Fee Increases For New gTLDs Need Not Have Detrimental Impacts, Although Plenty Face Uncertain Future

The recent news broke by Domain Incite that Uniregistry will “massively increase the price of some of its under-performing new gTLDs in an effort to keep them afloat” is surely an overreaction.

According to the report, Uniregistry will increase the fees on 16 of its underperforming new generic Top Level Domains by up to 3,000% from 8 September. Currently Uniregistry operates 27 new gTLDs with 871,000 domains under management, although nTLDstats.com lists only 26 new gTLDs. All of the new gTLDs have less than 10,000 registrations.

“We need more revenue from these strings, especially the low volume ones, without question,” Uniregistry CEO Frank Schilling told Domain Incite. “We can’t push on a string and stoke demand overnight. So in order for that string to survive as a standalone it has to be profitable.”

Increasing the registration fee does not necessarily impact on registrations. One new gTLD registry operator Domain Pulse spoke to pointed to .berlin’s recent experience where they increased their registry fee by 50% without any detrimental impact on registrations.

“Increasing the registry fee from €20 to €30 had no detrimental impact on registrations. OK, that´s not 3000% but it’s a huge step.”

“It is also very clear, that a TLD, or better a registry, could not survive with less than 5,000 domains, if the price is in the range between $10 to $50,” the registry operator went on to say.

It’s also something that DotBerlin’s Katrin Ohlmer explained at the Domain Pulse conference in Vienna in February. Speaking on a panel on the future of TLDs, not just new gTLDs, Ohlmer who was speaking with her Dotzon CEO hat on said “for .berlin, they have had their own experiences. In a bid to stimulate registration growth in the early days, they gave away or sold cheaply around 90,000 domains, but they didn’t gain anything long term as many of these didn’t renew.”

“Three years on from the launch of General Availability, registrations have now stabilised and are gradually increasing, now sitting at 59,000. These days the registry has even increased their registration fee with no detrimental impact on registrations.”

And while paid registrations are important to pay the bills, Ohlmer explained it’s “not just about the number of registrations but the usage and addressing the right target group. One of the main tasks for registries is to get message across is that a domain name is useful for a number of reasons, not just web and email.”

Probably a more important issue though is the future of some of the new gTLDs. There are currently at least 200 new gTLDs that have less than 5,000 registrations. Some of these have less than a hundred registrations and have been in General Availability for over 2 years. So their future is grim. And there are thousands of registrants in these underperforming new gTLDs that face an uncertain future after investing not so much in buying the domain, but developing a brand and face online with that domain.

Registrants in underperforming new gTLDs face some problems. “They’ve registered domain names in TLD´s that are special, for example .tatoo and .diet. and these registrants can´t just move to any other TLD,” our registry operator told Domain Pulse. “I guess for a few thousand people around the world asking over $300 per year is really not a problem. Of course for domainers or SEO folks, it is a problem and this pricing very unattractive.”

So what is the future? Research presented at the 2015 Domain Pulse conference by Godefroy Jordan from new gTLD operator StartingDot, now owned by Afilias, found that most new gTLDs sold for between €5 and €50. They also found there was a very poor correlation between volume and price and when the registrar fee for the domains gets above €50, it “really starts to have impact on registration volumes.”

“Many of the new gTLD will disappear from the market in the next 5 years,” said our registry operator. “For example Donuts with a few hundred gTLD´s may have problems sustaining all of them and they have huge scaling effects because the high number.”

But some specialised new gTLDs can sustain high prices, such as those for the financial and insurance industries where the fee is really not an object.

Certainly there is an uncertain future for some new gTLDs. But there are 28.5 million domains under management across the 1,216 new gTLDs and there are 173 with more than 10,000 registrations, 278 with more than 5,000 and many more that are still getting going. Add in the hundreds of brand .gTLDs and it would be safe to say that well over half, probably three-quarters, are safe.

And back to Uniregistry and Frank Schilling. According to our registry operator “he’s very clever and very good at marketing. It could be his view to give these underperforming new gTLDs a last chance, to try and increase the fee and if the revenue in the next 3 to 5 years is not enough to survive he may look at selling or closing down the gTLD after the initial 10 year contract with ICANN ends.”