Shrinkage in the .nz domain namespace is unprecedented

In October 2022 the total number of registered .nz domains (including .co.nz, .net.nz, .school.nz, etc) passed 750,000. That’s roughly one for every 7 New Zealanders. It was quite the milestone and more growth followed, like it almost always does.

But something very unusual has happened since then. The .nz namespace, as it’s known to geeks like us, is shrinking. The fastest-ever decline in .nz domains started in mid-2023, and it hasn’t finished yet.

We know this thanks to figures from the Domain Name Commission, which oversees the .nz market. What else has the DNC reported lately, and what it might all mean?

The sharpest drop

Here’s the DNC’s graph of total .nz domains from January 2013 (as far back as their market data webpage goes) to November 2023, the latest available. As you can see, for more than a decade things have gone up much more than down.

Squint and you can see some of New Zealand’s online history. The steep rush from around 550,000 to 650,000 domains, for example, shows the release of direct .nz domains (like myhost.nz, rather than myhost.co.nz) in the mid-2010s.

But in the top right-hand corner the story takes a sharp slide down to around 746,000 domains by November 2023. That’s 12,000 lower than June’s peak (758,000). Only one other collapse of this size has ever happened, starting in October 2018 and lasting through all of 2019.

1 out of every 6 domains with a November ‘23 expiry date has disappeared for good.

In fact, those are only two times when this graph has drooped for more than one or two months in a row. Let’s zoom in to the last six years so we can see them both:

What’s different this time is the speed. The same losses that took 18 months in 2018-20 have only taken 5 months now.

Another difference: we now know where the bottom was in 2018-20. The DNC’s official data hasn’t caught up with the last two months but we’ve seen other, less official, sources for December and January and the trend isn’t changing. This will be confirmed as New Zealand’s deepest-ever domain recession, as well as our fastest.

A bit of perspective

12,000 sounds like a lot of domains - and in a way, it is. But this isn’t exactly a massive collapse. Only around 1.6% of .nz domains have disappeared. There are still plenty of websites and email addresses that end in .nz, and that’s not going to change any time soon.

But when the normal state of affairs is consistent growth, this is still worth looking into.

Behind the headline numbers

The DNC and its parent organisation, InternetNZ, give us a few different ways to slice and dice the stats.

Almost every top-level domain is affected

First we’ll break the numbers up by NZ’s 16 top-level domains (TLD). Comparing December 2022 to November 2023, almost every TLD has shrunk:

• .co.nz, which accounts for over 70% of all .nz domains
• .nz, which makes up another 21%
• .org.nz (3.5%)
• .net.nz (2.4%)
• .kiwi.nz
• .ac.nz
• .gen.nz
• .geek.nz
• .cri.nz (the smallest TLD, which went from 6 domains to 5)

Some TLDs have kept growing. Every TLD associated with the public sector has seen year-on-year increases. Take a bow, .govt.nz, .mil.nz, parliament.nz, health.nz and .school.nz. Meanwhile both .iwi.nz and .maori.nz held steady.

Low renewal rates led the collapse

When you register a new domain, you choose a period of 1 to 10 years. (The one year minimum was introduced as part of a big technical change in November 2022). After that you have the option to renew it for another 1-10 years.

This will be New Zealand’s deepest-ever domain recession, as well as our fastest.

Usually around 90% of .nz domains are renewed when the time comes. For years the actual rate bounced around between 94% and a low of 86%, which we hit 3 times in 100 months.

An early red flag appeared over a year ago. In December 2022, renewal rates dropped to a record low of 83%. At the time more than enough new domains were registered to make up the difference, so perhaps things didn’t seem so bad.

The red flag kept waving though. For all of 2023 renewals never topped 87%. The nadir (so far) was 79% in October. For every 5 domains that came up for renewal, 1 was left to lapse.

The most recently reported renewal rate is only 83.2%. 1 out of every 6 domains with a November ‘23 expiry date has disappeared for good.

New domain creation is historically low, too

If enough new domains appear, they could make up for all the old ones that disappear. If.

When new domains are registered, the DNC calls it a “create”. Domains that aren’t renewed are called “deletes”. Right now “creates”, like “deletes”, are setting records but not good ones. The DNC’s graph shows creates in black and deletes in red. The lines are 6-month moving averages:

As you can see, “creates” are almost always higher than “deletes”, and they had never settled below 8,000 a month until 2023. Now they seem stuck there.

So the stock of .nz domains is being drained as people don’t renew domains, and it isn’t being replenished anywhere near as much as usual.

This isn’t just a New Zealand thing

Because we also do business in Australia we have an eye on .au domain stats, which come from auDA, the .au Domain Authority. The picture there is quite similar, but a little less grim for now.

Total .au domains started dropping in September, a few months behind .nz, and they’re now down almost 1% from their peak. It looks like a drop in renewal rates was what started the fall, but auDA doesn't report that stat directly.

Maybe the drop will be shallower over there, or maybe they’ll keep following our lead. Time will tell. But so far, it’s a familiar picture to us kiwis.

And that’s the data analysis done. Now let’s break out a crystal ball and predict the future.

How long will this last?

Predictions are hard, of course, but it seems safe to say that this domain recession is going to continue a while longer. Remember that the last one lasted 18 months. Today’s decline only started about half a year ago.

Plenty of future “deletes” will already be locked in, so those numbers will stay high. Even if you take your website offline and close down your email address, your domain is registered until it expires. It won’t show up in the statistics until then, which could take years. There are bound to be more abandoned domains waiting to lapse.

Only one other collapse of this size has ever happened, starting in October 2018 and lasting through all of 2019.

On both sides of the Tasman the domains that are dropping off the internet probably include covid-era side hustles, fun ideas that are harder to pay for when the cost of living is biting, and businesses cutting inessential domains (like short-term campaign websites, or domains that they’ve been sitting on just to stop anyone else from grabbing them).

Domain creation is harder to predict. But if we think of domain registration as an economic activity - a sign that someone’s going into business, for example - then they will rise again when confidence does. Or when the cost of living and inflation stop clouding the future so much. Even economists struggle to say when that will happen.

There’s an international angle as well

Did you know that New Zealand doesn’t have any rules to stop overseas companies setting up .nz websites? (This is one of the reasons why it can be hard to tell whether you’ve found real NZ web hosting when you search for it, but that’s another story). The trends that drive overall .nz domain numbers are partly international.

Overseas buyers surely contributed to the growth in .nz domains for many years, so they’re probably involved in the drop as well. Perhaps retailers with a lot of national sites are cutting back on smaller countries. Perhaps some have started running a single, international site, which could be simpler and cheaper. And perhaps doing business in New Zealand from afar is less attractive now than it was during the online shopping boom of covidtimes.

Could your .nz domain be cheaper?

People are cutting back what they spend on domains, so let’s finish with a quick word about prices. This is something else that the DNC tracks, and their latest update told us that the median price for .nz domains is $44.80 (incl GST). That’s $14.95 more than you’d pay at MyHost.

The same .nz domain carries a different cost at different retailers. The bottom line is that our .nz price, $25.95/yr (excl. GST), is cheaper than the regular renewal prices at:

• Freeparking - $49.95
• HostPapa - $39.95 plus another $39.95 for so-called “essentials”
• Crazy Domains - $35
• Discount Domains - $38.95.

Every dollar counts, and by transferring domains to us, you can save money over any of these competitors - and many others.

Main photo by Ussama Azam on Unsplash