Until recently, NSI had sole authority to issue domain names ending in ".com," ".net," and ".org," which account for an estimated 75 percent of the world's Internet addresses. The exclusive arrangement has generated millions of dollars for NSI and has turned the Herndon, Virginia, company into the world's dominant registrar.
In June, Register.com became the first of the "test bed" registrars appointed to test a shared registration system designed to end NSI's monopoly.
The New York City registrar will announce a partnership today in which 20 small ISPs and Web-hosting companies will sell addresses through cobranded pages that will appear on Register.com's and the partners' Web sites. A visitor searching a partner's site for Web hosting services, for example, will be able to buy domain names through a page that carries the logos of the partner and Register.com. Partners will receive a commission for every domain name sold.
"This is the beginning of the deployment of our strategy to compete" with NSI, Register.com chief executive Richard Forman said in an interview. He added that more partners are expected to come on board within the next few months, including Concentric Network, which already has a close relationship with Register.com.
Challenging NSI will not be easy. With 530 employees and an average of 400,000 registrations per month, NSI is the market's 800-pound gorilla. By contrast, Register.com employs a little more than 60 employees. It declines to discuss registration numbers, but an estimate based on registry data puts the figure at about 42,000 per month.
NSI has other advantages as well. The company's six-year head start has allowed it to build an enormous base of customers who would have to spend extra money and time to switch to a rival registrar. What's more, if a "Dot Com Directory" NSI unveiled last month becomes the Internet equivalent of the Yellow Pages, as some analysts predict, it would give businesses another strong incentive to register domain names through the incumbent. NSI also has snatched up many of the major Net players as partners, including UUNet, Sprint, GTE Internetworking, and MindSpring.
By contrast, Register.com has lined up partnerships with a few large players, such as office-supply retailer Staples and online community TheGlobe.com. But so far most of its partners have comparatively more modest businesses.
Despite the difficulty in unseating NSI's dominant position, however, there is plenty of room in the ever expanding registration market for new players, said Raimundo Archibold, an analyst at J.P. Morgan Securities who follows the industry.
"The dominance of NSI does not preclude others who are looking to get into the business from making money and creating sustainable businesses," Archibold said. "The pie continues to get larger, and as it gets larger there will be continuing opportunities for others like Register.com."
Register.com's Forman estimated that the 20 new partners could increase registrations by 10 percent, and as the company signs up more partners, he expects business to surge.
"We're thinking [registrations] are going to be in the tens of thousands, if not hundreds of thousands, as a result of these relationships," Forman said. "There's a market of 5,000 ISPs out there, and we see [today's announcement] as just the tip of the iceberg."