people selectively renewing domains? Sure.
Are there less people chasing drops? Probably.
Are there less bulk drop catchers/tasters? Yes.
Are there good drops out there? Sure.
That would mean that there are more drops and less people chasing them therefore they turn into hand regs.
I would classify those as dropped domains, not a new hand reg.
Tony
No one is saying there are not good domains available.
Your looking at the post on the small scale.
The question is looking at the really big picture of overall domain registrations which are measured in the tens of millions, will continue to grow as in the past many years or reverse course.
Rob
Just to be clear, domains that are dropped and not picked up by a drop catcher, auction house or like method, that then get re-regsitered are counted as “new” registrations by VeriSign
Mike,
That was exactly what I was doing, addressing just that one statement by Rob.
I know ‘new’ hand reg’s will decline or at least the rate will decline in the coming years.
I can sympathize with how Frank Schilling felt in the early 2000s now. I am so tempted to sell the house and lock myself up with a PC for 20 hrs/day.
😉
Tony
The difference between now and the early 2000’s is that in the early 2000’s goto.com was first starting to place PPC ads and Frank saw that domains were going to make money.
Today the future of PPC is highly uncertain.
Right now we are on a downward spiral and unless a new player comes into the game, or someone buys Yahoo and turns it around, I fear that Google will keep squeezing the margins out of the parking business.
If you can’t monetize a large portion of domains your not going to produce the $20M a year Frank did.
No argument there, Mike.
There is no way around the risk/reward aspect of investing. No one can expect a big reward without taking a correlating big risk. There is no doubt Google is adding to that equation.
A new domaining paradigm might be needed if ppc keeps declining but it will never render good generic domains worthless. Worst case scenario is domainers will have to sell portions of their folios to make up for less parking income. Direct navigation will always make generic domains valuable to end users. This is why I keep buying and why most of us still hang on to the 80% of our domains that don’t even cover their reg fee.
A lot of people all over the world though will be looking to make money on the side, so many of them will end up doing just that online, and they will need names.
Another often overlooked item that changes the numbers is that while re-registered names after drops used to be counted as new registrations, they now often change owners before being released, meaning the registry (Verisign) will count them as a renewal, when it actually was an aftermarket sale in many cases.