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A Few Thoughts About Renewal Fee Transparency and Predictability

Posted on 03 February 2014 by Andrei

As a domainer, I firmly believe that new gTLD operators would have a lot to gain by being as transparent as possible when it comes to the renewal fees and predictability is equally important in my opinion.

Let me explain why.

If you only register a domain or two, the renewal fees won’t be all that important. However, some domainers would be more aggressive in a good way (in other words, they’d buy more new gTLD inventory) if they’d know what to expect in terms of renewal fees.

No matter what you have to say about Verisign, their dot com contract is a reasonably good example of transparency and predictability. You know right off the bat what the “wholesale” price of a dot com is (in other words, the price registrars such as GoDaddy have to pay for each dot com) as well as whether or not it will be increased in the future and if so, how much of an increase you should expect.

I’m not saying it’s a perfect contract but from a transparency/predictability perspective, it’s not bad. You as a domainer will therefore know what to expect and will be able to organize your portfolio accordingly.

In my opinion, new gTLD operators should do the same thing.

It’s very important to me how much it would cost to renew my inventory because it all adds up. Let’s assume you own 100 new gTLD domains and intend to keep them for 5 years.

For a portfolio of 100 domains, the difference between a renewal fee of $5 and a renewal fee of $50 is basically the difference between paying $25/domain to keep it for 5 more years and paying $250/domain to do the same thing. In other words, the difference between paying $2,500 to keep your portfolio of 100 domains for 5 years and paying $25,000 to do the same thing. As you can see, the numbers speak for themselves.

How many domainers can afford the $2,500 price tag? Quite a few.

How many can afford the $25,000 price tag? A minority.

Now I’m not saying renewal fees are or should be the #1 argument you base your decision on, not at all. I’m simply trying to explain that in my opinion, new gTLD operators should take the renewal fee transparency and predictability aspect very seriously.

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7 Comments For This Post

  1. Domenclature.com Says:

    “As a domainer, I firmly believe that new gTLD operators would have a lot to gain by being as transparent as possible when it comes to the renewal fees and predictability is equally important in my opinion”. – Andrei

    @Andrei,

    When you see a tree producing lemons this year, you say to yourself: “hey, here’s a lemon tree”, you dont start telling the tree to produce oranges next year.

    Certain signs are tell-tale signs. If a Registry does not reveal renewal fees, or in fact commit to a ten year no-surprise policy, it’s a huge giveaway; it’s nothing to correct, it factors in the acceptance, and decision process for the end-user, and domainer. Only the worst sucker of them all will buy into a gtld with undetermined renewal fee, and policy.

    A bloggers role is to expose this, not correct it.

  2. Andrei Says:

    @Domenclature.com: the main problem, in my opinion, is that most new gTLD operators don’t yet have a good communication strategy for the domaining industry. As far as most end users are concerned, the renewal fee isn’t *that* important, certainly not important enough to be a potential deal breaker.

    Domainers however, since they buy and renew more inventory, see things differently. I’d say reaching out to them is worth it because the lifetime value of a domainer to a registry operator is extremely high. In fact, I’d even go so far as to say that domainers can make or break a new gTLD business model.

  3. Domenclature.com Says:

    I agree with you, 66%, out of your 3 key points.

    I guess I should address where i disagree:

    You said “As far as most end users are concerned, the renewal fee isn’t *that* important, certainly not important enough to be a potential deal breaker”.

    Who are end-users? End-users are fellow human beings; people like you and I; people who maximize utility; end-users are sometimes smarter than domainers, and actually more net-savvy.

    You’d be hard-pressed to find an end-user that would buy something with renewal fees, and they don’t know what that renewal fee would be. End-users subscribe to things all the time, and some of them have renewal fees. This is VERY important. If it’s the lease of a building, or office, or apartment, or cellphone service, Cabletv, Netflix, or you name; what kind of sucker will go into something with a yearly obligation for renewal without knowing what that responsibility is? Not end-users that I know.

    End-users read blogs.

  4. Domenclature.com Says:

    Oh BTW, for those who said it was unfair comparison to say that .co and other gtlds didn’t really make headway into the larger society.

    They cited the fact that .co and co were singular events; that these new gtlds is a deluge, in multiples.

    Well, the measurement has started. When .co came out, they partnered with Godaddy to present a super-bowl commercial announcing the ccTLD. So, if in fact quantity trumps quality, we should have seen at least 10 or more new gTLD super-bowl commercials. The fact of the matter is that we saw NONE, not even the .co one.

    So, for the super-bowl this year, the score is in:

    .COM : 48
    new GTLDs and .co : zero

  5. Andrei Says:

    @Domenclature.com: the thing is though, only huge companies can afford Super Bowl ads and those companies are unlikely to use new gTLD domains for their business (unless it’s their dot brand but that’s another discussion, we’ll have to wait and see how many companies will use it, will be interesting) because they can afford a great dot com as well.

    New gTLDs are mainly an option for end users who can’t afford an investment grade dot com. For example, I’m sure all furniture end users would love to own a domain such as furniture.com but most can’t afford it, just like they can’t afford Super Bowl ads.

    Those are the companies which are more likely to consider new gTLDs a viable option. Some will, some will prefer a longer dot com but again, I don’t consider the Super Bowl relevant this year because realistically speaking, only huge companies can afford ads and new the gTLDs this post is about mostly appeal to smaller end users.

    I said “this year” because over the next few years, the dot brands (so huge companies which have their own extension) will go live and it will indeed be interesting to see how many of them use their new URLs during the Super Bowl.

  6. Domenclature.com Says:

    @Andrei,

    “…the thing is though, only huge companies can afford Super Bowl ads and those companies are unlikely to use new gTLD domains for their business…”

    Let me pre-state that I’m not arguing with you, just debating. This medium rarely capture nuances, and facial gestures. Sometimes, I’m smiling while typing, and sure sometimes I’m frowning. This time, I’m doing the former.

    In the .co example I used, it is clear that the registry was the actor in Re: super-bowl ad, not the little end-user. It’s incumbent on the Registry to promote, and launch her extension. There’s a consensus that the .co Registry did a fair job launching; so the question, when comparing apples to apples is, can Donuts and the like, including Google, UniRegistry, etc afford a super-bowl ad, especially, in conjuction or join venture with Godaddy? If they could, and would not, it’s almost as damning as if they would, but could not.

    For our purposes here, only the result is measured, the score; not the reasons.

    If the reliance, the onus of promoting, and pushing these new gTLDs fall on the heads of end-users, then, the question about the chicken or the egg come in. Which came first?

    Two things are simultaneously important to these new gTLD pushers: 1. They want end-users to know about their availability 2. When they know, the end-users should welcome, and use them.

    It is the job of these Registries to achieve the first.

    On the issue pertaining to the rarity of premium dot coms, that’s just life, and reality. If the end user cannot afford dictionary word, keywords dot com, that sometimes range in the millions of dollars, they have options still in lesser qualty dot coms; they have uncountable options in two- and three-word dot coms. There’s nothing that says that you must have sex.com; you could have goodsex.com, greatsex.com, madsex.com, and so on…

    It is yet to be proven that great.sex is better that greatsex.com.

    The choice is not in the extremes; there are names in the middle for the frugal.

    In any case, I will nOT accept the reasons relied upon by pushers of the new GTLD, which is to say “it’s early, we just started, don’t measure our facts, figures, and numbers until we mature”. The measurement has started.

    It is quite fair to measure, and compare the introduction of .co and theirs; one with a bang, and the other a whimper.

  7. Andrei Says:

    @Domenclature.com: I agree that the dot co registry did a great job marketing its extension and that new gTLD operators should embrace a similar strategy.

    Why didn’t any of them buy a Super Bowl ad this year?

    On the one hand, it’s true that the timing wasn’t appropriate since most launches haven’t materialized yet.

    On the other hand, while registry operators have this excuse now and while the timing argument does indeed provide a reasonable explanation for the time being, this situation is only temporary and they won’t be able to use this argument a few months from now.

    In my opinion, the market will be ruthless and extensions which aren’t advertised properly will most likely fail. That’s just the way it is and again, I agree that the dot co example makes sense.

    To do well, an extension will have to be literally all over the place like dot co was. The #1 aspect registry operators have to understand is precisely this: there’s just no way to thrive without a decent marketing budget, there just isn’t.

 
 
         
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