As Fresh Domain Registrations Fall, Domain Registrars Get Desperate
Domain registrars seek fresh profit opportunities.
Yesterday’s news that fresh domain name registrations are down sharply and the total base of domains registered is stagnant is bad news for domain name registrars.
For years, registrars have been able to count on fresh registrations to fuel growth. Although the margin on fresh registrations is modest, registrars earn money by cross selling other products to registrants. So the typical margin on a domain may be only $2, but the margin with “extras” may be closer to $5-$10.
How can registrars counteract falling numbers? There are three key ways:
1. Take market share away from competitors. Although fresh registrations are down, there were still 9 million fresh domains registered last quarter. Aggressive registrars can capture a larger part of this pool. Also, the drop to 9 million is somewhat overstated since many of the domains registered at this time last year were from domain tasting, which was only done in scale at a handful of registrars. Registrars can also grow their base by courting domain transfers.
2. Do a better job of cross selling. Registrars that get clients — fresh and old — to load up their shopping carts can boost revenue. The key is to offer something innovative on top of standard web hosting and domain privacy products.
3. Push for fresh TLDs. Wonder why eNom, Tucows, and Network Solutions are so keen on seeing fresh top level domain names introduced? Cha-ching. Even though most of these fresh TLDs will fail, it could significantly boost these registrars’ sales over the next 2-3 years. It’s a lot easier to sell fresh TLDs than to come up with innovative products for their clients.
Keep in mind that ICANN’s revenue from domain registrations is also under pressure. Its contract with VeriSign will actually result in a $6M boost in financial year 2010, but its growth will certainly take a hit from reduced fresh registrations. It can’t take market share from competitors and can’t cross sell. So look for it to push through fresh TLDs as well.
