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Demand Media mum on $18m new gTLDs investment

Kevin Murphy, May 8, 2012, 22:18:32 (UTC), Domain Registries

Demand Media has invested $18 million in new generic top-level domains, but it won’t disclose whether it has spent all of the money on application fees.

The company, which owns number two domain name registrar eNom, held its first-quarter earnings conference call this evening, during which it revealed the investment.

A roughly $18 million investment could mean as many as 100 new gTLD applications, but Demand executives refused to elaborate on its plans.

CFO Charles Hilliard said that new gTLDs are seen as a “significant strategic growth opportunity” and that Demand would provide more details upon the closure of ICANN’s application window.

As Mike Berkens has already suggested tonight on TheDomains, a massive investment in application fees seems to be the most plausible use for the money.

The fact that the whole of the investment appears to have been made in April would support this view.

But CEO Richard Rosenblatt also confirmed during the call that the company has now also entered into the registry services provider business, providing the back-end for other applicants.

It does not appear to have been particularly successful attracting clients. Rosenblatt said that Demand has created a back-end platform and “signed our first two strategic customers”.

Just two clients would put Demand at the low end of the registry service provider rankings in this first new gTLD round.

I’m aware of at least one applicant that changed its mind about partnering with the company for its application.

ICANN’s background checks on new gTLD applicants include probes into, among other things, adverse cybersquatting decisions under the UDRP.

Demand Media, as a massive domain registrant, gets hit by UDRP complaints fairly regularly, and some have said it’s lost enough to be disqualified from running a registry under ICANN’s rules.

As far as I’m aware, it’s currently an open question whether hiding UDRP losses and applications behind subsidiaries will be enough to evade these background checks.

But if Demand is prepared to pump $18 million into applications, it must have a pretty good inkling that it won’t tumble at the first hurdle.

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Comments (1)

  1. Rob Golding says:

    Number of clients signing up for the back end registry service systems in and of itself doesn’t count for much though -just 1 successful new gTLD will be more significant than the hundreds of g’teed flops.

    That said 2 does seem low – to date we’ve signed up five!

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