A couple of weeks ago we posted and asked the question whether 2009 would mark the first year that new registrations of .com’s and /net’s would actually decline.
For the third quarter they processed 6.9 million new domain name registrations compared with 7.5 million names during the same quarter last year. So year to year new registrations declined for the second quarter in a row. This time by almost 10%.
Now according to the report the loss of domains is attributable to one source, domainers.
“”””The decline was largely expected as new name registrations and renewals for online advertising were down sharply from year ago levels largely reflecting changes in Google’s AdSense program.”””
“”””As a result, online advertising now represents 8% of the adjusted zone down from 9% last quarter. As a reminder, Google modified the smart pricing feature of its AdSense program in June, which impacted the profitability of web pages in the program.”””
“”””We now expect that the renewal rate for names related to online advertising will be lower well into 2009 as the impact of Google’s program changes fully working through the adjusted zone.””””
“”””At the same time, we’re also feeling the effects of lowering Internet advertising spending in general. While the specific data points vary among research reports, the theme that Internet advertising growth has slowed dramatically this year and will likely slow again next year is consistent and this affects our naming business. As a result, the percentage of new name registrations represented by online advertising was 6% this quarter down from 9% last quarter and down from historical highs last year.”””””
Other than PPC domains. New name registrations during the third quarter were approximately 6.4 million, 2% lower than the same quarter last year.
As far as renewal rates the report estimates that they “will be 1% to 2% lower almost entirely attributable to the transition in online advertising and the exit of a few large online advertisers”
Beyond the reduced profitability of the PPC industry VeriSign failed to cite the other major reason for reduced registrations and renewals, their 2 years of price increases. However, they are just looking at the third quarter results, when only the first price increase was in effect. Wait until you see the numbers for fourth quarter and 2009 results, after another 7% increase.
Yes, VeriSign you made a great business decision to keep raising prices in a failing economy.
If you raise your prices by 7% but lose 10% of your business, I think that’s a net loss of 3%.
Smart.
The same logic that served Wall Street so well.
Expect our prediction to come true.
2009 will see a much large loss of new registrations and renewals.
The price increase will be eaten up by lost business, leaving VeriSign with reduced overall revenues.
Meantime all domainers will continue to see our margain reduced as we pay this pay hike.
This is a lose-lose situation resulting from a stupid business decision.
Stupid is what stupid does
Greed is what it comes down too. As a good friend always says “Pigs get fat and hogs get slaughtered.”
All these companies will feel the pain if any of their foundation was built on greed and unethical business practices IMO.
This includes some domainers and their businesses.
The gross number of new regs was also reduced by ICANN’s anti-tasting action (making the $.20 per-domain fee effective on all regs) which went into effect July 1.
On a positive note, the expired domain market will pickup.
“Yes, VeriSign you made a great business decision to keep raising prices in a failing economy.
If you raise your prices by 7% but lose 10% of your business, I think that’s a net loss of 3%.”
Verisign is not seeing total registration drop by 10% every time it increases prices. It is in a monopoly situation, demand dropoff isn’t likely to be anywhere near the level of the price increase. Verisign should be putting up prices as much as possible if they want to maximise profitability (and that is their obligation to shareholders).
The real issue here is poor oversight by Icann to allow prices increases with little justification for them. Verisign is only doing its job and that is to make as much money for shareholders as possible. at the end of the day the finger should be pointed squarely at Icann for failing to protect registrants in allowing all those prices rises.
Snoopy
Is the most money for the shareholders determined over the here and now or over the long term?
If you lose 600,000 registrations at $6 but increase the price by 7% n exisiting registration you might make a little more in year one, but take into account all the renewals you won’t be getting at $6 for every year thereafter on the 600,000 registrations you chased away.
Do the math and you will see the normal Wall Street philosophy, that a $1 in profit today is worth $10 in lost profit in the next few years.
This is one of the reasons we have the mess in the market.
Big business needs to get smarter.
The quick buck today is not worth the loss of revenue down the line or loss in reputation or trust of the public
Great response to this post – Dost thou love life? Then do not squander time, for that is the stuff that life is made of- Benjamin Franklin.