ICANN has removed pricing caps on .org, so the company can charge whatever it wants for .org domains.

Posted by

The economics of .org domain names

Ethos Capital just bought a license to print money.

Picture of printing press printing money

Yesterday, Internet Society announced it was selling the .Org registry to a private equity company. The price has not yet been disclosed, but it was surely a very high figure, as I will explain.

.Org is the second most valuable namespace behind .com. As of the end of July, there were 10.5 million .org domains registered.

Although many associate the name with non-profits, anyone can register a .org domain for just about any purpose. Some groups even register .org domains instead of .com.

Let’s look at the economics of the .org namespace.

To start, round down to 10 million domains. At $9.93 per domain, it brings in about $100 million in revenue at today’s wholesale price.

Costs are minimal. About $18 million to backend registry Afilias (which will be negotiated down again in the future), a few million to ICANN, some marketing budget to registrars and staff to help push the name. Call the staffing element about $3-4 million, but it could be lowered. Especially if you fold it into Donuts or another registry.

But Ethos Capital wasn’t paying just for this $100 million a year. ICANN has removed pricing caps on .org, so the company can charge whatever it wants for .org domains.

To maximize profits, it should wait a year until things quiet down and then implement an increase. Raise it 50% to $15? Double it to $20?

Let’s go with the $20 price tag. This would have only a slight impact on total .org registrations. A company using a .org isn’t going to switch domains over five or ten bucks a year. It’s too much work. Some people will drop excess domains and domainers will think twice. But I believe .org would lose no more than 10% of registrations.

So 9 million domains x 20 each = $180 million revenue. And the costs barely budge.

There’d be some uproar. But Ethos could offer free .org domains to non-profits that apply. “Hey, fill out this application that takes an hour telling us about the good work you do and you get your name for free.” Very few non-profits will take them up on this. They can do more with their hour than fill out an application to save twenty bucks.

Also, registrants can renew for up to 10 years in advance at today’s prices. Not bad for Ethos if people want to pay ten years’ worth of registrations in advance. Most won’t. – full story – domain name wire .com