Domain Name Parking to Slow: Credit Suisse

Analyst predicts decrease in parked domain names.

Credit Suisse Internet technology analyst Philip Winslow predicts domain name parking will become less profitable, leading to a drop in domain registrations, notes financial publication Barron’s.

As stated by the Barron’s article:

To wit, some enterprising folks will sign up tons of temporary, or “parked” Web sites, to drive keyword search results to their pages and collect an ad fee they split with Google. Google’s cracking down on that practice, notes Winslow, in an effort to weed out what are called “link farms,” pages set up to milk Google’s ads while offering no real content for Web users.

And as that happens, it could reduce the practice of registering those opportunistic Web sites, which would reduce overall domain registration, which would affect VeriSign’s [NASDAQ: VRSN] growth, writes Winslow.

Although I hardly view parked pages at temporary, the general belief here is likely true. I haven’t talked to a domain owner recently who notes an increase in parking earnings. There are a number of factors conbributing to this, counting “parking page blindness” (which I’ll write regarding soon) and changes at ad providers such as Google (NASDAQ: GOOG). As certain domains no longer cover their renewal cost, they will likely be dropped.

Will this hurt VeriSign? Sure it will. It collects $6.42 from each .com registration. But domain growth will continue, even if it’s at a slower rate. And VeriSign can jack up its .com prices another 7% this year. It also has a built-in monopoly. Although I don’t like the monopoly, I don’t think VeriSign’s registry business will be hurting anytime soon.

As stated by the Barron’s article, Winslow blames other factors for lowering his estimates on VeriSign.