Nominet to restructure, slash jobs after losing 'major deal'

Nominet is cutting staff on the back of market pressure, including the loss of a government cyber contract and is considering a domain registration price increase, according to an update from its CEO. In his message to members, seen by The Register, Paul Fletcher did not elaborate on where the cuts would be, only that "up to …

[abend0c4]

Market pressures are squeezing margins

So the response is to put up the price of its core offering?

The appropriate response to the CEO might be to remind him not only of the value of sticking to one's last, but also of the name of the tradesmen from whom the proverb originates.

[AMBxx]

I don't remember learning this in economics!

He complains about price competition. Solution - Increase prices!!

[I ain't Spartacus]

Re: I don't remember learning this in economics!

Yes. Because he's increasing prices on the bit of the business that's a monopoly.

The profits from which used to go to good causes. But then the new board came along, and gave themselves nice bonuses - and increased their prices and reduced their payments for good causes in order to enter into various business ventures - to justify their new shiny salaries.

Have any of those buinsess ventures ever made a profit? I presume at least one of them must have - but most have failed.

[ITMA]

Re: I don't remember learning this in economics!

Which is, if I recall, very similar to what happened at GEC Marconi.

New bunch of suits at the top who wanted to do "exciting things" to justify their salaries to the "markets" and ended up virtually driving the company into the ground.

They also burned through an mountain of cash.

https://www.london.edu/think/the-destruction-of-marconi

[cipnt]

Re: I don't remember learning this in economics!

The cyber business (relatively new venture) has been making massive losses every year. They're complaining about tougher competition in this space and not being able to compete on price.

The registry business (.uk) has always been highly profitable due to it being a natural monopoly. They want to increase prices for the registry to make up for higher losses in the cyber.

I say cut the losses and stop messing about with these bright new venture ideas that each CEO and Board come up with every few years.

[anonymous boring coward]

Re: I don't remember learning this in economics!

I'd say, take away these "natural monopolies" that are anything but natural. That ought to teach 'em.

[rg287]

According to Fletcher's memo, the goal of reaching "profitability" with the cyber biz was to "compensate for static or reduced demand for domains in future.

I can't see why static demand would be an issue, nor why there would be a particularly reduced demand. They're a non-profit registry. Keeping domain fees basically in line with inflation, employing some engineers to run some authoritative DNS servers is basically a perfectly fine little (£40m) business. When you have a monopoly on the .UK TLD, you don't need to go chasing "growth" to appease the (non-existent) shareholders, in the same way a corner shop/branch post office doesn't need to chase "growth" to keep people coming in for their milk, paper and to post a letter (because they have a local monopoly).

Now sure, if you can make money out of DNS-adjacent commercial services like Protective DNS, then that's also a very fine thing, and helps fund social impact expenditure, although it's unclear what this does that Quad9 doesn't (except being British. Unless they're additionally filtering things that aren't straight malware). It's a bit of a mystery how their "Cyber" business is loss-making to the tune of nearly £2.4m on £12m/revenue. You'd have thought that running a PDNS system would have relatively fixed/predictable costs, and you should be able to contract appropriately to turn a modest (or immodest) profit. They seem to have UKGov/NCSC and the Aussie Gov on board (albeit with NCSC about to expire). How are they making a loss on two government contracts!?!

[R Soul]

It's a bit of a mystery how their "Cyber" business is loss-making to the tune of nearly £2.4m on £12m/revenue.

A headcount of ~350 - WTF!? - might well have something to do with that.

[rg287]

A headcount of ~350 - WTF!? - might well have something to do with that.

That's for the group as a whole (which turned a profit), not the cyber business. Hard to tell what the distribution is.

Important to note that it's only spiked to 315 this year, from 166 in 2018 and 200 in 2019 - some of this is probably to do with the leap in public benefit spending (£3m to £11m), both administration and if they're employing people to provide in-kind work for partner organisations instead of just doling out cash.

But yeah, it's still a lot, and it's unsurprising that losing the PDNS contract will see cuts.

[Anon21]

The headcount increases are nothing to do with Public Benefit spend - this is all delivered through partners

[Mike Pellatt]

Let me tell them why demand for domains has reduced.

.uk domains used to be competitively priced. I collected a few vanity domains, including <my ham callsign>.org.uk.

Now they're no longer competitively priced, I've cut the number of domains I have registered down significantly. Just not worth it.

[Anonymous Coward]

Nominet could concentrate on it's actual business - offering domain registrations.

[cipnt]

Bonuses become hard to justify then...

For example folks got $xxx,xxx bonuses each for signing the deal to acquire CyGlass which cost $x,xxx,xxx to buy and lost $xx,xxx,xxx in a few short years and was later sold for $1

[ITMA]

More than a passing resemblance to the great RBS fiasco of (stripped of the Sir) Fred "the shred" Goodwin.

https://www.youtube.com/watch?v=W_ZWGuQ07Q8

When he left Clydesdale Bank to join RBS they threw a leaving party for him - after he had gone to celebrate the fact he'd f***ed off.

Everything driven by greed to get their bonuses no matter what and to ensure their remuniration is geared to making fat bonuse no matter how bad or, in the case of RBS catestrophic, the decisions.

[captain veg]

Re: it's actual business - offering domain registrations

I would agree, except that you can't (so far as I can tell) actually buy a domain from Nominet. It's all resold.

Not being in the business I have no idea what is the markup on reselling .uk domain registrations. Nevertheless I don't get why Nominet -- or anyone else awarded the golden chalice of allocating ccTLDs -- would want to piss it away to the likes of, I dunno, Verisign.

-A.

[Anonymous Coward]

Re: it's actual business - offering domain registrations

I would agree, except that you can't (so far as I can tell) actually buy a domain from Nominet. It's all resold.

Not so. Nominet (and many other TLD registries) provide some sort of "registrar of last resort" service for those who choose not to go through a registrar. IIUC the price for that is at least 100 times the price to its registrars. Not surprisingly, this service is rarely used.

Not being in the business I have no idea what is the markup on reselling .uk domain registrations.

The article says Nominet sells names to its registrars for £3.90/year. Deduct that from the price a registrar charges you and voila! you have the gross markup. And in some cases, those markups really are gross.

Nevertheless I don't get why Nominet -- or anyone else awarded the golden chalice of allocating ccTLDs -- would want to piss it away to the likes of, I dunno, Verisign.

Taking .uk away from Nominet isn't going to happen unless the company does something really, really bad: going bust, money laundering, bribery, and so on. You then have to figure out who takes .uk out of their hands and decides who replaces Nominet, how that gets done, creating an oversight body, identifying the contract parties (and terms), transition/migration plans, etc.

[Anonymous Coward]

Re: it's actual business - offering domain registrations

"Not being in the business I have no idea what is the markup on reselling .uk domain registrations."

Going rate seems to be about £17 Inc VAT but the additional ~£12 isn't just profit,they have IT systems to operate and support, billing systems, customer support staff etc. Not all registrars are the same,service levels and features vary. In brief, they do add value to what nominet sell them. Frankly I'm more surprised by how little some registrars are able to charge and still make a profit.

[frankyunderwood123]

I'm sure at one time, the companies coffers were considerably stocked...

... perhaps all of that silly "playing at being a big tech company" whilst the former CEO was onboard and driving the fat bonuses for the C-Suite gravy train emptied those coffers?

It really did seem there was a rather large start-up style play area for the top brass to muck about with, where every single venture failed, other than the core business.

That core business being the unsexy but incredibly important infrastructure that kept the companies lights on whilst the the money was frittered away on all sorts of daftness.

[Doctor Syntax]

Re: I'm sure at one time, the companies coffers were considerably stocked...

I'm beginning to wonder if the new CEO is an actual improvement on the former.

[Anonymous Coward]

Re: I'm sure at one time, the companies coffers were considerably stocked...

Nominet is a MONOPOLY, the money just rolls in for maintaining a registry with domain registrations occupying a few bytes on a computer database.

Agree with your statement: “playing at being a big tech company”. Forget their aggrandisement statements, Nominet is just a monopolistic registry – end of!

Current headcount: 315. But now they say they will cut 70% and presumably Nominet will survive. So what were these 70% of these staff actually doing for all these years? What will be the cost of redundancy payments?

Bad decisions by the gravy-train senior executives awarding themselves huge bonuses. Leaving the monopoly company with huge losses.

Pricing now going up, despite pricing of newer technology generally meaning falling prices. Who now pays? The customer!

In a previous theregister news story: “In 2019, Haworth received a 30 per cent pay rise with his bonus almost as big as his salary: £299,000 in salary and £275,000 in bonuses. Hill received a £157,000 bonus on a salary of £215,000 and Bradley £103,000 in bonuses on a salary of £220,000.”

Last to leave is Eleanor Bradley by the end of the year. Will she hand back of her bonuses? The answer is probably not!

[rg287]

Re: I'm sure at one time, the companies coffers were considerably stocked...

Current headcount: 315. But now they say they will cut 70% and presumably Nominet will survive. So what were these 70% of these staff actually doing for all these years?

Don't know about "all those years". It seems a recent blip.

A quick look at the 2018 report shows 166 employees to March 2018, and 202 to 2019, ballooning up towards 315 now (which is post EGM).

Presumably some of these were to do with administering/delivering public-benefit schemes (seems reasonable that going from £3m to £11m spend would requires some extra hands, potentially quite a few more depending on whether you're just giving cash to charities, or delivering in-kind support by employing staff to work on projects for said charities). But trimming the headcount doesn't seem undue, given this sharp spike upwards.

[Anonymous Coward]

Re: I'm sure at one time, the companies coffers were considerably stocked...

The last to go. How will Nominet survive?

The Register 2021: “Bradley meanwhile has spent pretty much her entire career at Nominet.”

Now finally in 2024 How will Nominet survive when Bradley is at last gone?

What was the Nominet corporate culture that no one in Nominet before considered anyone up-and-coming talented seeking career advancement to replace high-salaried, bonus seeking Bradley (The Register: Nominet’s management team was paying itself more money every year, often double-digit annual increases,…. 2019 Eleanor Bradley : £103,000 in bonuses on a salary of £220,000) in a cushy-life protected career in Nominet.

[Macs1000]

Re: I'm sure at one time, the companies coffers were considerably stocked...

Err... no. It says 70 roles (out of 315), not 70%. So actually about 22%.

[Anonymous Coward]

Re: I'm sure at one time, the companies coffers were considerably stocked...

70 redundancies , not 70%

[rg287]

Re: I'm sure at one time, the companies coffers were considerably stocked...

I'm sure at one time, the companies coffers were considerably stocked...

... perhaps all of that silly "playing at being a big tech company" whilst the former CEO was onboard and driving the fat bonuses for the C-Suite gravy train emptied those coffers?

They still have a good nest egg. A quick look at their 2023 annual report yesterday indicated they had about £96m in investments (at fair market price). This was down from £114m in 2022 (but that had risen from £98m in 2019. I assume the 2022-23 drop probably reflects the jump in social-impact/public-benefit spending since the EGM and Simon Blackler (et al) joining the board. Up to £11m now from £3.7m in 2021 and a paltry £500k in 2018.

Which is not to say you want to run that down, because that's now a very nice "endowment" type capital fund which can fund social impact work off the investment income, but it looks like they've spent some of it.

They also seems to have ballooned from 202 staff in 2019, which puts the current redundancies in perspective.

If they could refrain from any more acquisitions of self-driving car tech, that'd be marvellous. If something that comes along which is genuinely DNS-adjacent and could add value to their core business, then maybe. But since they don't even seem to be able to make money selling Protective DNS services, I'd take a long, cynical look at new acquisitions.

[Will Godfrey]

"whilst the the money was is being frittered away on"

FTFY

[Missing Semicolon]

PDNS contract

So which of the usual suspects have picked that up? Presumably with the attendant lousy performance?

[Anonymous Coward]

Re: PDNS contract

It’s on their website as just been won ? Nov last year

https://www.nominet.uk/nominet-chosen-to-run-critical-domains-for-gov-uk/

I could imaging UK Govt giving it to Go Daddy or cocksuckers like Fujitsu/Cr@pita however.

[rg287]

Re: PDNS contract

It’s on their website as just been won ? Nov last year

That new contract is for registry services (authoritative DNS provision) for gov.uk - not the Protective DNS (recursive resolving of arbitrary domains with malware filtering and whatever else is required), which is the contract they've just lost.

[NeilPost]

Re: PDNS contract

So lost one and given one ? Seems like a lack of consistency, and opportunities for economies of scale.

[Roland6]

What no statement from Kieren McCarthy?

Okay Kieran is only a non-executive director but given the circumstances under which he stood and was elected…

[General Purpose]

Re: What no statement from Kieren McCarthy?

That's the downside of being a director. Once you're on the board, you mainly leave it to the chair and the staff (CEO, press officer, whatever) to talk to the press, rather than writing commentary yourself, and you don't start briefing against the CEO.

[Anonymous Coward]

Good grief Charlie Brown

$nslookup www.nominet.uk

Non-authoritative answer:

Name: www.nominet.uk.cdn.cloudflare.net

Addresses: 2606:4700:3033::ac43:cafc

2606:4700:3031::6815:163c

172.67.202.252

104.21.22.60

Aliases: www.nominet.uk

--

nominet.uk:

Domain last updated: 2021-11-30T13:16:31Z

Domain created: 2014-06-10T06:45:19Z

[R Soul]

Re: Good grief Charlie Brown

I don't know what point you're trying to make.

Nominet is just one of the many tens of thousands of organisations who pay Cloudflare for web hosting. (BTW The Register is another.) Nominet's core business isn't running web sites. So it makes sense to outsource that to one of the CDNs who has web hosting as their core business and has the economies of scale to do a good job of that.

[john.jones.name]

Re: Good grief Charlie Brown

yes cloudflare do their website but really they should be able to manage that themselves with a failover to cloudflare...

its still pretty poor that their RPKI has portions that are not signed

dnsa.nominetdns.uk.

... 2001:502:ad09::/48 AS397215 not-found

... 2001:502:ad09::/48 AS397218 not-found

... 2001:502:ad09::/48 AS397220 not-found

there is a HUGE market in SSL certificate authority that they could quite easily setup plus the filtering market

then there is the phone number registry they could get into in a blink of an eye combined with the certificate business you could have SHAKEN/STIR monopoly which would be prefered to BT...

[captain veg]

Re: Good grief Charlie Brown

> organisations who pay Cloudflare for web hosting.

Complain to Cloudflare about the fact that they host criminals (i.e spammers, counterfeiters and the like) and they, on the rare occasions that they respond at at all, claim that, in fact, they don't host anyone.

How convenient.

-A.

[anonymous boring coward]

All these companies never acknowledge that they are making money off of "the commons".

The internet isn't paid for by them. In many cases they act like squatters, demanding money to do jobs, based on "rights" that have been obtained by political manoeuvring.

The goal is always to get bigger, buy up the competition, and then hold those dependent on them (captive customers) pay more.

[Yes Me]

Problem or solution?

And there's the root of this "problem", which may turn out to be a solution.

Nominet should have stuck to its mission as a neutral registrar. It's a clerical job that creates enough revenue to fund itself, and some spare to donate to beneficial community efforts.

Nominet lost its way years ago; maybe now it will find it again. Sorry for the people who lose their jobs, though.

[Anonymous Coward]

Despite losses, the Monopoly Nominet Gravy Train continues.

Despite losses, the Monopoly Nominet Gravy Train continues.

July 2024. From domainincite.com “No .uk price hikes despite tumbling sales”

Fletcher and Bedford received hefty generous bonuses. Good Job, Well done Fletcher and Bedford.

The registry said in its annual report that its net loss for the year ended March 31 was £6 million ($7.7 million), compared to £3.9 million ($5 million) in fiscal 2023, on revenue up £2.3 million ($3 million) to £56.4 million ($72.4 million).

The increase in revenue was due to its non-domains Cyber business, which was up by £2.7 million, offsetting a £400,000 decrease in domains revenue that was due to a 300,000 decline in domains under management.

Fletcher and CFO Carolyn Bedford both received hefty bonuses during the year, amounting to an extra £180,000 for Fletcher on top of his £304,500 base salary and an extra £94,557 for Bedford to add to her £190,000 base.

[Anon21]

Re: Despite losses, the Monopoly Nominet Gravy Train continues.

The historic turmoil and EGM was driven by the high CEO/CFO/Registry MD salaries and bonuses compared to the reductions in Public Benefit spend together with arrogance and the loss of real engagement between the Chair/CEO and medium sized registrar members. Fast forward to today ...has anything really changed? The £0.5m CEO packaged is just not justifiable and the Registry only business does not now need a CFO (a good cost control FD would be better). The cost base and employee count is out of control. The status of the projects is hidden from members. The leadership team - given fancy C-suite titles, is just out of its depth. The new turmoil and outrage will come when domain prices are increased due to this current incompetent management.

[Anon21]

This is now just the Registry business with domains under management that have been static at around 11m for a number of years. The leadership team of the business have lost control of the cost base and the weak Board (content to take their NED fees and keep quiet) have been hoodwinked by the HR team on the benchmarking of salaries of the leadership team to appropriate comparative businesses. Does the public benefit Registry business really need a £0.5m package for a CEO, that is out of his depth? The projects to refresh the infrastructure and software/processes of the Registry business have been fundamentally mis-managed. Please explain how for FY24 any bonuses are appropriate - the Registry profitability has reduced from £19.2m in FY21 to £9.8m in FY24, DUM is reducing, all the projects are well behind schedule and suffering overspends and the Cyber business has been destroyed. You should not get a bonus for spending Public Benefit money.