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Was .xxx’s launch disappointing?

Kevin Murphy, December 8, 2011, 12:24:31 (UTC), Domain Registries

The weekend box office numbers are in, and .xxx didn’t put as many bums on seats as might have been expected.
ICM Registry sold 55,367 new .xxx domain names in its first 24 hours of general availability, giving it a total of almost 159,351 registrations, according to the company.
That’s pretty good going for a TLD which, despite the spin in ICM’s recent TV commercials, is intended for a limited customer base, and which is selling for $80 to $100 a year.
Given its $60 registry fee, ICM will have taken over $3.3 million in revenue yesterday, over $550,000 of which will be given to its sponsoring organization, IFFOR.
However, the 159,351 total includes non-resolving domains, ICM has confirmed.
Due to the unique trademark protection mechanisms put in place for non-porn companies, it’s possible to pay for a .xxx domain that will only ever resolve to a standard registry placeholder.
ICM has previously said that it took almost 80,000 sunrise applications, and that the landrush phase put its total “comfortably over 100,000”.
It did not, however, break out the mix of Sunrise A (resolving) and Sunrise B (non-resolving) domains.
That’s an important distinction, both for ICM’s ongoing revenue and for gauging demand for .xxx among registrants.
Each Sunrise B domain gave ICM a $161 windfall but, unlike every other TLD launched to date, has the sale had no recurring revenue component.
I think it’s possible that 50,000 to 60,000 sunrise domains were non-resolvers, which would give .xxx a total of roughly 100,000 active domains under management after one day of GA.
(My assumptions are that all 80,000 sunrise applications were unique and approved, and that roughly two thirds were for Sunrise B non-resolving domains).
Assuming all the active domains are renewed, it’s a $6 million a year business (or $5 million, if you exclude the mandatory IFFOR donation) for ICM already.
The .xxx zone is already bigger than .travel, .pro, .jobs, .aero, .coop, .museum and .cat. It will likely be bigger than .name, .tel and .asia by the end of the month.
So why suggest that it’s a disappointing result?
Pre-reservations
First, for a few years ICM was accepting no-cost .xxx “pre-reservations” through its web site, while its gTLD application was in ICANN limbo.
It racked up over 900,000 such reservations for roughly 650,000 unique .xxx domain names before shutting the offer down in July this year.
One might expect that most people interested enough in .xxx to pre-register a domain months or years in advance might also be interested in grabbing that domain during landrush, sunrise or at the moment of GA. That apparently didn’t happen.
.CO
Let’s also compare .xxx to the launch of .co by .CO Internet last year.
While .CO did not have anything like the long-term media exposure as .xxx, it did of course have the advantage of offering a completely generic string priced at a third of .xxx.
Within its first 24 hours of general availability, .CO said that it had 233,000 domains under management, about 39,000 of which were landrush or sunrise registrations.
Even at the cheaper registry fee (about $20 a year) .CO still made more money in day one than ICM (although ICM wins hands-down in terms of premium domain sales).
.CO, incidentally, also only had 10 accredited registrars at launch (not counting resellers) compared to ICM’s over 70.
Go Daddy
Go Daddy is responsible for roughly half of all new .com registrations, with similar numbers in other TLDs including .co, but it does not appear to be promoting .xxx very heavily.
For the last few days, its homepage has contained only one small below-the-fold reference to .xxx domains. Its TLD drop-down menu has .xxx in tenth place, between .biz and .ca.
Conversely, ICM has been promoting Go Daddy (and DomainMonster) more heavily in its own marketing – notably on gavin.xxx, the site “owned” by its TV commercial character.
Expectations
So is .xxx on track to meet expectations at this early stage?
ICM CEO Stuart Lawley has previously predicted 300,000 to 500,000 registrations in the first few months, and that’s still an achievable goal given its day-one performance.
.CO Internet, for example, more than doubled its 233,000 first-day take within two months of going into general availability.
The new Russian ccTLD .рф registered 200,000 domains in its first six hours when it launched in November 2010, and hit 800,000 by April this year.
While .xxx clearly hasn’t yet smashed estimates in the same way as its sunrise did, I think early indications are that it’s looking pretty healthy.

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Comments (9)

  1. Ann Kuch says:
    December 8, 2011 at 1:43 pm

    You perform a comparative analysis of the various TLD’s income relative to the number of registrations; however, you did not perform a similar analysis of the various TLD’s expenses. In other words, how much did each of these TLDs have to spend per registration.
    ICM, according to their own account, spent between 12 and 14 million dollars just to get the TLD approved. Because they had to promise ICANN that all .xxx sites would be “safe,” they had to sign an eight million dollar contract with McAfee. In addition to all of the free publicity, they spent 5 million on advertising. Because they promised registrants both a domain-specific search engine and a micro-payment system, they are having to invest unknown sums of money into the development of each. And the list goes on.
    The bottom line is that income is meaningless if you don’t take into consideration expense.

    Reply
    • Kevin Murphy says:
      December 8, 2011 at 1:54 pm

      If ICM’s estimates of a $200m/year business (based largely on micropayments) hold true, its capital expenditures will prove to be a wise investment, imho.
      I also didn’t get into its Founders Program or landrush auction revenues, which will amount to many millions, in this post.

      Reply
  2. Acro says:
    December 8, 2011 at 2:34 pm

    Unlike other TLDs the .XXX has extremely close ties with the adult content creation and entertainment industry. Licensing and upfront operating costs don’t mean much as it’s a long term investment.

    Reply
    • Jason says:
      December 9, 2011 at 1:18 pm

      You’re forgetting that the majority of the adult industry doesn’t support the idea of a .xxx tld. Major companies like Manwin (Youp*rn, Playboy, P*rnHub, Brazzers,…), DigitalPlayground, zBuckz, Hustler,… are boycotting dotxxx and in some case even sued ICM Registry.
      The real test for dotxxx will be 1 year from now when all those domains come up for renewal.

      Reply
  3. alan says:
    December 9, 2011 at 9:00 pm

    Ann, as usual you are spot on!

    Reply
  4. SexEducation says:
    December 10, 2011 at 2:47 pm

    I think .xxx domains can be used for sex education. Snare visitors to your site and offer them an alternative. I acquired a couple of excellent .xxx domains that I pland to use for sex education. Others can too. 🙂

    Reply

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