A Name For All Domains

Updated: More than 4.7 million new domain names were registered during the first quarter of 2004, according to stats released Tuesday.

The report issued by VeriSign said the number is the highest quarterly figure for new domain registrations in the history of the Internet.

As the operator of the global registry for .com and .net, as well as the provider of two of the root servers for the global domain name system, Mountain View, Calif.-based VeriSign has a top-level window into domain name space. Its latest quarterly report provides statistics and trends in the domain name market.

More than 63 million domain names have now been registered, the firm said. Quarterly registrations reached a peak in Q1 2004 with 4.7 million new domain name registrations representing 21 percent quarterly growth year over year.

More of those domain names are actively in use than ever before as well, as measured by renewal rates, look-up rates, and the percentage of domain names tied to live sites. Over 72 percent of today’s domain names now resolve to a Web site, up from 55 percent at the height of the boom in December 2002.

“The speculative market has been shaken out, and the market is maturing,” said Raynor Dahlquist, vice president of VeriSign’s Naming and Directory Services. “We’re also seeing growth in registration by current customers, who are coming back to purchase second and third [domain names]. It all points to a maturing industry.” Dahlquist said that, based on reports to VeriSign from domain name registrars, more consumers are registering domain names.

Don’t tell that to Craig S. Miller, CTO of The Next Trend, a corporate asset liquidator based in Santa Ana, Calif. On Tuesday, he announced the sale of a block of 500 domain names related to the trademarked terms atdiscount, atdiscount.com and @discount. The list of names for sale begins with accessoriesatdiscount.com and ends with xmasatdiscount.com. The list was registered over time, with the intent of forming an online e-commerce center.

“Over the years we’ve been offered hundreds of thousands of dollars for some of these names,” Miller said, “but we feel it’s worth more as a collection.”

Miller is almost as ideally placed as VeriSign to track the changes and trends in domain name registration. His company manages e-commerce and online activities for major corporations including Avery Dennison, owns thousands of domain names, active and inactive, and has a bulk account with Network Solutions, the registrar service acquired by VeriSign for $21 billion in 2000 and sold to Pivotal Private Equity for $100 million in 2003. He points out that domain name registration originally cost $70, when Network Solutions controlled it. Now, registration costs as little as $6. He agreed that the resale market for domain names has cooled.

The increase in the number of active domain names was aided by a purge of speculative names that VeriSign undertook in 2002, but it’s also the sign of an improving economy, said Darren Johnston, a principle in the analyst firm ICA Syndicate. “I think improvement we’re seeing is less indicative of speculation and more indicative of a broader market recovery, including the formation of new businesses and new product additions,” Johnston said. “Large enterprise customers are becoming clearer on how to use their digital franchise.”

For example, companies now routinely set up separate Web sites for individual promotions or e-mail marketing campaigns.

The .com top-level domain still accounts for 45 percent of all registrations, followed by the group of all country code TLDs, at 40 percent. The .net TLD holds 8 percent of the market, as does the group of generic TLDs, such as .org, .biz and .info.

But Dahlquist said there is increasing use of country code TLDs by residents and businesses within the country. For example, the .de TLD accounts for more than 90 percent of all domains registered in Germany.

“There does seem to be a country by country preference,” Dahlquist said. “For example, .com and .net still have high value in the U.S. and in Sweden, .com is still seen as de facto. But when you move to Korea or Germany, where there is high nationalistic value, you see a propensity to register names in .kr or .de.”

The increase in registrations and the prevalence of .com are, of course, good news for VeriSign, which manages the .com and .net top-level domain registries under a contract with ICANN. According to a report by investment banking firm Morgan Stanley, VeriSign collects $6 for every name in its registries.

Management of the .net registry will be up for grabs in May 2005. Dahlquist said the company would compete to keep it.

But ICA’s Johnston said he expects VeriSign to lose .net — possibly on purpose. “I don’t know how much of that loss will be with its own orchestration,” he said. “I think they’ll participate in the process and guide it.” Johnston believes VeriSign may be ready to give up .net due to its cantankerous relationship with ICANN.

It filed an antitrust suit against ICANN, because the Internet’s governing body told it to shut down its Site Finder service. Site Finder redirected misspelled URL requests to a VeriSign site that suggested proper URLs, letting VeriSign make money off advertising on the site.

ICANN also halted VeriSign’s planned “waitlisting” service, which put the company in charge of taking reservations for domain names whose owners let their registrations lapse. ICANN relented and approved the service, but VeriSign continued the suit, even as a group of domain registrars sued both VeriSign and ICANN over the WLS.

The court dismissed the anti-trust claim in May, allowing VeriSign to return with a bolstered version.

Johnston says VeriSign wouldn’t let go of .net simply out of pique; it would be a strategic decision to help build the market while taking off some pressure.

“It’s difficult not to have a competitor when you want to make a market,” he said. “In order for VeriSign to continue to mature that sector, they need a formidable competitor and they’ve never had one.”

Corrects prior version to clarify that VeriSign sold Network Solutions to Pivotal Private Equity for $100 million in 2003.

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