As the leading consulting firm to the Domain Name industry, we work with many of the leading existing gTLDs, ccTLDs and new gTLDs. During our engagements we do a lot of listening (as well as work) and this gives us a unique perspective on the key challenges the industry is facing. Recently, we are hearing a lot of concern from many leading registries / registrars about their need for more dynamic pricing / promotions and the inability of their back-end providers to give them what they want to compete effectively in the marketplace.
THE MACRO VIEW
- Growth rates in the overall Domain Name industry (existing gTLDs & ccTLDs) have shrunk or disappeared and in a cut-throat marketplace, pricing and promotions are seen as a key tactic to survive
- Over 300 new gTLDs have completed their launch phases (Sunrise, Landrush & early GA) and now are focused on stimulating demand for their strings through innovative sales & marketing programs
- The explosion of gTLD choices has changed the Registry:Registrar dynamic from Few: Many to Many: Many, and this has led to increased complexities for the Registrar community on how to manage their expanded inventory
As the Domain Name industry matures and new gTLDs come into the market place, the old way of selling domain names with a fixed, static price and paid using the “top-off” model is going away. More and more Registries are moving to sophisticated pricing and marketing programs along with selling domain names on credit terms to Registrars.
While the use of credit terms and dynamic pricing plans help Registries drive business and brand awareness, they have greatly increased the back-office accounting headaches for both the Registries and the Registrars.
Registrars now have to figure out how to accurately reconcile, voucher and pay all the multiple TLDs each in various stages of launch, with different pricing policies, variable renewals, and premium names.
Registries now have to accurately compile all domain activity, assign correct pricing, calculate taxes and discounts plus account for any marketing rebates or credit in preparing invoice, manage credit risk, resolve disputes and account for cash receipts in more complicated ways to allow aged receivable reports to be more accurate.
Registries are finding out that their back-end providers cannot adequately handle their business needs for more complex pricing & promotions options OR the time demanded by the back-end providers to change the pricing tables renders the proposed promotions useless.
Many registries / registrars feel that are being thwarted by their finance & billing systems as they try to operate in the new world order.
Yes, the industry is changing and your accounting complexities are only going to increase. But the good news is that other industries have solved the accounting issues of dynamic pricing, marketing rebates and credit terms.
For example, the hotel industry has many of the characteristics of the domain industry’s registries and registrars. Hotel rooms in various hotel properties (Hilton, Hyatt, Marriott, etc) are akin to domain names and are sold by travel wholesalers (Expedia, Hotwire, Kayak, etc). These hotel properties are akin to registry operators, and the travel wholesalers to registrars. Hotel rooms are priced differently even within the same hotel complex, and the total invoice could include other services such as room service, entertainment and spa, as well as tax.
A software service called Folio Exchange™ revolutionized the hotel industry by solving the invoicing, remittance, and cash accounting complexity for travel wholesalers and hoteliers. Folio Exchange “sits” between the hoteliers and travel wholesalers to take on the complex many-to-many tasks of invoicing, remittance, and cash accounting for dynamically-priced hotel rooms. Over the past 10 years Folio has billed over $10bn of billable transactions counting many large hotel chains as their customers.
A few years ago we saw the parallels of a “hotel room” to a “domain name” and worked with Folio Exchange to adapt their exchange software from the hotel industry to the domain name industry. It is designed to solve this many-to-many challenge of a registry having multiple registrars, and a registrar having multiple registries as well as potentially multiple wholesalers. Folio Exchange has the capability to be a trusted neutral translator that allows each party to have its own formats and relies on Folio to manage the translations. This has been effective in the hotel industry, which has much more complex pricing and service charges that we deal with here in the domain industry.
And if you are wondering if Folio Exchange is a promise yet to be delivered, the answer is no. Folio Exchange has already been implemented by one of the largest portfolio registry operators for all of their strings. It is also about to be implemented by brand and generic gTLDs, and a number of large registrars have come to the conclusion that a self-developed system will be far more expensive and will not match the learnings and features of an already tried and tested system such as Folio Exchange.
If you would like to see a demo of the system please contact us at [email protected]