ICANN budget: mild optimism amid maturing industry
ICANN thinks the domain industry, including the new gTLD industry, is maturing and will continue to grow, in its just-published draft budget for fiscal 2023.
The Org is predicting growing transactions across the board, as well as an increase in the number of accredited registrars and a slowing decline in the number of contracted gTLDs.
ICANN is expecting funding of $152 million for FY23, which includes the $4 million bung it negotiated with Verisign as part of the deal to allow the company to raise .com prices.
That’s up from the $149.1 million is expects to receive in the current fiscal year.
As usual, the bulk of the funding comes from gTLD transaction fees — the taxes registrants pay through their registrars and registries whenever they register, renew or transfer a domain name.
Legacy gTLD transaction fees are expected to amount to $93.1 million, up 3% on a forecast of $90.1 million in the current year, while new gTLD transaction fees are expected to rise modestly from $9.5 million to $9.9 million, a 4% increase.
Transactions in legacy gTLDs are expected to be 201.2 million, versus 193.6 million in the current year.
New, post-2012 gTLDs are expected to process 25.8 million transactions, up from 24.8 million, of which 21.1 million will be billable, up from 20.3 million. New gTLDs only pay transaction fees after 50,000 domains under management.
ICANN is expecting to lose four registries in FY23 — this almost always means dot-brands that cancel their contracts — with the total declining from a June 2022 total of 1,149 to 1,145 a year later. This will have a modest impact on fixed registry fees.
But the Org is once again expecting to see an increase in the number of registrars paying fixed accreditation fees, up by 28 to 2,447 at the end of FY23.
Accompanying the budget, ICANN has published some industry trend analysis (pdf) outlining some of the assumptions behind the budget forecasts.
Basically, the document describes what regular readers already know — many domain companies benefited from pandemic-related lockdowns driving small businesses online, but overall industry volumes were driven down by low-cost new gTLDs experiencing huge junk drops.
For ICANN’s purposes, factors such as customer quality and pricing are irrelevant. A spammer registering 1,000 domains in bulk pays ICANN the same amount in fees as 1,000 small businesses building their first web sites.
The document reads:
Taken as a whole, DUMs failed to expand in the past twelve months ending in mid-2021. While this decline is at least partly attributable to lower promotional activity among some of the largest new gTLDs which could be reinitiated in the future, it nonetheless points to an industry that has shifted from a period of rapid expansion to one that is now witnessing steady maturation.
The draft ICANN budget covers the 12 months beginning July 1, 2023, and is now open for public comment before possible revisions and final approval.
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