Operator of the dot-London internet registry, Minds & Machines, has told investors that it is "highly satisfied" with registrations in the new domain name extensions it operates – "particularly from a revenue perspective."
Unfortunately, the stock market and domain name industry don't seem to agree. Announcing that it would launch four more top-level domains in the New Year to add to its 10 extensions, the company's stock fell six per cent, later recovering to 2.5 per cent down. At 9.75 pence per share, it is some way from its 20p high mark last year.
Apart from the two city top-level domains that it operates – dot-London and dot-Bayern – Minds & Machines has had a lackluster year alongside other new extensions.
In its statement to investors, the company said it was "greatly encouraged by the uptake of names in dot-beer, where enthusiastic adoption by the North American craft brewers demonstrates how niche marketing to a specific sector can monetise a domain in a highly cost-efficient manner." However, the dot-beer registry has little more than 4,000 domains.
Others including dot-rodeo, dot-vodka, dot-fishing and dot-horse are hovering at or below the 1,000 registrations mark, well below the market average of 10,000 domains.
Pushing what it calls ".com equivalent years", or CEYs, as a way of recognizing changes in the domain name market such as higher prices and longer renewal periods, the company argues it has the equivalent of just under 500,000 dot-com domains, even though its actual total registrations are around 90,000 domains.
Recent decisions and auctions have also seen the company lose what could have been popular new extensions (dot-eco, dot-hotel), and many of the other extensions it has already spent $185,000 apiece applying for are also wanted by companies with much deeper pockets including Google, Amazon and gTLD giant Donuts (app, book, cloud, inc and store, for example).
Even with the most successful launch so far – dot-London with nearly 50,000 registrations – there are questions over the company's go-to-market strategy.
It has reserved an extraordinary 66,000 domains that it hopes to sell at "premium" prices. It has also gone against the market norm by setting a high annual renewal rate, rather than a one-off premium acquisition price followed by baseline renewal costs. This, registrars complain, is reducing demand for premium names. There have also been delays in the auction process for valuable names, impacting brand awareness.
Registrars and domainers have been increasingly vocal about high prices and the tight control that the company is trying to keep over its registries. A dot-London domain costs three times a dot-com. At the same time, the company is undercutting registrars by selling them for less than the market price it sets through its own website. It is also marketing its own sales website heavily on Facebook and in Google ads, leaving the domain selling industry in the cold.
Minds & Machines clearly sees selling direct to customers as an advantage, congratulating itself in its own announcement for being a "forward-thinking registrar" by "marketing directly to the niche verticals represented by many top-level domains" and complaining that it looks forward to "a more predictable and robust distribution channel."
Effectively, the company is banking on far greater consumer awareness of new internet domains and is willing to upset traditional channels in pursuit of that goal. It's a risky strategy that at the moment at least is not paying off. ®