Market Size

(in terms of $US industry-wide revenue per year)

Domain generators are almost always offered by accredited and affiliate registrars as for free in order to assist potential customers in their quest for good domain names as well as to differentiate themselves from competition. There are no pure-play domain generators, which do not offer domain registration services. Therefore, it is be more reasonable to estimate the size of the domain registration market, the approximate percentage of all registrars, which provide domain generation services and relying on educated assumptions, estimate the approximate revenue stream coming from domain generation.

The price for registering the domain name varies from registrar to registrar and lies in the range of $9.99- $35.00 US per year. $9.99 prices are offered by the outsourcing affiliate registrars or their affiliates, defined earlier in the report, and charging heavily for essential services. Most of the accredited retail registrars fix their prices at $35 per year. When estimating the market size for domain registration, the value-added services such as e-mail, hosting, design, etc. were not included into the model. However, it was assumed that since services such as domain forwarding, 24/7 customer support, and domain name transfer are offered by most accredited registrars for free and are charged for by affiliate registrars, the average price per registration should be assumed to be $35 per year. 

A careful analysis of the sites in the Netscape Open Directory Project's (dmoz.org) Computers/Internet/Domain_Names/ category and ICANN's list of accredited registrars, it has been identified that approximately   9% (~82/912) of all affiliate registrars (valid[i]) and approximately 17% (~24/143) of active accredited registrars have at least some domain generation functionality. For 1.9% (17/192) of affiliate registrars, domain generation is a core business competence.

If we conservatively assume that 50% of all registrations are performed through affiliate registrars (the chart 1 below shows that 71% of all domain name registrations in August 2000 were performed by the four major accredited registrars), then the total percentage of registrations potentially related to domain generation is 0.09*0.5 + 0.17*0.5 = 0.13 (or 13%). According to the recent survey of 12 people who cumulatively purchased total 169 domains in 1999-01 period, only 32 domain names or ~19% were created using an online domain name generator. Therefore, the total percentage of registrations directly related to domain name generators is 0.19*0.13 = 0.024 (roughly 2.5%). 

Chart 1: Percentage of new domain generations in August 2000 by registrar.

Since the domain name fee is paid every year, cumulative domain registration statistics will be used in the calculation.

The total number of domain names registered as of 22 January 2001 was 35,158,339. Therefore, excluding growth in the domain name registrations, the worldwide annual revenue of the domain registration market is $1,230,541,865 US. The total number of ".com" domains registered was 21,243,588, which translates into $743,525,580 US per year. Taking into consideration the percentage of domain registrars providing domain generation services, the annual revenue directly related to domain generators is 0.025*$743,525,580 US = $18,588,139.5 US.

However, another theory suggests that domain generation services do not substantially relate to the already registered portion of the domain registration revenues, since domain name owners pay the fee in order to retain their already registered sites. These services used to attract customers to register new domain names and therefore, the market size should be estimated taking into account only revenues from new registrations. This theory is supported by the growing number of affiliate domain registrars, providing sophisticated domain generation services and redirecting customers to accredited registrars for a one-time commission. The number of gTLDs registered in 1999 had surpassed 6.6 million, by July 2000 it reached 19 million and by January 22 passed the 21.2 million mark. The unofficial number of new registrations in the year 2000 was estimated to be 13,320,466, which translates into $466,216,310 US. Taking into consideration the percentage of domain registrars providing domain generation services, the annual revenue directly related to domain generators is 0.025*$466,216,310 = $11,655,407.7 US.

 Taking into consideration the incredible growth in domain registrations (see chart 2 for growth analysis), the above figures should be continuously revised on a monthly basis.

Chart 2: Growth analysis of domain name registrations over 1999-2000 period.