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You Just Signed a Registry Contract With ICANN. What Are Your Plans?

Back on February 4, 2013, I wrote a CircleID post entitled, ‘How the registrar Cash Flow Model Could Collapse with New ICANN gTLDs.’

My key point back then was this: new gTLD applicants need to be mindful of how the cash flow policies of their registry (and of their back-end service provider) could impact whether their TLD is actively promoted by ICANN registrars.

When ICANN registrars were first established, all of the business risk of domain name registrations was placed on Registrars. From pre-payments for future registrations to lack of credit policies, registries have historically assumed near-zero risk. This is going to change.

The introduction of hundreds of new gTLD’s is going to fundamentally change the risk-reward relationship between registries and ICANN registrars. Of course, registries now have the option of becoming vertically-integrated with their own registrar and assuming all of the risk. But if new gTLD registries want to utilize and maximize participation by ICANN registrars for distribution, then TLD registries will need to assume more business risk in the relationship.

Of course, a more cooperative relationship with registrars is just one of many elements that will contribute towards business success of a new registry. Registrars will want to see evidence of a well-designed business strategy and marketing plan.

EnCirca has been selling domain names for well over a decade now. We’ve been part of the launch of every new top-level-domain since 2001 and expect to be selling many of the new extensions in the coming years. I know that the delays in ICANN processes can be maddening. I know that, for many applicants, finally signing a contract feels like they’ve crossed the finish line. Let’s pop the champagne corks!

But from my vantage point, this type of celebration could be premature. Many of these new gTLD applicants do not really have a serious business plan for their new TLD. All that many have at this point is a back-end registry provider and, maybe, an auction house provider. Hoping to cash in during Sunrise and then by auctioning a bunch of premium names is not really a business plan.

Far too many applicants are assuming that simply securing a generic keyword as a TLD string ensures success as a domain name registry.

Far too many applicants are assuming that their back-end registry provider will run their business for them.

As a result, far too many applicants have been slow in developing a robust business plan and building a team that will help launch and run their registry.

At the risk of being overly simplistic, the key areas that I see lacking are:

  1. A Marketing plan
  2. An Operations plan
  3. A Sales plan

A Marketing plan

Many of the new TLD strings were selected based on their popularity as search engine keywords. But applicants should not assume that having a catchy keyword will be enough to generate sales. It certainly wasn’t enough for “.travel” or “.tv”.

Think of your TLD as not just a string, but as a brand. For many TLD’s, this means associating the TLD with a community or special-interest group. Registrants and end-users will need to feel some sort of connection with the TLD to invest time and money in the domain.

So: What will your brand stand for? How will your TLD be differentiated from the competing TLD’s? And how are you testing the key assumptions you made in the selection of your TLD string?

Who is going to do this for you? Will you hire employees or outsource?

An Operations plan

How will you run your registry business efficiently? What systems are required? What is your out-sourcing strategy to keep your costs down until revenues justify investing in infrastructure?
Who is going to do this for you? Will you hire employees or outsource?

A Sales plan

Who will directly sell your TLD? Even if you plan to do it yourself or with industry partners, you still need to operate or partner with a registrar. Resellers will be selective in what TLD’s they support and will want to see evidence of a well-thought business strategy and a marketing budget.

What incentives will your channel have? If your sales channel is someone other than registrars, how well will they play with ICANN registrars?

How will you recruit these channel partners and registrars?

And again, who is going to do this for you? Will you hire employees or outsource?

It’s Time To Get To Work

There WILL be more ICANN delays, but applicants should get started on these tasks right away. As I recommended back in February, a good place to start would be to have a conversation with your back-end registry provider to understand exactly what they will be providing.

In addition to attending ICANN meetings, there are also several conferences that help educate gTLD applicants about running a TLD business. One of these is the New Domains conference being held in Munich, Germany on October 28-29 (www.newdomains.org), where I will be serving on a panel addressing these very issues. Whatever you do, you should be getting out of the office and meeting with possible partners and resellers now.

By Thomas Barrett, President - EnCirca, Inc

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Marketing or Communication? Jean Guillon  –  Sep 13, 2013 7:30 AM

I spoke to “some” new gTLD applicants and most of what I heard is “PR” so how to ensure you do something that others did not think about?

It is important to note that the situation is different today. When we launched EURid ,the Registry for .EU domain names, we were alone.

This time, hundreds are launching at the same time. Don’t forget that…

Nice post. Well stated. Pinkard Brand  –  Sep 13, 2013 5:10 PM

Nice post Tom. Well stated.

This is the Key Point Joe Davison  –  Sep 14, 2013 6:20 AM

“Hoping to cash in during Sunrise and then by auctioning a bunch of premium names is not really a business plan.”

Great article.

Great words of advice Tom! A new Alexa Raad  –  Sep 16, 2013 10:53 PM

Great words of advice Tom!
A new GTLD registry has to have marketing and PR plan. This needs to address both registrars (should go hand in hand with a registrar recruitment plan) and the prospective registrants (to pull in demand to the channel). This marketing plan should clearly communicate the value proposition and have a call to action (buy from these authorized registrars). Lastly, it should include a sales and marketing kit for the registrars to make their sales efforts easier and consistent with the overall GTLD marketing plan and phases.
In the operations plan there has to be an HR plan to recruit and outsource functions based on timing and need.
And as you said the operations plan would include decisions on “build versus buy” say on financial systems or abuse mitigation systems.
Glad you raised these issues in your timely post!

Great Points! Christa Taylor  –  Sep 24, 2013 7:54 PM

Great article Tom!  I think part of the issue is the association between passing the ICANN evaluation process and equating it with a valid business plan.  I think some applicants expected ICANN to come back with feedback on the viability of their business plan which was not the case. 

Too many business plans have a large cash influx from the sunrise and premium names in the early year(s) which may artificially reflect a viable business.  Eliminate this influx or extend the plan beyond the ICANN required three years and the picture can look very different. 

Additionally, volume is one of the key components within the business plan and needs to carefully analyzed and developed from the ground-up.  Using volume numbers from existing registries is not realistic.  Determining the target markets for each TLD along with the associated size and penetration rate will help build a realistic volume and also assist in where to focus marketing efforts, budget and development of relationships.  With limited registrar shelf space and volume being critical, it will be interesting to see how creativity, registrars and relationships impacts sales.  Wait and see…

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