The following originally was published Feb. 10, 2021, on CircleID.
As executive director of CALinnovates, an organization that advocates for innovation and startups, as well as a new business owner myself, I know how important a .COM domain name can be to a new company’s online presence and marketing strategy. That’s why I read with interest a new Boston Consulting Group report on how the .COM market is changing. I have a much better understanding of why new businesses find it hard to get relevant .COM domain names.
According to a Boston Consulting Group report, domainers — speculators — are on the verge of becoming the biggest players in the .COM market. Here’s what BCG said: “The net result is that, on a dollar basis, the secondary market, at $2.1B/year, is almost as big as the primary market, at $2.3B/year, and nearly double the size of the registry’s wholesale revenue of $1.1B/year. In other words, nearly half of the dollars end-users spent buying new domains go to domainers.”
That has broad implications for anyone trying to get a .COM domain.
First, it means that many currently registered .COM domains are locked up by domainers. That in itself distorts the market and makes it challenging for a startup, organization, or person to get a domain that closely matches their online business or purpose.
Second, the scarcity created by locking up so many domains warps prices. According to BCG, the typical domainer price ranges from $1,700 – $2,500, but the average registrar retail price is only $16.58. And the price of a .COM domain is only $7.85 from the registry.
I found this out firsthand when searching for a domain name for a venture that I launched in 2020. The ideal domain was registered but not in use. If I were willing to pay GoDaddy $119, they would try to get it for me, but they calculated it would likely cost me $5,146. That’s a lot of money for any startup to pay, but it is consumers who ultimately have to pay these costs.
Speaking as a person who advocates for technology policies that foster innovation and enable new businesses to emerge and flourish, the .COM market seems upside down — it’s much more likely going forward that new businesses will be forced to deal with domainers than regular registrars.
And as a new business owner myself that doesn’t seem right that entrepreneurs like me will be diverted to the secondary market that charges 150-200 times the retail price (according to BCG) just to establish a preferred online presence.
I don’t know what the answers are here, and I’d encourage anyone interested in the domain world to read the BCG report. But it does seem that in the future, those looking for the right domain name are likely to spend more time digging deeper to pay a domainer.