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Domain industry likely to suffer from coronavirus as ICANN slashes budget by 8%

Kevin Murphy, April 28, 2020, 16:48:04 (UTC), Domain Policy

ICANN is predicting a miserable time for the domain name industry due to the coronavirus pandemic, today announcing that it’s slashing its revenue outlook for the next year by 8%.

The organization expects to receive revenue of $129.3 million for the fiscal year beginning July 1. That’s $11.1 million lower than its previous estimate, which was made in December.

ICANN’s budget is based on projections based on previous industry performance and its accountants’ conversations with registries and registrars, so this is another way of saying that it expects the industry to suffer due to the pandemic.

ICANN said in its newly revised budget:

ICANN org funding may be impacted because the economic crisis stemming from the pandemic has the potential to impact the funding from domain name registrations and contracted parties through the end of FY20 and into the first months of FY21. ICANN org also anticipates there may be long-lasting effects of such impacts. At the time this document is published, the impact cannot yet be quantified.

The drill-down is not great, showing that ICANN expects registries and registrars in both legacy and new gTLDs to be hit.

New gTLDs are predicted to be hit hardest, with revenue from registry transaction fees dropping by a full 33% from its FY20 forecast. That’s a drop from $6.7 million to $4.5 million.

Extrapolating from its $0.25 registry fee, that means ICANN thinks there will be 8.8 million fewer billable transactions — registrations, renewals and transfers in new gTLDs with over 50,000 names — for the year ending June 30, 2021.

Expected revenue from registrars selling new gTLDs has also been slashed by a third, down from $5.3 million this year to $3.5 million next year.

Legacy gTLDs are expected to fare a little better.

ICANN predicts transaction revenue from legacy gTLDs to decrease over the period, down to $47.7 million in FY21 from $49 million in FY20. Registrars selling legacy gTLDs are expected to bring in revenue of $29.7 million, down from $33.3 million.

That also represents shrinkage measured in the millions of domains.

It gets worse. ICANN is also expecting the number of registries and registrars to decrease even faster over the course of the next year.

It thinks it will end June with 1,174 fee-paying registries, but for this to decrease by 62 in FY21. It decreased by 29 in FY20. Many of these will probably be unused dot-brands having their contracts cancelled.

On the registrar side, it expects to lose 380 accreditations in FY21, compared to a loss of 104 this fiscal year, to end FY21 with 1,977 registrars.

ICANN does not expect its voluntary contributions from ccTLDs and Regional Internet Registries to decrease, but it does expect to lose a few hundred thousand bucks from the absence of sponsorship of its in-person meetings.

This overall predicted decrease in funding has led to a matching decrease in planned expenditure, with ICANN saying it will operate with “increased prudence, frugality, and with heightened conditions of necessity”.

It’s going to save 20% less on travel — $12.4 million — due to coronavirus-related restrictions, but seems to still be planning to take the industry to Hamburg in October for ICANN 69 (even though Munich has cancelled Oktoberfest this year).

ICANN also plans to delay some projects and to reduce its average headcount by 15 to 395.

The lower budget projections come even as some registries —including CentralNic, which looks after some very large new gTLDs — have said they expect the financial impact of coronavirus to be minimal.

The revised budget is published here and ICANN’s board may approve it as early as next week.

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Comments (1)

  1. Brad Mugford says:

    Looks like ICANN might need more shady kickbacks, like in the Verisign .COM extension…

    Brad

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