$16 million: Rightside’s net cost of 39 TLDs

Firm has spent $52 million acquiring fresh names, but its net cost is much lower.

We’ve all seen some shockingly high auction results for fresh top level domain name auctions. How can firms make a profit on these domains?

One thing to keep in mind is that for each private auction, all of the losers win. The winner’s payment is paid out to the losers (less administrative fees). This changes the dynamic of the entire program.

Take a look at Rightside (NASDAQ:NAME) to put this in perspective. The firm has spent $52 million to acquire its 39 top level domain names. At first glance, it appears that the firm spent regarding $1.33 million per TLD.

But the firm has received $36 million from withdrawing applications. This lowers the net cost to $16 million, or just over $400,000 per string.

While some of the firm’s domains are languishing, others are off to a good start. .News generated $1 million in wholesale cash sales within regarding a month of launch.