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Is the Domain Name Biz Recession Proof?

The domain name business is still adding new registrations even in the midst of the worst recession in at least 50 years.

According to the latest Domain Name Industry Brief from VeriSign (NASDAQ: VRSN), at the end of the first quarter of 2009 there was a total 183 million domain names registered across all Top Level Domain (TLD) names, representing a 12 percent increase on a year-over-year basis.

That said, new domain growth is actually slowing, according to a different metric in the VeriSign report.

The VeriSign report stated that 11.8 million new domain names were registered in the first quarter of 2009. According to the report, "this reflects a 17 percent growth in new registrations over fourth quarter 2008, but a 17 percent decline from the same quarter in the previous year."

Not all TLDs are growing at the same rate. Specifically, for .com and .net domains, VeriSign reported that the total number of domains grew by 9 percent on a year-over-year basis to 92.4 million domain names.

"We were pleased to see better than expected growth in the quarter and believe it is due to a number of factors including seasonality, as the first quarter is typically the strongest quarter for this business," Jill McNabb, VP of Naming Services at VeriSign, told InternetNews.com.

McNabb added that new .com and .net registrations were added at an average of approximately 2.4 million per month in the first quarter of 2009, for a total of 7.3 million new registrations in the quarter. This 17 percent increase from the previous quarter also marked the first positive growth rate in new registrations since the first quarter of 2008.

"While throughout most of 2008, the rate of growth of new .com and .net registrations was not as high as it once was, VeriSign still saw new registrations each quarter, which added to the overall base of .com and .net domain names," McNabb said.

While .com and .net are growing, so too is the .cn China Country Code TLD (ccTLD). On a year-over-year basis, the .cn ccTLD grew by 27 percent. The .cn ccTLD has been the second largest domain space (behind .com) in the world since December, when it surprised Germany's .de. VeriSign's report does not provide specific figures for the actual size of the .cn domain space, but they're not worried that it will surpass .com anytime soon.

"While .cn continues to grow as Internet use becomes more widespread in a country with a massive population, .com still has the largest base and we do not anticipate that this will change in the near future," McNabb said.

The growth of the domain business is good business for VeriSign, which recently reported revenue growth for its own first fiscal quarter of 2009.

Could the increase in domain registrations be a sign the economy is turning?

"We are cautiously optimistic that the increased growth in domain name registrations signals that the worst is over and may be a sign that the economic environment has a glimmer of stabilization," McNabb said. "While there are quarterly ups and downs in the domain industry -– and the larger economy expands and contracts -– the Internet continues to show sustainable growth year over year."