Tucows

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Tucows (originally an acronym for The Ultimate Collection of Winsock Software that has long since been dropped) was formed in Flint, Michigan, USA in 1993. It incorporated in Pennsylvania and headquartered in Toronto, Ontario, Canada. The company is perhaps most well known for its popular website directory of shareware, freeware, and demo software packages available to download. A system of mirror sites are maintained to allow the traffic to the site to be distributed among several world wide server locations. Tucows contains software for many major computer platforms including Windows, Linux and Macintosh, and also older versions of Windows (most notably the Windows 3.x series).

However, by 2007, Tucows' business model has evolved to becoming the holder of a portfolio of premium internet names, a direct navigation advertiser, a seller of premium domain names, a wholesale domain name registrar to ISPs, and a provider of internet services, including email, anti-spam tools, web-publishing tools, billing solutions.

The Tucows logo is two cows' heads. Additionally, their ratings system uses cow icons.

[edit] Company History

Scott Swedorski started Tucows in 1993 to provide users with downloads of both freeware and trial versions of shareware.^[4] Internet Direct acquired Tucows in 1996.^[4] STI Ventures acquired Tucows in 1999.^[4]

[edit] Merger with Infonautics

In 2001 Tucows, Inc. became a wholly owned subsidiary of Infonautics, and after acquiring Tucows, Infonautics changed its name to Tucows, Inc.,^[5] a business tactic called a "reverse takeover." Information Today, Inc. reported on August 26, 2002 that Tocows had sold eLibrary and Encyclopedia.com, its search and reference services properties, to Alacritude, LLC, a Chicago-based company.^[5] Tucows had acquired eLibrary and Encyclopedia.com in a merger with Infonautics, Inc. in August 2001.^[5]

[edit] Acquisition of ItsYourDomain.com

On July 27, 2007 Tucows acquired ItsYourDomain.com (IYD), another privately held ICANN-accredited wholesale registrar offering domain services through a network of over 2,500 affiliates with over 700,000 domains under management.^[6] Tucows will pay US$10.35 million in cash for IYD.^[6] "From our perspective IYD was perhaps the only substantial wholesale domain registration base that might be available over the next few years, and it's a compatible business that we'll be able to fold in to our existing operations," said Elliot Noss, President and CEO, Tucows Inc.^[6] ItsYourDomain.com managed 699,951 domains compared to Tucows' 5,919,987, at the time of the sale in July 2007 ItsYourDomain.com's monthly growth of 29,181 exceeded Tucows growth of 21,126.^[7]

[edit] Other Acquisitions

In 2004, Tucows acquired Mississippi-based Boardtown Corporation, a billing software provider. In January, 2006, Tucows completed its acquisition of certain assets of Critical Path, an outsourced email services provider. On 26 August 2006, Tucows was the winning bidder on an eBay auction for the web calendar site Kiko.com. In a blog entry about the purchase, it was revealed that they plan on rolling the features of Kiko into their existing email platform^[8]. In June, 2006 Tucows paid $18 million to purchase Mailbank.com Inc - a company that owns over 17,000 domain names for common surnames like smith.net or brown.org. Mailbank generates income from selling advertising on the websites of the name-based domains and also from customers who want e-mail accounts with their surname as the domain.

[edit] Business Model

Tucows' business has evolved over the years from hosting shareware to being a holder of a portfolio of premium internet names, a direct navigation advertiser, a seller of premium domain names, a wholesale domain name registrar to ISPs, and a provider of internet services, including email, anti-spam tools, web-publishing tools, billing solutions.

The Wall Street Journal reported on December 7, 2007 that Platinum Management LLC had reported holding a 5% stake in Tucows, according to a Schedule 13D filed with the U.S. Securities and Exchange Commission.^[9] Platinum said that Tucows' public market valuation does not reflect its intrinsic value despite a "strong history of positive cash flow generation and expansion prospects in 2008" and that Tucows has "an extremely attractive recurring revenue business model as a top-three domain name registrar along with several hidden assets that are misunderstood, including its ad business, premium names business and newly launched hosted e-mail business."^[9] Mark Nordlicht is the manager and controlling person in Platinum Management.^[10] Nordlicht was previously the largest shareholder and chair of Optionable Inc., a commodities brokerage firm.^[11] The Toronto Star reported on May 23, 2007 that class-action lawsuits had been filed in the United States alleging that Optionable helped David Lee, the star trader at the Bank of Montreal, mismark options, allowing him to hide millions in losses.^[11] The Financial Post reported on May 11, 2007 that Nordlicht sold 7 million shares of Optionable to Nymex for $19 million days before the Bank of Montreal received a strongly worded auditor's report into the activities of its options trading desk prompting the bank to announce it had uncovered natural- gas trading losses valued at between $350-million and $450-million.^[12] Optionables shares dropped 88% after announcement of the losses from $7.01 a share to 0.85 after the announcement.^[12]

On December 21, 2007 Tucows disclosed that they had retained Investor Relations firm, The MKR Group, to provide investor relations and corporate communications services in the United States.^[13] "Over the past year we have made significant progress in strengthening our overall business by improving our wholesale domain name and email services and adding to a now large domain portfolio, thereby positioning the company for greater growth and profitability," said Elliot Noss, President and CEO of Tucows.^[13] "As a result, we believe this is the ideal time to articulate the Tucows message to investors. An expanded Investor Relations effort in the US will enable us to better communicate our story to Wall Street, increase the overall awareness of the company, and unlock hidden shareholder value," Elliot added.^[13]

[edit] Portfolio of Premium Domain Names

On November 6, 2007 Noss disclosed that Tucows had been steadily building its portfolio of premium domain names and that the "cost of sales for the third quarter of this year also included $144,000 of recognized renewal costs for these names," Noss said.^[15] "From an accounting standpoint, we deferred the renewal cost at the time of purchase and amortize it ratably over the term of the renewal."^[15] Previously on August 7, 2007 Tucows disclosed that their new wholesale domain list pricing for .com names was $6.00 in Registry Fees and 0.20 for ICANN Fees. For domain names owned by Tucows it is not known if the $3.00 in Tucows management fees would be counted as part of the renewal costs and recovered later as fees or not, so the $144,000 paid for renewal costs would equate to over 20,000 premium domain names owned by Tucows paid for in that quarter at a per unit cost of $6.20 and over 15,000 premium domain names renewed in the quarter if they are accounted at a per unit cost of $9.20.^[16] This equates to a total domain portfolio of between 60,000 and 80,000 premium domains.^[16] On August 16, 2007 Tucows announced that they plan to further monetize their domain portfolio and that they had hired Bill Sweetman as General Manager of the domain name portfolio to develop and execute a strategy to enhance the quality and profitability of Tucows's portfolio.^[17]

[edit] Advertising Income from Direct Navigation

In Tucows' 10-Q filing with the SEC on November 14, 2007, Tucows disclosed that they offer pay-per-click advertising on the pages of domains within their domain name portfolio.^[18] When a user types one of these domain names into the command line of the browser (direct navigation), they are presented with dynamically generated links which are pay-per-click advertising.^[18] Every time a user clicks on one of the links listed on a web page, it generates revenue for Tucows through their partnership with third-parties who provide syndicated pay-per-click results.^[18] In their financial reports, Tucows does not break out their advertising income due to Direct Navigation from advertising income from other sources including the download site.^[18] However, Tucows announced $1,068,195 in total income from advertising during the quarter ending September 30, 2007.^[18]

[edit] Sale of Premium Domain Names

On June 19, 2007 Tucows announced that it has sold approximately 2,500 domain names from its portfolio of domain names for US$3.0 million in a private transaction and that it may earn an additional US$1.2 million from the sale in one year's time if certain performance criteria are met.^[19] "This sale indicates some of the latent value of our domain name portfolio," said Elliot Noss, President and CEO of Tucows Inc.^[19] "As I have stated in the past, we will continue to be opportunistic with our domain name assets."^[19] The cost per domain if the performance criteria are met is $1,680 per premium domain name.^[19] On August 7, 2007 Noss commented on the $3 million sale and said he expected more domain name sales in the future.^[20] "We do not think the $3 million in domain name sales in a year will be atypical," said Noss.^[20] "It will probably be the average over the next three years, and it will certainly be the average over the next five years. It is still very early days in this market and we would be learning every quarter as we move forward."^[20] Tucows also announced that they had entered into partnership with Domain Distribution Network and NameMedia to offer to over 600,000 premium domains for sale. Tucows' wholesale network supports near-instant transfers of premium names.^[21]

[edit] Wholesale Domain Name Registrar

Tucows is the fourth largest ICANN-accredited registrar in the world and the company is the largest publicly traded registrar.^[7] In the Quarterly Earnings Call for Tucows' third quarter held on November 6, 2007, President Elliot Noss said that Tucows hadn't been "competitive enough around price" in their wholesale domain name business and announced a substantial price cut in Tucows wholesale domain name services.^[15]

Tucows was the first to offer domain name registration services through a wholesale API driven platform business model entirely through domain name resellers. The company is well known for this platform, known as the OpenSRS software platform which manages their wholesale services business, including interaction with registries and resellers) to the extent that the names Tucows and OpenSRS are often informally used interchangeably when referring to Tucows' registrar business.

[edit] Personalized Email Accounts

On June 15, 2006 Noss disclosed that the portfolio of NetIdentity's surnames acquired by Tucows represents at least 68 percent of US and European surnames.^[22] Noss disclosed that the cost of the acquisition was $18 million.^[22] Noss disclosed that Tucows will earn income for the 90,000 customers who have email accounts, hosting, and other services^[22] of between $3 and $4 million.^[22] Tocows also expected to receive income for pay per click advertising revenue from domain parking the surnames.^[22]

Tucows had many highly visible problems in migrating email customer to a new system in 2006. In September, 2006 Tucows migrated these customers to a new mail system, an operation that in many respects failed, and left a number of customers without email access for weeks. Details of the incident have been chronicled at a Tucows managed blog starting with this entry. The migration is basis for the article "System migration may be the most dangerous thing you ever do" in ITworld[1].

[edit] Shareware Download Site

Tucows maintains a download archive that includes more than 30,000 software titles in its worldwide network of partner sites. Although some listing features are now available only on a for-pay basis, basic listing remains free.

The original creator of the Tucows software archive, Scott Swedorski, announced in November 2003 that he had resigned from Tucows.^[4] On March 10, 2006, Tucows Content division closed its satellite office located in Flint, Michigan, USA and relocated the remaining editorial functions to its corporate head office in Toronto. The Content division now solely operates from the corporate head office in Toronto under the direction of Greg Weir.

[edit] See also

• You have two cows
• List of Domain Registrars

[edit] External links

• Tucows software archive
• Tucows Corporate Website
• Tucows Resellers Info

[edit] Citations