I often hear and read critical and/or snide comments about various non-.com domain registries and how many are presumed to be failures. Some people seem to think that if a registry doesn’t have millions of domain names registered and/or if the aftermarket for a particular registry’s domain names is weak, that the registry is a failure.
One thing we all need to keep in mind is that a registry does not necessarily need millions of domain names to be a successful business, and a successful business should be all of our goals. They do not need to have a strong aftermarket or frequent large sales either. If a registry covers its expenses and makes any profit at all, by most business accounts, it should be considered a success (especially if the founder’s pay is part of the covered expenses).
Let’s think about the new gTLDs for a second.
Let’s say I operate the .xyz registry and sell 25,000 domain names a year at $20 a pop. That’s half a million dollars in annual revenue. Let’s do some back of the napkin math and say I paid my one-time $185,000 application fee and another $200,000 for annual operations expenses and commissions so I don’t have to worry about managing the registry. If I pay myself $200,000 for being fat, dumb, and happy, my registry would be profitable in its second year, after all costs are paid, assuming a strong renewal rate (likely if many are defensive registrations). Again, this is some sloppy math, but you can imagine how it would be profitable.
To the average Joe, 25k domain registrations sounds like a failing domain registry, especially if the aftermarket isn’t churning big sales. However, having a half a million dollar revenue stream with low overhead is a damn good business venture in my opinion. It might not be glitzy, and the general domain investor public may look down upon a small registry, but it can be lucrative, especially when you consider that many companies would happily buy strong revenue stream businesses at decent multiples.
That is one reason why there are so many gTLD applications, and it’s another reason domain investors need to look at the big picture to see that there are many ways to get rich in the domain industry. There are of course lots of risks and expenses, but we should all look at the big picture sometimes and see that there are many ways to make money in the domain industry.