First figures in and it doesn't look good for new internet dot-words

Domain name industry holds breath as renewal cycle comes around

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Figures on the number of new dot-word domain names renewed after their first time have emerged – and they are not absolutely stellar. More than one in 10 of the listed dot-thing domain names were not renewed.

Registry giant Donuts has released two sets of data for the first batch of gTLD addresses it put on sale this time last year – domains ending in .bike, .clothing, .guru, .holdings, .plumbing, and others.

The first batch of numbers covered 4,534 domains, of which 91.6 per cent were renewed; the second covered 6,352 domains, of which 85.3 per cent were renewed.

While both of those percentages are far above the industry average of 70 to 75 per cent renewal per registry, the two figures represent the very first people to get hold of gTLD domain names – trademark holders and those who applied to Donuts' "early access program" to get at domain names faster. As such, they are be far more likely to want to retain the domain.

The next set of figures, which are not out yet, will begin to include people who bought a specific dot-thing domain name out of interest, sometimes on a whim or as a potential investment, and who have to decide whether to pay to have them for another year.

Crucial metric

The domain renewal rate is a crucial metric for the health and growth of an internet registry, and so the industry is watching closely to see whether registrations of new generic top-level domains (gTLDs) are holding steady or whether a larger-than-normal number of domains were registered out of the novelty value of having a new-style domain name.

Donuts' COO Richard Tindal noted that the next dataset – expected this week – will cover 22,910 domains, and will be the last set of names that include a large number of "sunrise" i.e. trademark-related registrations. Tindal estimates a "mid-seventies" renewal rate, which is in inline with industry norms but lower that Donuts' estimate of 80 per cent.

It also suggests that "real" renewal rates for the registry going forward are likely to be lower than industry norms - something that will worry investors and new registries alike, especially since the overall registration of "new gTLDs" has been far below expectations.

So far the data released covers just under 11,000 of the 141,000 total domains overseen by the registry (representing 7.7 per cent of Donuts' crop). The next set of data will take that to 24 per cent of all domains and effectively represent the high-water mark for the first new dot-words.

The low registration volume for new domains is a huge topic of conversation in the domain name industry. Just last week, overseer ICANN revealed that it was lowering its estimate of income from registry fees from $1.2m to just $300,000 – a drop of 75 per cent.

The main reason for that fall is that registries only start to pay a per-domain fee of 25 cents after there are more than 50,000 domains under a particular dot-thing. So far, of the 500-plus new internet registries that have launched, just 15, or three per cent, have more than 50,000 new domain names on their books. ICANN has also estimated an average renewal rate for new gTLDs of 50 percent.

New g-what?

Many in the industry feel that the main barrier to more registrations is awareness – in other words that people simply don't know that the gTLDs exist. ICANN has repeatedly refused to put any funds into a broader awareness campaign although last week Donuts announced its first effort to advertise more broadly to the public.

That campaign will focus on the "freedom of choice" that new domains offer people. It is targeted at small business owners, and will comprise online banner ads on a number of lifestyle and business websites including The New York Times, Forbes, Mashable and Fast Company. No dollar figure was put on the campaign. ®

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