The economy of .org domain names – domain name wire

Ethos Capital has just purchased a license to print money.

Yesterday, the Internet Society announced that it was selling the .Org registry to a private equity firm. The price has not yet been disclosed, but it was surely a very high number, as I will explain.

.Org is the second most valuable namespace behind .com. At the end of July, 10.5 million .org domains were registered.

Although many associate the name with nonprofits, anyone can register a .org domain for just about any purpose. Some groups even register .org domains instead of .com.

Let’s look at the economics of the .org namespace.

To start, round up to 10 million domains. At $ 9.93 per domain, it brings in around $ 100 million in revenue at today’s wholesale price.

The costs are minimal. About $ 18 million for the Afilias backend registry (which will be negotiated again in the future), a few million for ICANN, a marketing budget for registrars and staff to help promote the name . Call the endowment item at around $ 3-4 million, but it could be lowered. Especially if you fold it into Donuts or some other register.

But Ethos Capital wasn’t just paying that $ 100 million a year. ICANN has removed price caps on .org, so the company can charge whatever it wants for .org domains.

To maximize profits, he would have to wait a year until things calm down, then implement a raise. Increase it 50% to $ 15? Double it to $ 20?

Let’s go with the price tag of $ 20. This would only have a slight impact on the total number of .org registrations. A business using a .org won’t change domains for five or ten dollars a year. It’s too much work. Some people will give up excess domains and domainers will think twice. But I believe that .org would not lose more than 10% of registrations.

So 9 million domains x 20 each = $ 180 million in revenue. And the costs barely budge.

There would be uproar. But Ethos could offer free .org domains to nonprofits that request them. “Hey, fill out this app which takes an hour to tell us about the great job you do and you get your name for free.” Very few non-profit organizations will do this. They can do more with their time than fill out an application to save twenty dollars.

Plus, registrants can renew up to 10 years in advance at today’s prices. Not bad for Ethos if people want to pay for ten years of registration in advance. Most will not.

To keep the top of the funnel moving, the registry would have to offer discounted first year listings, as is usually the case nowadays. Maybe keep the retail price around $ 10 to $ 15 for freshman registrations through rebates at registrars.

The registry can also withhold expired .org domains and apply premium pricing levels to them. It’s not as efficient as it used to be, as expired domain services transfer domains before deleting them, but there is still value here.

And the initial price increase is only the first. They can easily increase the prices from there, even if it’s only 10% per year.

Start adding that and I’d be shocked if it wasn’t a solid ten-digit deal. Verisign, which manages the .com, is listed on the stock exchange at $ 22 billion and has no carte blanche to raise prices.