March 7, 2005 -- (WEB HOST INDUSTRY REVIEW) -- Web hosting companies have recently been reducing domain name pricing, even selling at a loss in order to attract Web hosting customers. Companies like Hostway (hostway.com), Interland (interland.com), 1&1 Internet (oneandone.co.uk) and EV1Servers (ev1servers.net) are all selling domains for between six and eight dollars per year, while Yahoo! has gone as low as $4.98 for the last several months.
Pure-play hosts typically do not have accredited registrar status and purchase their domains from wholesalers such as Tucows (tucows.com) or Go Daddy (godaddy.com) at a cost of approximately $6.50. And with prices on a continual downward spiral, domains have become a marginal if not losing financial proposition.
Yet considering the fierce competition in the hosting business and the costs of purchasing pay-per-click ads for top hosting keywords on Google or Overture, domain loss leaders have become a cheap and effective marketing strategy.
Companies focused on domain registration have also used aggressive pricing and marketing of domains to break into or expand their Web hosting presences. Go Daddy, which is currently offering $3.99 registration with any of its Internet services, is a prime example, having used aggressive domain pricing to propel itself to the forefront of the hosting industry.
Network Solutions (networksolutions.com), the industry's first registrar with 7.4 million domains under its management, is employing a similar strategy. Just last week the company unveiled a suite of enhanced Web hosting packages complete with a free domain name. The announcement is startling, considering the company charges $34.99 for a single-year domain registration and generates approximately 90 percent of its total revenue from domain names. "Whoever thought Network Solutions would give a domain away for free," says Champ Mitchell, CEO of Network Solutions.
The impetus behind the free domain and upgraded hosting plans is a desire to increase the company's presence in the Web hosting space, which CEO Champ Mitchell envisions as the platform for its "next generation" of Internet services. This encompasses everything consumers and small businesses need to establish Web presences and conduct business online, including domain registration, hosting, e-commerce and other value-added services such as online book-keeping.
"Web hosting is something that [small businesses] need, and it is a platform on which all the other things that they need can be delivered online," says Mitchell.
The company's primary target, says Mitchell, is small businesses, a group that has registered more than three million domains with Network Solutions. And the new hosting plans are designed to fit this demographic and its growing hosting requirements. According to data from research and analysis firm Netcraft (netcraft.com), Network Solutions's active sites containing multiple pages has grown substantially since January of 2004, from 406 to 17,200 this past month.
The recent developments at Network Solutions are a sharp departure from a time when Network Solutions concentrated on the domain business, developing a rather shoddy customer service reputation that has since been rehabilitated, Mitchell says. Before rolling out this new generation of hosting plans, Network Solutions provided relatively rudimentary hosting through its ImageCafe template-based Web site builder, which offers $1.50 per page hosting up to a maximum of five pages. The platform was limited, Mitchell says, because it did not enable the company to other value-added Internet services.
"It didn't serve as a particularly good platform to add on the other things that [small businesses] might want," says Mitchell. "So we've gone into a very robust set of hosting packages, offered at very attractive price points in order to establish ourselves with this customer base. We think there are a lot of services that can be provided to these folks."
Mitchell explains that Networks Solutions intends to use hosting to lock customers into a valuable and recurring relationship. "Once we establish relevancy to them, then the next time they need something online, they are going to call us."
And it is the close contact in hosting between the customer and service provider that helps a strong relationship flourish and has made the push into Web hosting a natural next step.
"Whereas we only heard from our average domain customer - five percent of them in any given month - we hear from the vast majority of hosting customers and we're getting two to three calls in the first month," says Mitchell. "And the length of each of these calls is twice as long as the average domain call."
Network Solutions is offering Standard, Advanced and E-commerce Web hosting packages priced at $9.96, $13.30 and $29.13 per month with an annual agreement and disk space allotments of 1, 2 and 3GB. All the plans are on shared hosting platforms, and run on both Unix and Windows. The plans come with live technical and customer support around the clock, a 30-day money-back guarantee, and anti-virus and spam protection from Symantec.
