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How this small island makes money from doing nothing
Previously, Pub Convos talked about the micro island nation dependant on bird poop, this week I’m introducing another micro island nation, this time dependant on its name, but you’ve probably never heard of it before this.
The Island:
The country’s name is Tuvalu. It’s the 4th smallest country in the world and 2nd smallest by population (only 11k residents). It’s located halfway between Hawaii and Australia. It also has the lowest GDP worldwide at only $49 million. In short, Tuvalu is very small, very poor and very isolated. So, what’s so special about their name?
The Name:
Websites usually end their domains with .com for commercial, .org for organisation etc. For countries, we have .jp for Japan, .ru for Russia etc. Here’s where Tuvalu got lucky, it got .tv, the perfect domain for online broadcasting websites. Hence, it started selling .tv domains, most notably to Twitch.tv The sales of .tv licensing brings in about $5 million to Tuvalu each year (10% of its GDP). That’s $5 million per year for having a lucky name. This amount does help with their fishing-dependent economy (which may be volatile), but it’s still tiny numbers for the tiny nation. That’s because there’s a middleman involved, but things might change soon.
The Middleman:
VeriSign, an American internet registry company is the middleman that manages the sales and registration of these .tv domains. VeriSign leased the .tv licensing from Tuvalu in 1985 for $50 million. The actual sales of .tv domain names in the past 5 years is over $1.4 billion. So, yikes, $1.4 billion is a whole lot more than $50 million. Fortunately, Tuvalu’s leasing agreement with VeriSign expires this year, in 2021. It would be great if Tuvalu could leverage its position and renegotiate a better deal with VeriSign. Or, Tuvalu can just call it off and take its sweet name to another company.
A better domain lease would benefit Tuvalu greatly. For a country that only has one runway, one hospital and 2 banks, the .tv revenue could really help with their infrastructure, economy, and battle against rising sea levels.
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