MIT Researchers Estimate The Value Of Domain Name System (DNS) At $8 Billion
Since 1985, the Domain Name System (DNS) has played a critical but underappreciated role to map names to internet addresses. Domain names have important value as intellectual property and marketing assets in addition to their ability to “route the money of the Internet.” The market value of global DNS ecosystem is roughly $8 billion annually, with additional value for domain names. This finding comes from an important new paper Changing Markets for Domain Names: Technical, Economic, and Policy Challenges presented at the 48th Telecom Policy Research Conference (TPRC48) by William Lehr, David Clark and Steve Bauer. The paper represents another research milestone from MIT Computer Science & Artificial Intelligence Lab whose scholars explore fundamental scientific questions of the internet. Clark is one of the early internet pioneers who later served as its Chief Protocol Architect 1981-1989.
In the last 10 years, the number of generic Top Level Domains (TLDs) has expanded significantly from a handful of suffixes (.com for commercial, .org for organization, .edu for education, .gov for US government, and .mil for US military) to nearly 1200. Including country code TLDs (.EU etc), this makes about 1500 TLDs. This evolution has given firms more flexibility beyond .com to register their online business addresses and may even offer additional marketing value with suffixes like .baby, .cafe, and so on.
The DNS is managed under multi-stakeholder global internet governance coordinated by Internet Corporation for Assigned Names and Numbers (ICANN). It sets the rules for the generic TLD registries like Verisign (.com, .net) and the Public Interest Registry (.org) which supply wholesale second level domain names to registrars like GoDaddy and Alibaba which are then registered for a fee by registrants like Forbes (i.e., Forbes.com). The primary registration of domain names, 350 million and growing, drives roughly $8 billon in annual revenue. The secondary or resale market is $2 billion with the purchase and renewal of .com domain names. Calculating the market value of DNS is admittedly difficult because DNS activities are calculated within other business activities of major online firms, the decentralized ecosystem of the internet itself, and lack of transparency of domain actors in China and other countries.