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Price Increases for .COM and .NET: The Generated Impact on the Performance of the Two TLDs

Prices of .COM and .NET 2011–2023 US$

Verisign announced a few days ago a decrease of 0.4 million domain name registrations for .COM and .NET Top Level Domains, a first time in the history of these TLDs.

Could this decrease be related to the successive price increases of September 2021 and September 2022?

On 28 July 2022, Verisign, the registry for the .COM and .NET TLDs, announced that it would be applying a 10% increase in the price of .NET domains as of 1 February 2023. This followed the announcement a few months back of a second price increase for the .COM TLD as of 1 September 2022, the first since 2012, having been applied on 1 September 2021.

Frozen for a long time by the pressure placed on ICANN by the US Congress in 2012, the price of the .COM TLD only began to increase in 2021. As for the .NET TLD, it will have increased from $4.65 to $10 between 2011 and 2024, with a ‘plateau’ between 2018 and 2022. By 2024, the two domains could. Therefore, both cost more than $10 at registry level.

Afnic, the .fr registry, has published a short study to evaluate the impact of the price changes on the performance of the two TLDs, and to question the Verisign strategy in light of the data collected.

Performance of the .COM and .NET TLDs

A sharp drop in create operations for .COM

To the best of my calculations, the 2022 trend is characterized by:

  • A significant slowdown in growth which could drop from 5.3% in 2021 to around 2% in 2022
  • A sharp drop in create operations (-9%), which should, however, be put in perspective given that 2021 represented an exceptional high linked to the COVID situation. If 2022 creations come in at around 38 million, they will be comparable to the 2019 level, meaning that the ‘spectacular’ fall is, therefore, in reality, merely a return to ‘normal’ activity levels.
  • Increased delete operations and the stock of retained names, the latter outpacing deletions, with an increased Retention Rate as a bonus.

In short, the impact of the price increase on September 1, 2021 is, for now at least, relatively low profile: the fall in creations could be explained by a post-pandemic ‘return to normal, and there has been no decline in renewals. The latter could indicate that .COM is relatively resilient in comparison to price elasticity; and/or the 2021 price hike is still too recent to be visible in renewal operations; and/or that it was not on a sufficient scale to force a significant proportion of holders to make trade-offs. The situation is naturally all the more changeable in that prices increased once again on 1 September 2022.

A ‘weak’ yet tell-tale sign and no doubt a worrying one for Verisign as it reflects a potential acceleration in the ‘downturn’: the net balance for the .COM TLD, which was 682,000 names per month on average in 2021, dropped to 423,000 on average between January and April 2022 and… to 4,000 in May.

A very different physiognomy for .NET

Now let’s look at the indicators for the .NET TLD that shows a very different physiognomy. The 2022 trend is characterized by:

  • A slight decline in stock (-3%);
  • A substantial fall in create operations (-14%) compared to 2021, at a level (2.3 million) well below that prior to 2020;
  • A database of retained names in equilibrium and delete operations up slightly (+0.2%)

These factors may explain the lack of impact observed for the .COM domain, which will only start to be visible in late 2022—early 2023 if the timing is the same as for the .NET TLD. In any case, it is as if Verisign, aware that it had entered a dangerous zone for .NET in 2017/2018, had chosen not to alter its prices in 2019-2022.

Remain competitive compared with ccTLDs and nTLDs

Verisign needs to make a choice between a set of conflicting constraints:

  • On the one hand, protecting its revenue and its margins, potentially threatened by the slowdown or decline of its TLDs, by increasing its prices to offset the fall in create operations and names retained;
  • On the other hand, protecting its TLDs by maintaining attractive prices so that they remain competitive compared with ccTLDs (local domains) and nTLDs.

In May 2021, the .FR TLD was 29% less expensive than the .COM domain; at the time of the increase on 1 September 2021, 36% less expensive; on 1 September 2022, 49% less expensive.

Only the future will tell if Verisign made the right choice and, above all, at what level the price impact will begin to be visible for the .COM and .NET TLD.

To read the full post (free access) and detailed data click here.

By Loic Damilaville, Market Research Manager at Afnic

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