Higher retail pricing, sets plan for growth — Verisign blames

Firm will increase marketing plans in second half of year to grow domain name base.

Verisign (NASDAQ:VRSN) noted earnings yesterday and lowered its guidance for the year.

It once again blamed China for much of the drop, noting that its base of .com and .net domains fell by 360,000 names in the country.

But it added a wrinkle: it also saw softness with US domain name registrars and stated this was due to higher retail pricing.

While Verisign is increasing .net prices by 10% and .com prices by 7% this year, Verisign seems to suggest that registrars are pushing prices even higher, which is lowering demand. This might well be the case for registrars that don’t target domain investors. (Domain investors are probably letting more domains go at the margins, too, as prices creep higher.)

The firm needs to return its trajectory to domain growth, not just revenue growth. Its revenue grew 5.5% this quarter compared to the same quarter a year ago despite its domain base dropping 270,000 names. You can credit price increases for that. But Verisign doesn’t get automatic .com price increases in the next two years.

Last time the .com price was frozen, Verisign leaned on domain investors to grow registrations. It courted them at domain conferences and built tools to help them find expiring domain names.

Still, since domain investors are the only ones vocal regarding wholesale price increases, it eventually threw them under the bus.

Verisign states Q2 will be bad, thanks to seasonally higher expiring domains. But in the second half of the year, it plans to rev up its marketing plans with domain name registrars. This means you’ll probably see more onsite promotions and discounts at registrars.