This week here on the gTLD Strategy blog, we’re going to be talking finance. Specifically, we’ll be breaking down the costs of applying for and operating a new gTLD, the application questions that deal with finances, and a little thing called the Continued Operations Instrument. Today, we’re going to get started with the cost breakdown.
At this point, it’s common knowledge that it costs a cool $185,000 to apply for a new gTLD. But what exactly does that sum cover? Essentially, it amounts to a “pay-to-play” filing charge, and it is really just the cover charge applicants will have to pay to get into the new gTLD club. If the application faces complications like String Contention, any kinds of objections or Extended Valuation, that amount will creep up.
Once the gTLD is launched, new registry operators will have to pay an annual fee to ICANN in the amount of $25,000. As with any other new business operation, they will also incur a set of fixed costs to run the gTLD registry. For most corporate applicants, these duties will be outsourced to a registry service provider. In our experience, this fee can run from $10,000 up to about $50,000 per year, depending on the provider. As we’ve said in previous posts, it behooves companies to shop around, not only for the best price, but for the best fit based on their needs. That fee covers registry functions, but does not cover data escrow and registration fees that a registrar would charge, as well the cost for the employees that handle administrative and management duties. When all is said and done, most companies running a registry with up to 500 second-level domains are looking at a baseline of around $85,000 per year per gTLD in fixed costs.
Costs will fluctuate based on how many second-level domains each new gTLD operator wants to register. For companies running a “closed” or “single registrant” .BRAND gTLD just for internal use and marketing purposes, the fees will be much lower than for those running open gTLDs and selling thousands of second-level domains. The ongoing costs are almost entirely variable and depend on the number of second-level domains.
All applicants, regardless of their organization type or intended use for their gTLDs, will have to answer a set of questions about their financial capabilities as part of the application – Questions 45 through 50, to be precise. This will involve providing forecasts of the volume of domain registrations they expect. For those intending to sell second-level domains, including information about how much they intend to charge per registration will likely reduce projected costs significantly since revenue can be used to offset those costs.
Also in their answers to these questions, applicants will have to break down the costs for critical registry functions. This amount will coincide with the amount each applicant will be required to provide for the Continued Operations Instrument.
In the next posts in this series, we will be discussing the Continued Operations Instrument, as well as what applicants will need to know to pass the financial capabilities questions of the application. Check back tomorrow for Part 2.
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