Now that VeriSign settled the CFIT case, I thought we should take a look at what that means in dollars and cents to domain holders.
Verisign contract to run the .Com registry (.Net too) calls for presumptive renewals and the ability to increase the wholesale cost of domain name registrations and renewals, 7% in 4 of every 6 years.
Currently the wholesale price of domain name registrations and renewals sits $7.85 (there is also an ICANN fee of $.18 but we are going to exclude that for now).
Lets look back.
When VeriSign was awarded this contract the wholesale price of a .Com registration was $6.00
Here are the annual wholesale price:
2007 $6.42
2008 $6.86
2009 N/C
2010 $7.34
That means that VeriSign can rise prices again either this year 2011 or in 2012, the final year of this six year contract to $7.85.
That means during the next 6 years contact VeriSign can raise prices again 7% in 4 of 6 years, meaning that here will be the prices through the next contract (fractions have been rounded up & the ICANN fee has been excluded)
$8.40
$9.00
$9.63
$10.30
That puts the wholesale price for a .Com registration or renewal in 2018 at $10.30.
During the following 6 year contract here will be the wholesale prices:
$11.20
$12.00
$12.84
$13.74
That takes us through 2024 or 12 years from now.
After that prices will start increasing by $1 or more per rate increase and that is when the dollars will really start adding up.
Of course along the way registrars will be raising the retail prices as well.
As wholesale prices rise the cost of such things like credit card merchant fees and costs of processing also rise so retail prices might rise faster than wholesale prices along the way.
The silver lining? You can renew your domains out for up to 10 years and count your savings.
Different forms of competition
Competing registries via vertically integrated new gTLDs
v
Competing registrars and registry tendering
I wonder which in the longer term entities with large holdings will prefer?
I am curious if the total number of dot coms and dot nets is in decline. With the economy the way it is, and the value of domains themselves going down the drain. You are going to see a lot of domains not being renewed. With social media making the necessity of a great domain less critical, the value of all the not so great domains becomes essentially reg fee. I think you are going to see a huge drop in the number of overall domains registered across all extensions. With only the best of the best names being worth holding onto. And even then, with this new rapid URS thing coming along, even they are only going to be $300 away from being taken. Unless you have deep deep pockets, who is going to risk fighting back in a loser pays environment. You could lose 5o,000 defending a 5,000 dollar domain. Domains are becoming a commodity and less and less relevant. It’s develop it or lose it. How can they raise prices when the product they are selling is becoming less and less valuable while the demand for the product is drying up. Economics says this won’t work.
Mike
Wonder no more
Verisign publishes a quarterly report that has all this information.
http://www.verisigninc.com/en_US/why-verisign/research-trends/domain-name-industry-brief/index.xhtml
If you want to save the time, I will tell you that both .com and .net total registrations have steadily moved higher.
Renewal rates have held steady on the .com side at around 72% while new registrations and re-registrations of the 28% of domains dropping leave the total amount of domains as an ever increasing number.
So the price increased to date have not resulted in less domains, just higher profits to VeriSign
Thanks for the info. I think that the renewal rate is about to take a serious dip, now that many people are starting to realize 90% of their portfolio is reg fee.
That rapid URS is going to be the death of domain investing.
1. Find valuable domain owned by small time owner.
2. Look up personal info on owner, look at house on google maps, check financial /job info that is available on the web or via social media.
3. decide if they have the money to fight you in rapid URS.
4. Partner up with an attorney to make it appear that you have extremely high fees so that if you win they are going to have to pay those fees. If you lose you just don’t pay the attorney.
5. If owner does not fight back or reply, you get the domain.
Needless to say someone could threaten domain owner with this course of action and get the name real cheap, even if they don’t have anything close to a trademark.
Perhaps privacy will become necessary on all domains.
Thanks Mike for the maths, point taken 🙂
Mike
Well hopefully the URS will not apply to .com or .net
Right now they don’t
They will eventually. Then it’s Katie bar the door.
Lawyers are going to have an absolute field day.
@Mike….IF the URS is applied to .com and .net then there will be so many horror stories, and not just from domain investors, that the politicians will step and and start passing laws.
I could see Ralph Nader and others leading the charge for the small guy as well.
All things have a way of working themselves out. This is not domain armageddon.
The Protect IP Act 2011 could be of greater concern if it badly drafted.
There seems to be a Widespread hatred (or as least strong resentment) of domain investors. Many of those with that attitude have not thought about the economics of domain investing or considered what would happen if it were somehow “not allowed”. They are simply going with their emotional reaction.
Because of this, I expect the future will bring a concerted effort to eliminate domain investing. It will involve many different factions that will come up with ways to chip away at the ability to invest in domain names.
There will no doubt be an increase of organizations and their powers to take domains away from domain investors. They will be increasingly lopsided against domain investors. The over-reaching tactics done in the name of trademark protection have only just begun.
On top of all this, we can expect to see new things added to the mix. Expect new laws, taxes, fees, restrictions and who knows what else. Only those with very deep pockets May have some small amount of recourse against any of this.
I would love to be wrong. I hope I am wrong. If and when these things shift into high gear, registration and renewal numbers should start to show serious declines. Not a pretty picture.
“I would love to be wrong. I hope I am wrong. If and when these things shift into high gear, registration and renewal numbers should start to show serious declines. Not a pretty picture.”
I would love you to be wrong too SF but I think your’e spot on.
With more and more of the big corps just waking up from a decade of Dotsnoozing if they can’t buy what they want at a price they want they will sure as hell try and change the rules so they can take what they want.
Maybe we should’nt have kept yelling..”idiots, they just don’t get it” – the monster is now awakened from its slumber and it smells the money 😉
Gazzip
The problem is and has always been that domainers and companies in the space by in large have refused to support organization which have stood up to fight domainer issues.
The ICA struggles to raise money and get members is legendary and well documented on this blog.
Besides domainers which 99% of which have refused to spend the cost of 5 snapnames or namejet backorders to support an organization to support their own interests, large companies in the space such as Godaddy.com and NameMedia have refused as well to financially support any group.
CFIT was another group that domainers and large companies in our space mostly ignored and the “settling” of the suit was based on lack of financial support.
With industry leaders like Greg McNair going on the record with comments like the domain industry was founded on cybersquatting is it any wonder that no one wants to step up and self identify as a domaines or donate to domaines friendly causes? Most domineers would rather disavow any relationship they have to the industry I mean hobby. The notion that domaining is an industry is a joke. There is mo industry and as such there is nothing to represent. You want to advance the cause start an innocence project where bad decisions are challenged in court thereby laying the ground work for better decisions in future based on jurisprudence
Isee
There are those that have stepped up to identify themselves as domain investors but sadly most just find another excuse not to spend a dime, not to participate & to allow other interests to simply take what they want they want
Why didn’t ICANN take .com / .net registrants opinion before allowing Verisign to increase renewal costs?
Don’t registrants’ rights / opinions matter to ICANN or is it just about the deep pocket registries for them?
And, shouldn’t this be covered by monopolies and restrictive trade practices or am I oversimplifying here?
Samit
Why didn’t ICANN take .com / .net registrants opinion before allowing Verisign to increase renewal costs?
This contract was entered into with a 2006 starting date, were you in the discussion back then?
Don’t registrants’ rights / opinions matter to ICANN or is it just about the deep pocket registries for them?
See above
And, shouldn’t this be covered by monopolies and restrictive trade practices or am I oversimplifying here?
That’s what this CFIT case was about.
Funny things about legal rights, you have to enforce them and that is VERY expensive
Nope, I got into domain investment in 2007. Funny bit is I haven’t even heard of this CFIT case till today, not that I would have been able to do anything substantial even if I had, but it would have been nice to read about it somewhere at least.
I think what we lack is a central industry organisation, though I’m also not too sure whether there are enough active investors to matter even if there were one. Think the closest to this was DNOA and that didn’t take off either, but it had the right ideas.
And I get what you’re saying about legal rights and the cost to enforce them, totally true, which is why one can only just about protect oneself and that to more by sticking to the straight and narrow in terms of what you buy and not indulging in some of the more seamier avenues of this business.
Samit
We have written about it before
http://www.thedomains.com/2010/08/02/wsj-clock-ticking-for-verisign-to-choose-legal-option-chance-to-appeal-cfit-ruling-expires-on-october-18th/
http://www.thedomains.com/2010/07/16/trefis-com-cfit-case-will-pummel-verisign%e2%80%99s-stock-value-as-domain-names-prices-go-down/
http://www.thedomains.com/2009/09/10/barrons-verisigns-domain-registrationrenewal-fee-to-drop-to-4-a-year/
http://www.thedomains.com/2009/06/05/appeals-court-reverses-allows-suit-against-verisign-to-go-to-trial/
These issues with domain names vs trademarks and new tld’s are old news.
This was written by the infamous Jon Postel in 1996:
http://tools.ietf.org/html/draft-postel-iana-itld-admin-01
Wonder how many of those pushing for URS have read this?
Enforcing trademarks against domain names is never going to be 100% successful, for multiple reasons, including:
1. Trademarks are regional, not global. The internet is of course global, and is only described as regional (geoip) when it’s convenient for certain commercial purposes.
2. Not all marks are created equal. Registering a trademark is alone not conclusive evidence that the holder should have influence over any domain name. There is a qualitative side to the analysis. As of today, there’s no computer technology that can perform that sort of analysis.
3. Names are not unique identifiers. They vary in meaning. This is what underlies all the “semantic web” nonsense that gets regurgitated year after year. It’s why sometimes Wikipedia has to present a list of possible matches. It’s why we have telephone numbers, not “telephone names”.
4. The DNS is not a directory service. These are just aliases for numbers. They are like speed dial entries. This is why type-in navigation is complete idiocy. Enter ABC-Corporation.com and it’s a crapshoot. How many ABC Corp.’s are there? Maybe it’s a cyber squatter. Who knows? Only the IP number can really give you a clue. These aliases, aka domain names, can be changed by users on their own computers, without need for registries like Verisign, though very few know how to this.
There are certainly more reasons. Read Postel’s draft. It’s all in there.
The takeaway message is that the DNS has conflict built into it; it always has. The challenge was to create resolution mechanisms.
And here we are in 2011, 15 years later. Are we any closer to resolving conflicts than we were in 1996? Instead it looks like some want to enable _more_ conflict. They want to create a legal landscape that will bring in more lawyers and create more legal expenses (IP owners, the ones will billions in cash, are ready to pay). It will create _more_ conflict. Is that what we want?
Well, it’s good to be a lawyer, because this is going to create more work if it comes to pass.
And then there’s the matter of enforcing copyright in a digital internet environment (=perfect copies at the speed of light). This could be an excuse to take domains.
But this fight against copyright infringement online is a losing battle. It’s a no-win situation because the opponent is technology, not people.
Infringement in this sort of environment has little to do with human behaviour and much to do with enabling technology.
If you digitise information it is going to be copied. This is just plain common sense.
But there are people so ignorant that they can be convinced it’s possible to “protect” digital information from being copied.
And there are others who think that intimidation can stop people from copying bits; they want to criminalise broader categories of infringement.
Are we going to send people to prison for copying bits? Seems a little extreme.
It’s all a losing battle. And domain names will suffer.
If you don’t want the information copied then don’t digitise it. No one is forcing anyone to digitise anything. But people have been uploading content (that was never free in paper form) to the web like mad for over _20 years_, letting others access it for free, and until recently, with no apparent business plan. It’s still happening. People like to share stuff. Go figure.
I’ve watched this since the 90’s with amazement. Why do they do it? Maybe they just did it because it was possible. Enabling technology.
With regard to Verisign, over the last 15 years Verisign has been curtailed significantly as a monopoly compared to the early days of NetSol. Imagine if they had allowed to proceed unchecked.
Selling domain names that cost almost nothing to create and maintain is a very potent monopoly that had to be controlled. Domain names should be free, but at least they’re no longer $50 or some such.
Of course, in retrospect, those $50 names in the 1990’s have more than paid for themselves – they’ve made some people very wealthy. Maybe they knew that the earliest domain name sales would be for the most valuable names and they set the high rates accordingly? Doubt it.
It would be interesting to know who was behind the CFIT suit and the terms of the settlement.
Why didn’t ICANN take .com / .net registrants opinion before allowing Verisign to increase renewal costs?
Don’t registrants’ rights / opinions matter to ICANN or is it just about the deep pocket registries for them?
And, shouldn’t this be covered by monopolies and restrictive trade practices or am I oversimplifying here?
Samit,
ICANN has decided that competition should occur “between” registries rather than “within” a registry ( tendering to run each registry). The thinking being if they allow .eco .shop .car etc. then they will compete against .com and .net and then the market will set the price for .com and .net domains.
The questions are – Is ICANN right or has it been influenced by the huge increase in fees it will personally receive from allowing new gTLDs? And/or has ICANN been influenced by lobbying from its contacted parties (registries and registrars) and “would be” new gTLD registries?
iHinge
Well with all due respect to Mr. Postel the comments you site are really old news going back to 1996.
Unfortunately Congress passed a law in 1999 to deal with issue and since then the UDRP was put into place and made a part of your registration agreement so what Mr. Postel had to say as an academic has been superseded by law.
MHB
True enough. It seems the lawyers had their way with Postel and the other engineers in the end.
NetSol was sued back in the late 90’s for antitrust, but the end result was only reducing the $100 fee to $70. The monopoly continues…
I found the link to that Postel draft in the Wikipedia entry for IANA. There’s also a link to an old Slate article interviewing John Gilmore.
For ICANN critics it’s a must-read.
Years have passed but the issues have not really changed. The web has just become a lot more popular. As was predicted.
Postel wanted to introduce scores of new TLD’s to give the public (including the trademark owners) more domain namespace. What happened? This is where history needs to be reviewed by those who are not familiar with it.
15 years later ICANN is ready to open the system up to new TLD’s. But instead of being viewed as a step toward resolving issues with trademarks by increasing the available namespace, it’s taken as an opportunity to push for a new UDRP, the URS.
NetSol was the sole bidder in the early 90’s on the contract to create what became DNS. Then SAIC bought NetSol for a few million. They began charging $50 for domain names. And sold NetSol to Verisign two years later for 21 billion!
3 million –> 21 billion, in two years
Now that is just pure “magic”. A remarkable trick that is still working almost 20 years later.
Domain names cost nothing to create and pennies to maintain. And the web just keeps getting more popular.
We should all wish we were in Verisign’s shoes.
My approach is just continue to make better use of your domains – and any increased renewal costs could be justified.
Just renew your domains as deep as possible – and let the cards fall where they do.