Domain Registrars

I was going to write this long comment/rant in response to a couple of the comments left in the Moniker sale post, but I believe it merits its own post. I can only imagine the domain registrar business would suck if the primary target audience is domain investors.

As a domain registrar catering to the needs of domain investors, there are a whole lot of downsides and few upsides that I can see. You have demanding and time consuming clients (like me) who only wish to pay just above the actual cost for the domain name, so the profit margin is slim. You also need to have tech support and customer support staff, and that certainly isn’t cheap. When there’s a problem, people are quick to complain on forums and Twitter, without regard for the people working behind the scenes.

From a legal perspective, the company would frequently face litigation from other companies who claim the registrar is contributing to trademark disputes, although I don’t know if there has been a case where a registrar has lost. There are ICANN compliance and regulation issues to deal with, and many registrars need to send representatives to ICANN conferences. All of this is super expensive, considering that customers only want to pay a few cents premium over cost for their domain names.

There are also significant technology costs to consider, since domain investors want an advanced user interface that performs well and is easy to use. In addition, there are hackers who are always trying to find ways to hack into the company’s database to steal credit card information, user information, and of course, domain names. These are additional expenses.

One reason end user-centric registrars like Go Daddy, Name.com, and Network Solutions have seen success and continue to have success is that their end user customers buy add-ons like hosting and storage. These products and services have significantly more robust profit margins, driving profitable revenue for the registrar. Most domain investors don’t buy these additional products.

With all of these costs, a domain registrar needs to have massive scale, and that isn’t easy to achieve, especially with some of the factors above. I really wouldn’t want to be in the domain registrar business servicing domain investors like myself.

As I mentioned earlier this week, Namecheap sponsored  Move Your Domain Day, and the company pledged to donate $1.00 to the Electronic Frontier Foundation (EFF) for every transfer initiated to the company today.

By early this afternoon, the company surpassed 10,000 transfers, and Namecheap CEO Rick Kirkendall doubled down on his offer, in news that broke on this blog. Kirkendall promised that    “if we hit 25k transfers today, we’ll double our donation to EFF.” This was followed up with an article on the Namecheap blog confirming the offer.

Late this evening, it appears the company has surpassed the 25,000 transfer mark, and per Kirkendall’s revised offer, Namecheap will now donate $2.00 for every domain transfer. This means the company will donate at least $50,000 to the EFF.

Based on the all of the Twitter activity, tech news blog posts, and consumer action, it’s quite clear that the Internet community is rallying against SOPA in a big way.

It remains to be seen if action will be taken against other public supporters of SOPA, listed on a pdf on the House Judiciary Committee website. Companies like the NFL, Disney, ESPN, Time Warner, Mastercard, Visa, and others are all listed a supporters of SOPA. It’s quite interesting to watch this unfold, and I hope this action sends a message to our elected officials.