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Schilling: big price increases needed to keep new gTLDs alive

Kevin Murphy, March 7, 2017, 18:18:13 (UTC), Domain Registries

Uniregistry is to massively increase the price of some of its under-performing new gTLDs in an effort to keep them afloat.

Sixteen TLDs from the company’s portfolio of 27 will see price increases of up to 3,000% starting September 8, CEO Frank Schilling confirmed to DI today.

“We need more revenue from these strings, especially the low volume ones, without question,” he said. “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.”

While domainers have taken to new gTLDs in greater numbers than Schilling anticipated, demand among worldwide consumers has been slower than expected, Schilling said.

“If you have a space with only 5,000 registrations, you need to have a higher price point to justify its existence, just because running a TLD isn’t free,” he said.

The alternative to repricing would be to sell the TLD in question to a competitor, which in turn would then be forced to reprice anyway, he said.

The TLDs seeing the biggest price hikes are .hosting and .juegos (Spanish for “games”) which are going up from about $20 retail and about $10 retail respectively to about $300 apiece.

Schilling said he believed that true web hosts could afford the new pricing. The .juegos increase is modeled on what Uniregistry has been doing with .game, which currently retails for closer to $400.

At the budget, sub-$10 end of the portfolio, .click and .link are to see fees rise by a buck or two per year.

Names in .audio, .blackfriday, .diet, .flowers, hiphop .guitars and .property, currently priced in the $10 to $25 range, will all start retailing for about $100 per year.

The other affected TLDs are .christmas, .help, .sexy and .tattoo, which will all see big increases but stay in the sub-$100 range.

The TLDs seeing the biggest price increases are among the ones with the fewest registrations — .juegos has about 1,000 names in its zone, while .hosting has fewer than 6,000. Most of the 16 TLDs have fewer than 10,000 names in their zones.

Uniregistry is no stranger to highly-priced domains. It runs .cars, .car and .auto, where it sells every domain at $2,888 a year retail (with no reserved premiums) but has fewer than 500 names in each zone.

Schilling said that in some ways he prefers this model to the more standard model of low-price base fees with high-price premiums.

The higher prices will likely lead in the short term to lower registration numbers (as speculators flee) but will give Uniregistry more cash to invest in marketing.

“That metering effect of high prices, we like that, in terms of trying to grow the namespace, and it gives us money we can use to try to market the strings to prosperity,” Schilling said.

“At a higher price point, the marketing can scale, but we just can’t do it on base registrations of ten bucks or twenty bucks,” he said.

He added that the higher base fee gives Uniregistry more flexibility to provide periodic discounts.

ICANN rules make it much easier to have a high base fee and keep it regularly discounted than to periodically increase fees, which requires six months notice.

“Between renewals promotions and pricing promotions, a lot of the effects of the price increases will be moot,” Schilling said.

Because the new prices don’t kick in until September, registrants are able to lock in pricing at current levels by renewing for up to 10 years.

While the price increases and Schilling’s relatively gloomy commentary will certainly fuel opponents of new gTLDs, whom are legion, Schilling is still bullish on the market, which he continues to characterize as a marathon rather than a sprint.

“Within ten years, will it be bigger? Absolutely. It’ll be quintuple what it is today,” he said. “But we need to get to 10 years, and to keep the lights on between here and there we need higher prices, without question.”

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Comments (47)

  1. If you go to the .AUDIO new gTLD application:

    https://gtldresult.icann.org/applicationstatus/applicationdetails/1908

    (click on “Download Public Portion of Application”) it says:

    “18.C.2 Cost Structure and Increases

    Uniregistry will offer flat-rate, affordable pricing. It intends to offer certain co-marketing rebates and incentives to all registrars, some of which may be returned to registrants as introductory or bulk registration discounts at the discretion of the registrar.

    While not a ʺcommunityʺ application, Uniregistry views its prospective domain registrants as a community to be served, and not exploited. Uniregistry intends to make a contractual commitment to registrants and their registrars not to increase registry prices above cost of inflation for the first five years after launch of the registry. Our initial pricing model allows registry prices to find a market value that may be substantially below our projections, which are based on conservative assumptions of registration volume, rather than locking in a captive market with a deceptively low initial registration cost.

    Uniregistry does not believe that registry fees should rise when the costs of other technology services have uniformly trended downward, simply because a registry operator believes it can extract higher profit from its base of registrants. While competition in registrar services by ICANN caused an initial and substantial drop in retail domain registration prices, the fees for registry services have increased over the same span of time. Those increases have not been justified by increased Internet traffic, and thus zone server operational cost, since the cost the underlying technology has trended down while performance has increased. We do not believe registry fees should follow a different trend than comparable technological services. Uniregistryʹs management includes individuals who participated in anti-trust litigation which was brought to combat increases in existing TLD registry charges they believed to be unjustified, and we have no intention of following that path. We believe our best opportunity for prosperity is to offer a reliable, differentiated TLD which will attract increasing numbers of registrants.”

    Has it been 5 years already since launch? Doesn’t look like it! .audio appears to have launched in the summer of 2014.

    I leave it as an exercise for the reader to check his other new gTLD applications to ICANN.

    Similar statements were made on blogs, e.g.

    http://tldinvestors.com/2012/07/uniregistry-has-no-plans-for-premium-auctions.html

    “Our prices are fixed and only indexed to inflation after 5 years.”

    It’s so sad for those who relied on those commitments, and are now about to see their investments flushed down the toilet.

    Folks like myself strongly argued for pricing caps, etc. to protect registrants. ICANN wasn’t listening, but was too busy on travel junkets, and hiring ‘consultants’ to justify pay increases, etc.

  2. Anticareer says:

    Low volume of sales, so they jack up the prices. So now nobody new is going to come to purchase any domains in that gTLD because the pricing is ridiculous, and the domainers who are holding domains are going to drop what they bought because it’s too expensive to hold them.

    In the end this short sighted action will lead to less lower and surprisingly to Uniregistry less revenue.

    • I think you underestimate the impact of this action. It won’t just affect Uniregistry strings. It will affect ALL new gTLDs, since it highlights the lack of price caps, and the lack of any other meaningful protections for domain name registrants.

      And registrars are about to feel the abuse from registrants (as registrants don’t normally have any direct relationships with registry operators). That will make registrants even more reluctant in the future to give new gTLDs any “shelf space”.

      BTW, if you got suckered into a new gTLD registration, check whether you really want that auto-renew setting to be enabled….

  3. Kate says:

    Once again, George, well said.
    This is the (predictable) consequence of a non-regulated market.
    Domainers should know better. Told.you.so.

  4. Jack says:

    Just a couple weeks ago I heard Schilling mention on a podcast that his portfolio of gTLDs already made back his investment and were now profitable. I’d be willing to pay $10-50/year for decent gTLD names but anymore higher than that and I’ll have to trim my holdings and be very selective about picking up new names.

  5. Mark Thorpe says:

    .Com wins again. Game, set, match. Checkmate.

  6. Rev says:

    So what is the gameplan to register 10 years out, before Frank can rape us?

    • That’s not a good idea, in my opinion. The registry just told you “don’t trust us to keep renewal pricing low.” Reinvesting in strings from that registry operator would just be throwing good money after bad.

      One should be cutting one’s losses, rather than making them even larger by pinning one’s hopes on finding a “greater fool” to buy those domains in the future.

    • ThcNames says:

      Best comment on this increase. 🙂

  7. Reality says:

    Enjoy building your business, branding and SEO on a new gTLD when the registry can jack up the prices and destroy it.

  8. Rev says:

    Taryn has been outbidding me at namejet past few years on .com!!!

    Was the diversion to get us to put our money into these gtlds, while they scooped up all the good .com’s with less bids?

    Why would anyone destroy their business like this. All that will be said is these extensions suck, and nobody will pay hundreds of dollars per year to renew them.

  9. The demand for some of these gTLDs was the product of an artificial scarcity created by Domain Tasting. When ICANN was shamed into dealing with the problem, the artificial scarcity effectively disappeared. Unfortunately the models used and ICANN’s ridiculous Year 1 new gTLD count projections did not take the changed market conditions into consideration and ICANN effectively steamrollered the launch of the new gTLDs rather than carefully pacing them to give each a chance.

    It is a risky move by Frank and Uniregistry in that it is an attempted to flight to quality (higher prices mean more development and a greater possibility of renewal). The alternative was to go downmarket to a zombie TLD model with zone stuffing and discounting as a central element of the business model.

    • Snoopy says:

      How it is risky John? Those tlds are losing money right now, something has to change. The situation is clear “and to keep the lights on between here and there we need higher prices”. i.e. prices go up otherwise the light go out. If they keep prices as they are the lights will definitely go out.

      I suspect that every registry that owns strings (as opposed to those than manage them for others) are losing money right now. Minds + Machines lost $8million last year, Rightside lost $33million. I doubt Donuts or .club or .xyz is in a better situation.

      • YamadaMedia says:

        .CLUB admitted they are losing money but expect to make a profit soon.

      • It is going to cause a credibility problem, Snoopy.
        The registrars are going to take a lot of the flak with it but some of the smaller gTLDs have a low enough domain count to make this kind of pivot less painful in the long run. The problem with high priced TLDs is that their new registrations rate is a small fraction of that of cheap and open TLDs. As with a lot of gTLDs, registries are finding that the explosive growth rates as initially seen by .EU, .MOBI and .CO no longer exist. Those TLDs were more open and the wide availability of ‘premium’ registrations did encourage a landrush mentality which led, initially, to more sales. Some of Uniregistry’s gTLDs had all the premiums withheld so instead of that buzz that accompanies a new TLD launch, their launch became a yet another TLD launch. A lot of the domainer buzz was missing. All that was left was to make a pitch to the Mom and Pop developers. Commercially, the move makes sense but it will take time to reestablish these gTLDs as high quality TLDs with good development and renewal rates. To repurpose the gTLDs properly, it will take very careful handling of registrars and marketing and perhaps a ten year timeframe to see how things work out.

        • THCNames says:

          I would imagine many registrars and web hosts would drop Unireg’s TLDs and completely stop marketing them.

          Is Frank Schilling going to cover the angry customer calls, emails, and social media backlash against registrars and web hosting companies? Nope.

  10. Chad says:

    I own serve.hosting so I can use the sub-domain self.serve.hosting. This blows. I own it for a side project which is in slow progress. Not going to be worth the new cost to renew for side projects.

  11. Mark says:

    I count 15 which one am I missing?

  12. Domo Sapiens says:

    “While domainers have taken to new gTLDs in greater numbers than Schilling anticipated, demand among worldwide consumers has been slower than expected, Schilling said.”
    Asian domainers? Take Out .xyz and Registry hoarding (now backfiring) and there is no much left… hence this statement is pure B.S,
    Just like the AM Radio’s comment…

  13. John says:

    Could you imagine the impact of a recession or even a depression coupled with really high new TLD renewal prices?

    This would cause a dramatic stampede back to .com domains.

    Should you invest out at these high rates for the coming years assuming that there will be at least some economic market corrections?

    You be the judge but it sounds like a bad investment to me. You’d be better off buying gold or bitcoin with your money that investing in new TLD’s.

  14. Richard Funden says:

    While I am very much in favor of the new TLDs, I feel this is a stupid move.

    I thought the guy was rich? If he believed in the strings, he should use his own funds to market the strings instead of making the early adopters pay for his future profits.

    This move will hurt consumer trust not only in his TLDs but in the new gTLD marketplace as a whole. It was an error of ICANN not to implement restrictions on pricing models and price changes. When there is no stability, people will flock to the old TLDs instead.

  15. Chris B. says:

    I actually dont use my new tld domains for this reason. Established tlds and country tlds are much more reliable when it comes to continuity and pricing.

    This isnt about the height of the price itself but about ensuring your business or email wont face unexpected surprises in the future. I’d be more than happy to pay 50 euros if I knew the pricing would remain on that level, but we dont know that.

    Only new tlds with 50k+ registrations and run by budget registries do I trust somewhat. But still not enough to replace my other domains.

  16. Given the massive expected domain name deletions, Uniregistry shall henceforth be referred to as Punyregistry. 🙂

  17. Hentai says:

    This beahviour will kill newGTLD. Uniregistry, this is a bad game.

  18. Tom says:

    New gTLDs were doomed right out of the gate because of huge pricing for premium names and other premium names held back. This turns off registrants, especially end-users. The life and success of a gTLD is usage in the real-world by end-users with live thriving sites. That is the ultimate advertising.

    The strategy for the new gTLDs has always been to sucker domain investors. This article just shows how short-sighted this was. Any attempt at reviving dying new gTLDs is pointless imho. This whole new gTLD experiment just made .COM even stronger. If any new gTLD registry followed the .COM model they may have had a much greater chance of success. Just my two cents for what it’s worth. 😉

    • Rubens Kuhl says:

      You can’t have your cake and eat it too. If you sell domains in the secondary market at a higher price than registration fee, then you know that end-users can afford those prices.

      • Tom says:

        You’re basing this on mostly .COM/ccTLD aftermarket sales. It’s very hard, if unlikely, to sell domains with a RENEWAL cost of X,XXX. It kills the aftermarket. This is not about cake, it’s about apples and oranges. 😉

        • Rubens Kuhl says:

          There are gTLDs where premiums have standard renewal feee, there are those who don’t. But your initial saying was that end-users wouldn’t like premium prices, yet you sell domains in the secondary market… that’s the incompatibility.

          But if you remove end-users and say that domain investors shouldn’t look at new gTLDs due to like of price caps and due to premium renewals, in some of them, then that becomes at least congruent, even if I don’t agree.

          • Tom says:

            I get your point. But the secondary market price for a premium gTLD or ccTLD is one-time. How many buyers mortgage their homes or take out loans to acquire that super premium domain or number of domains. It wouldn’t make any sense if they have to pay a premium renewal costs too. It would definitely prevent them from having a portfolio of these premium names.

            You have to also consider that com’s and cctld’s values are determined more by the market than anything else. Yet, for new gTLD’s premium pricing is forced down people’s throats. These prices are not determined by the market but by the registry.

            I am also not saying investors shouldn’t look at new gTLDs. I just think that the registries, such as Uni, have shot themselves in the foot by creating different price levels (that don’t seem to be based on any rational data), rather than allow the market to decide that. This turns many investors away. But it’s only imho.

  19. kd says:

    This is a risky move for many reasons. For one, if there is ever a new round of TLDs, how can you trust an entity to apply for more TLDs when it failed to do what it stated in its own applications in round 1? (Per George Kirikos comments above.) Or put more simply, how can you expect to apply for future gTLDs when so many that that entity applied for previously failed?

    Also, you realize that in order to apply for a gTLD in the first place an applicant could not have had 3 UDRP losses against itself? But what does this show for registries who have failed to uphold their previous strings / gTLDs?

    Even more, this is proof that a lot more needs to happen before another round, and more time needs to go on in order for ICANN to ever consider a second round of fTLDs (Failed TLDs). Because it is still very early and end users are being screwed by failures like this. Rugs are being pulled out from under the global Internet community. Studies need to happen, and things will take another 5 to 10 years to truly show us the net effect from all of the registry operators as a whole.

  20. Rubens Kuhl says:

    One curious coincidence is announcing the price hike the same day ICANN published the draft report for the Competition, Consumer Trust and Customer Choice review of the new gTLD program.

    Some people might want to comment on this in the report:
    https://www.icann.org/news/announcement-2-2017-03-07-en

  21. Joe says:

    .Com is the king and it will never change. I’ve always said; If you promote a non-com domain, you are in fact promoting the .com. If you promote whatever.whatever, you will drive traffic to whatever.com. It’s that simple. Spend your money on .com. Domains are realestate. Location, Location, Location, is the three most important things for realestate, just like domain names. com, .com, .com.

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