Stuart Lawley of .XXX domain registry ICM Registry answers questions relevant to new TLD registries.
With dozens of new TLDs coming out every month, I thought it would be interesting to get thoughts from a registry that launched its domain a few years ago: ICM Registry and .XXX. I reached out to Stuart Lawley of ICM Registry to get his thoughts on what is transpiring. Lawley provides some great insight into premium domain names, marketing, and realistic expectations. .XXX has been a financial success for ICM — but it has invested millions of dollars to make this happen.
DNW: .XXX launched near the end of 2011. Bring us up to speed on the metrics — number of registered domains, blocked domains, etc.
Lawley: We currently have just under 110,000 paying registered domains. The number of names “blocked” under our innovative Sunrise B program was just over 70,000. Our database shows total “domains under management (DUMS)” of around 195,000 including all reserved names etc…
Our “peak” number of actual registrations was circa 146,000 which was achieved in year one after a 55,000 day one performance and a 110,000 end of month one figure. This may give an indication as to where many of the new registries may end up in bona fide registration levels. We have since gone through 2 renewal cycles with better than average renewal rates (greater than 70%) and the overall number of names under management seems to be at a fairly static level with around an average of 30-40 new names registered each day.
DNW: What has been the biggest surprise, either good or bad, now that your domain has been on the market for several years?
Lawley: Given the turbulent path we had to delegation, I don’t think anything that has happened since launch has come as a surprise.
We had always touted the potential performance benefits of .xxx and perhaps the most satisfying trends that we can reflect on after 3 years is that it’s encouraging for our customers to report back the “overperformance” of their .xxx sites in terms of SEO, bounce rate and conversion ratios compared to many of their existing, similarly situated, .com sites. This in turn has led some major adult industry groups, who may have initially been opposed to .xxx domains, to eventually adopt .xxx after seeing and hearing the irrefutable empirical evidence reported by their peers who embraced .xxx names earlier.
It is also very satisfying to see .xxx sites often listed in the top 10 results, even at #1 sometimes, in Google for the more common everyday adult keyword searches. In my own personal experience I cannot name another gtld or cctld that I regularly see on the first page of search results for common keyword terms.
We are also rightly very proud of our stewardship of this important domain and in most circles we are regarded very highly for our responsible, innovative and thorough approach to running a niche TLD targeted at a specific vertical.
DNW: Which new TLDs are you involved with?
Lawley: We were the sole applicant for .porn and .adult and we are currently going through the final contract stages with ICANN before we hope to launch them later this year. We are in a contention set with another applicant for .sex and that is currently scheduled for ICANN auction in March 2015. We are confident in bringing .sex to market alongside our other adult themed TLDs.
Existing .xxx registrants will have the pre-emptive right to register the matching name in the new TLDs we bring to market, subject, of course, to the final terms and conditions of the program and complying with the rules laid down by ICANN for the roll out of new GTLD’s.
DNW: .XXX continues to make headline-grabbing premium domain sales. Some new TLDs seem to be struggling with this. How do you continue to make six and seven figure domain sales?
Lawley: Compared to many new GTLDs we held back a very small number of names (approximately 1,500) as part of our Premium Name Program. We were the only TLD launching in 2011, hot on the heels of the successful .co launch. Following enormous press coverage and having spent around $7.5 million on direct media buys including national TV in the US, there was a lot of interest in our new TLD and this resulted in us achieving some very notable premium name sales out of the gate.
I think anyone expecting to buy a premium name in a new TLD and to make a quick profit on a flip sale is likely to be disappointed. There are 2 typical buyers; a) actual end users who intend to develop and new and interesting sites on the domain at some stage and b) speculators/investors. For the buyer type a) (actual end users) the proof statement of the wisdom of their purchase will be determined by the eventual performance of the site and the returns for type b) buyers (investors) is also determined by the results obtained by the actual end users. I remember when we did the $1.65 million founders deal with Frank Schilling he and I agreed that it would take many years, perhaps as many as 10, before the “jury would be in” on the performance of his investment. In the early days many folks would, perhaps rightly viewed Frank’s speculative investment as a poor one, but as the .XXX space is maturing and delivering for its registrants, it now seems to be quite a good one.
I believe at last count we had sold over $15 million in premium names since launch and continue to do new deals every week at, or very close to the prices published on our premium name list. Apart from say half a dozen names we sold at TRAFFIC in 2011 at launch, we have not listed any premium domains for sale in auctions or other listing services like Sedo. The reason for this is actually very straightforward. The potential adult industry end users simply are, in general, not looking to buy domains from those sources.
We have made most of our sales via face-to-face negotiations at the various adult industry trade shows and gatherings we attend and sponsor around the world.
This targeted direct-to-end-user sales and promotional activity probably costs us around $ 1 million a year taking into account media spend, sales salaries and commissions, travel, entertainment etc. We have been doing this consistently for 3 years now and the recent $5 million deal we announced (including sex.xxx @ $3m), was a result of numerous face to face meetings on different continents and over a period of almost 2 years.
The vast majority of our premium name sales have been for single payment cash consideration but we do also consider sensible staged payment arrangements subject to suitable “finance” charges. Being the registry we are, of course, in a unique position regarding “security” over the asset, compared to the normal escrow based transactions.
As a well financed registry we were never in the position to have to sell premium names to raise operating cash. It was our deliberate decision on our part to put, what we saw as reasonable price tags on the names we had for sale that we believed offered good value but also a good return. We were also confident enough in the prospects for the .xxx domain to wait a year or two before that value became more obvious to would be buyers, as now seems to be the case.
DNW: What, if any, mistakes do you see companies that are rolling out new TLDs making?
Lawley: From what I have seen so far from portfolio applicant Donuts, who I believe have launched most of the new gtlds to date, they are employing a deliberate, well thought out long term strategy, which I applaud and believe will prove ultimately successful for them given their huge economies of scale.
For many of the others I have already seen launch and continue to watch launch on what seems to be an almost daily basis, there seems to be an increasing air of desperation. Owning a TLD registry used to be viewed like owning a “Faberge egg” but now a non stand out TLD is more of a commodity. From my perspective the vast majority of the new strings just aren’t very good or appealing, even to a relatively limited audience. An audience that is almost impossible or prohibitively expensive to reach for most I must add. There seem to be VERY VERY few short, 3-4 character gTLDs focused on specific verticals that have the size of membership and or motivation to help build a successful registry. The gTLD launch space is massively cluttered right now and is almost impossible for any registry to get heard above the “noise”, even amongst the “insiders” that make up the domaining industry.
We have already seen some “free” offers and what seem to be potentially questionable marketing initiatives and the like that add to the pervading air of desperation and may lead to a continued race to the bottom allied to a negative perception of new gTLDs in general.
There has been a lot of comment and speculation about what constitutes “success” in this new paradigm.
To me it’s quite simple:
For the registry: If the registry operator is a for profit enterprise then its success can be measured in its financial performance for its investors.
For the end user registrant: Success for them is having a domain name they are happy with, can use effectively, that is recognized and delivers for them the traffic and customers they want.
For the domain investor: Success, I would imagine would be measured in the total ROI measured over several years of all investments in a particular gTLD.
At ICM, 3 years on we believe we have succeeded on all fronts.
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