Anguilla got lucky with the AI boom. But in partnering with Identity Digital, they’ve played their cards well.
Today, we’re continuing the topic of licensing, but in the world of domains.
What if I told you that AI isn’t just transforming technology, but also bankrolling a Caribbean island’s budget?
Anguilla is earning millions per year from licensing the .ai domain — its country-code web address.
According to Semafor, .ai domains now produce over USD $32 million per year in revenue for a population of just 16,000 people. That’s 20-25% of Anguilla’s total government revenue, or roughly $2,000 per person.
But here’s the twist: Anguilla doesn’t operate .ai domains themselves. The registry is managed by a little-known US-based company called Identity Digital — one of the quiet giants of the internet which serves as the backend provider for dozens of extensions, including .org, .info, and .io.
This raises some interesting questions:
- How much revenue is Anguilla really making from these domains — and for how long?
- Was the registry deal structured for long-term royalties or just upfront fees?
- What other small nations are quietly sitting on valuable digital real estate?
To unpack this, I chatted with Slade Michalec, co-founder of Lumis, a respected domain brokerage.
Slade is a good friend of ours here at Alts — and was in fact the broker we worked with to acquire the alts.co domain.
Let’s go 👇
Table of Contents
The .ai land grab is on
For decades, the rule of domain names was simple: .com reigned supreme.
Owning your brand’s .com wasn’t just a nice-to-have, it was essential to credibility, especially for startups. Investors expected it. Customers trusted it. Entire companies waited years, saved up cash, or hired brokers just to negotiate a deal for theirs.
But that mindset is beginning to fade.
In the last 18 months, the rise of artificial intelligence has turned .ai from a novelty into a strategic branding asset. The shift has happened quickly, and it’s changed the rules of domain acquisition.
It’s about scarcity and speed. Startups don’t want to be caught in negotiations while a competitor snaps up their name.
Per Slade:
“For .ai domains, the urgency of demand has increased. Sometimes it’s a frantic pace. Buyers aren’t just negotiating one domain at a time anymore. They’re pursuing multiple options simultaneously, just to make sure they lock something in.”
– Slade Michalec
Some companies are even acquiring .ai domains in addition to their existing .com, just to future-proof their branding.
What used to be a long, deliberate process is now a high-speed land grab:
“There’s a general understanding among founders now: If you want a clean, one-word .ai domain, you’re looking at five figures minimum. That’s the floor — and people aren’t blinking at it anymore. They get it. They want it. They move.”
This shift has transformed .ai into something rare for a top-level domain: not just functional, but a status symbol — a way to instantly signal that you’re building in AI.
Lame? Maybe.
But in a world where 58% of all VC funding is going to AI and machine learning startups, optics matter.
By the numbers: The .ai boom
There are now over 836,000 .ai domain registrations, with 250,000 of those coming in the past year:
According to Slade’s company Lumis, the share of deals involving .ai domains has more than doubled over the past year, from 8.3% to 18% of all deals.
Recent .ai domain sales
Publicly reported .ai sales this year have shown just how far pricing expectations have moved:
- Weather.ai — $150,000 (not live)
- Village.ai — $75,000 (live, sales tool)
- Sauna.ai — $70,000 (live, has nothing to do with saunas)
- Osmosis.ai — $50,000 (live)
- Sona.ai — $50,000 (not live)
- Revive.ai — $20,000 (not live)
- Point.ai — $20,000 (not live)
- Objects.ai — $15,000 (not live)
The average sale price for .ai domains at Lumis this year is $49,700, and that’s not being driven by end users or companies. In many cases, investors are the ones speculating.
“We’re seeing consistent five-figure prices at auction. And that’s before resale markup. It’s clear expectations have shifted.”
The high-end
Domain sales at the very top of the market are also heating up.
According to NameBio:
- From 2015–2020, there were 14 publicly reported domain sales of $1m+
- From 2020–2025, there have already been 30
Most of those are still .com, of course. But .ai is moving quickly up the value ladder.
It’s a consistent six-figure player, and there is at least one $1m+ .ai domain sale that we know of: fin.ai (live, AI agents for customer service).
Why .ai stuck (and others didn’t)
To be clear, the .com extension is still dominant, sure.
But in terms of cultural zeitgeist, it’s trending downward.
Meanwhile, .io — once the darling of developer-focused startups — has effectively disappeared from the market.
.io had a clean look, a vaguely “input/output” connotation. But it was always a bit of a stretch — more visual shorthand than thematic fit.
“.io had its moment. It hasn’t completely dried up, but the luster for .io domain names has certainly faded.”
Even .xyz, which rode the wave of crypto, NFTs, and “Web3 maximalism”, has lost momentum.
.ai, on the other hand, actually signifies something concrete. It doesn’t just “signal tech” like .io did, it tends to define the product.
“It’s directly correlated with artificial intelligence. There’s a wide understanding in the market that an .ai domain represents a company working in that space. It’s clear. It’s clean. It makes sense.”
That clarity has changed buyer behavior.
Slade shared that many companies — even those with access to their matching .com — are sticking with .ai as their primary domain.
It’s not a placeholder like .io was, it’s the destination.
“I’ve talked to plenty of companies who know the .com is available. They just have no interest. They already own their .ai, and they’re happy with it.”
Behind the curtain: Who really owns .ai?
The .ai domain is a country-code top-level domain (ccTLD) — assigned in the 1980s to the Caribbean island of Anguilla, a British Overseas Territory with a population of just 16,000.
This decision, made decades ago by internet governance bodies, turned out to be an incredible stroke of luck. Anguilla now earns millions of dollars a year from licensing .ai domains.
But Anguilla doesn’t actually operate .ai anymore.
In October 2024, the government announced a partnership with Identity Digital to modernize operations and distribution. On Jan 15, 2025, the migration was complete.
Identity Digital isn’t a household name, but it’s one of the most powerful players in the domain industry.
What is Identity Digital?
Identity Digital has quietly become it the largest registry services provider on the internet.
Formerly known as Donuts Inc. (which was a way cooler name 🍩) Identity Digital rebranded in 2022 after merging with a registry services firm called Afilias.
Today, it manages a portfolio of over 270 top-level domains, including those of other Caribbean nations like Belize, Antigua, St Lucia, and St Vincent.
Think of them as a digital landlord who owns dozens of neighborhoods.
They don’t sell domains to you directly. But you buy a domain on one of their streets, whether it’s .ai, .org, or .info. they collect rent in the form of annual domain fees.
There are two sides to their business:
- Registry Operator: They own and sell less popular extensions including .info, .pro, .world, .charity, .social
- Registry Services Provider: They manage the backend for more popular extensions like .org, .io, .me, and now .ai
Identity Digital doesn’t build the shops or run the businesses, but still has enormous influence over domain pricing and policy. They’re one of the internet’s most important private landlords.
While the Government of Anguilla still benefits financially from .ai domains, Identity Digital has taken over day-to-day operations.
What are the terms of the deal?
The contract itself has not been published, so we don’t know the exact wholesale price schedule and any performance clauses (i.e., service-level penalties, compliance triggers, etc).
But here’s what we do know:
- Five-year agreement, expires in 2029
- Revenue-share model, with 90% of revenue going to Anguilla
- Minimums: Identity Digital committed to a minimum revenue guarantee to Anguilla
- Operational control vs.ownership: Anguilla still remains the administrative authority, while Identity Digital serves as the registry services authority.
- Aftermarket: In Feb 2025, Namecheap replaced Dynadot for auctioning off expiring .ai domains
This seems like a very good deal for Anguilla.
Anguilla charges $140 for a minimum 2-year registration. 90% of domains are renewed after two years, so this model guarantees a steady stream of renewal income.
Meanwhile, Identity Digital runs all the technical backend, policy tooling, distribution to registrars, and support. Anguilla gets to sit back, ride the AI wave, and collect 90% of the revenue.
And boy is that revenue starting to come in — though it’s proving tough to quantify.
How much is Anguilla making from .ai domains?
This week’s article in Semafor kicked off plenty of chatter on this topic. But as usual most coverage has been light on original sourcing. Everyone is just parroting each other.
So I set out to validate this claim myself.
The best source I can find is the IMF, who reported that Anguilla earned EC$87m (USD $32m) from .ai domains in 2023, over 20% of the government’s total revenue (up from just 5% in 2022)
However, this revenue figure is nearly two years old, and was before the deal with Identity Digital.
So I scoured through Anguilla’s massive 251-page budget report to try and find out how lucrative this was for them last year.
I’ll save you the suspense — it’s not in there.
At least, not as a direct line item. In fact, the word “license” only appears 3 times in the whole document.
Domain licensing revenue appears lumped in under another category rather than being called specifically out by name — making it extremely difficult to nail down.
(I stopped short of sending a note to Anguilla’s Ministry of Finance asking which specific revenue head the NIC.ai receipts hit.)
But based on the 4x growth from 2022-2023, and the fact that Anguilla keeps 90% of revenue, it’s likely that yes, .ai domains are indeed fueling at least 20% of Anguilla’s government.
And possibly much higher than that.
Closing thoughts
It’s important to have some perspective here.
According to Domain Tools Research, .com’s are still king, and it’s not particularly close:
And there is a negative externality we should mention too: According to Slade, local businesses in Anguilla have voiced frustration that their own national domain is now too expensive to use.
“There’s some tension. They’re priced out of their own namespace.”
But it’s hard to see how this is anything but a massive win for the Anguillan people.
Remember, Anguilla isn’t the first small island nation to benefit from a lucky country-code domain. Tuvalu, for example, leased its .tv domain to an American registrar for just $5 million a year! (They renegotiated in 2021, but by then it was too late to make a real difference)
Meanwhile, Niue is still fighting to reclaim its .nu domain, seeking US$30 million in damages in a Swedish court and hoping to earn US$2 million a year from it going forward.
Anguilla got lucky — but they’ve played their cards well.
Meanwhile, you’re building in AI, and you haven’t locked in your domain strategy (or if you’re a domain investor) now’s the time. The good ones are certainly going fast. 🏝️
—
That’s a wrap!
A huge thanks to Slade Michalec for lending his time on this issue. If you want to buy a domain name, he’s your guy. Tell him I sent you.
Also a big thanks to Altea City Captain Oliver Sampson for the heads up on Domain Tools Research.
Say hi in the Alts Community.
See you next time, Stefan
Disclosures
- This issue was written by Stefan von Imhof, with editing help from Slade Michalec.
- This issue was sponsored by Fenchurch Legal.
- Altea has no holdings in any companies mentioned in this issue. We are planning to open an SPV with Fenchurch Legal.
- This issue contains no affiliate links.
