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ICANN slashes new gTLD revenues by 57%, forecasts renewals at 25% to 50%

Kevin Murphy, March 19, 2015, 12:42:41 (UTC), Domain Registries

ICANN has dramatically reduced the amount of revenue it expects to see from new gTLDs in its fiscal 2015.

According to a draft 2016 budget published this morning, the organization now reckons it will get just $300,000 from new gTLD registry transaction fees in the year ending June 30, 2015.

That’s down 75% from the $1.2 million predicted by its FY 2015 budget, which was approved in December.

Transaction fees are paid on new registrations, transfers and renewals, but only by gTLDs with over 50,000 billable transactions per year.

Today, only 14 of the 522 delegated new gTLDs have added more than 50,000 names. ICANN says that only 17 registries are currently paying transaction fees.

It’s not only the transaction fees where ICANN has scaled back its expectations, however.

The organization also expects its fixed new gTLD registry fees — the $6,250 each registry must pay per quarter regardless of volume — to come in way below targets.

The new budget anticipates $12.7 million from fixed registry fees in FY15, down 24% from the $16.7 million in its adopted FY15 budget.

This is presumably due to larger than expected numbers of would-be registries either withdrawing or dragging their feet in the path to delegation.

Registrar transaction fees are now anticipated at $1.1 million, compared to $2 million and $3.2 million predicted by the adopted and draft FY15 budgets respectively.

Taking all three revenue sources together, ICANN now expects new gTLDs to contribute just $14.1 million to its fiscal 2015 revenue, down 29% from the $19.8 million forecast in its adopted FY15 budget.

That’s down 57% from the $32.7 million in the original draft budget for the period.

The current budget assumes 15 million new gTLD registrations in the 12-month period, revised down from the 33 million domains predicted in its draft FY15 budget a year ago.

With just a few months left until the end of the fiscal year, there are currently fewer than 4.5 million domains in published new gTLD zone files.

ICANN plainly no longer expects new gTLDs to get anywhere close to 15 million domains.

Renewals expected to be weak, weak, weak

The organization is taking a conservative view about renewals for 2016.

The 2016 budget expects renewals at just 50% for regular gTLDs and 25% for registries — presumably ICANN has .xyz in mind — that gave away domains for free at launch.

That 50% is both ICANN’s “best” and “high” estimate. Its “low” estimate is 35% for non-free domains.

Obviously, 50% is a very low renewal number for any registry (70%+ is the norm). Even شبكة. (.shabaka) told us recently that 55% of its registrants are renewing before their domains expire.

Conversely, 25% may be a very optimistic number for free domains (when Afilias gave away free .info names a decade ago, almost all of them dropped rather than being renewed).

For fiscal 2016, which begins July 1, 2015, ICANN expects new gTLD revenue to be $24.1 million — about a quarter off its original plan for 2015.

That breaks down as $19.9 million from registry fixed fees, $2 million from registry transaction fees, and $2.3 million from registrar transaction fees.

ICANN said it is is assuming that it will start the year with 602 registries and end it with 945.

The proposed FY16 budget, now open for comment, can be found here.

For comparison purposes, the adopted FY15 budget is here (pdf) and the draft FY15 budget is here (pdf).

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Comments (6)

  1. R P says:

    Weak and weaker

    Rolling out all of these new gtlds in such a short relative time frame appears to have been the kiss of death. Donuts business model is solid, everyone else just fringe players fighting for scraps

    Some of the new gtlds will have some long term value in their native languages/countries but none will draw true international credibility

    Long live the king! (.com)

  2. Tom says:

    Absolute waste of money no end user appeal, take it from me, as I burned good money. The people selling you will never admit it, never thought I would say this, but icann is right.

    Big drops coming across the board, budgets being revised everywhere.

    30% is online on renewals, .xyz would be probably 10 percent

  3. Jack says:

    It serves everyone right that was stupid enough to invest in these things.

    Time to play hot potato. Who’s going to get left holding it? If you are the last man holding your new gTLD your hands will burn to a crisp.

  4. There is no free lunch, work as hard for example as .club or .me does, or .co did and you are going to suceed. There must be a global awareness programm for Domains. We all have to stick together and make this industry move!

  5. Aditya says:

    I’d have to agree with Dietmar, broad statements to the entire nTLD program don’t make sense.

    A TLD that puts in the effort, has a clear marketing plan in place, will manage to grow as we have seen with the sucess of .club and others.

    The game has changed, the players need to change the way they play now..

  6. The mistake is expecting a group of differing TLDs to perform in the same way. Even their web usage differs considerably. This will have a major impact on renewals. Bubble TLDs like .xyz are going to take a hit on renewals and some groups of its TLDs will have renewal rates in the range 6% to 20% (looking at similar historical patterns in other gTLDs). Freebies grow registration volume but they don’t necessarily translate into developed websites. The .xyz gTLD isn’t really a single TLD but is two TLDs – a freebie one and a paid registration one. However not all the new gTLDs are like .xyz as some of them are following ccTLD growth patterns.

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