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ICANN again opens the Pandora's box of Tiered Pricing for Domain Names
icann, tiered pricing, new gTLDs, .tv style pricing

 2:12 pm on Nov 10, 2008 (gmt 0)

ICANN has posted draft contracts for new gTLDs [icann.org]. These contracts contain a Trojan horse that could radically alter pricing of domains in existing gTLDs like .com.

In particular, the draft contracts remove price controls from domain names. According to the draft of new Generic Top-level Domains (gTLD) contracts for Section 7.3 [icann.org]:

Price controls have been removed for 2008 in favor of the transparent pricing model outlined above.

Existing gTLD contracts have an "equal treatment" clause, though, that permits registry operators to copy terms that are accepted by ICANN in other gTLDs. Section 3.2.b) of the .com registry agreement [icann.org] states:

ICANN shall not apply standards, policies, procedures or practices arbitrarily, unjustifiably, or inequitably and shall not single out Registry Operator for disparate treatment unless justified by substantial and reasonable cause.

Thus, existing gTLDs like .com which do have price controls would be able to have those price controls removed if the draft contracts for new gTLDs are adopted as-is.

This would re-open the issue of tiered pricing for domains [webmasterworld.com] that the registry operators lost 2 years ago due to public outcry, when .biz/info/org attempted to remove pricing limits from their contracts. I urge everyone who does not want .tv style pricing in .com or other gTLDs, where the renewal price of any domain can be set unilaterally by the registry operator based on the quality of the domain, to voice their concerns [icann.org] while the public comment period is still open. Once again, ICANN has not been representing the needs of registrants when they produce these sloppy draft contracts that threaten existing domain registrants with unlimited price increases.



 2:20 pm on Nov 10, 2008 (gmt 0)

Just remember you can renew existing domains at existing rates for 10 years.

If it's your business or personal domain, I say spend the $70 or so and get it over with.


 2:26 pm on Nov 10, 2008 (gmt 0)

Most companies have an expected lifespan far greater than 10 years. If you owned Hotels.com or Cars.com and VeriSign said "Your renewal price in 10 years will be $2 billion/year" how would that affect your company?


 7:09 pm on Nov 10, 2008 (gmt 0)

How could ICAAN allow registrars to arbitrarily set pricing for renewals? Bob Parsons must sit on that board and is gettin real excited right about now.


 7:34 pm on Nov 10, 2008 (gmt 0)

It's not registrars, but registry operators. GoDaddy, Tucows, Network Solutions, eNom, Dotster, Moniker, etc. are registrars. They register domain names on behalf of end-users (registrants) through registry operators like VeriSign (for .com), Nominet (for .uk), etc.


 9:30 pm on Nov 10, 2008 (gmt 0)

Thanks for reminding me to renew all my main domains back out to 10 years again... Every year or two I keep pushing it back up to 10 years... Just in case... ;-)


 12:56 am on Nov 11, 2008 (gmt 0)

it will 'never' happen. Why would the registries hit the jackpot each year because someone bought or registered a good name? Why should they really own the name, and lease it to you at market prices as if it was theirs?

Imagine the confusion and chaos this would create with hundreds of millions of domain names. The internet is part of life now, not just bobscats sites.


 1:18 am on Nov 11, 2008 (gmt 0)

I've just sent my disagreement with the proposal to gtld-transition@icann.org as per the instructions over at icann.org .

10 years isn't enough :( my first website was started more than 14 years ago now ...


 3:48 am on Nov 11, 2008 (gmt 0)

it will 'never' happen. Why would the registries hit the jackpot each year because someone bought or registered a good name? Why should they really own the name, and lease it to you at market prices as if it was theirs?

It's naive to say that they won't, if the contract allows it. Registry operators are beholden to their shareholders, and are profit-maximizing. VeriSign's latest contract for .com, for example, permits 7% annual price increases. In theory, they could have left prices alone, decreased them, or raised them by less than 7%. However, they have increased them by the maximum possible each year. Always.

PIR's contract for .org had 10% price increases allowed. Did they, the so-called "Public Interest Registry", keep prices constant, or decrease them, or raise them by less than 10%? In the first year, they went from $6.00 to $6.15. But, then they went from $6.15 to $6.75 in the most recent year, a 9.7% price increase, giving in to greed in a world of decreasing technology costs.

It has already happened in .tv. The only way to ensure it will not happen in .com or other important gTLDs is to ensure that the contracts don't permit it. The registries are counting on people to be complacent and apathetic, hoping to sneak in these favourable provisions which are irreversible. Don't fall into that trap, but instead add your own public comments to change these draft contracts so that the offending language is removed.


 9:11 am on Nov 11, 2008 (gmt 0)

Network Solutions until at least January this year offered a 100 year domain name renewal term:


(the price was $999)

Since ICANN only allows 10 years at a time, they basically use their computerized system to renew it automagically. Of course this assumes they will last 100 years, but given their ties with Verisign, it's quite likely.

But it's now disappeared. I wonder if they will still cover people who used the service originally.

They seem to instead offer 20 years @ $12/year (which is a ripoff IMHO)
However if registrars suddenly go back to $30/year, that would be a deal eh?

[edited by: amznVibe at 9:16 am (utc) on Nov. 11, 2008]


 1:50 pm on Nov 11, 2008 (gmt 0)

If I remember correctly from my last solicitation from Register.com, they had re-raised their prices.

They had dropped down to 19.99/year to try and compete the last few years.

I think they are back up to 35.00/year which they are now calling their "Limited Time Only" pricing.


 2:06 pm on Nov 11, 2008 (gmt 0)

Since ICANN only allows 10 years at a time, they basically use their computerized system to renew it automagically. Of course this assumes they will last 100 years, but given their ties with Verisign, it's quite likely.

VeriSign used to own Network Solutions, but that's no longer the case. VeriSign sold its entire stake in the firm (part of the condition of retaining the role of .com registry operator).


 7:34 pm on Nov 11, 2008 (gmt 0)

Sorry for being a bit dense, but I want to make sure I really understand this.

If I am reading this correctly, under the new rules, the registrars would be able to arbitrarily set the renewal price of the domains? So, if I work my butt off and finally succeed, the domain registrar can set whatever price they want?

Again, that's what it seems like to me but I'd appreciate it if somemone could confirm this.




 7:39 pm on Nov 11, 2008 (gmt 0)

Well in theory as long as the REGISTRY can't set the price for a specific domain name (like it does with .TV) open competition between registratars should mean that at least one registrar will promise it's customers never to charge more then the lowest rate. Some will try to raise premium prices.

Thanks to US law in general they could not conspire to ALL raise prices based on the same formula for certain domains, or so I believe based on what I have read for other industries.

I think though Verisign wants very much to do what .TV has done.


 8:14 pm on Nov 11, 2008 (gmt 0)

cmedia: This is about the registries being able to set any price they want for domains (i.e. elimination of price controls), including setting a different price for each domain (e.g. cars.com or google.com would cost more to renew than lgjlkjjlkjkjhkjg.com or lkjkjabba.com). Just like .tv.

As amznvibe correctly states, registrars can charge any prices they want, but they're constrained by competition (i.e. if GoDaddy try to raise the renewal price for one of your domains to $1 million, you can simply transfer it to Tucows, Dotster, eNom, NSI or one of the other hundreds of registrars out there).

But, if the registry operator set the price (i.e. VeriSign), you can't avoid the price change. This is why it's important to ensure that no bad precedent is set in the new gTLD contracts that can then be imported into existing contracts under the "equal treatment" clauses.

For example, someone who wants to run .store or .shop might want to charge more for cars.store or google.shop than for mylonganduselessdomain.store or thisisareallylongandhardtotype.shop. VeriSign would then be able to say "Hey, ICANN, we want to be able to do that too!" And then they can point to their contract with ICANN that says "We are entitled to equal treatment, so we insist that we get what you gave to .shop and .store."

That's when your renewal price for a domain you've invested and built up over the past 10 years or that you've bought at a high price (e.g. business.com, creditcards.com, sex.com) will see VeriSign potentially jack up fees on. e.g. Books.tv now has a renewal price through .tv of $25,000/yr. Imagine what it would be for desirable .com domains.


 8:36 pm on Nov 11, 2008 (gmt 0)

So rising the fees for .com renewal last year and then this year is not enough and now Verisign want to "unlock its potential"?
What a mess!
How about regulators, will they step in?


 9:01 pm on Nov 11, 2008 (gmt 0)

All I can say is... You WHAT?

I mean... WHAT?

Crazy loony madness. It could (would?) come to the point where it would be cheaper to buy a new gTLD than register a good .com.

Besides the generics, you employ a team to look at the business potential of every domain coming up for renewal, and charge them a formulaic fee. Such as 1/10th of the total expected revenue for the registration period.

What I'm trying to say (and think cmendla was alluding to) is its not just the generic domains such as cars.com that will have a problem - LatestSuccess.com (wholly owned by poor grad students) might suddenly find their domain is priced out, and bought up by M$, Google, Yahoo (er, maybe not) and other tech firms. Indeed, why pay billions for a buy-out, just bribe someone to set the price higher than cash-flow will allow, and buy the domain.


 9:16 pm on Nov 11, 2008 (gmt 0)

That's the risk. That's why folks need to voice their opposition now to the current draft of the new gTLD contracts, so that those lack of pricing controls don't become the standard in existing gTLDs like .com.

The level of apathy I see is disturbing, given those are the current draft contracts which would be approved by default, unless people speak up and oppose them. Wake up folks! I can only make 1 comment, not 8000. But, 8000 people can take 1 minute out of their day and send in 1 comment, assuming they oppose the draft contracts.

The analysis that Shaddows performed is indeed correct. When looking at a contract, you should assume that your enemy is on the other side, looking at all the angles to maximize their advantage (including looking at the discounted cash flow of your business). That's what I would do, if I was able to engage in tiered pricing. .tv already engages in tiered pricing, because their contract allows it. Let's not have the same model be applied to .com because some staffer at ICANN doesn't see it as a problem (probably because they don't own any websites/domains of quality, and thus work at ICANN instead of a quality California internet company). The fact that someone at ICANN doesn't see it as a problem and allowed it to appear in yet another draft contract (when it was already opposed 2 years ago) probably explains why they're working at ICANN, as their analytical skills are so flawed!


 10:25 pm on Nov 11, 2008 (gmt 0)

Surely there are laws that forbid such abuse of a monopoly position?


 10:40 pm on Nov 11, 2008 (gmt 0)

Like the laws that stopped VeriSign from turning their position as a contractor, with a fixed end to their contract, to essentially controlling .com forever with perpetual price increases permitted, instead of engaging in a tender process like other government contractors (where the contract is awarded to the lowest bidder, e.g. like for management of the toll-free numbers database, etc.)?

Already .mobi is auctioning off their premium domains to the highest bidders. As did .asia.

I wouldn't rely on regulators to place a high priority on watching out for "abuse of monopolies", when it becomes such a political game. They could say things like "Well, NYC charges higher taxes on $20 million condos than $500,000 townhouses --- why can't we?"

Best to ensure that the contracts explicitly forbid it, rather than permit it and try to fight later to put the genie back into the bottle. VeriSign could argue things like ".com is ours, just like VeriSign SSL certificates are ours, and we can charge whatever we want, because folks can buy certificates from Entrust or others. Folks can switch to .org or .shop or .whatever if they don't like our pricing for .com."

If you think your switching costs from .com to .somethingelse is zero, don't post against these draft contracts. If instead you do value your .com holdings and think the switching costs will be high, you should post against it.


 10:46 pm on Nov 11, 2008 (gmt 0)

OK... Dumb question #2 from me.

When we follow the link you mentioned and find the email address, then we should say something like

<i>I am against the removal of price controls on .com and .org domains. I feel that there is a tremendous potential for abuse in the removal of these price controls.</i>

The pricing is one thing but I can see this being used politically. ie. <yourfavoritecause dot org> suddenly finds themselves priced out of the domain.

I also agree that a 10 year protection is simply not enough if I understand the concept correctly.

Thanks GeorgeK for the heads up.


 10:48 pm on Nov 11, 2008 (gmt 0)

By the way, every contract ICANN signs with registries has a clause like 8.5 in the .com contract:


No Third-Party Beneficiaries. This Agreement shall not be construed to create any obligation by either ICANN or Registry Operator to any non-party to this Agreement, including any registrar or registered name holder.

In other words, you don't even have standing to sue ICANN or VeriSign. You don't have direct contractual relations with them. You have to rely upon ICANN to watch out for your interests, and ICANN is trying desperately to get away from US government oversight to be independent (and thus unaccountable). Go to Guidestar.org and check out ICANN's IRS Form 990 filings -- their staff compensation has gone wild. Their motivations are certainly far different from registrants who are looking for predictable low cost pricing of their domains.


 10:55 pm on Nov 11, 2008 (gmt 0)

cmedia: It should be something like:

"I oppose the removal of price controls on new gTLDs, as these terms could then be incorporated into existing gTLDs like .com under their equal treatment clauses."

In your own words, of course. The .com contract isn't being directly negotiated right now -- it's the new gTLD draft contracts. But what's insidious is the implication on existing gTLDs should those new gTLDs contracts go through unamended, because .com/net/org etc. could then be modified. That's what's sneaky about all this.

Last time, it was about .biz/info/org, and those had several million registrants who were up in arms. But, these new gTLDs have no registrants, so few people are watching. The few people who are watching are either:

1) people who want to acquire a new gTLD on the cheap, with the most favourable rules possible; this group won't oppose unrestricted pricing, since they want to maximize their own profits;

2) people like me that watch ICANN like a hawk (as we do a lot of internet commerce)

Unfortunately, there aren't many people in group #2 !

[edited by: GeorgeK at 10:56 pm (utc) on Nov. 11, 2008]


 12:32 am on Nov 13, 2008 (gmt 0)

I don't tend to follow these issues closely, but it seems to me that if any authority is allowed to set prices arbitrarily, this would probably mean that domain names would end up being auctioned to the highest bidder as renewal approaches. I can see one very obvious legal problem with this - trademarks.

Even if another company were to acquire a domain name, would they be allowed to use it? For instance, if NBC were to outbid the BBC for the right to use the domain name bbc.com I think it's fair to say that a lawsuit would begin immediately.

Of course, this argument would not apply to all domain names, but it would probably apply to most of the valuable ones.



 12:47 am on Nov 13, 2008 (gmt 0)

How about the most popular domain blogs?
Why they arent rising concern about this issue?


 1:15 am on Nov 13, 2008 (gmt 0)

There's profit. There's greed. Then there's filthy greed. The first one is okay. I can live with the second (sorta). The final will just get me very irritated.


 2:41 am on Nov 13, 2008 (gmt 0)

It's not a name, it's a business, links and all. Many are probably billion dollar ones


 6:22 am on Nov 13, 2008 (gmt 0)

OK - Sent it off.

Also, I'm posting this on my blog. I don't get a ton of traffic but I supposed every little bit will help.



 1:53 pm on Nov 13, 2008 (gmt 0)

BE SURE TO LOOK for the incoming email verification message when you send in your comments. They are using a reply system to 'stop spam'. If you comment and do not reply to their reply email, you comment probably won't be counted.


 12:07 am on Nov 16, 2008 (gmt 0)

Im not sure about the proposed changes in regulations at question here but I wanted to clear up a misconception about .TV premium pricing.

With TV the registrar can only boost the premium renewal fee if the domain is dropped and re-registered, otherwise it holds the same. If I renew or transfer a tv domain to someone else the premium registration fee stays fixed.

TV premiums started very cheap $50-100 but have rapidly increased $xx #*$!x
Some of the best tv keywords actually have low premium fees because they were bought at the very beginning and never dropped.

TV does arbitrarily add premium fees to dropped domains at will however - and people pay...
cars.tv - Yearly Renewal Fee - US $75000.00 - taken!

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