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Six private new gTLD auctions raise $9m
Kevin Murphy,
June 7, 2013, 10:03:01 (UTC),
Domain Registries
We now know (roughly) how much a new gTLD is worth.
The new gTLD contention sets for .club, .college, .luxury, .photography, .red, and .vote have been settled in a series of auctions this week that raised over $9 million.
That’s an average price of $1.5 million per string.
Writing on CircleID, Innovative Auctions project director Sheel Mohnot confirmed that the withdrawal of Donuts’ application for .vote was a result of losing the auction.
We also already know that .CLUB Domains won its auction.
But Mohnot did not reveal the winners of the other four auctions, each of which was a two-way fight between Donuts and one rival. ICANN’s web site does not yet reflect any other withdrawals.
His article does, however, quote Top Level Design and Luxury Holdings, which applied for .photography and .luxury respectively, as saying they were happy with the outcome.
Assuming they won too (which is of course not certain) that would mean Donuts lost at least four of the six auctions.
Donuts had originally submitted 63 strings to auction, but they could of course only go ahead if all of its competitors agreed to participate.
One wonders if the company submitted its lowest-value strings first in order to build up its war chest for future auctions. A good chunk of the $9 million raised will have flowed straight into its coffers.
“One wonders if the company submitted its lowest-value strings first in order to build up its war chest for future auctions. A good chunk of the $9 million raised will have flowed straight into its coffers.”
Yes, to say that Donuts “lost” may be the wrong way of putting it 🙂
Private auctions to resolve contention between applicants are welcomed in general. But these latest auction results raise the question if the money involved will impact the business models and financial stability of the winning parties, what I think is likely with the reported auction sums.
Paying such high amounts as auction winner not only changes marketing spending and staff count in a new gTLD’s business plan but it goes deeply into the whole business model of the applicant and is very likely to change the domain name price, expected number of domain name registrations and revenues. Public or hidden change of ownership or high debts are other likely outcome of an auction.
According to the Applicant Guidebook a change request and/or material change will lead to a re-evaluation of an application or may lead to a push of the application to the next round or a non-approval of an application.
We will see what the winning parties are going to report back to ICANN, if they do.
Financial models were to exclude auctions funds. Not saying it won’t impact business plans but thought it was important to point that out as it relates to change requests
Sue
How are any of the points you make any different in an ICANN auction?
Also, no-one knows how much the TLDs were sold for. It’s very possible that there was one that sold for a lot and the rest for much less.
Antony
The financial models submitted with the applications specifically excluded auction funds. That doesn’t it might not have an impact but thought it was important to point that out
I agree that the winning bidders have an issue in regards to supporting the top level domain especially given the significant dollars required in order to obtain the rights to the name. As a winning bidder, I believed it was important to raise enough money to acquire and launch the name properly. I am also happy to know that my investment to get the name will be used by other entrepreneurs who will more than likely inject that money back into the industry either to acquire the rights to another name or to support the launch of a top level domain. I strongly believe that private auctions accomplish this task far better than ICANN auctions. At least until ICANN makes it clear with respect to how their massive surplus will be dealt with.
I would add that an ICANN auction may lead to a more expensive acquisition strategy as bidders like myself would have been forced with only two outcomes failure vs. success. I strongly believe that this will result in much higher bids and costlier outcomes for the winning bidder making resources even more scarce. When faced with the outcome of losing an auction and getting a substantial payout one really thinks twice about each bid as the temptation to pull out of the auction becomes greater as the bids increases. The alternative is the ICANN auction which is really a brutal fight to the end where all the applicants for 1 string except the winning bidder will lose everything. And even the winning bidder will likely be stuck with the winners curse of overpaying for the name.