Donuts’ new 50% price hike explained

Donuts’ new pricing model for 10 of its new gTLDs, announced yesterday, has caused some confusion for registrants and will make life more complex for registrars.
The company said yesterday that from October it plans to raise its wholesale fee by 50% for new registrations in .camera, .camp, .cleaning, .dog, .glass, .kitchen, .plumbing, .shoes, .solar and .toys.
It’s a substantial increase for domains that typically retail for between $25 and $40, and Donuts has clearly got an eye on profitability rather than volume.
But, crucially, the increased fees will not apply to renewals of existing registrations.
This introduces an unfamiliar pricing paradigm to the domain name industry — the notion of variable renewal pricing for non-premium domains.
Let’s do an example, assuming the wholesale fee is currently $10 (it isn’t, but Donuts does not disclose its wholesale fees).
If you were to register example.dog today or before October 1, the wholesale renewal fee for that domain would be $10 for as long as you held that domain. In 20 years, you’d still be paying Donuts $10 a year in renewal fees.
But if you were to register the same domain name after October 1, you’d be paying Donuts $15 a year in renewal fees.
Donuts told DI last night that the only way an already-registered domain in one of the affected gTLDs would see an increased fee is if it deletes and is re-registered.
The current, lower, wholesale fee will continue to apply if you transfer your domain to a new registrar. It will even apply if you sell your domain to a new registrant, according to Donuts.
In practice, how much you actually pay depends on your registrar, of course.
Registrars may decide to have variable renewal fees at the retail level too or, probably more likely, they may apply a uniform renewal price. In the latter case, current .dog domains would be 50% more profitable than domains registered from October 1.
Under the hood, the new model introduces complexities for registrars, described to DI by one registrar as a “pain”.
They’ll need to update their systems to account for the varying rates and will need to pass data about renewal tiers between each other when domains are transferred.
If Donuts were to raise prices every two years, and applied the hike to more gTLDs, pretty soon there’ll be a lot of tiers to track.
But variable pricing is not completely unheard of, and is regulated to an extent by ICANN.
The standard Registry Agreement, which applies to all Donuts’ gTLDs, forbids registries from charging some registrants higher renewal fees than others.
But there are exceptions. If the registrant explicitly agrees to the renewal fee at the point of registration, it’s legit. Donuts and others already use this exception in order to charge higher prices for premium name renewals.
The purpose of that part of the contract “is to prohibit abusive and/or discriminatory Renewal Pricing practices”, preventing registries imposing higher fees on customers that are using domains very profitability, for example.

Donuts to hike prices 50% on some TLDs

While some new gTLD registries are all about the giveaways and deep discounting, Donuts has taken the unprecedented decision to actually increase its prices.
The company announced today that it will add a whopping 50% to its wholesale fee for 10 of its TLDs.
The TLDs are: .camera, .camp, .cleaning, .dog, .glass, .kitchen, .plumbing, .shoes, .solar and .toys.
While Donuts does not disclose its wholesale fees, these domains typically retail for $25 to $40 for non-premiums.
We could be looking at a .dog at GoDaddy, for example, going up from $40 a year to $60 a year, if the increases are passed on proportionately.
None of the 10 TLDs in question have set the market alight, volume-wise. They’re all struggling around the 3,000 to 6,000 domains mark, according to zone file data.
Seven of the 10 zones have actually been shrinking in recent months.
All but one of them went to general availability in the first half of 2014, so have been on the market about two years.
The new prices will kick in October 1, Donuts said.
Renewal prices for domains registered before that date will renew at their original wholesale fee, the company added.

.xyz adds 788,000 domains in a day

Blimey.
XYZ.com managed to “sell” at least 788,167 .xyz domain names yesterday, as registrars gave them away for peanuts.
According to this morning’s zone file count, the gTLD has 3,644,826 domains, compared to 2,856,659 yesterday.
And its sale is not even over until midnight tonight.
The company has pumped millions into marketing .xyz for the second anniversary of its general availability launch, and many registrars dropped their prices accordingly.
Registrars are currently selling the names for $0.02, $0.01 or, apparently in the case of at least one Chinese registrar, nothing.
It goes without saying that this is the biggest one-day spike for a 2012 new gTLD, blowing the previous record of 238,616 out of the water.
While XYZ.com no doubt gets bragging rights, one has to wonder how much value has actually been created here.
The vast majority of these names will have been acquired by investors and will sit idle before eventually dropping. It’s possible that some have also been registered for nefarious purposes.
Some number will no doubt renew, otherwise the promotion will have been a wasted enterprise.
If you look at XYZ’s first big giveaway — the controversial free push into Network Solutions customer accounts — you’ll see very low retention.
NetSol had 360,683 .xyz names under management after the promotion finished in July 2014, but that was down to 18,919 by October 2015, when most had deleted.
That’s a drop of 95%.
The difference here is of course that registrants this week have had to pick their domains and hand over nominal payment.
Investors have been known to form emotional attachments to their portfolios, which could increase renewals this time around.
XYZ.com will have to pay around $200,000 in ICANN fees for yesterday’s added domains.

These might be the top 10 biggest new gTLD daily growth spikes

With news seeping out this evening that XYZ.com’s latest marketing blitz has very possibly added half a million domains to its .xyz gTLD today, I thought I’d knock out some data on the previous largest one-day growth spikes in new gTLDs.
With some caveats, which I’ll get to, I think these might be the top 10 growth days for new gTLDs.
[table id=41 /]
They’re the only 10 spikes of over 100,000 domains I could confirm in the DI PRO database, at least in 2012-round gTLDs.
With .xyz reportedly adding at least 400,000 domains today, due to several registrars basically giving them away, it’s certainly going to be at the top of this table tomorrow.
XYZ is celebrating its second anniversary of general availability tomorrow, and has invested several million bucks in promotions on registrars which are in turn selling .xyz names for as little as a penny apiece.
As mentioned, there are some caveats to the data in the table above.
It’s based on the zone files published daily by ICANN’s Centralized Zone Data Service, which can be patchy.
CZDS is set up in such a way that each user has missing days here and there, and it has in the not too distant past had a tendency to balk when it receives an unexpectedly large zone file.
In other words, there’s a pretty good chance I’ve missed some spikes, but I’m confident there’s nothing else approaching 400,000 in a day.
UPDATE: .vip should be on the table, with a one-day spike of 115,245 on May 18 2016.

Registrars selling .xyz names for pennies

XYZ.com’s campaign to keep its volumes high as .xyz approaches its second anniversary seem to have resulted in basically free registrations.
Uniregistry said yesterday that it has started selling .xyz domains for just $0.01, and NameCheap is offering them for $0.02.
The prices, which apply to first-year registrations, kicked in yesterday and expire at midnight June 3.
Over in China, Xin Net and West.cn are both pricing the domains at a relatively huge CNY 2 ($0.30).
I expect there are similar offers at other registrars too.
West.cn. the largest .xyz registrar, said last week that it is also subsidizing renewals for the month of June, bringing the cost down to $2.73.
The aforementioned registrars have big splashes announcing the offers on their home pages.
XYZ said Friday that it has put aside “several million dollars” to advertise its birthday on registrar storefronts and elsewhere.
Uniregistry said that from June 3 to June 30 the price will be just $0.18.
Uniregistry’s current .xyz volume is measured in the tens of thousands. It’s ranked just behind Go Daddy, which does not appear to be participating in this promotion, by .xyz domains under management.
.xyz went into general availability June 2, 2014.
Since August 2015, not long after its anniversary deletes have been substantially outstripping renewals, but adds have been going nuts.
It has about 2.8 million domains in its zone file right now, two million of which have been added in the last 12 months.
Despite the anniversary hoopla this time around, there was not a big spike in .xyz registrations around its first birthday last year, when it added a fairly normal 50,000 or so domains.

West.cn to prop up .xyz renewals with $1.5 million subsidy

Leading Chinese registrar West.cn has said it will subsidize .xyz renewals to the tune of $1.5 million.
According to a West.cn press release, CEO He Xiaojiang made the announcement alongside XYZ.com counterpart Daniel Negari at meeting in Beijing on Friday.
The registrar’s .xyz customers “are going to get high rebate back from West.cn so that they can get very low renewal fees”, according to a translation of the original Chinese.
The subsidized renewal price, which starts in June, will be RMB 18 ($2.73), according to the company.
That’s about a $7 discount on West.cn’s usual renewal price of RMB 64.
First-year .xyz prices at the registrar are currently RMB 8 ($1.22).
West.cn is believed to have well over a million .xyz domains on its books. With over a third market share, it’s XYZ.com’s biggest registrar.
The press release points out that West.cn is not getting a special rate from XYZ (which would be against ICANN rules).
Negari declined to elaborate on the specifics of the subsidy.
But in what is no doubt a related move, he told DomainInvesting.com yesterday that XYZ has “reserved several million dollars to be spent with registrars and on advertising platforms for our 2 year anniversary”.
This ad spend will be made over the month of June, he said, to coincide with the June 2, 2014 general availability launch of .xyz.
Fifty registrars are participating, he said, calling it the “biggest sale” the industry has seen.
Whether through heavily discounted renewals or bargain first-year regs, it seems the company is set on making sure its DUM volume does not dip as its anniversary approaches.
It’s not unusual for registries to do special offers to coincide with launch birthdays.
.xyz currently has about 2.8 million registered domains, but about 1.8 million of those were registered after June 2015 and are not in need of renewal before the promotion period expires (though registrants can of course renew whenever they like).

CentralNic doing okay out of new gTLDs

Local former rival Minds + Machines may be struggling to turn a profit, but CentralNic seems to be doing quite well out of this new gTLD malarkey.
But not as well as you might expect. Large growth at its clients does not appear to have translated to a whole lot more revenue for CentralNic itself.
The company yesterday reported 2015 profit before tax of £1.45 million ($2.13 million), compared to £520,000 in 2014, on revenue up 71% at £10.39 million ($15.28 million).
While it may be best known nowadays as a back-end registry provider, its revenue is now fairly evenly split over its three reporting segments.
CentralNic runs the back-end registry for volume gTLDs including .xyz and Radix’s .site, .online, .website, and .space.
The company calls this “wholesale domain sales”, and it brought in £3.12 million last year, compared to £2.82 million in 2014.
You might think that the volume success of .xyz, which added about a million names in 2015, might have translated into a bigger boost, but it didn’t.
Its registrar business, which it got into through the acquisitions of Internet.bs and Instra, brought in £3.4 million, compared to £1.55 million in 2014.
Its third segment, “Enterprise including Premium Domain Name Sales” saw revenue of £3.85 million, compared to $1.69 million.
The enterprise business, which also included two software licenses and revenue from dot-brand clients, is easily the most profitable segment, with a 67% EBITDA margin. For wholesale, it’s 44%.
The £3.8 million of enterprise revenue included £3.22 million premium name sales, of which over £3 million came from a single buyer.
It’s not clear whether this was a single domain deal or a package of premiums, but it represents the most volatile element of CentralNic’s revenue.
Update (May 30) — This article originally misidentified “Company A” and “Company B” in CentralNic’s accounts as registry clients. In fact, according to CEO Ben Crawford, they’re registrar channel partners.

1,000th new gTLD goes live

The 1,000th new gTLD from the 2012 application round was delegated yesterday.
It was either .shop or .realestate, appropriately enough, which both appear to have been added to the DNS root zone at about the same time.
Right now, there are actually only 999 new gTLDs live in the DNS. That’s because the unwanted .doosan was retired in February.
During its pre-launch planning for the new gTLD program, ICANN based its root zone stability planning on the assumption that fewer than 1,000 TLDs would be added to the root per year.
In reality, it’s taken much longer to reach that threshold. The first few new gTLDs were added in late October 2013, 945 days ago.
On average, in other words, a new gTLD has been added to the root slightly more than once per day.
Over that same period, nine ccTLDs — internationalized domain names applied for via a separate ICANN program — have also gone live.
The 1,000th new gTLD to be added to the IANA database was .blog.
There are 1,314 TLDs in the root all told.

M+M makes $3.2 million in five days from .vip

Minds + Machines has billed $3.2 million in .vip domain names sales after the first five days of operation, the company said this morning.
It’s already managed to pay off the cost of acquiring the domain at the September 2014 auction, which was $3.1 million.
Between 1600 UTC May 17, when .vip went to general availability, and the same time May 22, the gTLD racked up 203,720 domains, the company said.
The $3.2 million is a “billings” number, which will convert to accounting revenue over the lifetime of the domains.
For comparison, billings in the whole of 2015 was $7.9 million.
M+M now has over half a million domains under management, a 64% increase from the start of the year, the company said.
Registrations from China, where presumably owning a .vip name does not make you look like a douchebag, accounted for over 80% of the registrations. Almost half of its registrars are Chinese.
Major Chinese registrars are currently selling .vip names for CNY 25-26 (about $4) apiece.
The discrepancy between that low price and the $3.2 million (which implies an average wholesale price of about $16) is due to the effects of premiums, sunrise and multi-year registrations, CEO Toby Hall told DI.
M+M, like the vast majority of TLD registries, is not currently licensed in China, so these names will not legally be allowed to be developed into sites until the company has gone through the full governmental approval process.
Hall said in a press release:

The Chinese market for top-level domains is real and we are delighted to have accessed this key region through the .vip launch… It is a major milestone for the Company, the new management team and our business model centred on working with best-in-class partners across every aspect of our business so as to best monetize our assets while maintaining a tight control on central overheads. It demonstrates that, when properly executed, how quickly the initial investment costs for a domain can be recovered and the potential for a strong recurring revenue established. The .vip launch equally illustrates how as a b2b business we do not have to burn funds on marketing to reach end-consumers and achieve outstanding results.

He’s referring there primarily to M+M’s ongoing restructuring, which has seen the company ditch its registrar business in favor of a more heavily channel-focused approach.

SpamHaus now publishing better TLD abuse data

SpamHaus has updated its “10 Most Abused Top Level Domains” list to provide a much more useful insight into abuse levels.
Rather than simply showing unexplained percentages of “badness” in each TLD, the spam-fighting organization’s daily report now exposes the hard numbers, in domain terms, underneath.
For example, on today’s list Famous Four Media’s .download is the most-abused TLD with 82% bad domains.
That percentage is based on SpamHaus categorizing 11,431 domains as abusive of the 13,945 .download domains that crossed its systems.
But the gTLD has 67,500 domains in its zone file, so the actual percentage of abusive domains could be as low as about 17%, much lower than SpamHaus’s 82%.
Whether you think the 82% metric is fair will depend on whether you think SpamHaus’s sample — about 20% of the full .download zone — is representative.
Some of the other TLDs on its list have even smaller sample sizes.
Minds + Machines’ .work is ranked #2 on the SpamHaus list with 73.3% badness, based on a SpamHaus-seen sample of 6,297 domains, something like 7% of the full .work zone.
Registries criticized SpamHaus for publishing misleading data when this list was first published in March, and I agreed with them.
Now that the group is publishing empirical data alongside its percentages, the conversation can now shift to something along the lines of:
“Is it okay that at least 17% of .download domains are abusive?”
To which the answer I believe is a clear: “Hell, no.”
The SpamHaus daily report can be found here.