The guy who owns .xyz will only get $8 from Google every year
On Monday afternoon, Daniel Negari was working at the Santa Monica headquarters of .XYZ, the company he founded in 2011 to dole out website addresses that end with that domain. He was having a run-of-the-mill day fielding requests for new .xyz websites when he got a message from a friend that read, “Congrats on abc.xyz.” He headed to the URL and discovered that Google CEO Larry Page had just used it to announce the launch of a newly minted parent company, Alphabet; its new home was abc.xyz.
“I was shaking,” Negari told me. “The biggest thing that could have ever happened happened.”
Negari is the web equivalent of a real estate developer, and Google had just moved into Negari’s digital condominium building, making him feel even happier about paying nearly $200,000 for .xyz.
Maybe you haven’t been paying attention but the world has moved beyond dot-coms. In 2011, ICANN, the international non-profit that controls Internet naming, decided we needed domains besides the existing ones like .com and .org, because the market was saturated; more virtual buildings were needed for inhabitants of the Web. In 2012, ICANN released new domains—like .beer, .active, .bible, .hiv and .xyz—which offered entrepreneurs like Negari a chance to own—and sell—their own piece of the internet. Rather than just squatting on one domain (like the infamous sex.com), internet land entrepreneurs could now buy .porn and sell lots of different versions of the url. It’s like buying a condominium with infinite condos instead of a house.
Negari says he invented .xyz—you can request new domains; and he was lucky that he was the only one who wanted it. He paid the minimum amount a domain goes for, $185,000. Otherwise, it would have gone to auction, where prices can skyrocket, as with .app which went to Google for a record-setting $25 million.
Once Negari locked .xyz down, he got to decide how much to charge people who wanted to “move in.” He charges a negligible amount for registration of a .xyz site. There may not have been a Google-sized paycheck for abc.xyz. Google declined to comment. Negari wouldn’t disclose any specific financial details about the sale, citing a non-disclosure agreement, only saying that Google/Alphabet will pay him $8 annually through a registrar to retain ownership of the site. He collects the same fee from anyone who wants a .xyz website, whether they’re Google or some random dude looking to buy a personal website.
A weird thing about the internet is that it’s a renters’ market. When you register a domain name, you pay a so-called registry, like .XYZ, a set amount of money annually to keep it. Website renters can renew the lease for a maximum of 10 years at a time. If you ever let the lease expire, you get an e-eviction, and your digital home goes back on the market.
Since Negari went public with .xyz in June 2014, .xyz has registered over 1 million domains, according to the site ntldstats.com, making it the most popular of the new domains, controlling 17% of the new “generic top level domain” (gTLD) market. It got its first boost with the premiere of HBO’s Silicon Valley, which features a Google-like company whose website is hooli.xyz.
Negari says he decided to buy .xyz because of its universality. “To me, it was the most natural and distinctive ending that there could be,” he told me. “The alphabet ends with xyc. Domains should end that way.”
Before Google’s announcement, .xyz was fielding roughly 3,000 new registrations a day, he says. Now it’s closer to 20,000. At $8 a pop, that amounts to $160,000 a day. That’s a good business! In addition to the initial $185,000 Negari coughed up for .xyz, Negari pays just $6,250 in quarterly fees to ICANN, plus an additional $0.25 per registered website (which kicks in after a domain racks up more than 50,000 of them).
When Negari dies, the rights to .xyz will remain with the company he’s set up in perpetuity, assuming it keeps paying its quarterly fees and isn’t in breach of contract by letting the domain name servers fail. (If someone doesn’t set up a company to administer the rights to a gTLD, they could be willed to a person or company of choice, just like any other piece of physical real estate.)
Negari had thought about using abc.xyz to market his .XYZ brand, but changed his mind when he heard someone big might be interested in it. It was first registered more than a year ago, on March 20, 2014, by MarkMonitor, a kind of Internet real estate broker owned by Thomson Reuters, which caters to high-powered companies like Google to keep their identities secret when buying internet land.
“I knew something big was happening with the domain name, but didn’t know the identity of the party,” he said.
The fact that Google went non-dot-com for Alphabet is a big deal. As long as the internet has been around, .com has been the digital equivalent of the Upper East Side or Beverly Hills. It’s where anybody’s who’s anybody has wanted, and needed, to be for relevance. Other domain names can carry such a stigma that some Silicon Valley influencers have advised companies to rebrand if their namesake .com domain isn’t available.
“If you have a US startup called X and you don’t have x.com, you should probably change your name,” Y Combinator founder Paul Graham wrote on his blog this month.
Google’s migration to .xyz will change that, bringing long-overdue legitimacy to other domains. In the physical world, higher demand, paired with the arrival of a ritzy tenant like Google would result in prices going up. The same can happen in domain real estate. The domain .sucks got popular with celebrities and companies that wanted to buy their x.sucks website before someone else could; registering there costs over $200. Google, which owns .how, charges around $30 for website registrations. Surprisingly, a .soy website will also cost you around $200.
“There is no cap on money that can be charged. It’s the amount the market can bear,” James Cole, ICANN’s global media coordinator. “We don’t impose a limit.”
Right now, the going rate for a .xyz site on GoDaddy is $9.99, and Negari says he has no plans to increase it. He says he wants to keep prices low to make the .xyz part of the web as accessible as possible. He’s banking that sheer volume, fueled by the Google news, will displace .com as the go-to digital zip code.
“.xyz is for everyone,” he told me. “I want it to take over the world.”
Daniela Hernandez is a senior writer at Fusion. She likes science, robots, pugs, and coffee.