Easily compare Rightside and GoDaddy — You can’t

Two soon-to-be public firms aren’t necessarily good comps for each other.

Demand Media is getting ready to spin off its domain name business, Rightside. Competitor GoDaddy recently filed its S-1 for an initial public offering.

It might be tempting to compare the two firms. Following all, both of them are prominent in the domain name space.

But when it comes to comps, Rightside and GoDaddy don’t match up. Here are some key distinctions between the two firms.

GoDaddy is a retailer, Rightside sells through middlemen.

GoDaddy primarily sells directly to the public. Rightside, through its eNom brand, sells domain names through resellers such as hosting firms. Rightside also owns retail brand Name.com, but it’s a modest percentage of its sales.

While GoDaddy counts on millions of individual clients, Rightside depends on an army of resellers. When it rolls out fresh products, it has to convince each of its resellers to carry them. Rightside markets to a smaller group of clients than GoDaddy. That makes its marketing costs lower, but margins are squeezed as well.

Rightside is betting directly on fresh TLDs.

Ahead of everything is stated and done, Rightside will probably “own” regarding 50 top level domain names. These domains will be sold through its own channel as well as the registrar channel. This can be a high margin business.

The firm will also provide the backend for hundreds more top level domains.

GoDaddy, on the other hand, is content with being the shelf space for these domain names.

Rightside’s topline has stopped growing. It’s banking on fresh TLDs for growth. GoDaddy is banking on growing its client base and selling them more stuff.

Rightside is a big domainer.

Rightside owns 300,000+ second level domain names. GoDaddy has previously played this game, but it’s a modest part of its business now.

If I could summarize the difference with one thought, it’s this: GoDaddy is a marketing firm. Rightside is an infrastructure firm.