the domain name market

The domain name market

On Friday, tech billionaire, philanthropist, visionary and all-round-good-guy Elon Musk announced that he’d repurchased the domain name ‘x.com’ from PayPal. He tweeted ‘Thanks PayPal for allowing me to buy back X.com ! No plans right now, but it has great sentimental value to me.’ Originally registered in the early 90s, X.com is one of only three single-digit .com domain names in active use.

X.com was the name (and domain name) of Musk’s online payments company from the late 90s. The company, and thus the domain name, was bought out and later became PayPal. 16 years later, Musk bought back the domain name and launched a new website on it. The website’s homepage consists of just one letter: an x in the top left corner. Although, if you try to go to any subdirectory (e.g. http://x.com/index or http://x.com/home), the ‘x’ is replaced with a ‘y’. Very simplistic.

For now, the purchase seems to be completely nostalgic, and there’s no word on how much Musk paid PayPal for ownership of the domain name. Because of the rarity and uniqueness of the domain name, you’d expect it cost Musk a fair chunk of change. By way of comparison, in 2014 Nissan Motor Company sold ‘z.com’ for $6.8 million. Because PayPal is a limited company, they could have to disclose the transaction and price on their annual earnings reports with the government.

Single-digit domain names

The only single-digit .com domains in active use are x.com (Musk), z.com (GMO Internet) and q.com (CenturyLink). As well as the .com domains, the only other single-digit generic top level domains (gTLDs) still in active use are i.net, q.net, and x.org. All of the other single-digit .coms were explicitly reserved in 1992 by Jon Postel of the Internet Assigned Numbers Authority (IANA). It was his desire that no company should be able to commercially control a letter of the alphabet, so he reserved any that weren’t already in use, and they have remained unused ever since.

As new top level domains (nTLDs) were released to the market over time, there became more single-digit domains in circulation – often used as redirects or link shorteners. Twitter acquired t.co, Amazon has a.co, and Google owns g.co, for example.

The global domain name market

According to research from domain registry Afnic, at the end of 2016 there were over 338 million registered domain names in total. 169 million of those were legacy TLDs like .org, .net and .com.

The start of 2017 saw, for the first time in history, a year-on-year decline in the total number of registered .com domain names. Afnic says this dip likely came as a result of a huge spike in registrations at the end of 2015 as the Chinese marketplace began investing heavily in ‘domain flipping’ of .com domains. Effectively, flippers registered domains in bulk with the goal of selling them on for profit, and those that didn’t sell were set to expire. The scale at which this happened caused the overall inventory of .coms to drop for the first time ever.

Domain flipping

Buying and selling domain names is a big industry, and there are some staggering figures paid for the right one, by the right business. The most expensive domain name sale was insurance.com for over $35 million.

At the end of 2016, only just over 25% of domains registered were in actual use – as in hosted, with a website on them. The rest either showed invalid HTTP responses, were being used as redirects, or were ‘parked’. The majority (over 60%) of the domain names were parked with no website or hosting. These are either domains reserved by businesses for future use, or by domain flippers looking to make a profit.

Most popular domain names

With a market share of 39% and over 131 million registrations in total, .com is by far the most popular domain name – which is why all of the good ones have been taken already. Chances are, someone has already registered ‘yourbusinessname.com’, but I’m sure they’d sell it to you for $(reasonable price)*1000 if you asked nicely.

The alternative to a gTLD is commonly a ccTLD (country-code top level domain) like .uk, .fr or .us (United Kingdom, France, United States). ccTLDs prove most popular in Europe, with ccTLDs of European countries (by geography, not politics) accounting for 53.7% of the market share of global ccTLDs.

Continent-wise, the biggest adopter of ccTLDs in 2016 was Africa. With stock increasing 45% from 2.3 million to 3.3 million. By comparison, stock of European ccTLDs increased by just 1.8%.

The growth of ccTLDs and nTLDs (up 144% in 2016 from 11 million to 28 million), as well as the decline in the .com, shows some interesting outcomes. It seems companies and individuals are now looking outside of the traditional .com for their domain names. With domain names, it’s best practice to have one that is short and memorable, and with more than 130 million already registered, there aren’t many short and memorable .com domains left available.

nTLDs like .co and .io are popular in the tech industry, where URLs aim to be as short as possible. The new domain ‘.xyz’ saw a stock increase of 275% in 2016 but had a retention rate of just 49% from the previous year. This shows that a lot of domains are being bought with the intention of reselling for profit, and then just set to expire before renewal if they don’t sell.

So, businesses are getting more specific with their domain names. Restaurants are choosing .restaurant domains, cafes are choosing .cafe domains, churches are choosing .church domains, with a wide range of nTLDs it’s now easier to find a short, memorable domain name that matches your business. So, instead of having to settle for ‘thebeehivepubsouthglos123.com’ as your domain, or forking out half of your annual turnover to buy ‘thebeehive.com’ from a domain flipper, nTLDs allow you to register ‘thebeehive.pub’. Short, simple, cheaper.

To register your domain with over 250 domain name extensions to choose from, visit the Fasthosts domain checker.

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