Domain name market stabilises after contracting in first 3 quarters

Contraction followed by stabilisation

Between February and September, the market contracted by 1.7 per cent. A low number of new registrations (-10 per cent YOY) combined with a high number of cancellations (+10 per cent YOY) led to steady contraction. A lot of the cancellations were down to service providers and client businesses letting go of unwanted domain names registered during the pandemic. In many cases, the names were not in use because the businesses that had registered them had since stopped trading. At the end of September, things began to change, however. The cancellation rate eased and above all new registrations picked up. As a result, the size of the .nl zone remained stable through October, November and early December, at roughly 6.2 million domain names.

Slight drop in market share

.nl wasn't the only domain whose Dutch market shrank. Most gTLDs and .eu experienced similar contractions, leaving the overall size of the domain name market at roughly 10 million. However, there was a rise in demand for .com domain names over the summer. In the first 3 quarters, .com grew by 7.5 per cent in the Netherlands, despite contracting at the global level by 2.2 per cent YOY. The growth in demand was most pronounced in the run-up to .com's 7 per cent price rise, which took effect on 1 September. The increased sales of .com domains had the effect of squeezing .nl's market share, which fell from 62 to 61 per cent.

Cancellations after the first 12 months

While it's hard to be sure why domain names are cancelled, it's clear from our data that renewal at the end of the first year is critical. Across the board, 85 per cent of all domain name registrations are typically renewed each year. At the end of the first year, however, the renewal rate is only 68 per cent. In many cases, non-renewal will be down to registrant-specific factors, such as the name being registered for a project that didn't ultimately go ahead. However, price is also a factor in first-year non-renewals. Most new registrations are made at discount prices, with a new domain name costing an average of just 10 per cent of a renewal. Consequently, many registrants baulk when confronted by the renewal price at the end of year 1. Discounting is a marketing strategy that registrars independently choose to adopt.

Economic cycle and business climate

The business climate has considerable influence on how the .nl domain fares. The number of businesses that are started or expanded, relative to the number that stop trading, is particularly important. In that context, the first half of 2024 wasn't a good period: business closures rose by 15 per cent, while start-ups were 8 per cent down YOY (source: Chamber of Commerce). The figures stabilised as the year went on, but the authorities' plans to clamp down on 'sham self-employment' caused a lot of uncertainty, with 1 in 7 self-employed tradespeople already reporting lost orders. That's a worrying development for .nl, because self-employed people and other small businesses account for a high proportion of consistently used domain names.

Structural trends in internet use

Finally, major changes are taking place in the way that people use the internet. We have previously reported on the impact of Google changing the way sites are ranked and on the rise of AI tools. This autumn, we commissioned research agency GfK to investigate the effect of those trends on the use of domain names. From the study findings, it's clear that Google's policies are particularly influential. Of the surveyed businesses, 31 per cent reported that the line taken by Google had impacted the size of their domain name portfolios. Although 23 per cent of all respondents said that AI was influencing their internet use, it wasn't thought to have significantly affected domain name registrations yet.

Focus on sustainability

So, what are the implications for the year ahead? For hosting and domain name registration service providers, the Dutch market is not as attractive as it used to be. Much will depend on service providers' ability to adapt to the new climate by, for example, focusing more on activation, customer retention and upselling. Such strategies can reduce the percentage of registrants that don't renew after the first year, which is likely to be the key to growth. We're committed to helping service providers maintain the health of the market for .nl domain names. As well as to the development of activities that contribute to the quality and security of providers' services. For example, we invest in the security of the zone, providing a sound infrastructure, communicating with start-up businesses, and, crucially, partnering with domain name registration service providers.

At the time of writing, not all TLD registries had published data for Q4. This article therefore doesn't take account of developments involving various TLDs, including .com.