Demands Focus on Its Registrar Business — Demand Media

Stock investors need to pay less attention to Demand Media’s content business and more to its domain business.

If you ask most stock watchers, they’ll tell you Demand Media is a content firm. The firm, they’ll say, relies on driving eyeballs to its ad laden pages.

But underneath this is the truth: the “rock” of Demand Media is the domain name registrar and its huge portfolio of parked domain names.

When it disclosed quarterly earnings yesterday, the firm noted a 20% hike in registrar revenue compared to the third quarter of 2010. It now has 12.2 million domains managed on its platform. That’s up from 10.6 million a year ago.

Make no mistake — Demand wants its content business to drive revenue increases. But investors ought to pay more attention to its domain name registrar business than they right now are. With fresh top level domains on the horizon, domain name registrars like eNom are well positioned. Not only will they realize a spike in registrations but they also have the clout to push registry providers for incentives to promote their domains.