It’s a fact that applying for a gTLD is going to be expensive. We know that the cost for a gTLD application is a non-refundable $185,000 payment to ICANN, and the cost will be considerably more if there are other companies that wish to operate the same gTLD.
In addition to the fixed costs of applying, there will likely be additional legal costs associated with the application as well as consulting costs for companies that want to work with experience professionals like Right of the Dot and Minds + Machines.
These front end costs aside, the actual cost of maintaining the gTLD registry has been an unknown to people without the experience of running a domain registry. Minds + Machines, a company operated by Antony Van Couvering, just put out a press release announcing a simplified pricing plan for back end gTLD services.
According to the release, “for a flat fee of $100,000 a year, the company will provide unlimited registrations for new TLDs using the Espresso platform, with no per-name fee for most new TLDs.”
The company is also willing to offer a discount to “disadvantaged or needy applicants providing services to underserved communities.”
Singapore, June 24 2011 – Minds + Machines, a wholly owned subsidiary of Top Level Domain Holdings (London AIM, TLDH.L) today announced new pricing for back end registry services for top-level domains. For a flat fee of $100,000 a year, the company will provide unlimited registrations for new TLDs using the Espresso platform, with no per-name fee for most new TLDs.
“We’ve simplified the model,” said Antony Van Couvering, CEO of Minds + Machines. “For a simple, low, flat fee, any prospective applicant can be in the TLD business. Until now, pricing for registry services has been shrouded in secrecy, and potential applicants have had to try to decipher convoluted pricing tiers. The new gTLD program, approved on Monday by ICANN, was meant to usher in a new era of choice and innovation. Minds + Machines is proud to kick that off with our offering.”
“ICANN has opened the Internet’s addressing system to the limitless possibilities of the human imagination,” said Rod Beckstrom, CEO of ICANN. “We have provided a platform for creativity and inspiration, and for the next big dot-thing,” said Peter Dengate Thrush, Chairman of the Board of ICANN.
“The Minds + Machines flat-rate formula is predictable, simple, and attractive,” said George T. Bundy, president of BRS Media, operators of .FM and applicant for .RADIO. “We have been using their Espresso platform for .FM, and it is reliable, flexible, and easy to use. Combined with this pricing it’s very attractive.”
The new Minds + Machines offering excludes certain high-volume super-generic terms such as .music, and geographic terms such as .nyc. The new pricing will be extended to existing clients.
In addition, for disadvantaged or needy applicants providing services to underserved communities, Minds + Machines will offer the service for a 50% discount.
“Our goal is to increase the number of new gTLDs, and the new pricing will be a great help. The fact is that many applicants don’t know how many registrations they will achieve,” said Van Couvering. “The better you can predict your costs, the less risk there is to applying for a new gTLD. An all-inclusive flat fee will give applicants predictable budgets and great savings if they hit their numbers.”
Is the price quoted above merely for the customer-facing registration platform, rather than back-end registry operations from Neustar?
You would have to ask Antony.
I assume there is some sort of annual payment to ICANN after your initial $185,000 payment. I don’t recall seeing that number anywhere. I would guess that it is based on the number of domains that you sell/use + some sort of flat fee.
I am sure it’s not a one time $185,000 payment.
The application fee is $185,000. I am not sure of the annual fee to ICANN to maintain the gTLD.
Annual fee to ICANN is $25,000.
185k application fee plus 25k annual fee.
These numbers are a little misleading as they make us believe that it actually costs that much to create or maintain a new TLD, the truth of the matter is that creating a TLD is all about adding a “word” to the “root” , you can think of the root as the ultimate domain, every TLD is a subdomain of the root which is represented by an invisible dot on the right side of each TLD.
It seems like the 185k is just a number that has been pulled out of someone’s hat. 🙂
According to ICANN the 185k nonrefundable application fee is going to help recoup their initial cost of the New TLD program (which supposed to be around 40 million dollars), but its hard to imagine how they came up with that 185k figure, it only takes 200 applicants (not TLDs, but just applicants) to make that 40 million at 185k a pop, and from the looks of it we might see a few hundred (if not thousands) of applications right of the bat and considering that there might be multiple applicants for the same TLDs those numbers could double or triple very easily, which brings us yet to another point which is has ICANN accounted for the millions of dollars that might be generated in the auction phase when setting the 185k application fee.
The real cost of a new TLD is not going to be what is involved in the approval process, but rather in what it takes to make a TLD operational (maybe close to 500k) and the real cost of the yearly maintenance is not the 25k that ICANN is going to charge for just keeping a TLD (a word) in the root, but rather the backend capabilities that are needed to handle the registration and maintenance of all the subdomains for that TLD.
Considering the number of potential applicants that are showing interest in the New TLD program, and considering the money that is going to be generated in the auction phase (once the bidding wars begin amongst the companies that are interested in the same TLDs) it seems that ICANN should be able to recoup their initial cost even if they lowered the application fee to somewhere like 50K and perhaps they can lower it even more (like to somewhere between 5 TO 10K) after they got their 40 million back. Lets not forget about the 25k yearly maintenance fee which would look more reasonable if it was lowered to something like 2.5k considering that ICANN is supposed to be a nonprofit organization.
…also a 25 cent charge per domain
The total cost of a gTLD is so much higher than people actually realize.
$185,000 Application Fee +
Legal Fees – ?
Then you are probably talking at minimum $225K/year to run the registry itself.
$100K admin fees.
$100K employees (bare minimum.)
This does not include any potential legal fees such as disputes.
So you are talking about a $2M – $3M financial commitment over 10 years base price for basically any registry.
It will cost even more for larger registries with more employees and legal issues.
You want to actual market your new gTLD? That is going to cost even more.
I think many people will find out these don’t make financial sense except for the best generics and GEOs.
Whatever it is,it sure makes dot com looks good.
You might be right if someone wants to build their own registry from scratch, but most applicants are going to use the services of some of the existing registries which already have everything in place for handling a new TLD, as far as the expenses associated with advertising and promoting a new TLD that is not going to be a big problem if you are dealing with a Company or City name that is already famous. If ICANN ever lowers the application fee and their yearly maintenance fee then the biggest costs you probably have to worry about would be legal fees and the cost of acquiring your favorite TLD if it goes to the auction specially if some big Companies are interested in the same TLD as you are.
All and all if you don’t have to outbid anyone in the auction phase you might be able to launch your own TLD for the same amount that you might have to spend on acquiring a half decent domain in .com .
I am not sure what all the legal fees would be, unless you are going to tread dangerously close to someone else’s trademark. At these prices, I doubt squatting is going to be a problem. If the 185k app fee is non-refundable, and you lose in an auction where there are several applicants for the same gtld, do you lose your 185k? Seems kinda steep. Maybe you would have to pick a different gtld.
Business formation costs, contract reviews, user terms and conditions, researching other legal issues…etc.
Also, potential disputes. How will those be handled?
There are so many legal issues from startup to running the registry, that it is going to be a major expense.
What happens to the domain owners if a registry goes bankrupt, and no one is willing to take it over?
“What happens to the domain owners if a registry goes bankrupt, and no one is willing to take it over?”
Quick note as I’m trying to catch a plane out of Singapore after the ICANN meeting.
Our deal with Neustar is only for geographical names, i.e. city names. The flat-rate pricing is using our proprietary platform, called Espresso, which currently runs .FM.
ICANN’s $185K application fee (+$25k/yr) is ICANN’s fee. Our fee ($100K annually, or $50K annually if you are, in our opinion, either needy or serving an underprivileged community) is an all-you-can-eat flat rate. There are some exceptions, for what we can super generics: .music would be an example. But there are very few of those, so this pricing is available to just about anyone.
We figure that all-in, your cost to *start* a gTLD, before you see any revenues, is about $500K, including a lot of the costs that are mentioned above by other commenters. I’ve gone through a few of the costs (and revenues) at mindsandmachines.com/home/tld-economics/
But the fact remains that plenty of smaller ccTLDs are run by a couple of people on very small budgets, and back end registry services, while specialized, are largely automatable (which we have done) and the pricing should reflect that price. Basically, our competitors are all charging some fraction of VeriSign’s .com wholesale price, which is an artifact of a different era and a negotiated agreement between VeriSign, the US Govt, and ICANN — it has nothing to do with the cost. We’re just trying to clear away the confusion and provide clear and predictable pricing.
@Brad – a registry has to post a bond covering 3 years of basic core registry services in case they go bust — plus most of the registries will be signing cross agreements handle services in case anyone can’t continue. Disputes have been the subject of years of debate and are codified in very comprehensive ICANN rules. A contention between two parties for the same string will be handled by auction.
I have had the unpleasant fate of being very involved in the ICANN rules, so I’m happy to answer any questions here, or email me directly.
Antony Van Couvering
CEO, Minds + Machines
Thanks for that post clarifying the process and financial aspects.
I think it is fair to say the cost to obtain and run a registry is far more that most people realize.
ICANN : we gonna have a party !!! Singapore! Rock and Roll !
GAC : but we have many issues not resolved. How we gonna handle US trademarks and EU trademarks ?
ICANN : party pooper, we gonna have a party first and then we deal with all the nasty things. you wanna party right?
GAC :….i guess
ICANN : Party time! We gonna chance the internetzz! All your TLD’s are belong to us!
ICANN was formed in 1998. It is a not-for-profit public-benefit corporation with participants from all over the world dedicated to keeping the Internet secure, stable and interoperable. It promotes competition and develops policy on the Internet’s unique identifiers.
” I am not sure what all the legal fees would be ”
You are going to need some kind of legal and professional advice and consultation in regards to the TLD application and implementation at every stage of that process.
Its best to find a consultant who is familiar with all aspects of the new TLD program.
Here are some of the things that you might need help with:
You need a consultant to do all the necessary research to make sure that the TLD that you are interested in falls within the guidelines of the New TLD program. This is a very important step that needs to be taken care off by a knowledgeable professional before you start the application process, otherwise your application might get denied right off the bat.
You need a consultant to help you fill out the application form properly and to help you send all the required documentations and any application or processing fees on time.
You need a consultant to help you decide what application designation is best suited for your purposes, it makes a difference at every stage of the application processes whether you have chosen the STANDARD designation or the COMMUNITY BASED designation, once selected it cannot be changed later on.
You need a consultant to help you respond to any objections and to guide you through the dispute resolution processes and to assist you with the auction phase if you ever get to that point.
You need a consultant to help you pass any financial or technical capability evaluation and to help you with the contract with ICANN if your application is approved.
You need a consultant to help you set up any third party registry and registrar agreements and contracts.
You need a consultant to help you get your TLD recognized by network operators after it is approved by ICANN, this is a very important step in order to make your TLD operational. Here is what ICANN says about this:
1.2.4 Notice concerning Technical Acceptance Issues with New gTLDs :
“All applicants should be aware that approval of an application and entry into a registry agreement with ICANN do not guarantee that a new gTLD will immediately function throughout the Internet. Past experience indicates that network operators may not immediately fully support new top-level domains, even when these domains have been delegated in the DNS root zone, since third-party software modification may be required and may not happen immediately.
Similarly, software applications sometimes attempt to validate domain names and may not recognize new or unknown top-level domains. ICANN has no authority or ability to require that software accept new top-level domains, although it does prominently publicize which top level domains are valid and has developed a basic tool to assist application providers in the use of current root-zone data.
ICANN encourages applicants to familiarize themselves with these issues and account for them in their startup and launch plans. Successful applicants may find themselves expending considerable efforts working with providers to achieve acceptance of their new top-level domain.”
You also are probably going to need some level of legal and professional help for handling the day to day operation of your new TLD even after it is fully operational.
I think your right it sure does make the dot com look good to companies with not so deep pockets have noticed a uptick in search on all my generic domains with dot com and dot ca getting the most dot net and org just a little.
I guess I also need to add:
You need a consultant who is unbiased and who can help you cut through all the propaganda and the misinformation on either side, and who can help you see who is in this game to protect their own interest and whom you can trust to protect your interest.
There are certainly going to be some great opportunities both with the older extensions such as .com and the prominent ccTLDs (Country Code TLDs) and with the New TLDs that are soon going to be made possible.
When I get a chance I am going to compile all this information and put it at TLDguidebook.com