Trouble in .UK Land?

Having a few .co.uk domains in my portfolio (as I know lots of fellow Aussies do), I was interested to read about what’s happening in the UK domain space.

Many people aren’t happy with Nominet’s announcement of price rises of up to 50% on .uk domain names.

Particularly when you have a look at Nominet’s Annual Report (on page 39) – they have over £34,000,000 in reserve funds (that’s about $AUD71,000,000). 😉

The price rise has been covered on Wired.co.uk – as well as a rather scathing report on The Register.

The reality is that not only does it affect current registrations, but it will also give all the rights holders of .uk domains an increased holding cost when they come to register them. (Nominet eventually offered all .co.uk domain holders the right to acquire the .uk within a 5 year period).

Some interesting comments from The Register:

“Unsurprisingly, many of Nominet’s members – most of whom are small companies that sell domains to end customers – are unhappy with the proposed changes and have already set up an online petition to oppose them at egm.uk.”

“The price rise and proposed changes to terms and conditions are just the latest in a long series of unpopular changes that have: repeatedly put the nonprofit’s membership at loggerheads with the organization; caused the resignation of multiple directors, staff, and a chairman; and led to repeated calls for the resignation of the former CEO”.

“Nominet’s staff pushed through a decision to create second-level .uk domain names, going through a highly contentious year-long consultation that at one point saw them throw critics out of a meeting where the plans were being discussed”.

“However, the new head, Russell Haworth, risked agitating the situation just a few months later when he announced yet another review of the organization’s membership structure – something that members have come to associate with a gradual reduction in their powers to hold the organization accountable”.

Other Issues

On the face of it, if you only hold one or two domains (or even a handful), then the price rise won’t hurt you.

But as a well known UK domain investor said to me overnight, to understand just how disruptive this will be in UK market for those who have a number of domains, if you take the example of a smallish portfolio (1,000 names) then…

• The current holding cost is £3,000/year (£5+VAT for 2 years)

• The holding cost from March 2016 will be £4,500/year

• The holding cost from June 2019 will be £9,000/year (.co.uk + .uk – domain investors will need to hold the pair to have any chance of making a sale at a decent price level)

Bear in mind that the above are based on wholesale prices. Registrars will also add their margin.

Here’s a great graphic that helps understand the price rises.

You Do Know Where I’m Heading!

What will be the effect on domain portfolio holders in Australia if direct registrations are ultimately brought in? It’s something many of us have to consider.

And I’m not just talking about domain investors like me. There are lots of small businesses and corporates that hold many domain names in order to mamimise their online presence.  e.g. for SEO (search engine optimisation) purposes.

The simple fact is that there will be a truckload of defensive registrations happening. Double the holding costs. It’s going to have a major effect on the business models of many.

This is not scare tactics – we can now see it in reality and practice in the UK.

What do you think?