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CEY—a new metric and the key to understanding the value of a registry
There’s a new site on the web—nTLDstats.com—that has a ton of valuable information about the new gTLD program. It shows numbers of registrations by registry, registrar, registry service provides—all the “Rs” in the domain name industry. It has quickly become the place where people go to measure how the industry, and the competitors in it, are doing.
There’s only one problem—not all domain registrations are created equal.
Does a name that sells for $400 have the same weight as a registration that’s given away for free, or sold for a dollar? If you just looked at the raw numbers on nTLDstats.com, you’d think that some registries are running away from the pack, when in some cases their business model of minting very cheap names may leave them with very little profit and a long-term brand-destroying reputation.
If we’re going to get a true picture of the health of the new gTLD program, or any individual registry, we need an apples-to-apples comparison.
A new measure: .com-equivalent years (CEY)
CEY is simply the wholesale revenue received by a registry from a domain name sale divided by $7.85, which is the price paid to VeriSign for each year of a .com registration. As .com is and will be for some time the best-known and the best-researched generic TLD, it’s a great baseline. Wholesale prices of new gTLDs are well-known, as are rebate schemes provided by registries to registrars. Big giveaways too are well-publicized. Premium name prices are also widely available, making CEY an objective and verifiable measure. Prior to the introduction of new gTLDs, a standard measure among registries and registrars was “domain years under management,” and this is an extrapolation of that useful metric. To come to a useful baseline comparable for new gTLDs, therefore, nTLDstats.com and other providers of new gTLD statistics should report CEY.
Why does this matter? Because just counting registrations is a gross distortion.
Consider the following domain names sold to a customer:
examplename.com (1 year)
losangeles.luxury (1 year)
premiumname.london (2 years)
example1.giveaway1 (1 year)
example2.giveaway (1 year)
example3.giveaway (2 years)
The way the domain name industry is currently counting things, you would think that .giveaway was the clear winner here. But here’s the reality:
Name Years Wholesale Price per Yr Revenue CEY examplename.com 2 7.85 15.70 2.00 losangeles.luxury 1 400.00 400.00 50.96 premiumname.london 2 150.00 300.00 38.22 example1.giveaway 1 3.00 3.00 0.38 example2.giveaway 1 3.00 3.00 0.38 example3.giveaway 2 3.00 6.00 0.76
Instead of what’s currently reported:
.giveaway – 3 names sold
.london – 2 names sold
.com – 1 name sold
.luxury – 1 name sold
The real rankings are:
.luxury – 50.96 CEY
.london – 38.22 CEY
.com – 2.00 CEY
.giveaway – 1.53 CEY
No-one contends that a thirty-second YouTube segment is equivalent to a hit movie, even though they are both video content. No-one says that a tent is equivalent to a mansion, even though they are both shelters. No-one insists that a blade of grass is equivalent to a oak tree, even thought they are both plants. It’s time to stop pretending that all domain registrations are equal and agree on a sensible and verifiable metric of registry economic value.
1 .giveaway is not an actual new TLD, and is here for illustration purposes, but the domain press has reported that some TLDs have given away or drastically discounted massive numbers of second-level domains.
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AVC,
Nice work here. I have spoken out on this topic a number of times. V$ will always want to use pure volume as the metric. It is all they are holding onto.
I don’t want to divert from your point but this made me think of another point. The voting in the Registry Stakeholder Group is weighted to volume. How much longer should this remain in place? Should .luxury never have an appropriate level of say no matter how successful their namespace is? V$ will always hold the balance of power. Volume is being used everywhere as the bench mark. The gTLD program has brought innovation. It is time the rest of the Industry did the same.
Cool idea.
I look forward to M+M and ARI publishing their registry fees so these calculations will become possible.
Hey Kevin! We don't have any registry fees. We could ask our Registry Operator partners on your behalf if you like :)
Can't you just shout across the room and ask them yourself? ;)
To someone with a non-accountancy background, it is all beginning to resemble the Golgafrinchan Leaf Exchange rate in Hitchhiker’s Guide To The Galaxy.
Will a domain name that is sold for $400 be developed into a working website or service compared to a .COM domain name that’s sold for under $10?
Anthony,Agreed, these reported registration volumes hide the truth of what is really going on.
I like this CEY metric. Let us financial stats guys look into this further.
Another truer measure would be to only count “arms length registrations ” - so strip out any transfers to affiliated registrars, loss leader registrations, (even)those that become parked. It would be interesting to see who is then in the top ten.