The domain-name registration industry is suffering a bloody blow with the recent calamity at one of its most popular registrars. Registerfly was once one of the fastest-growing discounters on the scene, amassing millions of domain registrations, until an awkward ownership struggle and a bout of sloppy customer support found countless owners watch their dot-com names expire without renewal.
ICANN, the regulatory body that watches over the industry, finally stepped in to help clean up the mess last month. It sent a notice to the site that it was in breach of its registrar accreditation agreement. ICANN announced over the weekend that it would file a suit against Registerfly to gain control of its data. The site's outage for several hours yesterday added one more layer of horror to this grim Internet tale.
This isn't a call to take sides. As an investor, it may seem like a non-event. During the Internet bubble days, registrars were hot. VeriSign's
It didn't end well. Register.com was taken private in 2005 for little more than the cash on its balance sheet. VeriSign spent a whopping $15 billion to buy Network Solutions in 2000 but was willing to sell an 85% stake for a mere $100 million three years later.
Before the debacle at Registerfly, the industry was coming back into favor. GoDaddy, the aggressive top dog in this space, was angling to go public last year. Larger portals have also moved into this space. Google
Because domain registrations are cheap -- with most discounters offering names for less than $10 a year -- this is no longer a game for corporate land grab specialists. Sure, you have companies like Marchex
The Registerfly story may still have a happy ending, but the clock on existing annual registrations keeps ticking. Whether the site cleans up its act, is sold off to a rival registrar, or finds ICANN in a more hands-on role, the industry's reputation is at stake. And consumer faith is on the line.
In the name of domains, let's hope this nascent industry gets it right.
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Longtime Fool contributor Rick Munarriz still can't believe that folks are paying $30 for domain name registrations through the full-priced sites. He does not own shares in any of the companies mentioned in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.