ICANN released its second draft of guide book for the New gTLD’s today.
You can download the pdf version here by clicking here.
As one of the most knowledgeable people on ICANN matters, George Kirikos points out on on his post on Circleid.com:
“”There continue to be no price caps in place to protect registrants (see section 2.9). “””This is a backdoor way of allowing existing registry operators (e.g. com/net/org/biz/info) to get unlimited pricing power for existing domain names through .tv-style tiered pricing. Obviously ICANN is only listening to registry operators and prospective registry operators, given they’ve even lowered fees for registry operators (see Section 6.1)””
“”Note that price controls were a major source of comments by the public (see page 121-123).””
“”In particular, Neustar (operator of .biz) is on record (see page 123) stating they want elimination of price caps for .biz under the “equitable treatment” clause of existing registry agreements if other registries get it:””
“””Any material changes for the newer, no-price capped TLDs regarding vertical separation and equal access in general must be applied to NeuStar – this is required under the .biz Registry Agreement and ICANN’s Bylaws”””
“”If you are an existing registrant, and Neustar suddenly decides to raise the renewal price to of an existing domain to $1 million/year, that will definitely affect you, and is not something where “competitive forces” are at play.””
“”If VeriSign asked for $1 billion/year as a renewal fee for Google.com, Yahoo.com, or Microsoft.com, there is nothing in the contracts to protect domain name registrants.””
“”Similarly if PIR (the .org registry) wanted to raise the renewal price of Redcross.org to $10 million/yr, or Sex.org to $100 million/yr, or other “elite” domains to any price level they desire, there is simply no language to protect registrants.”””
“”””This demonstrates conclusively that ICANN is simply out of touch with the public interest and knowingly favours the interests of registry operators, to the detriment of consumers.”
It is time for the DOJ to take decisive measures now to prevent further damage through ICANN’s utter disregard for the public interest. “””
Mr. Kirikos knows his stuff.
I haven’t had the chance to even start review the hundreds of pages of material on this second draft, but it is very disturbing the ICANN has failed to address the numerous comments objecting to the lifting of price caps on domains, which is clearly unfair to the holders of the 177 million domain names that VeriSign reported on yesterday.
Let’s be clear here.
Even if you couldn’t care less about the new gTLD’s, this process can and will open the door for all existing registries, VeriSign for .com and .net’s, Neustar for .biz, PIR for .org’s to set any renewal price on any domain that you own.
The better your domain the higher the renewal fees will be.
This has the potential to be the biggest issue and threat for every domain holder.
I will go through the guide later today and have additional thoughts and comments, but for now I’m joing Mr. Kirikos and ringing the alarm.
Wake up people.
Thanks for keeping this topic at the forefront, Mike. As I mentioned near the end of that CircleID article, ICANN even directly went against the two specific recommendation of the Department of Justice, in their joint letter with the NTIA, namely:
(1) ICANN Should Give Greater Consideration to Consumer Interests before Creating New gTLDs and Renewing Registry Agreements, and
(2) ICANN Should Revise The RFP Process and the Proposed Registry Agreement to Protect Consumers from the Exercise of Market Power
ICANN did the exact opposite. The only “good” part of the new draft is that it pushes any new gTLDs beyond the September 2009 expiry of the JPA agreement. Thus, I think putting the pressure on NTIA/DOJ would be more fruitful to have them make any renewal of that agreement conditional upon ICANN either abandoning new gTLDs completely or revising them to meet the criteria they specified in the DOJ letter.
I believe ICANN often knowingly drags out the process for multiple comment periods in a “war of attrition” hoping that the public gets tired of submitting new comments. Given that their prior comments were completely ignored, what motive does the public have in submitting additional comments, especially as they would amount to “See what we wrote last time.” Microsoft, for example, made it very clear that they oppose new gTLD introduction, and that it’s likely to threaten DNS security and stability, see page 35 of the Comments Summary, or do a search for “Microsoft” within that document). From ICANN’s point of view, though, it’s all a done deal, and new gTLDs are coming whether the public wants them or not.
I noticed the same thing George did. They totally ignored the DOJ ( I had thought it was the DOC that made the comments) and kept moving forward as if nothing ever happened.
They lower the registrar fees but raise our fees? How is that not insane?
I smell collusion with ICANN and the registries !
.
If you feel there is an alarm that needs ringing, can I suggest that you use ICANN’s Question Box to put questions directly to ICANN staff and Board?
Kieren McCarthy
General manager of public participation, ICANN
Here is the response we posted to George on Circle ID:
The author of this post has taken NeuStar’s comments to the CRAI Report out of context. The original CRAI Report stated that restrictions on Registry/Registrar cross-ownership should only be loosened if the particular registry was not subject to price caps. Our comment was relating to that statement. .BIZ has price caps simply because of a legacy situation and not because a previous economic study stated this should be so.
If ICANN had adopted that recommendation by CRAI for new TLDs (which apparently it has not according to the new Applicant Guidebook), our comments simply meant that ICANN needed to re-examine whether price caps were appropriate for .biz given that .biz represents such a small overall market share for TLDs. We are confident that such an economic study would show that price caps were not necessary and therefore, a relaxation of cross ownership restrictions would be just as appropriate for .biz as it would be for new TLDs.
Our comments did not state that we intended to, or would ever, raise prices to the extremes the author suggests. After all, NeuStar is subject to market pressures to which perhaps the dominant market share registry is not.
The author’s post seems to boil down to a concern for the renewal price of a domain name, as that price could potentially disadvantage a registrant who has built up brand equity in its domain name. NeuStar sympathizes with this comment and has suggested to ICANN and others in numerous conversations that perhaps a cap on renewal pricing for all TLDs is appropriate and warranted. After all, if the initial price of a domain name registration is too high, market forces will push a potential registrant to another TLD. However, if the renewal price is as the author suggests, then that could hurt the consumer.
Renewal price caps are a basic protection mechanism, and would be a start towards increased price protection. However, they are not enough.
In particular, registry operators would be incented to find ways to get valuable domain names deleted, so that they could raise the prices. For example, Afilias implemented a .INFO Abuse Policy which gives it sole discretion to define what constitutes “abuse.” If that policy was widespread in important registries, I would not want VeriSign deciding whether one of my domain names was “abusive” when they know that if they made that determination, they could raise the price on one of my dot-coms from $7/yr to $1 million/yr. I’m sure Google, Yahoo, Microsoft and others would feel the same way (Afilias, for example, gets to have sole discretion over the definition of spam, and certainly all the companies in the world that have user-generated content, free webmail, or webservices that are subject to hacking would be at risk; e.g. your Apache webservers gets hacked, you get flagged as “abusive” and the registry seizes your valuable domain to auction for more money).
Furthermore, all expired domains would effectively be able to be auctioned by the registry operator (i.e. through setting higher than normal registration prices, like .tv). Once again, this is asking for a handout, a change to your contract that only benefits Neustar. You signed a contract with ICANN, and are looking for more. What are you giving up in exchange for “more”? You’re giving up nothing.
Those are the one-sided contract changes that the registry operators always seek. That’s why the only solution is regular tenders for operation of the registry, just like the DOJ suggested (and which I’ve long advocated). Registry operators could compete to run .com or other gTLDs, and whoever bids the lowest (for a fixed level of service performance specified in the tender) wins the contract. Very basic stuff that companies do all the time in procurement, but apparently too basic for ICANN, because there’s no money in it for ICANN. The process is so simple that it doesn’t require an annual $60 million budget and hundreds of staff.
Notice with tenders, there are no incentives for registry operators to seize valuable domains, since they’re all the same price. All the benefits flow to the consumers. Competition between prospective registry operators maximizes consumer benefits, and registry operators receive “normal” profits. The most efficient registry operators will be the ones to be awarded the contracts, since they can operate the TLD at the lowest cost.
Until there’s a Domain Registrant’s Statement of Rights that gives registrants far greater protection than exists today, you’ll have to get in line behind us when looking for one-sided contractual changes.
Jeff
Thanks for the clarification.
If price caps are removed it would be fair to remove them on all registries.
However, from the point of view of a domain holder you can see how the removal of price caps would be grossly unfair as each registry could set whatever fee they want to on each domain for annual renewal.
This would cause domain holders to pay thousands of dollars or millions of dollars a year for renewal fees, basically making the registries a profit sharing partner in any domain or site.
This is certainly not tenable under any rule or logic or reason.
Certainly VeriSign is no more entitled to share the profits of Google, by virtue of registering its domain, than any Google user is, by simpy using Google’s services.
So Jeff, while making the argument that as a registry Neustar should be entitled to remove the price caps off their renewal and registration fees to the extent any other registry is so allowed, Neustar should also make the argument that no registry should be allowed to do so, as such an arraignment is patently unfair to any and every domain holder
MHB:
Just to clarify. NeuStar believes it is reasonable to have price caps on renewals and that should apply for all registries.
Jeff
Great we are in agreement.
@Jeff Neuman (Neustar) – “Just to clarify. NeuStar believes it is reasonable to have price caps on renewals and that should apply for all registries.”
It is extremely important that you made this statement publicly. Jeff, Neustar’s original comments did not have enough (or any) context or clarification. And to be blunt, you scared the sh*t out of everyone by not fullying addressing your insinuation that price caps be removed. Your original comments, included in letter to ICANN, were incomplete and left the door open for consumer concern & speculation of a worst case scenario.
I appreciate that you have posted here and made Neustar’s position on this subject crystal clear. Thank you. With all due respect, the head of a registry has an obligation to fully answer these types of questions and to provide reassurance to the original and ongoing stakeholders of the .BIZ extension.
LoL @ Kieren… it is the whole point here that ICANN obviously doesn’t listen to public input (even though that is a direct madate of the MOU). So how, exactly, does it help us to condense our comments down to 30 words for your little box? Oh, I get it.. .makes it easier to ignore… Is that how you “manage” Public Participation?
Also of note, NeuStar states it supports price caps on RENEWALS… while this may ease fears of unexpected raises in renewal costs, the whole idea of arbitrary REGISTRATION costs becoming the “norm” are alarming to me… it costs no more for a Registry to administrate the records for one domain over another, so what basis could possibly justify a $1000 registration/renewal fee for Pepsi.TLD over somethingelse.TLD other than pure greed?
Indeed, Cartoonz. I have a comment above still waiting moderation (presumably because it contains a link), but one should also fear the incentives created when registries realize they can make a lot more through a deletion of a good domain name, than through its renewal. Just like registrars “forgetting to send renewal notices” to registrants, we might see all kinds of games played by registry operators. Dot-info has an “Abuse” policy, for example, that gives it huge discretion over what constitutes “abuse”, including its own definition of what is “spam.” If you have any user-generated content at all, or if your site gets hacked, the registry operator can simply point to your website and cry “Abuse”, and then seize it to resell for a much higher value than a $7/yr renewal.
Give the registry operators an inch, and they’ll take a mile. That’s why the solution is to have competitive tenders, with strict specifications for registries, just like other government (and non-government) procurement. Neustar was able to compete and win management of .us. Give everyone a chance to run .com, and competition will create benefits that flow directly to consumers, through huge price reductions.
@ Cartoonz: I think you are confusing a number of issues here.
First there was the public comment period on the Applicant Guidebook. Now, while there are obviously some feel their views should have been *included*, that is very different from saying they were *ignored*.
In fact, that is the whole point of the extensive summary/analysis of public comments. It clearly lists what the public says but not only that, it also explains what ICANN’s current view on that issue is, and why it has arrived at that view.
There is never one perspective on any issue and so it is inevitable that not everyone will be happen with changes that are or are not made.
And that is what the second public comment period is for. Everyone can now see what others said, what their arguments were and the view that ICANN has so far formed. If you disagree with that you are now in the position to understand the perspectives of others and so you are able to respond to ICANN explaining why you believe your solution will meet both your concerns and those stated by others.
All of that is entirely different to the Question Box – which is no more than a simple way to ask a question to the entire ICANN community during the public forums held in Mexico City.
You are in a position to ask a question about a subject in case the explanation is not sufficiently clear to you why ICANN has so far moved in any particular direction.
The question box is in no way a replacement for the actual public comment process – it is simply a useful addition to the process.
I hope that makes sense to you. If you don’t believe that this approach to arriving at a consensus policy is the most effective or efficient, I am ICANN’s general manager of public participation and I will happily take on board suggestions for improving the system – seriously, if there is something that would encourage greater participation from you and others then please make suggestions and I will see what I can do to include them.
Cheers
Kieren
Kieren
According to ICANN:
Those represented in this process are: stakeholders, governments, individuals, civil society, business and intellectual property constituencies, and the technology community.
Out of these how many will benefit from lifting price caps on domain names?
1
domain registries
I believe they number 4 at the moment.
Who will be hurt by this?
177 million domain holders by VeriSign’s count.
Easy call no? unless you represent one of the 4
@ Michael. I understand your point of view and while I should point out that you also have an identifiable bias in this case as someone who benefits financially from the fact that domains are identifiably worth more than their wholesales, it is my job to tell you how and where to participate in the ICANN process so that we end up with a policy that everyone has had an opportunity to review and discuss.
So, there is of course the Question Box – where you may make the same point as above in a question format – but most significant there is the second comment period, which is linked to on the front page of the ICANN site.
My only advice would be to not just push your point of view but also review the same issue from a number of different perspectives and then make a suggestion that would serve as a useful compromise.
Kieren
Kieren: You should stick to being manager of public participation, rather than injecting your preposterous views into the process.
Your suggestion that anyone has a “bias” because domains are worth more than registration fees is preposterous. Ask every single domain registrant whether their domain name is worth more than the wholesale cost, be it Google, Yahoo, Microsoft, the mom and pop webstore, the personal blogger, or anyone else, and they’ll say “of course, that’s why I keep renewing.” Following your logic, you appear to want to drive all domain values down to registration cost, through dilution or other idiotic policies.
VeriSign also “benefits” because domains are worth more than their wholesales. How else do you think they convince people to register domains? By definition, people only register them if they’re worth more than what they cost. Did you point out their “identifiable” bias? McDonald’s sells hamburgers to people who buy them because they benefit financially from the fact that consumers pay more for them than their wholesale costs. Those clothes you’re wearing had a wholesale cost, and you paid more than that when you bought them, benefiting the retailer financially. Go back to ECO 101.
So, stop pushing your twisted point of view, and listen to the public, who was very clear with their comments. Or, if not the public, listen to the NTIA/DOJ, lest you need to polish your resume come September. You’re attempting to lecture people who know far more than you do, and making an idiot of yourself everytime you start typing.
I do have another piece of advice for those wishing to persuade the wider ICANN community and so seek to have an influence on policies: personal abuse doesn’t tend to go down very well.
Fortunately for George, it’s not me that needs to be persuaded since I have no influence on the end result.
Can I suggest to others though that they take a more reasoned and reasonable tone if they wish people to take them seriously.
Kieren McCarthy
General manager of public participation, ICANN
Personal abuse? Notice you didn’t address your idiotic comment that Mike has some “bias”. Go ahead, show me that VeriSign doesn’t have a “bias” in the process. Show us your logic. Otherwise, “making an idiot of yourself” rings true. It’s a harsh truth, but true nonetheless.
Here’s the “reasoned” nature of that statement, for your little mind to grasp.
1. Person falsely labels one as having a “bias” (a “bias” shared by 177 million domain registrants, and practically every consumer in existence, every other business in existence, etc.).
2. Statement #1 is dumb.
3. People who make dumb statements are idiots.
4. Kieren made statement #1.
5. Kieren not only made statement #1, but had a chance to correct himself, but chose to whine like a crybaby that he was subject to “personal abuse” and didn’t like the “tone.”
6. Ergo, you’ve been making an idiot of yourself.
Q.E.D.
Kieren
I analyze this situation as I do all situation, with my knowledge and background as a domainer and as a lawyer.
For example the other day when Mr. Neuman from Neustar, the .biz registry, made the argument that if price caps are taken off new gTLD’s then they should be take off all TLD’s and I agreed with him.
If as you claim I only look at things through a narrow focused domainer point of view, then I would have taken the position that NeuStar should not be able to have the price caps removed there existing contract has nothing to do with new gTLD’s, especially in light of the fact that I own internet.biz, one of those domains certainly to have a high renewal price if the price caps are removed.
However, as an attorney trained to think in a logical manner and as businessman understanding that everyone is in business to make money, I had to agree with Mr. Neuman.
However, when I see abuse, unfairness, rules that can possibly only benefit one party in a relationship between many parties, I have to object and make my voice heard.
Don’t worry Kieren, I will be posting my views through ICANN’s proper channels.
Be assured that if ICANN despite all logic and reason, overlooks the objection of 90% of the commentators, and without regard to fairness or consideration of property rights, passes rules which attempt to take my property away they will be meet with a team of laywers and years of litigation.
Promise
Implementing a price cap is potentially unfair to the Registry operators.
The price cap means that the only way for the Registry to ensure profitability is through a continued high volume of sales.
No problem having a provisional cap on Renewals, but surely the Registry ought to have the scope to adjust new Registration prices according to prevailing market circumstances. And in extreme circumstances the provisional cap on Renewal prices may also be reviewed.
Keep in mind that it is the notion the real estate prices would ALWAYS rise that was a key component of the economic formulas that facilitated the current financial fiasco.
Similarly if we were to adopt the notion that all Registries would see high volumes of additional domain Registrations in perpetuity we would be introducing an unreasonable pricing component into future calculations of Registry profitability.
John
Are you saying VeriSign registry operation is not profitable?
Funny, I did not see them on the list of companies seeking government assistance.
Moreover, if its such a money losing business, why did Godaddy offer to take over the central registry for $2 a domain rather than the unlimited amount VeriSign wants to charge?
@MHB
You say you are a lawyer…I am in law school so I’m directing this towards you. Are ICANN decisions subject to review in the DC Court of Appeals under an “arbitrary and capricious” standard i.e. FCC decisions? Thanks!
ICANN, unlike the FCC, is NOT an agency of the US government. Instead it is a non-profit private corporation, operating under an agreement with the US Department of Commerce to administer Top Level Domains (TLD’s).
ICANN’s headquarters are in California
The contract is up for renewal this year.
MHB
First of all I trust that you know that Verisign is not the only Registrar in the business.
Secondly your exaggeration of the pricing situation does not sway anyone who is vaguely familiar with the industry.
The only constituency bothered by the prices which the Regsitries charge now and any potential small increases are the DOMAINERS. Yes domainers who want to buy something for $2.00 and then make a killing from a sale or auction. I find it ironic that people who cry bloody murder if a potentially valuable commodity costs $7.00, would have no problem gouging someone in the secondary market for millions if they get a chance.
John
VeriSign is not a registrar. Network Solutions is a registrar, so if Godaddy, moniker and the rest.
VeriSign is the central registry.
All domain registration are charged the VeriSign Fee regardless of the registrar you use.
If VeriSign as the central registry is allowed to set renewal rates without any price caps then it can set prices in the thousands, tens of thousands, hundreds of thousands or millions for each domain you own, and you will have to pay that, in addition to the registration fee, your registrar charges you.
Got it?
I am well aware that Verisign is a Registry and not a Registrar. I only spotted the error after I posted and I knew that a Domainer would be quick to try and show superior knowledge.
In any event, like I said before your RIDICULOUS exaggeration of any likely price increases is a FARCE. You are attempting to frighten individual registrants who would have no problem paying up to $100.00 per year (for arguements sake, since it will never get anywhere near there) for a domain name as they know that this is by far and away the lowest expense they will have across their business or even private operation of their website.
Only speculative Domainers who want to hoard domain names in the hope of gouging others later have any problem with a modest increase in domain prices. They are a stubborn lot though and when they see their business model is under threat they jump up and down and make nonsensical rants and claim that outrageous prices are on the way. Take a hint MHB, if your domain portfolio would be unmaneageable if there was a 5 or 10% increase in your annual domain prices then you should consider scaling back and stop acting like the people in the traditional real estate market who have gotten the world into the current financial pickle.
John
I beginning to think you don’t really know what your talking about.
VeriSign already has a 7% price increase in place.
What they would do with NO price caps is like they do with .TV domains, except with to .com’s.
I already pay $3,000 a year for great.tv as ransom to VeriSign. I have plans to develop but so far I’m out $9k for the same thing I have with any $8 .com
A domain.
Sex.TV renewal price is set, I believe at a very reasonable $1,000,000 a year.
What would they charge for sex.com per year.
I guess your saying $100
If price Caps are removed people will be paying
Ask every single domain registrant whether their domain name is worth more than the wholesale cost, be it Google, Yahoo, Microsoft, the mom and ownbrand shop, the personal blogger, or anyone else.