There is still dancing on board, but at WEDOS we are enlightened ( 🙂 ) and so we know very well that the end of the good times and prosperity is coming to an end. In the Czech Republic we are currently having a very good time. If you get to know more countries in the world, not only from the view of the hotel, but also how people live there, you have to admit that the Czech Republic is currently one of the best places to live in the world. We don’t realize it and so we don’t appreciate it. Somehow we forget that the economy works in cycles. Add to that our dependence on neighbouring countries (and the fact that we are an assembly plant). The addiction is huge. At WEDOS we don’t want to be an assembly plant, but we are always moving forward and always inventing. We are building one of the most efficient datacenters in the world and we hope to patent the whole thing 🙂 .
It seems to us that nobody admits that bad times are coming, because a serious economic crisis is imminent. Human labour is becoming more and more expensive while the work done is becoming less and less, all inputs are becoming more and more expensive, and the list goes on. Nothing grows to the sky.
Yesterday we reported about the price increase of CZ domains, which is coming from January 2019. We would like to present our thoughts on this issue.
At the outset, we would like to point out that this text is a reflection on the issue of domain prices and is not a criticism of the work of CZ.NIC. On the contrary – we appreciate the work of CZ.NIC and we are glad for the cooperation that is taking place. We somewhat disagree with the chosen path for the pricing policy, so we will write our opinion on it.
A little about CZ.NIC
CZ.NIC, z.s.p.o., is an association of various legal entities and they state the following on their website:
CZ.NIC was founded by leading Internet service providers in 1998 and now has 114 members. The main activities of the association are the operation of the registry of domain names registered under the CZ domain, ensuring the operation of the .CZ top-level domain and education in the field of domain names. Currently, the association is intensively involved in the expansion of DNSSEC technology and the mojeID service, the development of the domain management system and the promotion of new technologies and projects beneficial to the Internet infrastructure in the Czech Republic. The association also operates an internal security team CZ.NIC-CSIRT and since 2011 the National CSIRT team of the Czech Republic – CSIRT.CZ. In 2013, CZ.NIC was behind the creation of the security project FENIX. CZ.NIC is a member of the EURid association managing the EU European domain and other similarly focused international companies (CENTR, ccNSO and others).
For information on the financial performance, please see the Annual Report, which can be downloaded at www.justice.cz.
WEDOS is not (as one of the few registrars) a member of this association and so we do not participate in the decision making and management of CZ.NIC. However, we are the second largest (and also the fastest growing) registrar, i.e. a business partner of CZ.NIC. We have no influence on the running of the association. If we had the opportunity to intervene, we would certainly oppose any increase in price.
The extra CZK 20 in price will mean a 16% increase in price and thus a 16% increase in potential revenue, but at the same time (in our opinion) the number of domains will decrease or stop growing. In view of the coming global economic crisis, it is therefore to be expected that the number of domains for the coming years will rather fall.
The increase in price is a move that goes against the precepts of economics. This is not the time to increase prices. The peak of the business cycle is behind us and now the whole of Europe (and therefore our country) will be heading downwards for a few years. But maybe we’re wrong. I believe that, on the contrary, keeping the current price or even lowering it could maintain or increase the growth of the number of domains and thus further support the entire IT market in the Czech Republic.
The best way to see how domain growth is slowing down is with this chart:
We currently have a market share of 17.73%. And we started later than the others 🙂
Isn’t there a better way than making it more expensive?
In our opinion, it would be much better if the price for a domain was a few crowns lower, or if it surpassed the magical 100 crowns. Yes, CZ.NIC would have less income, because such a reduction in price (by 20%) would probably not bring an immediate increase in the number of domains by 20%, but it would get the whole hosting market moving and it would also support other projects and activities that can be linked to domains.
Even more interesting for both the hosting market and CZ.NIC would be the discounting of domains for the first year. Domains that are registered now would provide economic security at the current (or new) price, and newly registered domains at (much improved prices) would help keep the market growing. Imagine that a domain registration costs 10 or 50 crowns for the first year. There would be so many new sites and new activities linked to these domains that there would be significant growth… After a year, a large part of them would be cancelled and not renewed, but certainly the lower tens of percent of cheaply registered domains would be renewed, so it would be a rather interesting increase in the number of domains (and related services).
How we cooperate with CZ.NIC
Our cooperation started in 2010. Thanks to the favourable prices of .CZ domains and joint marketing actions, we have been able to grow nicely together. We are “a little” better off 🙂
For example, 86,484 .CZ domains have been added in the last 3 years, of which 55,575 were added by WEDOS. Our share of this growth was an incredible 64.26%.
And what are we doing together? Simply put, we register domains with them. We do “joint” advertising. CZ.NIC has an interesting joint marketing program. Part of the money spent in the previous year is returned to us as a contribution to joint advertising in the next year. The base amount is 7%, but that is capped at a maximum amount, which we exceed, so we hit that limit. However, there are other bonuses and incentive criteria. For example, this year, CZ.NIC will contribute a total of about 10.3% of the turnover we achieved with .CZ domains last year. However, we cannot spend these funds for joint marketing on cheaper domains or subsidize domains. It has to go into advertising and marketing.
We are glad that this programme exists. We use it to the fullest and are one of the first to always sign up. Sometimes you would think that it would be better if the domains were a few tens of crowns cheaper and everyone would pay for marketing themselves… But there is no such thing, so we are using this joint marketing and we are glad for it. Sometimes we get embarrassed and angry during the joint approval process, but thank you again.
Unlike some other registrars, we try to make our joint advertising as visible as possible and get results. At the same time, we don’t waste money on nonsense. Co-promotion has strict rules, but we know about them and we always go with it. There is no doubt that this is a nice boost to our marketing. Despite all the constraints, it makes economic sense for both parties. We spend a small part of the total CZ.NIC budget on similar marketing activities for all registrars (we estimate 25 million), but we have the largest increments (64.26%).
Where it makes sense we promote the “Good Domain” brand and in the IT industry DNSSEC.
We think that the brand good domain is a bit complicated, even considering that CZ.NIC does not own the domain dobra-domena.cz, but only dobradomena.cz …
Much better and more understandable would be the use of a simple logo CZ. There is power in simplicity 😉
Such a simple and beautiful logo is nice to work with and captures exactly what it is all about. It can even be nicely combined with WEDOS.cz.
However, we respect CZ.NIC’s decision and use the graphics they have prescribed.
Apart from the usual online and offline advertisements, you can see the CZ.NIC logo on the jerseys of the HC Motor hockey players from South Bohemia, who are regularly featured in photos not only in sports magazines, and their matches are regularly attended by almost a full stadium (6,400 visitors).
Some of the funds from CZ.NIC we also give to promotional (gift) items such as T-shirts, sweatshirts, flash drives, hats, gloves, umbrellas, scarves, PowerCube, lanyards for tags/keys, Swiss Army knives, power banks and many other things. Of course, we also had a competition for laptops, of which we gave away 111. We then give these gifts to you, our customers and fans, which is often more effective than costly banners on big sites.
By the way, the small personal websites in our affiliate program often achieve better results than the well-known magazines of large media groups. that is why we have already paid them over CZK 12 million in commissions. In the future we plan to support them even more (more rewards not only for orders, conferences, beer chat …)
That we do it well is best seen in the stats 🙂 There you can see what the growth looks like for us and for others. Others also benefit from this joint marketing programme.
But it was much better before, CZ.NIC was not afraid to go into a joint competition for cars 🙂 Registrations and renewals of .CZ domains were skyrocketing. Unfortunately, sometimes it happens that successful events are cancelled – from our side there was definitely interest to continue.
Online advertising hasn’t made much sense lately. The number of advertisers is constantly increasing, the price is increasing and the cost of advertising is so high that it does not make economic sense to advertise (online) at all. When we also take into account the advertising blindness of Internet users and the oversaturation of the entire Internet with advertising, two basic things go against each other. The high (and rising) price of advertising versus oversaturation (and advertising blindness of users) on the other.
That is why we need to look for new ways. We come up with one every year. When we want to repeat it a year later, it is often rejected in joint campaigns. It’s kind of a shame. Instead of others (including CZ.NIC) taking inspiration from the most successful (and fastest growing) company in the industry, the best will be banned for another year. Too bad, too bad (just so this sigh doesn’t sound like an advertisement for the car company 🙂 ).
Thank you for this joint marketing programme. Again. Sometimes we only regret that successful actions cannot be repeated. Too bad. But it forces us to come up with more events and ideas. And he who invents nothing waits for death. There is no doubt about it. So it moves us further and further. You can see it in the results.
How the price change will affect the .CZ domain
You may be thinking that the price increase of 20 CZK (or 24.20 CZK with VAT) will not affect the .CZ domain in any particular way. However, based on our experience and statistics, we expect a slight decrease.
Some of our customers set up websites only temporarily – for example, on the occasion of a one-off event such as weddings, conferences, seminar papers, etc. These customers usually try not to spend unnecessary money and do not care about the domain. Often they prefer domains that are on sale, such as .EU, which we have had for a long time on first year at super prices. In the event that it is not in the stock, so choose rather .CZ (the difference was 15 CZK without VAT was not so fundamental). After all, our national domain looks better 🙂 If the difference is 35 CZK, we assume that even if .EU is not on sale, some of these customers will prefer it.
Then you have customers who are trying to optimise their costs with an eye on the future. They wait for our renewal promotions and often extend their services for several years thanks to them. For these customers, it will be more profitable to get .EU, which are priced at 110 CZK/year excluding VAT. In 9 years or if they have 9 services, they will save one year per extension of our shared NoLimit. If the crown appreciates, it is possible that the price of .EU will even go below 100 CZK in the next few years.
More changes with us
We also discussed the .CZ domain in terms of our numbers, marketing and other costs. Its new price of 145 CZK will already be over 48% of the cost of the entire NoLimit web hosting, so we will stop giving .CZ domains for free. Up until now, it was less than 42% and it was at the limit of what we could afford.
For a certain segment of our customers it will not be so interesting anymore, that’s why we plan to cancel all discount promotions for .CZ domains. On the contrary, we are considering introducing discount coupons for .SK and some other domains. In Slovakia we will be one of the top 10 registrars in a few days and we started only a year ago. Of course, we want to be number one there as well.
We are therefore considering cancelling the .CZ domain as a free gift with the NoLimit shared web hosting. Even with the discount coupons, it no longer makes sense. We are clearly the largest hosting company in the Czech Republic (we host more than the number two and three in the market combined) and we now want to focus on other markets. In addition to Slovak, we also have English, Polish and Russian versions of the site. We are preparing German, French, Ukrainian and we are considering other national versions. Currently we have a large part of our clients from abroad. You can see that, by the way, on our service map.
By the way (and off topic) all our new sites are running on WordPress and we will write a separate article about that sometime.
We are also considering the possibility of our own nTLD. The costs are quite high, but we believe that if we offered it to our customers at an affordable price (lower tens of crowns per year), we would recover the costs and our customers would appreciate it. Basically, all we need is an ideal domain name that would appeal to the greatest number of our customers. Anyone got any ideas? 🙂
Message for CZ.NIC
We have been a registrar for 8 years and we have to thank CZ.NIC for what it does in the field of domains. The registry works great, without error, and it’s definitely one of the best (or maybe the best) registry in the world.
CZ.NIC does not primarily aim to be profitable. The real costs (without the aforementioned joint marketing) for the .CZ domain are up to CZK 20 million per year. With such a budget, a .CZ domain would cost less than 20 crowns per year. Even if we allow for a cost of 40 million, domains would cost, say, 35 crowns a year.
We know what we’re talking about. We take care of about 17.73% of all .CZ domains. We support clients, issue individual invoices and receive hundreds of thousands of payments a year, which is much more demanding than receiving payments from dozens of registrars. At the same time we operate 4 DNS servers (in 3 different locations, in 3 different IP ranges and on 2 different systems – programs), which in terms of the number of queries exceed the number of queries to the DNS servers of CZ.NIC.
In addition, we have a fully automated system for registering and making changes to domains (dare we say, one of the most secure processes for making changes on the market).
We do 24/7 support and still sell domains at the purchase price. We know how much work it is… so we can estimate the cost of running .CZ domains.
We can already see that someone will say that it is not possible to run it for 20 or 40 million. But we stand by that number. Of course, you can do it for 200 or even 300 and it may not be enough…
From this own experience (22 years overall on the Internet and 8 years with WEDOS) we estimate the real costs to be the above amounts. With the current number of domains and the current price, the projected revenues of CZ.NIC are around CZK 165 million (in reality they are higher). So many times more than the real costs we estimate. After the CZK 20 increase, the projected revenue will exceed CZK 190 million. But the cost won’t go up…
In the above considerations, which are based on real numbers and experience, we of course do not include any joint marketing events and activities. This is an estimate of the amount purely for the operation of the registry.
Where’s the rest of it? The rest is “eaten” somewhere else.
One of the arguments for the increase in the price of domains was the increase in wages, which has been quite dramatic in recent years throughout the country. In such a surplus budget (i.e. without other projects) there can be no problem with increasing wages.
Arguments about rising energy inputs, rent and other prices do not stand up either.
The argument that others are making it more expensive, meaning not only other companies in the Czech Republic, but also other registries in the world, cannot stand either. Everything must be taken in the context of the whole economy of a particular country.
In our opinion, CZ.NIC is extending its intention into many areas that it could never cover if it were a classic commercial company and not an entity with a virtually monopolistic position on the market.
We do not understand the projects that (in our opinion) cost CZ.NIC the most money and thanks to which (in our opinion) the budget must be increased and .CZ domains must become more expensive…
In our opinion, the biggest “money guzzlers” are projects such as:
- MojeID (we have commented on this several times already) and all this activity cost at least tens of millions of crowns a year for several years. And everyone can find the results for themselves. We’ve criticized the whole MojeID for years. And we were one of the few who did not get bribed with generous subsidies. MyID was introduced by registrars and e-shops for a reward of up to a million crowns (it was in the terms and conditions on the website), this is known and just not talked about 🙂
- Turris, where we see it as fighting windmills. Good idea, BUT … it has a chance of success only if Europe separates itself from China with one huge wall and we don’t allow a single piece of similar hardware to be imported into Europe… It’s clear that IT enthusiasts will now swoop down on us like vultures, but we need to be clear.
- The various promotional and popularisation activities are also sometimes a bit problematic.
We’ll see in a few years what happens with these projects. Anyone can make a mistake, and sometimes it’s better to slow down and stop the project early.
On the contrary, from our point of view, we consider the following projects to be fantastic and useful:
- fred – the registration system that has no fault
- bird – routing daemon, which we have used successfully for several years
- knot – the excellent DNS server we use (along with the much slower bind)
- data box – an interface for data boxes that makes them user-friendly
- DNSSEC – DNS server security
- CZ.NIC-CSIRT
- 100GE DNS stack – a large and powerful DNS server solution with high resistance to DDoS attacks
We will stop at the last point (100GE DNS stack). We do not know the specific costs of building a similar dual DNS stack from the CZ.NIC point of view, but we can imagine that there was a cost of around 7-10 million crowns. A quick guess suggests that this might be the case somewhere. There are maintenance and operating costs that are not included in the calculation.
When CZ.NIC announced an increase in domain prices, we officially suggested that it would be good if this DNS stack was offered to registrars as a secondary DNS and that it was included in the domain price. This is the only way (in our opinion) to justify a 20 crowns increase in the price of domains 🙂 . At the same time, this would significantly increase the security and resistance of most Czech domains against attacks. We believe that CZ.NIC will accept this alternative and we will all be able to function beautifully and forget about the increase in price and we will cooperate beautifully and happily. 🙂
CZ.NIC has 2 100GE DNS stacks.Without any problems and risks, one of them can be shared with registrars as secondary DNS servers and it will not compromise the operation of the .CZ.
Questions for CZ.NIC
What will CZ.NIC say about the thrown glove regarding the common use of 100GE DNS stack? We’ll find out in time.
What about the idea of significantly reducing the price of the domain for the first year?
Conclusion
We’d better keep quiet, because eventually CZ.NIC will find out that it doesn’t need registrars and that they will register the domains themselves and at a price that they will determine themselves. : -)
We secretly hope that maybe it was a joke on the part of CZ.NIC or an attempt at market research… they will announce that there will be no price increase.
In conclusion, I subscribe to this reflection. It is partly a collective work, but the author should be clear. This is me, Josef Grill, as Chairman of the Board of WEDOS Internet, a.s.