Tucows 2013 Annual Report Download - page 37

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With the acquisition of EPAG Domainservices GmbH (“EPAG”) in August 2011, we now offer registration services
for over 200 TLDs.
Our domain service revenue is principally comprised of registration fees charged to resellers in connection with
new, renewed and transferred domain name registrations. The registration fee provides our resellers with access to our
provisioning and management tools to enable them to register and administer domain names and access to additional services
like WHOIS privacy and DNS services, enhanced domain name suggestion tools and access to our premium domain names.
We earn fees in connection with each new, renewed and transferred-in registration and from providing provisioning services
to resellers and registrars on a monthly basis. Domain registrations are generally purchased for terms of one to ten years, with
a majority having a one-year term.
Wholesale – OpenSRS Value-Added Services
We derive revenue from our hosted email service through our global distribution network. Our hosted email service
is offered on a per account, per month basis, and provides resellers with a reliable, scalable “white label” hosted email
solution that can be customized to their branding and business model requirements. The hosted email service also includes
spam and virus filtering on all accounts. End-users can access the hosted email service via a full-featured, multi-language
AJAX-enabled web interface or through traditional desktop email clients, such as Microsoft Outlook or Apple Mail, using
IMAP or POP/SMTP.
We also derive revenue from other Value-Added Services primarily from provisioning SSL and other trust
certificates. In addition, we derive revenue from the bulk sale of domain names and advertising from the OpenSRS Domain
Expiry Stream.
Other services included in Value-Added Services include web publishing tools and fees we receive from time-to-
time from vendors to expand or maintain the market position for their services. In addition, we provide billing, provisioning
and customer care software solutions to ISPs through our Platypus billing software.
Retail – Hover
We derive revenues from Hover's sale of retail Internet domain name registration and email services to individuals
and small businesses.
Retail - Ting
We derive revenue from Ting's sale of retail mobile phones and services to individuals and small businesses.
Portfolio
We derive revenue from our portfolio of domain names by displaying advertising on the domains and by making
them available for sale or lease. When a user types one of these domain names into a web browser, they are presented with
dynamically generated links that are pay-per-click advertising. Every time a user clicks on one of these links, it generates
revenue for us through our partnership with third-parties who provide syndicated pay-per-click advertising (“parked page
vendors”).
37
Our parked page vendor relationships may not continue to generate levels of revenue commensurate with what we
have achieved during past periods. Our ability to generate online advertising revenue from parked page vendors depends on
their advertising networks' assessment of the quality and performance characteristics of Internet traffic resulting from online
advertisements rendered on their websites. We have no control over any of these quality assessments. Parked page vendors
may from time to time change their existing, or establish new, methodologies and metrics for valuing the quality of Internet
traffic and delivering pay-per-click advertisements. Any changes in these methodologies, metrics and advertising technology
platforms could decrease the amount of revenue that we generate from online advertisements. In addition, parked page
vendors may at any time change or suspend the nature of the service that they provide to online advertisers. These types of
changes or suspensions would adversely impact our ability to generate revenue from pay-per-click advertising.
Portfolio names are sold through our premium domain name service, auctions or in negotiated sales. The size of our
domain name portfolio varies over time, as we acquire and sell domains on a regular basis to maximize the overall value and
revenue generation potential of our portfolio. In evaluating names for sale, we consider the potential foregone revenue from
pay-per-click advertising, as well as other factors. The name will be offered for sale if, based on our evaluation, the name is