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Username: David Coombs
Date/Time: Thu, October 19, 2000 at 5:37 PM GMT
Browser: Microsoft Internet Explorer V5.01 using Windows NT 5.0
Score: 5
Subject: Business Plan

Message: 		 

 
       
      I think the both of you are somewhat myopic in your analysis of the business plan.  Most companies try to use a longer vision than 1-2 years, and that is particularly the case for an internet registry.  Say it costs them $6 per customer in marketing costs and they get $6 in revenue from that customer in year 1, they don't have to spend that marketing cost to get that customer to renew in year 2, or year 3, etc.  That is why when you look at any of these applications, they forecast large net income numbers by years 3,4, and 5.  If a company is capitalized well enough to absorb those early losses, it is clearly a very sound business plan to "buy" customers in year 1 if the expected net future value of the cash flows of the customer (include a reasonable renewal rate) exceeds the cost of buying the customer and a reasonable profit margin.  You will note that Network Solutions has been very profitable charging $6 registry fee for the .com, .net,.org because it is further along in the cycle (i.e., getting renewals).  That being said, I think the $15 registry fee proposed by IOD is excessive and, (if .web is awarded, I feel it should be IOD), I hope they would reduce this before going live for new registrations.
 

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