Many TLDs Facing Increasing Requirements And Reduced Growth, And For One, .NZ, Leads To Registry Fee Increase

Top-level domains, both generic and country code, are facing challenges in recent years for many, with growth either plateauing or declining. The one big exception of course is .com that continues to power along. But for most others growth has stalled or declined, while budgetary pressures have increased due to registries being required to do more, such as combatting internet-related harm, privacy, cybersecurity, compliance checks, customer service difficulties between registrants and registrars and more. All of this requires more money. As a result, for one, InternetNZ, it’s meant a 20% increase in the registry fee for .nz domain names from 1 June 2020, from NZ$1.25 to $1.50 per month which will allow for around an extra $2.1 million in revenue per year.

“Falling registrations are threatening our ability to offer the core security and co-ordination services which our market demands,” said InternetNZ Chief executive Jordan Carter. “In order to sustainably offer those vital services long term, we have to increase our prices.”

Carter also said that InternetNZ now knows the real size of the local market.

“Since we started it’s been all about growth. We can now see how big our market really is and with this change, maintain our organisation at the right size to service that market—as well as delivering on our public good commitments.”

These budgetary pressures are problems facing all registries to varying degrees whether they have growth or not. There’s more competition from the new gTLDs and for the smaller players such as .nz, the large registrars aren’t giving them the publicity in such a crowded marketplace, in some ways being the king and queen makers, the rest being consigned to bit players and left to struggle. Smaller local registrars will still promote their local ccTLD though.

As well, even with all these issues aside, the market in many developed countries’ ccTLDs have reached a saturation point with limited growth opportunities anyway. Those businesses that are already online don’t need many more domain names. Those that aren’t, well, it’s difficult to convince them to do so. And they often find options such as WordPress and social media such as Facebook to be good enough.

It also appears that many large domain name portfolio holders aren’t holding as many domains. As dispute resolution and domain name take down processes have improved the ability is there to protect brands without large defensive registration portfolios.

These were points addressed by InternetNZ’s Commercial Director David Morrison in a post titled “Domain name trends in a maturing market” posted on the day before InternetNZ’s announcement of a fee increase. Morrison writes on 1 February 2018, .nz domain registrations totalled 706,086, rising to 719,266 at the end of 2018, while the past four quarters have seen steady decline with registrations in February this year totalling 709,883.

Top Level Domain Q3 2017 Q3 2018 Q3 2019
.com 130.8m 137.6m 144.0m +13.2m
.tk (Tokelau) 19.1m 21.5m 25.1m +6.0m
.uk (United Kingdom) 10.7m 11.9m 13.3m +2.6m
.cn (China) 21.4m 22.7m 23.0m +1.6m
.tw (Taiwan)     6.8m  
.fr (France) 3.1m 3.2m 3.4m +0.3m
.br (Brazil) 3.9m 4.0m 4.1m +0.2m
.nl (Netherlands) 5.8m 5.8m 5.9m +0.1m
.de (Germany) 16.3m 16.2m 16.3m No increase
.eu (European Union) 3.7m 3.8m 3.6m -0.1m
.org 10.3m 10.3m 10.0m -0.3m
.ru (Russian Federation) 6.4m 5.9m 5.7m -0.7m
.net 15.0m 14.1m 13.4m -1.6m
.info 6.0m 6.0m    
.au (Australia) 3.1m 3.2m    
.nz (New Zealand) 706,086 (Feb 2018) 719,266 (Dec 2018) 711,945  

Source: Verisign Domain Name Industry Brief for Q3 2017, 2018 and 2019 for top 10 TLDs and top 10 ccTLDs

Morrison writes how the rise of social media has seen businesses choose to forgo a domain name in favour of Facebook or Instagram as their business hub. But this may be shortsighted as “consumer perceptions of business websites are overwhelmingly more positive than businesses on social media, but when it’s so easy to create a new social media account you can see the appeal” according to InternetNZ research in 2018.

There’s also some ‘storytellers and influencers migrating from personal sites toward individual channels on Medium, Blogger, Twitter, Instagram, and Youtube.’ As Morrison notes, “there’s a risk here—those creating and sharing unique content on these channels can lose ownership of that content. And in a world where content is king, brands need to protect their identity.”

Morrison goes on to address brand protection, writing that “in previous years, purchasing and parking a domain name was one way to protect a brand name for use at a later date. But as the number of new generic Top-Level Domains (gTLDs) has increased, consumers can have more confidence in the availability of their brand at an alternative TLD without the need to park and protect.”

Going forward, “as we move into a stage of maturity in the .nz market, we’re exploring ways to innovate both within the .nz space and through our exploration of new products,” writes Morrison. “As the global Internet changes so rapidly, it’s important we monitor these trends and respond to ensure .nz provides value to customers for years to come.”