In this blog post, we look at the power and potential effect of Regulation on the Domain Business.
Recalling 1980’s Dublin, Ireland: the smell of burning coal would dominate afternoon journeys the suburbs. The smell of Anthracite coal was particularly warm and pleasant.
Every plus has a minus; and the downside of this ritual was cleaning out the fireplace each morning.
Now, I didn’t really care about business at this stage of my life. But, as I found it later, a lot of people were cleaning up (financially speaking) from all this coal burning. Anyone who had the gumption to order in coal from abroad and sell it – was in the money.
But overnight, this was to change.
And it was about to change due to Regulation. The Government Minister at the time, Mary Harney, banned the burning of coal overnight, for environmental reasons.
So overnight, and at a stroke, these entrepreneurs – distributors – had a big problem with no solution; the business was over.
Could the same happen to the domain business?
For many of us, the business is only sustainable with the low renewal rates under $10. If that goes up to say $100, I would say a lot of domaining business models are gone.
I like to keep in mind that this model is only alive due to a favourable regulatory environment.
As has been said before, the Number One mistake in business is making the assumption that a current level of Income or Revenue will continue ad infinitum.
In a nutshell – no, not necessarily.
In the domain biz, we’ve already seen one aspect if the business wiped out – domain parking.
So I try and prepare pshchologically for a time that this business cannot continue, and make hay while the sun shines.
Now I’d invite you to picture this scenario.
A group of people have jobs counting items of clothing for a large retail chain (okay so I did this job once). They must travel a lot to the various Department Stores and are proficient in stocktaking, which usually takes place after the shop shuts. It’s vital for this mutinational that the stock gets counted accurately.
Now, imagine on one such job where they are out of town and it’s late. They are taking a break but there’s a problem; there are no biscuits to go with the coffee (and trust me, it was coffee at that hour).
A decision is made to purchase a packet of biscuits from the Company Float.
The purchase of this packet of biscuits kicks off a the following series of accounting ledger transaction within the multinational:
DR: Petty cash float (Balance Sheet)
CR: Bank account (Balance Sheet)
DR: Supplies (P&L Account)
DR: Sales tax account (Balance Sheet)
CR: Petty Cash Float (Balance Sheet)
The spider of money spins a little web.
The transaction affects the Multinational Bank Account at some point as a Credit; this will then be reflected in the corresponding ledgers of the Bank as a Debit (as the Bank now owes the Multinational less).
When I think of the way these multinationals operate, it reminds me that the entire Financial System i.e. Money — is an entirey notional system; an endless series of Debits and Credits impacting a huge amount of notional Ledger accounts somewhere, in some Financial Institution.
The damn thing is not even real, and it’s all in our heads.
Now don’t get me wrong; believe you me I’m well aware of the catastrophic consequences to your health from a lack of money.
And we’re all running around like headless chickens because of this system of endless debits and credits. And believe you me it is a system.