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How solid is the customer relationship with the new gTLDs? Is any registry making decent money?

Some new domain extension (new gTLD) registry operators may be doing OK or even much better than OK despite lackluster volume. Unfortunately for more than a few, not so much.

DOMAINER LOOKING AT COM VS NEW GTLD

It’s not just the number of domains under management (DUMs) that may indicate the relative health of a particular TLD registry operator and/or its future relationship and up-sell revenue potential with the end user.

Just because a new gTLD registry has 1 million+ names under management does not confidently indicate to me that they have a solid long term relationship with the majority of their end user customers, and thus solid prospects for long-term continued recurring renewal revenue.

Cases in point: Some of the top 10 selling new gTLDs have average create terms of just barely over 1 year.  Like 1.01 and 1.02 years.

That means they are going to have to work even harder and spend money or giveaway a lot of marketing dollars/incentives to keep that business at renewal time—and hopefully for more than a few dollars per name year.

I’d bet that barely 6 months after selling a 1 year create they have to start thinking about how they are going to get renewals in place. In my mind this takes management/investor focus away from developing a proper name product that demonstrates value to the customer, and that has decent margins for everyone involved in the value chain, vs. having to focus on short term domain renew goals and bother the hell out of registrars and others down the line.

Sure some have reported decent renewal rates. But we’ve heard frank comments coming from experienced operators recently warning to expect lackluster renewals in the coming months.

It’s not easy out there in the new gTLD name space. But you already knew that.

So what other metrics can one use to measure the relative health of a particular new gTLD and prospects for long term relationships with their end users?

One metric I look for is Average Term in order to estimate Total Name Years under management—then at what average net wholesale price per name year after all rebates/credits/free name years/marketing etc. are taken into account.

Unfortunately most registry operators do not publish such metrics for a variety of reasons. However if you dig around a bit sometimes you can find data points to help you do the reverse math to get some idea how someone might be doing.

I submit that there are new gTLDs with seemingly insignificant numbers that may be making decent money from a registry operator standpoint, although on the surface their low DUMs number might make it look like their staff is just wasting time converting oxygen into CO2.

For example, there is in fact a new gTLD registry operator with a little over 9,000 DUMs that might not look like a long-term player at first glance based on that number alone, but appears to be banking decent revenue.

According to NameStat this registry operator has an Average Term for all those names equalling just slightly greater than 8 years, the highest of all the new gTLDs. So doing the math it indicates they have about 72,000 name years under management.

If a new gTLD registry has an average term that is 1.25 years or greater then something is going well.

Unless they are giving away multi-year registration or renewal terms for zero or little change then I submit they may be doing well with direct B2B sales to actual end users willing to pay upfront for much longer terms than the average domainer. Of course some registrars may default their GA create offers to 2 years and that can also be a factor.

I dug further.

This operator is largely selling direct at ~$430.00 retail per name year in the mid-range of their pricing/service offers. The lowest retail price product is $185 retail per name year.

Yep you read that right.

There are also extra one-time service fees on top of the registration fees, and even charges for periodic changes to registration information.

Impossible you say?

OK. I did notice they were giving away some extra name years that can apply to a second name registration if you purchased or renewed a certain minimum term to start. If you only apply the lowest retail fee they are offering, which appears to be $185 per year and multiply by the average term of ~8 years, there’s potential for $13,320,000 in upfront direct retail sales revenue with no pressure to have to worry about renewals for nearly a decade.  And that’s still not including mandatory service charges and other fees.

Not too shabby.

Which guys with less than 10,000 DUMs are possibly getting those kinds of numbers? Well, it is a Chinese IDN that is mostly selling direct.

An IDN???  Are you kidding???

Nope.

A Chinese IDN that’s very restrictive. In fact more restrictive than many ccTLDs.

It’s .商标 (DOT SHANGBIAO). Translated to English it’s the “trademark” domain.

It’s first come, first served, but they apply a serious validation process. Within China there is 2-layer authentication, where the registrant must first pass the registry’s real name registrant authentication (real name verification) and then a trademark verification process.

Over 90% of the registrants are from within China. The rest are foreign registrants doing business in China. (e.g. Gucci, Starbucks).

trademark web site home pageThe registry operator is Huyi Global Information Resources (Holding) Company Hong Kong Ltd. They also have offices in Beijing and Guangzhou, China. The parent company has deep experience in directory services, intellectual property protection services and B2B trading platforms in China. They’ve got more than 200 trademark service companies working with them right now to help sell DOT SHANGBIAO domain names…presumably for multi-year registration terms mainly via two Huyi controlled registrars.

I recently corresponded with Walter Wu, the President of the registry operation. He’s a soft-spoken and long-time industry friend of mine.

Walter is no stranger to the domain name business.  He was co-founder of China Springboard, which provided managed DNS, online advertising, domain name investment and online media development services leveraging direct navigation. He also was founder and President of NameRich, one of the early leading pioneers in the China domain aftermarket.

Walter confirmed the retail pricing indicated on their website and corroborated average term and total domain name years.  Of course the actual wholesale price is going to be lower than the retail price.  Still, if you look at the direct sales model there’s plenty of room for margin in the value chain. I’d imagine it’s better than what some of the top 10 ASCII new gTLDs are depositing these days to their bank accounts.

I asked Walter: “Why do you feel that enterprises are starting to purchase IDN’s? And in particular why do you think they are purchasing [your TLD] .商标?”

He opined “…IDNs provide an opportunity to let an enterprise use their core brand name for their online entrance.”

He added: “…before the IDNs launched, Chinese users could only use their indirect brand name (maybe in Chinese pinyin, or maybe their English name). But those types of names are not easily remembered by Chinese users. IDNs provide the solution for Chinese brand owners to use their core brand name as their domain name which is easily remembered in 3 seconds by customers. Recently the value of traffic is very high. SEM costs too much to get the traffic for enterprises. So applying the IDN, it’s easily remembered. Expanding the IDN direct type-in traffic is a good best practice for Chinese enterprises.”

Do the math and you can start getting a feeling for the potential by selling just a couple of thousand new names per year with an average term of 8 years.

If you take a look at NameStat you will find that as of today 8 of the top 10 new gTLDs (ordered by average term length) are Chinese IDNs. The only exceptions are .MMA (a brand TLD) and .CODES (a Donuts TLD).

I caution that just because a TLD has a high average term it does not necessarily indicate a particular level of revenue, or that they have a solid long term relationship with their end users. It is theoretically possible that some TLDs are assigning inventory to certain registrars for extended terms at lower costs to later resell to end users. However in the case of DOT SHANGBIAO this is not possible due to the registration restrictions.

In conclusion, yes it seems that some new gTLD operators are making decent money. It appears to me that direct B2B sales can work for some new gTLDs depending upon the domain product and access to a related database of customers.  Designing a TLD registry operation business plan so that sales organizations sell high average term lengths at decent margins will enable management to focus on new customer acquisition growth and product innovation vs. spending dollars and time to convince registrants to renew year after year at insanely slim price points and margins.

It appears that Huyi and .商标 (DOT SHANGBIAO) are able to leverage customer relationships that already exist in the value chain and offer an extremely restricted domain product that customers are willing to spend thousands of dollars for upfront—and use. The long term relationship will enable future potential to expose other complimentary services to the customer base.

 

 


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English site is up for the 2017 Global Domain Industry Summit slated for 7-9 July in Xiamen, China

You can now view information in English about the 2017 Global Domain Industry Summit slated for 7-9 July in Xiamen, China.

www_gdsday_com

The agenda for all three days has been posted, although you won’t find too much detail. The main event IMHO, as at any domain conference, is the opportunity to network. You either plonk down your cash for a ticket (cheap by western standards), book your long-haul flights, and prioritize your time to be in Xiamen and meet people to possibly do business with in China, or you don’t. It’s that simple.

Here’s a screen shot of the ticket prices. You can slum it with a “Common Ticket” for 19 bucks. Or go all out with the bling-bling “Diamond Ticket” for $399.

GDS 2017 Ticket Pricing

The website states that the 2017 event is being co-organized by Go Daddy, AliCloud, Baidu Cloud, eName and Bizcn. Since their “Cooperation” page is still up, it also appears they are actively looking for additional sponsors to pony up anywhere from $3,000 for a Bronze sponsorship on up to $100,000 for a Diamond Sponsorship.

For three grand you can cover the reception car with your company’s advertisement and logo tags.  Or for $15,000 you can sponsor a “closed-door meeting” and “organizing propaganda.”

Shell out $50,000 or more and you get a “High Class” stand.  Anything less and you get an “Ordinary” stand.

There’s still no further information about the auctions as I had mentioned in my previous post. That page remains in a “coming soon…” status.  The clock ticks as I think many are interested in this, and it is unfortunate so little information is available to date.

Lots of “guests” photos and names are posted. It’s a wish list, not a confirmed attendee list. This is typical with domain conferences held in China.

I have to chuckle just a bit at the English translation. I see the same mistakes being made from Chinese to English by some of my good Chinese colleagues as I see from English to Chinese by western companies. One cannot simply rely on Google Translate or that intern who understands a bit of Chinese or English.  A professional interpreter who understands DNS industry lingo and marketing can add so much more value and benefit.

With the above stated, I do recommend that you consider attending if you are serious about making connections in China. It’s easy to get there via Hong Kong or Beijing.

You don’t need me to tell you that China is a massive country. It is so much larger in scale and complexity than the USA or Europe.  It is impossible to describe or even communicate with pictures or words. You have to see it for yourself and meet the people. There are not too many chances to meet a lot of China domain industry movers and shakers in one spot this year. This event in July is a splendid chance.

 

 

 

 

 

 

 

 


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2017 Global Domain Industry Summit slated for 7-9 July in Xiamen, China

One of the largest domain conferences in China will proceed with its second act this July in Xiamen, China.

UPDATE: The conference website seems to be only in Chinese at the moment. However according to English documentation that I have obtained, the conference will be held at the Swiss Grand Hotel.  It will feature multi-platform real-time auctions. They are stating “Ten platforms: 10,000+ bidders…” Auction items will include “user submitted quality domains and reserved quality domains from registries.”  Besides new gTLD auctions, they are indicating domain names will be on auction for “Double Pinyin, NN, NNN, LL, LLL.”

Ticket prices range from an incredible $19 for a “Common Ticket,” which gets you in the door to the entire meeting and even the “closed-door” sessions, plus the chance to network and get invited to non-published events by sponsors and such.  However if you’re looking to attend the lunches, welcome wine party, round-table dinner and want your 4 or 5 star room included in the deal, it will set you back anywhere from $199 for a “Silver Ticket” to $299 for a “Gold Ticket,” or $399 for a “Diamond Ticket.” That’s a steal by western standards. 

Xiamen is a lovely metropolis with fabulous outdoor markets and attractions. It’s known as China’s “domain island” where several domain name registrars and domain investors are located.

It’s on the coast and about an hour and a half flight NE from Hong Kong, or about three from Beijing. Last I checked, it will take you 1 or 2 connections to get there from the USA or Europe.   You lose a day when traveling there from overseas, so for USA folks that means you can still enjoy the 4th of July, leave on the 5th or 6th, and get there in time for the start, although you may have to deal with the jet lag.

I’ve been to Xiamen several times in the summer and it can be rather warm and sticky, even for someone like me that’s originally from Houston. But don’t worry, they have A/C.

I have to say that everything seemed well-organized last year for a conference with over 1,000 attendees, at least from an attendee point of view.

So last year, on behalf of ChopChop.domains, I put together a video summary of the first event held in Hangzhou that will give you a little taste on what a Chinese domain name conference is all about. I also had all of about 7 minutes to grab the person that ran the entire conference on behalf of the main organizer, BizCN.com, and do a quick video interview with her. It sheds some light on the increasing role of women in the China domain name industry.

The site for this year’s conference is at www.GDSday.com


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39 days on the road

Back home in Austin after 39 days, 7 countries/territories, 13 flights, 7 hotels, 2 rental cars, countless meetings, Ubers and taxis—and 1 carry on for the whole shootin’ match.

It’s the longest I’ve been away from home in years, although some of that time was spent working from my “second” home in Ireland, where I was a resident for five years.

All told I’ve spent nearly three months total in China alone in the past year. It’s been rewarding learning so much from my Chinese colleagues and friends.

Here are a few pics from various meetings and events with registrars and others in the domain biz in China over the past few months. Some of the friendliest and hardest working people you’ll ever meet in the domain name industry.


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VIDEO + PHOTOS: 2nd China Domain Name Development Conference

*The following is a courtesy republishing of an original blog post by TLD Registry Ltd.

Just a few weeks ago, on January 10th, TLD Registry was a proud sponsor and invited speaker at the 2nd annual China Domain Name Development Conference held at the Beijing New World Hotel.
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The event was co-organized by the Ministry of Industry and Information Technology (MIIT), the China Academy of Information and Communications Technology (CAICT), the Internet Society of China (ISC) and the ICANN Beijing Engagement Center.
Attendance was reported to be over 300 (triple vs. last year), consisting of registry operators, registrars, domain investors, the media and representatives from MIIT, CAICT, ISC and ICANN.
There were plenty of content and networking opportunities to keep one busy the entire day. This is just a partial list of some of the topics that were covered:
  • Domain Name Industry Regulation.  Review of 2016 and outlook for 2017.
  • Internet development trends in China
  • Domain industry development trends in China
  • UASG: Where are we now.
  • Report on Chinese IDN Universal Acceptance
  • Roundtable: Domain names in the new era
  • TLD entry license and review
  • Evolution of DNS structure and security practices at China Telecom
  • Trends of new gTLDs in the China Market
  • Analysis of the Digital Assets ecosystem and its future
Our CEO, Mr. Arto Isokoski, presented on “Providing innovation to the Chinese domain name marketplace.” He offered comments on the China opportunity, the importance of the digital economy, and upcoming Chinese IDN email initiatives.
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Our VP, Mr. Pinky Brand, participated in an extensive roundtable discussion: “Domain Name Market: The Next Step” with representatives from CONAC, Rightside, GMO, 190.com, West.cn, Yuwei, Domain.cn, RITT, and Afilias.
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As at any domain name conference, one of the best benefits of attending is the opportunity to network! There was no shortage of opportunities to do so in Beijing, especially at dinner, where many of the “who’s who” of the China domain name industry were on hand to talk shop and visit with old and new friends.
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In addition to the photos posted above, we’ve also created a short 3 1/2 minute video and photo montage to give you a taste of our day at the conference. We look forward to participating again!  Enjoy.
*The above is a courtesy republishing of an original blog post by TLD Registry Ltd.


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Video: Summary of Global Domain Summit in Hangzhou, China

I was very fortunate to attend the Global Domain Summit in Hangzhou earlier this month.

I flew to Beijing first and spent a few days there. Then we took the 6 hour high-speed train to Hangzhou, and were promptly and warmly greeted by the conference organizers at the train station.  We were immediately whisked in a private bus with other attendees to the Relax Hotel where we received our badges upon walking in the lobby.

I have to say everything seemed well-organized for a conference with over 1,000 attendees, at least from an attendee point of view. There was plenty of food on hand if you were hungry, and plenty of friendly conference workers to assist.

My only complaint early on was that the air-conditioning did not seem to be working in the main “ballroom” of sorts, and during the opening ceremony I found it to be quite uncomfortably warm and sticky.  Being originally from Houston, I know what this kind of heat is like. But it’s another situation when you are in a room with hundreds of others and there is no air blowing at all. I literally had to leave the room after about 10 minutes.

Eventually that little matter was resolved and the rest of the conference provided ample opportunities to meet up with old industry friends and lots of new faces.  I found many of the local China domainers on hand to be very friendly and engaging. Many came right up unannounced and immediately introduced themselves.  By far WeChat is the way everyone exchanges basic contact information.  I have found it to be an indispensable tool when traveling in China.

So on behalf of ChopChop.domains, I put together the following video summary that will give you a little taste on what a Chinese domain name conference is all about. I also had all of about 7 minutes to grab the person that ran the entire conference on behalf of the main organizer, BizCN.com, and do a quick video interview. It sheds some light on the increasing role of women in the China domain name industry.

 


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New gTLD Delegation Date Calculator – UPDATED

NOTE TO READERS: I originally posted this via the DomainDiction blog on 11 January, but since have updated the calculator and updated my comments below.  You can download the updated version here.

I’ve put together a little scenario calculator on a spreadsheet in the quest to figure out some idea of when a new gTLD might be delegated into the root zone by simply entering in the known ‘Draw number’ for the TLD application.

Hopefully it’s simple enough to understand on its own, but if you care to watch my 4-minute explanation video it might give you a better flavor for my logic in the assumptions.

My assumptions are based on the following metrics:

  • Assumed Initial Evaluation Rate (IE) Processing Rate per week by ICANN
  • I’m saying it’s 30 per week for now, but ICANN says it could ramp up to 150 per week.
  • Assumed Metering Rate per Week for pre-delegation testing (PDT) and Root Zone Entry (Delegation Processing).
  • ICANN says no more than 1,000 new gTLDs delegated in a year, so that implies a PDT and delegation rate of about 20 per week. It’s been stated that this could be ramped up to 80 or 100 per week.
  • Date ICANN has stated it will start process of releasing IE results
    • That’s 23 March 2013 at the moment
  • “Fudge Factor” – # of days PDT and beyond processes are delayed due to uknown/unforeseen issues
    • We all know there have been/will be delays. At present ICANN says on it’s microsite that first delegation requests begin on 1 August 2013, so for now I’ve added 110 days to the process as the ‘fudge factor’ to force a first delegation date in the calculated results for Priority String 1 to = 1 Aug 2013. You can change this if you believe otherwise.
    • Of course if Fadi’s comments at the recent regional ICANN meeting in Amsterdam come to life then you may want to change this to 365 days. 😦
  • # of days after IE for Contracting
    • I’m going with 7 assuming there is no negotiation and the applicant signs the standard deal. We all know back and forth and paperwork and lawyering can make this longer, but I’m thinking motivated applicants will move very fast and have some advance knowledge what they are dealing with before they even get to this stage
  • # of days to process PDT
    • I’m going with 7 based on what I’ve read. Change it if you don’t agree
  • # of days for ICANN to submit root zone delegation request after applicant passes PDT
    • ICANN is currently thinking the max. would be 10 business days. I translate that to 14 calendar days.
  • # of days for IANA to process root zone delegation request
    • ICANN is currently thinking the max. would be 30 business days. I translate that to 42 calendar days.
  • # of days after Delegation before Sunrise Period begins
    • 30 according to the Strawman proposal that all parties seem to be OK with at this time. That’s the minimum. You can change this if you think it will be longer.

If you don’t agree with my assumption metrics, or just want to play around with various ‘what if’ scenarios then have at it as I’ve designed it so you can change the numbers.

The output of the calculator provides:

  • Date initial evaluation results are released by ICANN (for the input Draw #)
  • Estimated Contracting completion date
  • Estimated PDT completion date
  • Estimated Delegation date
  • Estimated Sunrise Period start date

IMPORTANT:

The calculator assumes no Contention Sets, no negative GAC advice, no Formal Objections, no delays with financials, contracting, PDT, delegation, lawsuits, Fadi decides to stop everything for 1 year, etc. It does not formally take into account that ICANN may not start any delegation requests until 1 August 2013 as currently displayed on the ICANN new gTLD microsite. It does not formally take into account that ICANN has stated that no contracting will begin until after the April ICANN meeting in Beijing is completed.

WHAT ABOUT ACCOUNTING FOR CONTENTION SETS?

If you know that x number of contention sets are ahead of your draw #, then consider inputting an artificially lower # to generate an alternative scenario. For example: Your draw # is 942 but you believe 200 contention sets exist where the highest draw # is lower than yours — so input 742 instead.

If you feel that reasonably 100 of the 200 contention sets ahead of you might be resolved ahead of your draw #, then consider entering 842 instead.

NOTE: This tool is purely speculative, based on some facts and plenty of opinion. Finally, as many know over the years following and participating the process, the situation is likely to change. I may have made some mistakes. Don’t rely on this to make business plans.

You can download the updated version here.