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New TLD Application Tip: Learning from History to Estimate New TLD Volume

If you are a prospective new top-level domain (TLD) applicant, one of the most important questions you must answer is: how many registrations will my TLD have? This will be an essential element of your submission to ICANN, and if profit or even economic sustainability is your goal, getting the volume right is critical.

Although the market has never seen hundreds of new TLDs launched in rapid succession, it has experienced many new TLD launches, and each applicant should study these as they develop their volume estimates.

In 2000, when 47 applicants submitted bids to ICANN for all types of TLDs, there were already over 20 million .com domains in a total market that was less than 50 million names. Many applications relied on the belief that "all the good .com names had run out and that new TLDs were needed to serve market demand."

Of these 47, only 7 applications were chosen and the first new TLDs were launched in 2001. A second round for "sponsored TLDs" was hosted in 2004, and 6 additional TLDs were launched. .EU and .ME have also launched. In all, more than 15 new TLDs have launched since 2001.

Well, here we are in 2010 and the industry has now grown to over 190 million domain names. If you think it was because of new TLDs, you'd be wrong.

COM, NET and ORG have grown by over 80 million names. ccTLDs, like China's CN and Germany's .DE, have grown about 45 million names in total. But new TLDs have added less than 15 million names. Indeed, from a market share standpoint, new TLDs have never comprised more than 7% of the market.

This shouldn't be bad news for prospective new TLD applicants. .INFO, for example, launched in 2001 and now has nearly 6 million domains. And many of the other new TLDs are considered successful and sustainable. With over 13 million total registrations in a growing segment, new TLDs can be quite successful.

So while it may not be realistic to assume millions of registrations, what should you plan on?

First, look at the history: Afilias has supported more launches than any other provider, so we have more history. The .info, .mobi, .asia, and .me domains had enough time to successfully build demand among registrars and gain some awareness to the target market. They were able to obtain an initial Landrush of between 50,000 — 300,000 names within the first year. After 1-2 years, if you have the same determination and market penetration, you may be able to sustain daily new creates as much as 100-200 per day, which would put you roughly at a growth of 30,000-75,000 domains per year.

Second, consider pricing: To be competitive, you will need to price your TLD against others in the market. This July, .com will raise its wholesale price to $7.34 per year. But you should be aware that some gTLDs are offered as low as $1.99 in the market at retail pricing.

Third, leverage launch revenue: To generate revenue early, you should consider revenue streams such as premium name auctions or RFP bids. These often provide higher revenue per name and may result in the creation of flagship Web sites that can drive branding, awareness and usage. In addition, if your TLD is a high-margin specialty domain or it offers add-on services, those advantages may provide more revenue.

Fourth, address channel needs: As more and more new TLDs come on the market, obtaining shelf space at registrars will be a critical challenge. The fastest, cheapest and most effective way to gain access is to use a registry provider that registrars are already connected to. While no provider can guarantee distribution, it stands to reason that existing connections will deliver results faster than having to start from scratch.

Of course, community or corporate TLDs are not as subject to these types of market conditions. But even these applicants will find it easier to leave the technology to experienced providers so they can focus on their unique community and corporate needs.

As you consider your own TLD, carefully consider the above points and tap the experience of those who have gone before. Few clients we have talked with have the special registry and DNS knowledge needed to address the complex needs of today's TLDs — and even fewer already have relationships with registrars. As the applicant, you should focus on what makes your TLD unique and valuable, not on the nuts and bolts of registry systems, DNS and channel connections. Experience matters — seek a partner that can help you steer clear of the potholes.

About Afilias

Afilias

Afilias is the world's second largest domain registry, with more than 20 million names under management. Afilias powers a greater variety of top-level domains than any other provider, and will soon support hundreds of new TLDs now preparing for launch. Afilias' specialized technology makes Internet addresses more accessible and useful through a wide range of applications, including Internet domain registry services, Managed DNS and mobile Web services like goMobi® and DeviceAtlas®. (Learn More)

Related topics: Domain Names, Registry Services, ICANN, Top-Level Domains

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