Masters Of Their Domains? - Page 2

The Big Fish Thrive
The bursting of the dot-com bubble brought a healthy dose of reality to the registrar business, but unlike many other Internet sectors, it remains highly fragmented. The Internet Corporation for Assigned Names and Numbers (ICANN) has accredited 122 registrars, and many small, mom-and-pop operations have survived in a market that's truly global in scope.

However, the center of gravity of the registrar business remains at the top, where three companies - Verisign, Register.com, and Tucows -- accounted for 51 percent of market, according to SnapNames.com. Verisign, despite losing so many registrations from October until June, is still the undisputed leader with a 33 percent market share. Tucows has replaced Regiter.com at No.2 with 10.2 percent, while Register.com has 9.9percent.

"Revenues are still bunched at the top," says SnapNames.com's Cole. "What are some of the smaller-volume players going to do to stay healthy? Our observation was that unless some new products are brought into the marketplace, it looks like some of those are ripe for consolidation."

With many discount registrars selling domains for as low as $10, one industry executive at a large registrar says it is not possible for them to stay in business, given the economics of the industry.

"To make this business a viable business you have to be a certain size," the executive says "You have a few players out there charging very low prices. Looking at the economics, they're going to have trouble making money."

Beyond the Domain
With registrations now leveling off, registrars have focused on providing more services to their valued customers, typically large companies with many domain names under their control. But unfortunately for everyone in the market except Verisign, the business of "wait-listed" domain shopping is now off limits as a potential revenue stream.

That means companies are left to offer their customers value-added services, including the company's digital-verification and various and security products, as well as back-end services for Web sites. The goal, says Verisign's Donoghue, is to draw customers in with domain names and bump them up to other services.

"Our business today is not just about selling names," he says, pointing out that 35 percent of those registering a domain with Verisign also bought at least one add-on service.

Registars are confident more businesses will continue to use country domains for specific national marketing campaigns.

"When you look at [country domains], they're a lot more expensive, often costing hundreds of dollars," says Register.com's Pollack. "Many are manual, require paperwork, require a trademark, or presence in the country" - further boosting the price.

"Adding new services and proving new value is one thing facing the industry," says Lisa Melsted, an industry analyst with Yankee Group. "A lot of big players had been moving toward putting names together in a brand-management mix. It's not a bad move particularly for large enterprise companies that own lots and lots of names that aren't centrally managed."

Register.com has pushed this service, Pollack says, in order to position itself as the one-stop resource for companies that can have thousands, even tens of thousands of domain names.

The company offers corporate services, from centralized billing to industry data to premium domain name system. Pollack says companies are beginning to realize the importance of having a domain-name strategy, including monitoring derogatory sites.

A recent example of such a snafu was PwC Consulting's decision to re-brand its business as Monday, launching a Flash (and consultant-speak) heavy Web site, www.introducing monday.com. However, PwC did not register the UK address, only to see a British prankster register the introducingmonday.co.uk site for a parody. IBM ended up buying PwC and deciding to scrap the Monday moniker.

"You don't want your name taken over," Melsted says. "That's one of those brand-management issues that's often overlooked and can be somewhat damaging to a company's reputation."

While the gold rush days of business.com are over, registrars hope their new services will help them chart a steadier, if less spectacular growth.