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Domain stocks doing very well this year

Tucows more than doubles and other domain stocks also on a tear.

It has been a decent year for the NASDAQ so far. But returns on domain stocks have been exceptional.

Consider Tucows (TCX), which opened the year at 75 cents. It has more than doubled to $1.52 at today’s open. The company continues to buy back stock, but I also think there’s overall enthusiasm for its domain business and the prospects of its mobile phone offering Ting.

Demand Media, which owns eNom, has jumped 35% this year to today’s open of $9.52. Investors are becoming more comfortable with the company’s ability to adapt to search engine algorithm changes. It’s also well positioned to take advantage of new top level domains. As a registrar, it will certainly profit from other company’s new TLDs. More risky is its $18 million bet on its own new TLDs. (WWWW), which owns domain registrars and Network Solutions, is also up 35% this year to today’s $15.97 open.

Finally, .com and .net registry VeriSign (VRSN) has marched forward 9% this year. It has a lot of new TLD clients (over 200 applications), but I suspect its revenue from new TLDs will remain insignificant compared to its .com registry revenue for the foreseeable future.

© 2011.

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Demand Media invests $18 million in new TLDs

That’s a whole lotta top level domains.

[Updated with comment from Demand Media and from investor call] Demand Media, parent company of eNom, announced today that it has invested $18 million into new top level domain names.

It’s not clear if this is for application fees only:

In April 2012, Demand Media invested $18 million in pursuit of its generic Top Level Domain (“gTLD”) initiative, which it believes represents a complementary strategic growth opportunity for its Registrar services.

Given that this refers only to the month of April, when Demand Media would have completed its applications, it’s possible that this is for application fees and related expenses only. That’s a whole lot of top level domains.

Kristen Moore, VP, Corporate Marketing & Communications at Demand Media, tells Domain Name Wire: “As the ICANN application process is not yet completed, we aren’t commenting on the specifics of any applications beyond the size of our investment and our enthusiasm for the opportunity at this time.”

On the investor conference call today, the company said it has committed $18 million in “support” of the program. It has signed two partners that will use its backend system. It also said it “may become a registry in our own right”, e.g. apply for domains itself. Its CFO said it “funded” $18 million in April, which still leads us back to application fees.

Interestingly, by the spirit of the rules, Demand Media shouldn’t be eligible to apply for new TLDs due to multiple UDRP losses. But there are plenty of technicalities to get around that.

© 2011.

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Related posts:

  1. In Demand (Part 2): How the Domain Business Can Benefit from Demand Media
  2. Demand Media Gets Into the Other Side of UDRP
  3. Demand Media Renews Ad Deal With Google

Latest New TLD Applicant Guidebook Still Disses Go Daddy, Demand Media

Companies still fall victim to anti-cybersquatting rule for new TLD applicants.

The latest (but certainly not final) version of the new top level domain name guidebook still includes a provision that, at least by the spirit of the clause, would prevent Go Daddy and Demand Media (NYSE: DMD) from applying for new top level domain names.

Section 1.2.1 of the May 20 release (large pdf) includes a laundry list of reasons why an applicant would be barred from registering a top level domain name, including if they have been “involved in of a pattern of adverse, final decisions indicating that the applicant or individual named in the application was engaged in cybersquatting.”

The guidebook defines this as three adverse decisions (including UDRP) including one in the past four years.

Both Go Daddy and Demand Media (which owns eNom) would be barred under this provision as they have multiple UDRP losses. Demand Media is clearly concerned about this provision.

That said, I still think there are loopholes that would allow these entities to apply.

© 2011.

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Related posts:

  1. Demand Media Demands Three-Strikes Rethink
  2. eNom and Go Daddy Still Disqualified from Applying for New Top Level Domains
  3. Demand Media Will Never Get Love from the Mainstream Media