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The United Kingdom and the .co.uk Country Code Top Level Domain
A strong secondary market with a ccTLD that has not quite caught up - this means bargains and good investments for domainers!
Sedo is proud to be able to contribute its international expertise to DNJournal.com’s Around the World article series! This time we would like to report on the state of the UK domain name market and the .co.uk ccTLD. Sedo has been operating in the UK secondary market for over 3 years and recently hosted a domain name conference in London at the University of London. These insights into the market, the exchange of ideas and suggestions from key players, and Sedo’s overall experience operating in the secondary market were instrumental to this article.
The United Kingdom is not only one of most important industrial nations for the “Old Economy,” a vibrant economy and well educated population that is extremely internet savvy, makes it one of the strongest Internet markets world wide. Despite wide spread Internet use and domain registrations, some of the best bargains in the aftermarket are to be found in the UK, especially among .co.uk domains. We would like to take the opportunity of this article to explain why this is, and a little bit about the UK domain name market in general.
Overall Structure
The .uk ccTLD (including .me.uk, org.uk and .gov.uk) is operated by Nominet, a private, not-for-profit company, limited by guarantee. The company was established in 1996 and recognized by the UK internet community as the official manager of the .uk Top Level Domain. Registrations are handled a bit more centrally than for other TLDs, with owners being registered both with a Registrar (TAG holder), which runs issues such as noting registration and DNS/URL redirections, and Nominet, which handles official ownership and ownership transfers.
Disputes are resolved in a very similar manner to the ICANN/ WIPO procedures, where both sides have ample opportunity to present evidence of a valid claim to the domain and/ or “bad faith” on the part of a cybersquatter. Until recently the expiration process was a real mess, being handled over a system known as “de-tagged,” where many users complained of fraud on the part of the companies contracted to manage the process, and many domains were stuck in limbo for years. In order to clean up the process, Nominet has retaken control of the process and domains will be released to the public after 90 days of expiration, thus also giving the owner ample time to renew.
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Primary Market
Thanks to Versign’s latest Domain Name Industry Brief we can see that the primary market (i.e. Registrations) is finally out of its slump and that industry growth has reached levels last seen during the 90s .com boom. Verisign reported that Q1 2004 was their best ever and that new registrations are at record levels, with 4.7 million domains added in Q1 2004 alone
This recovery and strong upturn in growth is not just limited to the TLD “king” .com, but is mirrored across all TLDs, and .co.uk is also showing significant growth in new registration. Nominet, the .co.uk NIC (which also took part in Sedo’s recent London conference), indicated that it as well was having a record breaking start to 2004, and expected 2004 to be its most successful year since starting operations. Total .co.uk registrations have reached around 4.5 million.
UK Market Share
The domain name market in the United Kingdom is well developed and one of the
top 3 markets world wide along with Germany and the US. Versign’s recent
brief showed that .co.uk domains hold the number three place out of all registered
domains, just behind .de. Statistics from Zooknic show that British registrants
have the second highest number of domains registered (after US registrants)
across all TLDs.
This interesting contrast where UK registrants hold on to the 2nd most domains
overall, but the .co.uk TLD is 3rd among the most registered TLDs, probably
shows a mix of TLDs used versus a sole preference for the country code TLD,
and will be discussed in detail later.
The overall strength and growth of the UK primary market, and especially the high UK market share (relative to other countries) makes the UK one of the most important secondary markets as well.
Secondary Market
Any one who visits DNJournal.com often does not need to be told that the success and growth in the primary market has been mirrored in the domain name aftermarket! Sedo’s recent experience alone shows that the aftermarket has picked up dramatically and is now in a strong growth period. Unlike its competitors, Sedo fortunately never had a “slump” period during the past years and mainly expanded due to its strong international position. This continual growth and recent strong upswing in the market is also occurring in the British aftermarket. For the first time in Sedo’s experience, this year brought 5-figure .co.uk sales, 2 of which hold a place on DNJournal's list of top domain sales for this year.
As mentioned very often on DNJournal.com, many, and often the best, sales go unmentioned as they are between private parties and\or subject to confidentiality agreements. This is especially true in the .co.uk market. For example, during the Sedo conference we offered Sedo tee-shirts to the participants that could write down the value of the highest .co.uk sale of this year. Participants went busy to work writing down figures. When we explained that we required that the name of the domain be submitted along with the value, all sales higher than the ones Sedo knew of were withdrawn (some even in the 6-figure range). Not even the lure of a free tee-shirt could persuade the bigger players to reveal the nature of their deals!
One final note to the sales: for all the strong recent .co.uk sales there have been an equally high amount of bargain .co.uk sales so far this year. Sales like Subculture.co.uk for £400, Ann.co.uk for £400 and Amatuer.co.uk for £2,500 are typical of large discrepancy between value and price in the .co.uk market, and show that there are still a lot of bargains to be had.
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.co.uk Lags Behind
As mentioned Sedo has been a key part of the recent boom in the secondary market
and this success has been broad based across all international markets. The
UK market has grown proportionally to the rest of the aftermarket. A look at
Sedo’s International domain sales for the last 2 quarters show that the
UK represents an important segment of Sedo’s customer base. Interesting
to note is that this is despite the fact that .co.uk sales only make up a small
portion of the overall international (non .de) sales at Sedo. .Co.uk sales are
showing strong signs of growth (look at the last 2 weeks DnJournal Sales Reports),
but they have quite a way to go to catch up to other sales, this even within
the UK aftermarket.
This “catching up” becomes even more apparent when you compare the success of the .de ccTLD with that of .co.uk. As previously reported in the “Around the World” articles, the other “Top 3” TLD, .de, for Germany is having success almost on the level of the .com, including showing strong 6 figure sales. Sales in volume roughly equal those of .coms at Sedo (this at over $5 million in sales year to date) and have a promising future. This seems to beg the question: Why is the .de so much more successful than the .co.uk when both markets have a very close, and among the top, importance in the domain name primary and secondary market?
Why the lag?
There could be a myriad of reasons for the .co.uk sales lagging behind other TLD sales in the UK market, and significantly behind the comparable .de. Here we will take a look at the most plausible reasons for the discrepancies, which we see.
The simple statistic that Germany has a population 88 Million Versus 60 Million in the UK would seem to indicate a major reason for the difference. However recent studies by EC Media and the University of Copenhagen show that the UK Internet market overall equals or exceeds that of Germany. For example, the Internet Penetration rate is 10% higher in the UK than in Germany (meaning a net 7 million more German Internet users) and one of the studies rates the UK ahead of Germany in Internet Development and Internet Business Friendliness. These results seem to indicate that market size is not as large of a factor as population would have you believe.
A recent TLD Preference Study conducted by DNJournal and Dr. Robert Connor of DomeBase.com shows some degree of distraction from .co.uk to .com, but seemed to indicate that UK users prefer .co.uk over .com to a higher degree than German users, a thesis that seems weak when compared to some basic facts. As mentioned before, the UK has a larger share of registered gTLDs with 12% overall vs. 10% in Germany. Many major British shopping centers advertise with the .com version of their TLD and not the .co.uk. Lastly, the low percentage of .co.uk sales at Sedo, when compared with overall UK domain sales, seems to indicate the presence of some preference for other TLDs than the .co.uk ccTLD. So while the jury may still be out on this one, there certainly seems to be a significant degree of “.com distraction” at work in the UK domain market.
One major barrier to domain speculation and a vibrant aftermarket in the .co.uk TLD is the complicated, costly, and paperwork-intensive transfer process imposed by Nominet. Extra paperwork, which first must be requested from Nominet and then sent to both parties, makes a typical transaction take weeks to complete. Additional fees (GBP 35) for a transfer levied by Nominet depress many “low-end” sales and annoy unknowing buyers. Furthermore, the strict privacy laws in the United Kingdom allow individual users (but not firms) to leave the Whois registry blank for their domains. This anonymity restricts buyers somewhat from being able to acquire domains and makes a sales platform such as Sedo all the more critical for secondary market success. During their presentation at Sedo’s London conference, Nominet promised that they are working on solutions to the current cumbersome system, but the nature of their organization as a government-sanctioned monopoly makes the change process slow and less than satisfying.
Finally, the fragmented nature of the UK domain name secondary market is certainly a factor that contributes to the current state of affairs in the UK aftermarket. Currently no pure UK-based domain forum or online domain journal exists to exclusively cater to the UK market. Sedo has no major competitors in the UK, and was able to fairly quickly consolidate majority market share as an outsider. As mentioned before, a majority of the large sales for .co.uk domains occur among individual players who try to keep all such deals confidential, and thereby average sales values low. Forums like DNForum and journals like DNJournal have been instrumental in giving the domain name aftermarket a community and standards, and opened up great networking opportunities. While many (especially DnJournal) have done an excellent job in bringing in international elements, they have been primarily US and .com focused, strengthening the .com dominance, especially for the other non-.com English speaking markets.
These factors all play a role in creating a secondary market that is strong and full of potential, but also is not living up its potential in all areas. More involvement from a UK domain name community is certainly one the keys to realizing this potential in the future.
The Future!
Sedo has been working hard to expand into the UK aftermarket and raise the awareness of British domainers to the opportunities in the UK and more specifically the .co.uk market. Sedo is continually working with many of its UK partners to build a true community and network of domainers of all levels from professional to small market, this effort culminating so far in the Sedo-sponsored Domain Conference in London this past July. Overall the current growth seems likely to continue and increase, eventually leading to a maturing of the market where .co.uk sales will fall in line with their potential. Of course as long as the current situation still exists there are many bargains for domainers in the UK market, especially when hunting for .co.uk names! So get out there and find that bargain .co.uk!
Source : http://www.dnjournal.com/
