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At least one in 10 new gTLDs are shrinking

Kevin Murphy, June 14, 2016, 15:31:49 (UTC), Domain Registries

While the universe of new gTLDs is growing at a rapid clip, DI research shows that at least one in 10 individual new gTLDs are shrinking.
Using zone file data, I’ve also established that almost a third of new gTLDs were smaller June 1 than they were 90 days earlier, and that more than one in five shrunk over a 12-month period.
There’s been a lot written recently, here and elsewhere, about the volume boom at the top-end of the new gTLD league tables, driven by the inexplicable hunger in China for worthless domain names, so I thought I’d try to balance it out by looking at those not benefiting from the budget land-grab madness.
It’s been about two and a half years since the first new gTLDs of the 2012 round were delegated. A few hundred were in general availability by the end of 2014.
These are the ones I chose to look at for this article.
Taking the full list of delegated 2012-round gTLDs, I first disregarded any dot-brands. For me, that’s any gTLD that has Specifications 9 or 13 in its ICANN Registry Agreement.
Volume is not a measure of success for dot-brands in general, where only the registry can own names, so we’re not interested in their growth rates.
Then I disregarded any gTLD that had a general availability date after March 14, 2015.
That date was selected because it’s 445 days before June 1, 2016 — enough time for a gTLD to go through its first renewal/deletion cycle.
There’s no point looking at TLDs less than a year old as they can only be growing.
This whittling process left me with 334 gTLDs.
Counting the domains in those gTLDs’ zone files, I found that:

  • 96 (28.7%) were smaller June 1 than they were 30 days earlier.
  • 104 (31.1%) were smaller June 1 than they were 90 days earlier.
  • 76 (22.7%) were smaller June 1 than they were 366 days earlier.
  • 35 (10.4%) were smaller on a monthly, quarterly and annual basis.

Zone files don’t include all registered domains, of course, but the proportion of those excluded tends to be broadly similar between gTLDs. Apples-to-apples comparisons are, I believe, fair.
And I think it’s fair to say that if a gTLD has gotten smaller over the previous month, quarter and year, that gTLD is “shrinking”.
There are the TLDs.
[table id=42 /]
Concerning those 35 shrinking gTLDs:

  • The average size of the zones, as of June 1, was 17,299 domains.
  • Combined, they accounted for 605,472 domains, down 34,412 on the year. That’s a small portion of the gTLD universe, which is currently over 20 million.
  • The smallest was .wed, with 144 domains and annual shrinkage of 12. The largest was .网址 (Chinese for “.website”) which had 330,554 domains and annual shrinkage of 7,487.
  • The mean shrinkage over the year was 983 domains per gTLD. Over the quarter it was 1,025. Over the month it was 400.

Sixteen of the 35 domains belong to Donuts, which is perhaps to be expected given that it has the largest stable and was the most aggressive early mover.
Of its first batch of seven domains to go to GA, way back in February 2014, only three — .guru, .singles, and .plumbing — are on our list of shrinkers.
A Donuts spokesperson told DI today that its overall number of registrations is on the increase and that “too much focus on individual TLDs doesn’t accurately indicate the overall health of the TLD program in general and of our portfolio specifically.”
He pointed out that Donuts has not pursued the domainer market with aggressive promotions, targeting instead small and medium businesses that are more likely to actually use their domains.
“As initial domainer investors shake out, you’re likely to see some degradation in the size of the zone,” he said.
He added that Donuts has seen second-year renewal rates of 72%, which were higher than the first year.
“That indicates that there’s more steadiness in the registration base today than there was when first-year renewals were due,” he said.

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Comments (6)

  1. Michael says:

    The freemium strategy to initially boost figures coupled with the higher cost renewal rates to cover this offer must help contribute to this tail off.

  2. Donuts Inc. says:

    Thanks for the coverage, Kevin. In other reporting, you might consider looking at legacy TLDs, which are definitely taking a market share hit from new TLDs. Further, a metric growing in importance is that of usage — even in TLDs with shrinking zones, the usage rate is increasing. In two areas — the number of names being used in new TLDs and the number of new registrations in new TLDs — rates are going up overall. Both those trends are anticipated to continue. It would be useful to see coverage of rates of usage and dollar-based market share penetration as an indicator of new TLD strength.

    • John says:

      Some of your TLD prices are high to the point of discouraging adoption, awareness and desire. Even if you squeak out a profit numerically on an individual TLD you are probably losing out on what could be big success with some that do not lend themselves to the kind of high pricing Schilling likes and thinks can work.

      • Rob says:

        John you have the wrong definition of adoption, its not growth, its usage. People that pay a higher price point are more likely to adopt (actively use) the domain. Once its being used the lifetime value of the customer becomes higher. Sure the growth is slower, but lifetime value is higher than bargain basement priced TLDs

  3. Dot Advice says:

    Hi Kevin, great coverage. On the flipside, outside the top twenty, a worrying trend is the monthly growth regs increase is not sustainable in 60% to reach a break even Y1 10K target, irrespective of whether they are parked or used. So do TLD operators invest more, raise prices or sell up – assuming they can find a buyer !!

  4. There is a virtuous circle with domain names: Usage drives awareness which drives registration. However with many of the new gTLDs being at relatively early stages in their development, the trends that only become evident in late Y2 will only be just appearing for some. There’s also a Hold’em/Fold’em decision that many of the early registrants make with Y2 and Y3 renewals. This shows up as an increased deletion of extremely speculative registrations.
    The .EU ccTLD figures still exhibit an echo of its 2006 land rush ten years later. Some of the new gTLDs, particularly the higher priced ones, have flatter growth curves than the lower registration fee gTLDs. The land rush dump (or Junk Dump) that always follows the land rush a year later, and its corresponding secondary land rush where people register some of the “good” names that have dropped will not be as obvious with some of these new gTLDs.
    The problem with the bubble growth that some of the legacy TLDs experienced in Q3/Q4 2015 is that most of those speculative registrations are not developed into domains with working websites. This means that they have a lower probability of renewal. This is a separate issue to the development of some of the new gTLDs. Verisign has stated that it is unsure as to the renewal rate of these bubble registrations and they will hit COM/NET over the next six months. Some of the other legacy TLDs, ORG, BIZ and INFO also experienced some bubble registration activity and their renewal rates for early 2017 will be interesting.
    The Freemium model which some new gTLD registries have used to drive growth has a major sustainability issue. The renewal rate for freebies and other promotional registrations is typically in the region of 5%. The Freemium and discounting model can lock a gTLD into a boom and bust cycle where the registry will always be looking to the next registrar deal or special offer to keep the new registrations ahead of the deletions.
    Usage and development is a critical aspect in new gTLD uptake. I’ve a full new gTLD web usage and development survey running at the moment. Some of the new gTLDs are actually closer to having ccTLD-like patterns of growth. The initial growth of a new ccTLD is slower than that of a gTLD because a ccTLD is extension or string specific. The string acts as a limiter. The extension/string of the new gTLDs, apart from the obviously generic .XYZ, acts in much the same way so that these zones do not follow a typical gTLD growth pattern. As with a new ccTLD, there’s also a delay between the new gTLD launching and its gradual acceptance by its target market. With a ccTLD that’s generally followed by a point where that ccTLD begins to dominate .COM in that market. But that can take a long time (more than five years) to happen. The best that some of these new gTLDs can hope for in the short term is a drift from generic legacy gTLDs (other than .COM) towards their niche-specific gTLDs. If these niche-specific gTLDs are not well marketed then they will not attract new registrations in the volume necessary to establish them as a viable niche gTLD.
    Grouping all new gTLDs as one can be misleading because there’s a mix of 2014, 2015 and 2016 launched TLDs. As Phil, (Dot Advice), mentioned above, some new gTLDs are struggling to build registration volume. While some of the registries may have been overly optimistic in their expectations, the rapid rollout of so many new gTLDs in such a short time may have caused confusion with end-users.
    There’s a larger trend in most country level markets and that’s the increasing focus on the local ccTLD at the expense of the legacy gTLDs. This is the web becoming local. In some of these markets the legacy gTLD share of the market has plateaued or is declining while the ccTLD share of those markets is increasing month on month.

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