Apparently there isn't limitless demand for new dot com domain names, but it's still a very healthy technology that underpins the modern internet and could well be the foundation for what comes next.

Verisign, the registry operator for the .com and .net top-level domains (TLDs), reported steady financial results in its latest earnings call yesterday, although there is some declining demand in the domain name business. Verisign is also responsible for operating a pair of the critical internet root servers for domain name system (DNS) that helps to direct global internet traffic.

For the fourth quarter of 2023, Verisign generated revenue of $380 million, up 3% from the same quarter last year.  While revenue was up, the actual number of domain names that Verisign manages declined. At the end of December, Verisign's domain name base for .com and .net totalled 172.9 million names, down 0.6% from 173.8 million at the end of 2022.

CEO Jim Bidzos said that decline in domain names is multifaceted.

New registrations in the fourth quarter of 2023 came in at 9 million, down from 9.7 million for the fourth quarter of 2022. For the full year, new registrations were 39.4 million names, down 490,000 names from the 39.9 million names registered in 2022.

New domains are only part of the domain story, there are also renewals, which also lagged.

Bidzos said that the domain renewal rate for the fourth quarter of 2023 is expected to be approximately 73.1% compared with 73.3% in 2022. Bidzos cited weak demand from China as the primary reason for the contraction.

“Declining demand from China remains the primary source of drag on the overall domain name base growth,” said Bidzos.

According to the company, demand from Chinese registrars dropped by 2.2 million names in 2023. Bidzos said this was driven by “challenging economic conditions, a more stringent regulatory environment and the impact of a weaker local currency.” However, Verisign's domain name base grew by 1.2 million or 0.8%,  when excluding registrars based in China.

During the earnings call, Bidzos was asked about a recent announcement from domain registrar GoDaddy to support the Ethereum Name Service (ENS). GoDaddy is among the many registrars that work with Verisign and its dot com registry.

Bidzos said that what GoDaddy did is make it easier to link a domain name to a blockchain address in the form of ENS identifiers. ENS identifiers are typically linked to wallets holding cryptocurrencies and are typically difficult to read as they appear as an unintelligible string of characters. He said that the move reinforces his strong belief that a domain name can act as a stable global identifier.

“It’s a very positive development for the DNS [domain name system] and it reinforces the utility of a domain name and the already strong value proposition of a domain name,” Bidzos said.

The DNS and associated domain registrar business that Verisign operates is well regulated and runs continuously without fail to enable the modern internet. It's a capability that Bidzos is hopeful can be extended into new types of applications, including Web 3.0 and ENS.

“For years, we’ve been working on what we call responsible integration of alternative name spaces with the DNS for the very reason that we believe that at some point secure, well-regulated DNS is going to be a better basis for a global identifier,” Bidzos said. “This is the part of the plumbing that people don’t see when we talk about operating and maintaining the critical infrastructure that we do.”