Why international domain prices are going up, and what we’re doing

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Max
29-06-2022
News

The market for international domains is tilting in favour of a few massive players, so we’re doing what we can to work around them.

From 1 July we will be charging more for international domain names like .com and .au. It’s not the sort of thing that we enjoy doing, but the simple fact is that we have been asked to pay more for each domain name that we secure for our customers. There’s more about domain pricing in our previous blog article. This article takes a look at the domain name industry to see where price rises are coming from, and what we’re doing to improve things for MyHost customers.

How the domain name supply chain works

To get started, let’s look at what happens when you register a new domain through MyHost.

Every domain name ends with a TLD (top-level domain) - that’s the bit after the dot. The most obvious example of a TLD is .com. Depending on the exact TLD, there’s an organisation or company that’s responsible for administering it. In the case of international domains like .com, that’s ICANN (the Internet Corporation for Assigned Names and Numbers). If it’s a .nz domain then the equivalent is InternetNZ.

If ICANN is at the top of the supply chain, then the next link is a registry. That's who operates each TLD - they set the price all registrars pay, like InternetNZ does for .nz. However, while InternetNZ is a NZ organisation with members, many overseas registries are owned by private companies. Next come registrars - they are accredited companies which comply with all the rules and regulations set by ICANN, the registry, and/or other administrators. Registrars then have their own customers who ultimately provide domain names, along with the tools to manage them, to customers like you.

When you get a .nz domain through us, we are the registrar working directly with InternetNZ. On the other hand if you register a .com then we have a few more upstream companies who have shareholders to report to. This helps explain why this week’s price rises haven’t affected .nz domains.

Two big reasons for higher domain prices

So, why are international prices rising? For a number of years now we’ve seen two big, long-running trends work together to change the international domain name market and increase prices. They are deregulation and marketing consolidation.

The rules that controlled pricing are being loosened

Start with deregulation. ICANN used to enforce firmer caps on prices for TLDs like .com and .org. Since 2020 those caps have been allowed to rise, fast. Today there’s every indication that registrars will be allowed to add 7-10% to their prices every year.

This affects some of the most popular international TLDs.

It’s getting harder to find competing suppliers

At the same time as this, mergers and acquisitions within the industry have left fewer registrars to compete with each other. This sort of market consolidation has been going on at almost every level of the tech industry, often with private equity investors snapping up brands that begin as independents but end up as stablemates.

Here at MyHost we’ve seen market consolidation at the local level - overseas acquisitions explain why there aren’t as many NZ-owned hosting companies as there used to be - and internationally. We used to have two separate supplier relationships for international domains like .com. It made sense to us to split our eggs into a couple of different baskets, but ultimately both suppliers have been acquired by the same private equity investor. Despite our careful planning, we’ve lost our diversity of supply.

In other cases there’s literally no chance of finding competing registrars at all. As our article about why .kiwi domains cost more than .nz explains, .kiwi is owned by a monopoly supplier - which means a single price-setter. There are many other TLDs like this, from .travel to .ninja, with commercial owners.

It’s worth talking about .biz and .info here. These are relatively popular TLDs, which for years had been priced in the same ballpark as .com and .net. It would have been easy to believe that they were administered in the same way as .com and .net, but this hasn’t ever been the case. Instead, .biz and .info have private, commercial owners who have started to multiply what they charge. Perhaps the biggest surprise is that they took so long.

We’re getting ready to shorten the supply chain

Now for the good news. Through one of our sister companies, we have earned ICANN registrar accreditation. This is a massive milestone in a much larger project to work directly with the ultimate suppliers of domain names. We will eventually be able to cut a number of middlemen out of the supply chains that get domain names to you, via MyHost.

We’re already a .nz registrar, so this isn’t completely new to us. There is still a lot of work to do before we’ll have everything in place, but when we do we’ll have a bit more control over domain pricing. It will be worth the wait.