Domain names Market

Transcript of Domain names Market

As the global registry operator for .com and .net,VeriSign closely monitors the state of the domainname industry through a variety of statistical andanalytical research. As the leading provider ofintelligent infrastructure for the Internet, VeriSignprovides these key trends to educate industryanalysts, media, and businesses on importanttrends in domain registrations. This brief detailscurrent trends in the industry, highlighting keyperformance indicators and growth opportunities.

The VeriSign Domain Report

The Domain Name Industry BriefVolume 2 - Issue 2 - May 2005

The .Com and .Net BaseThe .com and .net active base of domain name registrations was 41.4 million domainnames at the end of first quarter 2005, representing an increase of eight percent overfourth quarter 2004.

New RegistrationsNew .com and .net registrations were added at an average of 1.6 million per month inthe first quarter of 2005. This is a 19 percent increase over fourth quarter 2004. Oneof the drivers behind this growth in new registrations is registrants setting up websitesto derive revenue from PPC advertisements placed on the websites. While the exactnumber can not be discerned, estimates place these PPC-purposed domain names atapproximately 20 percent of new .com and .net registrations.

RenewalsAt 74 percent, registry renewal rates for .com and .net continued to reach historicallyhigh levels in the first quarter of 2005. This continues an upward trend in renewal ratesthat began in 2003. Renewal rates are a key indicator of the continued strength of thedomain name industry. The renewal rate for a previously renewed domain name is 84percent compared to a renewal rate of 64 percent for domain names going throughtheir first renewal cycle.

.Com/.Net Registry Renewal Rates

Since domain names that are in use are more likely to be renewed than unused domainnames, domain name usage is a key factor in the high renewal rates. In a recent study ofall .com and .net domain names, 76 percent of these names are currently associated witha Web site; 62 percent are live sites and 14 percent are parked sites. Live Web sites arethose being used by an organization or an individual. Parked Web sites are defined asWeb sites that are not actively being used, but are associated with a domain name.3

.Com/.Net Web Sites

T H E D O M A I N N A M E I N D U S T R Y B R I E F - M A Y 2 0 0 5

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+ Opportunities for GrowthTen countries represent 78 percent of all of the domain names registered worldwide.The United States is the largest with 37 percent of the domain name base which is ninedomain names for every 100 people. While Germany has the second largest domainname base, it has the largest domain name penetration with 14 domain names for every100 people. The United Kingdom and the Netherlands also have high domain namepenetration with 11 and 12 domain names per 100 people, respectively. These highdomain name penetrations in Europe may be attributable to strong usage of the localccTLD as well as organizations setting up Web sites in multiple languages and countries.Not surprisingly, .de, .uk and .nl (Netherlands) are the top three ccTLDs in terms ofdomain name base.

Top Domain Name Countries

The domain name industry seems to mirror the leading Internet indicators such as thenumber of Internet users and broadband households. Eight out of the top ten domainname countries are considered to be the largest broadband countries as well as measuredby the number of broadband households. The other two, Netherlands and Italy, are notfar behind. The United States, China, Japan and South Korea lead in broadbandhouseholds. With 107 percent growth in broadband households in 2004, China saw thelargest growth. South Korea has the largest penetration of broadband at 73 percent.4

As these Internet indicators continue to show favorable trends, domain nameregistrations will follow as more businesses and users seek to establish their onlinepresence and increase their usage of ecommerce and other Internet-centric activities.

+ Learn MoreTo subscribe or to access the archives for the Domain Name Industry Briefs, pleasego to www.verisign.com/domainbrief. Email your comments or questions [email protected].

+ About VerisignVeriSign, Inc. (Nasdaq: VRSN), operates intelligent infrastructure services that enableindividuals and businesses to find, connect, secure, and transact across today’s complexglobal networks.

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70%

72%

Q1 ‘04

Q2 ‘04

Q3 ‘04

0% 10% 20% 30% 40% 50% 60% 70% 80%

74%

Q4 ‘04

Q1 ‘05

Total Domain Names Spidered = 41,672,942 Percent of all Domain Names Resolving to a Web site = 76%

100 20 30 40 50 60 70 80 90 100

Live Web sitesParked Web sites No Web sites

24%62%14%

InternetUsers

InternetPenetration

DomainNames

United StatesGermanyUnited KingdomCanadaNetherlandsItalyChinaJapanSouth KoreaFrance

185,550,00041,880,00033,110,00020,450,0009,790,00025,530,00099,800,00078,050,00031,670,00025,470,000

64%51%55%64%61%44%8%61%74%42%

25,885,40511,198,8856,409,9162,104,8631,917,7661,640,3601,602,3521,484,3731,431,0431,411,734

% of TotalDomain Names

37%16%9%3%3%2%2%2%2%2%.Com/.Net Registry

Renewal Rates

Source: VeriSign, May 2005

Sources: eMarketer, April 2005;

ClickZ Stats, May 2005; Zooknic,

April 2005.

3 “Live” Web sites include sites that areclassified as live, redirected, underconstruction and for sale.

Zooknic MethodologyFor gTLD data cited with Zooknic as a source,the analysis uses a comparison of domain nameroot zone file changes supplemented withwhois data on a statistical sample of domainnames which lists the registrar responsible for aparticular domain and the location of theregistrant. The data has a margin of error basedon the sample size and market size. The ccTLDdata is based on analysis of root zone files. Formore information, see www.zooknic.com.

4 eMarketer, April 2005; ClickZ Stats, May 2005; Zooknic, April 2005.

.Com/.Net Web Sites

Source: Cyveillance, May 2005

© 2005 VeriSign, Inc. All rights reserved. VeriSign, the VeriSign logo “Where it all comes together,” and other trademarks, service marks, and designs are registered or unregisteredtrademarks of VeriSign and its subsidiaries in the United States and in foreign countries. 05/05.

+ Executive SummaryThe domain name industry continued its impressive growth in the first quarter of 2005.At the end of the first quarter 2005, there were 76.9 million domain names registeredworldwide. This represents a nearly eight percent growth over the fourth quarter of2004 and a 22% increase over the first quarter of 2004. .Com remains the largest TopLevel Domain (TLD) in terms of its total base of registrations. The next three spotsremained unchanged with .de (Germany), .net and .uk (United Kingdom) roundingout the top four.

Total Domain Name Registrations

+ Industry Growth

and Composition

GrowthOver 6.7 million newdomain names wereregistered in the firstquarter of 2005. This isnearly two million morenew registrations than thenumber of new registrationsin the first quarter of 2004,a 36 percent increase yearover year. The first quarternew registrations were fourpercent higher than thefourth quarter of 2004. Thisincrease is larger than theone percent increase seen infourth quarter of 2004. Keyfactors for this growthinclude a strengthening

Total Domain NameRegistrations

Sources: Zooknic, April 2005;

VeriSign, April 2005

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global economy, increasing numbers of regular Internet users and the continuedimportance of domain name registrations for use in the Pay-Per-Click (PPC) advertisingmarket.

Domain name registrars and resellers continue to offer product bundles and services thatenable registrants to establish their web presence quickly and easily. In these packages, adomain name is bundled with other Internet-related services such as Web site hosting,email and e-commerce tools. In addition, there are a growing number of bundles thatinclude a domain name with a parked Web page and search engine listing.

An increasing number of domain name registrars and resellers are using traditionaladvertising, including television and radio, to increase their registrations. In February2005, Go Daddy, a leading U.S.-based registrar, kicked-off their television advertisingcampaign with a Super Bowl spot. A few registrars are also offering domain nameregistrations at extremely low price points to spur new entrants and multiple domainname registrations.

Registrars are also promoting ccTLD registrations to registrants beyond the bordersof the ccTLD country. For example, registrars used email marketing and other sitepromotion to promote and cross-sell .uk registrations to registrants in the United States.

Industry Composition.Com currently accounts for 47 percent of all domain name registrations active in thezone, followed as a group by Country Code Top Level Domain Names (ccTLDs) at 35percent, .net at 7 percent, and the alternate Generic Top Level Domain Names (gTLDs)such as .org, .biz, .info and .name at 11 percent, collectively. The overall compositionof the domain name industry has remained relatively constant for the last few quarters.

Industry Composition*

The number of .info registrations increased dramatically at the end of 2004 due to aprice promotion that offered one-year .info registrations for no cost. The resulting spikein new registrations more than doubled the base of .info domain names by the end of2004. The growth rate in new registrations dropped but remained strong at 18 percentin the first quarter of 2005. This drop coincided with an increase in the wholesale priceto $0.75 for a one-year term.

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ccTLD BreakdownThe vast majority of ccTLD registrations are attributable to a small number of ccTLDregistries. Out of the more than 240 ccTLDs, the top ten account for 71 percent of allccTLD registrations. From 75 percent in the first quarter of 2004, this percentage hasbeen decreasing slightly each quarter over the last year. The impressive growth of someother ccTLDs, including .cn (China) and .ru (Russia) has contributed to this slowdiversification of the ccTLD market. All of the top ten ccTLDs saw growth in thefirst quarter.

The largest ccTLD continues to be .de (Germany) in terms of the total base of domainname registrations with .uk (United Kingdom) as the second largest. Together, .de and.uk represent 46 percent of the ccTLD base with the growth rates of three percent andsix percent in the first quarter 2005 over the fourth quarter 2004, respectively.1

While some large ccTLD registries allow essentially unrestricted registrations, manyhave requirements for registrations such as a business identification number or a localpresence. Some of the more restrictive ccTLD registries will only permit domain namesthat exactly match a registrant’s registered trademark. Regardless of registration policies,ccTLDs remain an attractive option for local businesses and Internet users.

ccTLD Breakdown

+ .Com/.Net DynamicsVeriSign processed an average of 15 billion .com and .net queries per day in first quarterof 2005, thereby enabling millions of Internet users to access Web sites or send email.2

As it has for the past seven years, the VeriSign Domain Name System (DNS) continuedto maintain operational accuracy and stability for 100 percent of the time during thefirst quarter of 2005.

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Name

Biz

Info

Org

uk

Net

de

Other ccTLDsCom

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

2001 2002 2003 2004 Q1 ‘05

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

Top 10 Total ccTLD

2002 2003 2004 Q1 ‘05

Industry Composition

Source: Zooknic, April 2005;

* Due to numerical rounding, percentagesmay not equal 100%

ccTLD Breakdown

Source: Zooknic, April 2005

1 Zooknic, April 2005.

2 VeriSign statistics on daily queriesreported for Business Week. athttp://www.businessweek.com/technology/tech_stats/nettraffic050321.htm

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

Q1 '04 Q2 '04 Q3 '04 Q4 '04 Q1 '05

Org/Biz/Info/Name Com/Net ccTLDs

Com 47%

Other ccTLD 19%

de 11%

Net 7%

uk 5%

Org 5%Info 4%

Biz 1%Name 0%

Com

Other ccTLDs

de

Net

uk

Org

Info

Biz

Name

New Registration Growth

TOP CCTLD REGISTRIESBY DOMAIN NAME BASE,FIRST QUARTER 2005

1. .de (Germany)

2. .uk (United Kingdom)

3. .nl (Netherlands)

4. .it (Italy)

5. .us (United States)

6. .ar (Argentina)

7. .br (Brazil)

8. .ch (Switzerland)

9. .jp (Japan)

10. .dk (Denmark)

VeriSign, April 2005; Cyveillance,

May 2005; ICANN Monthly Reports

+ Industry Growth

and Composition

2

3

ccTLD Breakdown

4

Name

Biz

Info

Org

uk

Net

de

Other ccTLDsCom

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

2001 2002 2003 2004 Q1 ‘05

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

Top 10 Total ccTLD

2002 2003 2004 Q1 ‘05

ccTLD Breakdown

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

Q1 '04 Q2 '04 Q3 '04 Q4 '04 Q1 '05

Com 47%

Other ccTLD 19%

de 11%

Net 7%

uk 5%

Org 5%Info 4%

Biz 1%Name 0%

Com

Other ccTLDs

de

Net

uk

Org

Info

Biz

Name

1. .de (Germany)

4. .it (Italy)

6. .ar (Argentina)

7. .br (Brazil)

9. .jp (Japan)

10. .dk (Denmark)

+ Industry Growth

and Composition

2

3

ccTLD Breakdown

4

Name

Biz

Info

Org

uk

Net

de

Other ccTLDsCom

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

2001 2002 2003 2004 Q1 ‘05

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

Top 10 Total ccTLD

2002 2003 2004 Q1 ‘05

ccTLD Breakdown

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

Q1 '04 Q2 '04 Q3 '04 Q4 '04 Q1 '05

Com 47%

Other ccTLD 19%

de 11%

Net 7%

uk 5%

Org 5%Info 4%

Biz 1%Name 0%

Com

Other ccTLDs

de

Net

uk

Org

Info

Biz

Name

1. .de (Germany)

4. .it (Italy)

6. .ar (Argentina)

7. .br (Brazil)

9. .jp (Japan)

10. .dk (Denmark)

New RegistrationsNew .com and .net registrations were added at an average of 1.6 million per month inthe first quarter of 2005. This is a 19 percent increase over fourth quarter 2004. Oneof the drivers behind this growth in new registrations is registrants setting up websitesto derive revenue from PPC advertisements placed on the websites.

.Com/.Net Web Sites

5

6

April 2005.

.Com/.Net Web Sites

New RegistrationsNew .com and .net registrations were added at an average of 1.6 million per month inthe first quarter of 2005. This is a 19 percent increase over fourth quarter 2004. Oneof the drivers behind this growth in new registrations is registrants setting up websitesto derive revenue from PPC advertisements placed on the websites. While the exactnumber can not be discerned, estimates place these PPC-purposed domain names atapproximately 20 percent of new .com and .net registrations.

.Com/.Net Web Sites

5

6

70%

72%

Q1 ‘04

Q2 ‘04

Q3 ‘04

0% 10% 20% 30% 40% 50% 60% 70% 80%

74%

Q4 ‘04

Q1 ‘05