Web hosting provider iPowerWeb has slashed its domain name pricing to $2.95 a year, following the lead of Yahoo, which is offering limited-time domain pricing of $2.99 a year. iPowerWeb's promotional offer undercuts the lowest prices seen among current market leaders, and is a sign that Yahoo's continuing promotions are pressuring competitors to respond, planting the seeds for further domain price cutting.
Netfirms ($4.95 a year) and 1&1 Internet ($5.99 a year) are currently offering the lowest non-promotional pricing on domain names, which are viewed as an important "gateway" purchase by small business customers who are likely to be shopping for web hosting and e-commerce services as well. Yahoo has been particularly aggressive in using domain pricing to attract new users, with "permanent" pricing of $9.98 supplemented by limited-time offers of $4.98 and now $2.99 a year.
The business of advertising on parked domains is facing a shakeout that could dampen speculation in the domain name market. The domain advertising business, which is based on pay-per-click advertising from Google and Yahoo, has seen explosive growth this year. This week one of the industry's largest players, DomainSponsor, announced that it was shifting its payment model to combine pay-per-click and pay-per-sale ads.
The shift is driven by advertiser concerns about low conversion rates on click-throughs from parked domains. While the new model offers higher payouts for domains that generate sales, it will also mean smaller checks for domains that produce click-throughs but no sales. It also reduces the incentive for click fraud, which is believed to inflate the cost of campaigns in some advertising niches.
Industry observers say other domain parking services may soon follow DomainSponsor's lead. "Is this a sign of things to come? Probably," notes Leonard Holmes of Domain Parking News. "Some of the other major players have beta projects that seem to offer the same promise - a bonus for higher 'traffic quality.' "
British betting site operator Leisure & Gaming plc has paid $1.4 million to acquire the domain name vip.com. The sale is the highest publicly reported domain resale of 2005, nearly doubling the $750,000 price for sales of property.com and website.com. The deal comes just two months after Leisure & Gaming plc acquired VIP Management Services and its themed online betting sites for 23.4 million pounds (about $42 million US).
Prices for registering a stand-alone .com domain remained unchanged this month at all major providers except Register.com, which ended a $30 "sale" and is once again the priciest domain seller at $35. The bargains on new domains have shifted to packages in which a domain is bundled with a hosting account. Go Daddy last week began offering domains for $1.99 with the purchase of any non-domain product, such as hosting or SSL certificates. That slices $2 off the $3.99 price for that package, which Go Daddy introduced in January.
Domain pay-per-click advertising services have come under siege from digital attackers, with distributed denial of service (DDoS) attacks disrupting advertising on hundreds of thousands of parked domains. The attacks in the past week have targeted Sedo and ParkingSite, two of the largest domain monetization services. Both services say they have issued credits to customers to compensate them for service interruptions.
The attacks open a new front in the battle between e-commerce sites and DDoS attackers, who have previously targeted online betting sites, payment gateways and even online games. Sites with large volumes of transactions are the primary targets for a cottage industry of digital extortionists using DDoS attacks, usually launched through large botnets of compromised computers. The sites targeted in the latest attacks have not said publicly whether they received any requests for payment.
The market for resold domains continued to trend higher with a series of spectacular deals this month. Meanwhile, prices for first-time domain registrations can't get much lower, with pricing unchanged at all major providers this month.
The sales of website.com and property.com for $750,000 apiece set the pace in the resale market. The mid-July sale of website.com was the highest sale price this year, according to auctioneer Sedo.com, topping the $700,000 sale of Local.com in March. The buyer, Hub Services Ltd., operates DotEasy, a free hosting service in British Columbia. That price was matched early this month when New Jersey commercial real estate professional Ted Kraus sold property.com for $750,000 in a private sale, with industry veteran Rick Schwartz reported to be the buyer.
As in July, pricing for first-time domain sales remained stable, with no significant price changes by major providers.
EurID, the operator of the new .eu top-level domain (TLD), says registrars won't be allowed to sell .eu domains through resellers. In a statement on its web site, EurID says its agreement with the European Commission prohibits .eu sales by parties that haven't been approved by EurID. "This means that the offering of services as a 'reseller' ... is completely excluded," says the statement. While no firm date has been set, the launch of .eu domain sales is expected to begin in early 2006. Domain industry insiders say similar reseller bans are being considered for other upcoming TLDs, including the .xxx and .travel extensions.
Resellers are an important sales channel for many domain name registrars, who provide back-end management of the domains sold by partners. The reseller model is used by thousands of web hosting companies, allowing them to seamlessly sell domain names alongside their core hosting and e-mail offerings. Some registrars specialize in the reseller market, providing private-label domain management sites, which can be branded with the resellers' logo and marketing. One of the largest reseller networks is operated by eNom, which is among the registrars approved by EurID to sell .eu domains.