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- Jul 29, 2011
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One of the good things about attending DomainFest was that you can’t help but soak up all of the latest changes in the industry. For example, I’ve always believed that many of the new gTLDs would fail but after speaking with the various new registries I now find myself changing my position. So why is this the case?
To apply for each new gTLD extension the applicant had to pay ICANN a fee of $185,000. There are some costs associated with fielding the application so let’s make it a round $250,000 is invested per application. In the case of a company like Donuts this will be lower as the administrative cost is distributed over several hundred extensions.
What I didn’t know was that the ongoing fees to ICANN amount to around $25,000/gTLD/year. This seems like a pretty low number!
So let’s back-out the financials of this whole process and work under the assumption that the average sales price of a domain is $50 (remember with variable pricing some sell for $10 while others $10,000). Let’s also assume that there is a cost to run the registry which represents 70% of the registration fee. This means that the registry will have a retained earnings of $35/year/domain. To be profitable they will need to sell on average 715 domains per year. I think that for the great majority of them they will easily get to that level.
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