A link between domain name growth and the economy?

Published on: Saturday 4 January 2014

Our sector's umbrella group CENTR recently published the findings of research into the growth of domain name extensions (TLDs) such as .nl in the period 2008 to 2013. The aim of the study was to identify and explain patterns in the development of TLDs. Particular attention was given to the relationship between developments in the number of domain names and developments in the global economy. The key findings are summarised below.

Economy or saturation?

Within the domain name industry, it is generally recognised that domain growth has slackened since 2008. But is that due to the economic downturn, which began in that year? Or is it because all the most attractive domain names have already been taken? Is the market simply saturated? To answer those questions, the correlation between the growth in domain names and various economic indicators was investigated. The analysis took in not only variations in growth, but also fluctuations in the numbers of new registrations and cancellations.

New registrations reflect trade growth

The study concluded that the most prominent correlation was between global trade volumes and new registrations. Very often, growth in the number of new registrations precedes trade volume growth by five to seven months.

What happened in 2012?

In the research data, the first half of 2012 stands out as a period in which TLD growth went into sudden decline. While a reliable explanation remains elusive, the study put forward two hypotheses:

  •     A link with Google's new search algorithms
  •     A link with ICANN's announcement of plans for new gTLDs

The latter possibility appears to be particularly plausible, partly because growth picked up again in the middle of the year, when it became clear that the gTLD programme would take significantly longer than previously anticipated. Money and resources may have been diverted from existing TLDs to the planned new extensions.

Conclusion: the economy influences domain name growth; the influence of other factors is unproven.

The bottom line is therefore that market saturation may be a factor, but that the economy definitely is a factor – particularly in the short and medium term. Variations in the growth of domain name numbers may have explanations that are unrelated to developments in the economy, but there is no hard evidence.

Growth in Dutch trade from the middle of 2014?

In the autumn of 2013, the number of new .nl registrations rose significantly in comparison with the corresponding period of 2012. If the correlation between registrations and economic growth holds true, summer 2014 could be a good period for the Netherlands' strong commercial sector. Let us hope that that is the case.

The full research report is available from CENTR ccTLD Growth 2013

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