Outsourcing & Registry Operations Present Challenges to New TLD Applicants Published in CircleID, June 27, 2011, by Architelos CEO Alexa Raad

After ICANN announced in Singapore approval of the new TLD program, we heard many prospective applicants say they would start asking registry infrastructure providers to break down their costs into registration and resolution components. The last few TLD launches have shown that although you can achieve some respectable registration volumes for new TLDs, chances are it will take some time for content to be associated with the domain names, and hence, resolutions to pick up. So applicants are considering new business models and re-thinking outsourcing relationships.

Part of the reason may be that it takes time to educate registrants that the TLD is available and then more time to incent end-users to navigate to and otherwise use the new domain extension. The other issue may be what I covered in a previous CircleID post: the user experience with new TLDs will be sub-par, unless applications (email and web related issues such as form fill, etc.) recognize them in time.

So some applicants who’ve studied the last set of TLD launches now figure that if registrations outweigh resolutions for some time, why not price the two components separately, so they pay only for the resources they’ll actually use?  If this becomes the predominant thinking among applicants, it could mean new and more flexible pricing structures from the infrastructure providers.

Meanwhile, the focus now is on the application process for the new TLD program and perhaps the evaluation process. Few applicants are thinking about what happens if and when they get their TLD. I’m not talking about launch plans, awareness etc., but something far more fundamental. All of the launch, sunrise, etc. assumes the applicant has hired a knowledgeable team, set up operations, licensed and configured the various systems they need and that everyone and everything is ramped up in time to  implement the business plan.

Unfortunately, the realities of the domain name system industry present challenges. Have you noticed the recent departures of staff from many well known players? Expect to see a lot more moves as the bidding war for good talent heats up.  Now that the program is underway, competition will be on for resources. Because of the relatively small size of the industry, the few existing knowledgeable resources, and the potential onslaught of new entrants, new TLD operators should expect a costlier and lengthy hiring process.

Setting up the registry involves, amongst other things, the evaluation, purchase, configuration and customization of various software and then staff training so that the implementation is smooth from the start. Examples include the mundane such as such as office productivity and contact management systems to the critical financial systems and compliance management, to name a few. In addition, the policies described in the TLD Application Guide would now need to be codified into procedures and quite possibly integrated into the software and staff training.

New TLD operators could look to their registry infrastructure providers to assist, but the reality is that they will already have their hands full with more TLDs than they’ve ever managed at one time, so their resources will be strained.

Hence, it’s important to set expectations now and encourage TLD applicants to think beyond the evaluation period. What will happen once some finally get their wish? Will they be ready in time?

Alexa Raad