Latest news of the domain name industry

Recent Posts

People are forgetting .com exists — ICANN survey

Kevin Murphy, September 22, 2016, Domain Policy

Have you ever heard of .com, .net and .org?

That question was posed to 3,349 domain name registrants in 24 countries by market research firm Nielsen this June and guess what — awareness of all three cornerstone gTLDs was down on a comparable 2015 survey.

Unbelievably, only 85% of respondents professed to be aware of .com’s existence, compared to 86% in 2015.

Equally unbelievably, awareness of .net and .org fell from 76% to 69% and from 70% to 65% respectively between 2015 and 2016, the survey found.

Those are just three among many hundreds of findings of the Nielsen survey, which was carried out in order to inform ICANN’s Competition, Consumer Trust & Consumer Choice Review.

The CCT is one of the reviews deemed mandatory before ICANN is able to launch the next round of new gTLD applications.

A great many of the numbers revealed by the survey are seriously open to question — some could even be empirically proven wrong.

But David Dickinson, project lead for Nielsen on the survey, told DI yesterday that the numbers themselves are less important than the trends, or lack thereof, that they might represent.

Nielsen carried out two surveys in 2015 — one of consumers and one of registrants — then repeated both surveys again a year later.

Respondents were selected from a pool of people who have at some point indicated to third-party market research companies that they are available to take surveys online, Dickinson said. They are usually compensated via some kind of redeemable loyalty points scheme.

The registrant surveys were limited to those who said they have registered a domain name. The consumer survey was limited to those who said they spend more than five hours a week online.

While the number of respondents were measured in the low thousands, the idea is that they provide a representative sample of all internet users and domain name registrants.

But there’s a lot of weirdness in the numbers.

Dickinson said that the 85% awareness number for .com could be due partly to random “mechanical errors” — people clicking the wrong buttons on their survey form — but said that lack of awareness was more common among younger respondents who were more likely to be aware of newer, less generic TLDs.

The surveys also highlighted a bizarre split in TLD awareness between consumers and registrants.

Given that registrants are a subset of consumers, and given that they are by definition more familiar with domain names, you’d expect respondents to the registrant surveys to show higher TLD awareness than those responding to the consumer surveys.

But the opposite was true.

The surveys found, for example, that 95% of consumers knew about .com, but only 85% of registrants did. For .net and .org the numbers were 88%/69% and 83%/65% respectively. None of it makes any sense.

Dickinson said that the 2015 consumer/registrant awareness numbers were “almost identical”.

“My only real conclusion here is that [in 2016] there was some systematic difference in the diligence that the registrants selected these names on these awareness questions, and that a large portion of that is just due to random variation,” he said.

“However, when we do look at those people who are registering new gTLDs, they tended to have much lower awareness of those legacy gTLDs than those people who were unaware or had not registered those new gTLDs,” he said.

“The people who said they did not recognize any of those new gTLDs at all the are very very centric on the legacy gTLDs and in particular .com,” he said.

“I think the data is overstated because of the random variation but there is a learning here when we break it down… that those legacy domains are becoming less relevant or less noticed by the younger people and the people who are registering these new gTLDs,” he said.

“I think there is a shift going on, but it’s not as big as what is stated here [in the numbers],” he said.

The surveys also looked at awareness and registration levels for new, 2012-round gTLDs, but again the numbers probably don’t accurately reflect reality.

For example, 39% of registrants claimed to have heard of .email domain names and 15% claimed to have actually registered one.

Again, these numbers don’t seem plausible. There are fewer than 60,000 .email domains in existence today. Even if there were only one million domain registrants in the world, 15% registration rate would mean at least 150,000 names should have been sold.

Dickinson said that this number could have been higher due to selection bias. The survey took about half an hour on average to fill out, so people more personally interested or invested in internet or domain name related stuff might have been more likely to stick around and complete it.

Interestingly, new gTLD awareness rates in North America were substantially lower than awareness elsewhere in the world. For example, only 25% of North Americans professed to have heard of .news, but that grew to 42% in Asia where most languages use a different script.

My sense here is that respondents — which all took the surveys in their native languages — may have just been clicking to confirm English words they recognized, rather than TLDs they had seen in the wild.

Nielsen clearly suspected that there would be an element of “false recall” among respondents because it actually included some fake TLDs among the real ones.

This led to findings such as: 26% of Africans have heard of .cairo, 17% of North Americans have heard of .toronto and 21% of South Americans have heard of .bogota.

None of those city TLDs exist.

Dickinson explained this as “assumed familiarity”.

“What very much seems to happen is that if something has an implied ‘face validity’ — it seems to make sense or seems to be readily interpretable — then those ones will get higher stated awareness than the ones that are just random letters, such as .xyz,” he said.

Indeed, while there are over six million .xyz domains out there today, with high-profile registrants including Google, only 13% of respondents claimed to be aware of it.

“The more implied familiarity or sense of familiarity there is, the more likely people are to feel like they’ve been there or seen it, so it’s definitely a false recall, but the learning from that is that the more interpretable… those things are then they have more easy acceptance by consumers than things that are not interpretable,” Dickinson said.

The surveys did not only cover awareness and registration patterns. There are literally hundreds of data points in there covering different perceptions of TLDs new and old. I’ve just focused here on the ones that made me question whether the survey was worth the time, expense and paper it was written on.

But Dickinson said that the raw numbers are not necessarily what the ICANN review teams should be looking at.

“Maybe the absolute number is not exactly dead-on, but what are the relationships between the numbers?” he said.

“I tend to look at the relationships, so for example one of the objectives of doing this survey was to see if the new gTLD program impacted the perception of the industry in any way, or trustworthiness in the industry,” he said.

“For example, we can say we’re not sure it improved — the numbers didn’t change significantly in that direction to allow us to definitively say it improved — but it certainly did not decline,” he said. “We can rule out that it declined.”

“Overall, we can say that the new gTLD program is emerging with fairly strong awareness, relative,” he said.

“We can also say with certainty that none of those new gTLDs are anywhere approaching the awareness of the legacy gTLDs, and even if there is some erosion in the legacy gTLDs it’s going to take a long time for those to reach parity, if they ever do,” he said.

The Nielsen surveys are one input to the work of the volunteer CCT Review Team, which intends to publish its preliminary report before the end of the year.

CCT-RT chair Jonathan Zuck recently published a blog post on the ICANN web site giving a progress report on recent work.

Verisign announces .net price increase

Verisign has just announced that prices for .net domains are going up again this coming February.

Announcing its second-quarter earnings, the company revealed plans to raise its registry fee from $7.46 to $8.20, effective February 1, 2017.

That’s the maximum 10% price hike it’s allowed to claim under its .net Registry Agreement with ICANN.

Raising .net prices has become a bit of an annual tradition with Verisign, one of the few gTLD registries to still have its prices regulated by ICANN.

The company had about 16.2 million .net domains under management at the last formal, published count in March. Its daily “domain base” has .net at 15.7 million names today.

Verisign has great quarter but sees China growth slowing

Kevin Murphy, April 29, 2016, Domain Registries

Verisign beat its sales expectations in the first quarter of the year, but leadership said rapid growth from Chinese registrants will now “normalize”.

The .com/.net registry last night reported net income up 21% at $107 million, on revenue that was up 9.1% to $282 million.

That’s based primarily on it selling 2.65 million net new .com/.net names during the quarter, at 7.1% increase on the Q1 2014 level baseline. It said it sold 10 million new names in the quarter, up from 8.7 million a year ago.

For comparison, Q1 2015 saw 1.51 million net adds across the two TLDs. Three months ago, the company had predicted net adds to be 1.5 to 2 million names.

It had 142.5 million names at the end of the quarter, 126.6 million of which were .com.

CEO James Bidzos told analysts: “We again saw activity coming from registrars in China that exceeded our expectations.”

However, he added: “At this point, we expect activity from registrars in China to normalize as we continue through the second quarter.”

When pressed, CFO George KIlguss elaborated (according to the SeekingAlpha earnings call transcript):

as we look at the trends, we’ve seen the demand that happened in the second half of the first quarter kind of ebb and flow. So we saw it come. It was pretty strong for a few weeks and then it came back to more than normalized path. So we don’t have a perfect crystal ball, but based on the trends that we’ve seen that we’ve been tracking, it seems to be back on the normalized path for that particular region, at least as what we’ve seen historically.

Verisign is currently negotiating for the renewal of its .com contract with ICANN, which may or may not enable it to raise its government-frozen registry prices in future.

Verisign warns about Chinese .com boom

Kevin Murphy, November 24, 2015, Domain Registries

Verisign has warned investors that the current boom in .com sales is largely coming from Chinese domainers and may not be sustainable.

The company has added an unprecedented 4.1 million domain in .com and .net so far during the fourth quarter.

“While there continues to be demand for domain names globally, the recent increased volume for Verisign’s top level domains, as well as top level domains of other registries, during the fourth quarter is coming largely through registrars in China,” the company said in a Securities and Exchange Commission filing.

It listed several factors that are likely responsible for the sudden uptick, but warned that renewal rates are typically not great.

In the past, Verisign has discussed many factors that affect the demand for domain names, including, but not limited to economic, social, and regulatory conditions, Internet adoption, Internet penetration, and increasing e-commerce. In addition to these factors affecting demand, Verisign is also evaluating additional potential factors unique to China that may also be responsible for the recent increased volume of new registrations in China.

In no particular order, these potential factors, or combination of factors, could include, but may not be limited to, government initiatives in China to develop their online economy such as ‘Internet Plus;’ registry and registrar regulatory requirements; cultural influences such as the popularity of numeric domain names; increasing competition amongst Chinese registrars; potential increases in domain name investment activity; and recent capital markets volatility and access to capital in China.

Verisign cannot predict if or how long this increased pace of gross additions will continue and we cannot at this time predict what the renewal rate for these domain names will be. Verisign has noted in the past that renewal rates for domain names registered in emerging markets, such as China, have historically been lower than those registered in more developed markets.

It’s difficult to imagine that Chinese investors have managed to find four million unregistered domains worth keeping.

There are currently 123,497,852 domains in the .com zone file, according to Verisign’s web site.

Verisign is not the only registry that appears to be benefiting from a deluge of registrations from China.

XYZ.com has seen over 440,000 domains added to its .xyz zone file in the last three weeks, bringing its total to over 1.5 million, which appear to be largely coming through Chinese registrars.

Verisign adds 750,000 .com names instantly with reporting change

Kevin Murphy, March 23, 2015, Domain Registries

Verisign has boosted its reportable .com domain count by almost 750,000 by starting to count expired and suspended names.

The change in methodology, which is a by-product of ICANN’s much more stringent Whois accuracy regime, happened on Friday afternoon.

Before the change, the company reported on its web site that there were 116,788,107 domains in the .com zone file, with another 167,788 names that were registered but not configured.

That’s a total of 116,955,895 domains.

But just a few hours later, the same web page said .com had a total of 117,704,800 names in its “Domain Name Base”.

That’s a leap of 748,905 pretty much instantly; the number of names in the zone file did not move.

.net jumped 111,110 names to 15,143,356.

The reason for the sudden spikes is that Verisign is now including two types of domain in its count that it did not previously. The web page states:

Beginning with the first quarter, 2015, the domain name base on this website and in subsequent filings found in the Investor Relations site includes domains that are in a client or server hold status.

I suspect that the bulk of the 750,000 newly reported names are on clientHold status, which I believe is used much more often than serverHold.

The clientHold EPP code is often applied by registrars to domains that have expired.

However, registrars signed up to the year-old 2013 Registrar Accreditation Agreement are obliged by ICANN to place domains on clientHold status if registrants fail to respond within 15 days to a Whois verification email.

The 2013 RAA reads (my emphasis):

Upon the occurrence of a Registered Name Holder’s willful provision of inaccurate or unreliable WHOIS information, its willful failure promptly to update information provided to Registrar, or its failure to respond for over fifteen (15) calendar days to inquiries by Registrar concerning the accuracy of contact details associated with the Registered Name Holder’s registration, Registrar shall either terminate or suspend the Registered Name Holder’s Registered Name or place such registration on clientHold and clientTransferProhibited, until such time as Registrar has validated the information provided by the Registered Name Holder.

Last June, registrars claimed that the new policy — which came after pressure from law enforcement — had resulted in over 800,000 domains being suspended.

It’s an ongoing point of contention between ICANN, its registrars, and cops.

Verisign changing its reporting methodology may well be a reaction to this increase in the number of clientHold domains.

While its top-line figure has taken a sharp one-off boost, it will still permit daily apples-to-apples comparisons on an ongoing basis.

UPDATE:

My assumption about the link to the 2013 RAA was correct.

Verisign CFO George Kilguss told analysts on February 5.

Over the last several years, the average amount of names in the on-hold status category has been approximately 400,000 names and the net change year-over-year has been very small.

While still immaterial, during 2014, we saw an increase in the amount of names registrars have placed on hold status, which appears to be a result of these registrars complying with the new mandated compliance mechanisms in ICANN’s 2013 Registrar Accreditation Agreement or RAA.

In 2014, we saw an increase in domain names placed on hold status from roughly 394,000 names at the end of 2013 to about 870,000 at the end of 2014.