The advent of new types of Internet domain name does not appear to be the windfall that some providers were hoping for. They might therefore have to think about diversifying their activities.

Does the Internet Domain Name Industry Need to Change?

The majority of Internet domain name providers are not very optimistic regarding future development in their sector. For example, only 7% of German companies offering registrar services expect strong growth in the market. The Registrar Atlas 2013, a comparative survey of domain name providers across a number of European countries, compiled by the Association of the German Internet Industry, shows that the arrival of new generic Top-Level Domains (gTLD), which are characterised by denominations such as .biz, .int, .coop and .edu, have not met with an enthusiastic welcome from domain name providers. Over the next five years TLDs will on average not exceed 1% to 10% of the product portfolio of European registrars. Those looking for a more profitable market will therefore need to seek out opportunities to diversify their product offering.

Diversification the key?

Only 50% of UK and Bulgarian companies responding to the Registrar Atlas survey report that sales of domain names constitute a large proportion of their revenue, while for French providers, domains remain a sideshow, fully 40% of respondents stating that this is not a very important business. Among the activities towards which these companies are diversifying, the provision of Domain Name System Security Extensions (DNSSEC) protocols represents a potential way of boosting business. Some 36% of German registrars envisage offering these protocols to their customers, 21% plan to market suggestions for similar domain names to client companies, 19% include Internet site design in their product portfolio, while 12% provide, or plan to provide, certification services. Most Internet domain name providers thus have a range of existing products in their portfolios, but there are strong contrasts. While in France domain name suppliers are not very diversified, providers in the Netherlands are offering cloud-based services, data servers, electronic mailboxes and website hosting services.

Threats to provider viability

Survey respondents believe that the Internet domain name industry is to a greater or lesser extent under threat from the burgeoning use of mobile devices, apps and search engines. Some 53% of domain name providers see search engines as a threat to their business, and 49% state that ‘vanity URLs’ used on social network sites could also threaten their existence. Mobile devices are seen as one of the greatest dangers to the industry, with 57% of those surveyed seeing some risk that the gravitation of the online consumer towards downloadable apps and ubiquitous use of search engines will mean that Internet domain names are no longer used.

By Guillaume Parodi