The news broke last night that ICANN was opening the public comment period on the renewal of the contract with Verisign (current one expires at the end of this year) which once again would give Verisign a 6 year contract to operate the registry with a right to raise prices in 4 of the 6 years of its choice 7% compounded.
Back almost a year ago we wrote a story entitled What The Settlement Of The CFIT Case Means To The Cost-Of-Your .Com Registrations/Renewals.
Once the CFIT case was dismissed by the parties our fate and the price increases were sealed.
We noted in that story what the cost would be to domain holder for new registrations and renewals though the next 12 years.
As we noted then and several times on TheDomains.com, the contracts with Verisign to run the .Com/.Net registries have a presumptive renewal provision in them.
Presumptive renewal is just what it sounds like, a contract that is pretty much automatically renewed unless Verisign really screws up in the operation of the registry.
So before I re-print the story from last May below, I’m going to anticipate the question on you’re mind, how did this happen?
Frankly we have also told this story before, but when the contract was first proposed back in 2004/2005 (before we started writing the blog) with the guaranteed rate increase and the presumptive renewal there were only a few domainers that put together an organization to fight.
As usual accept for a handful of domainers, no one supported it financially.
This fight cost a few people a lot of money and then would have cost many millions dollars more to continue to fight.
Had domainers been organized and contributed substantial dollars to the fight at the end of the proceedings the court could have done a lot of things including invalidating the contract and throwing it open for bidding.
It’s not easy to fight a company that has a billion dollars in the bank whose whole business is threatened by the suit.
So here is our story from last May. As the old saying goes read it and weep:
“”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, maybe at a higher rate picking up an extra few pennies to dimes to more each time.
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.””
This is a monopoly.
dot-com prices should be like $2-$3 per domain and the registry will still make lots of money on over 100 million domains registered.
Can ICANN be forced to put this contact for open bidding?
So is there a chance that someone will prevent this new agreement from being implemented?
US Gov
Other Gov’s.
Some big companies in domaining space, etc?
Unless a company with big bucks steps up to challenge Verisign, this is a done deal because ICANN is in Verisign’s pocket and has been for the last 10 years.
The silver lining for me is that even with annual increases, it won’t approach the original price tag I was paying back in 1996 at $50/year or in 1998 at $35/year until about 2034.
That said, it is still one of the great bargains in the world today. For the cost of a modest lunch, anyone can be in business.
@Rick ……..hopefully by 2034 domain owner’s traffic will be so prized that every click will be going for several dollars (if the Dollar is still in existence), with the exception of low-end stuff like dental floss and porn in Paraguay.
The last 20 years has been amazing on the Net. Just imagine the next 20.
JNet
I’m down with fighting it, wish Godaddy would have financially supported the CFIT suit rather than relying on the good graces of Congress which has been unwilling to get involved in this deal for the past 8 years or so
Thank you Mike for your input.
Let’s hope some big shoe drops on ICANN and Verisign.
This is not just a monopoly but a clear abuse of power by the ICANN in giving Verisign this monopoly.
I hope the price to renew a .com goes to $10,000 per year by 2020. Think of how uncluttered the web would be…
I recall reading posts that domain registrars benefit from these price increases.
@ RL
Registrars do benefit. They use the price increases to justify raising their prices, which are normally far more than the actual price increase.
The wholesale cost goes up 7%. A registrar will bump it far more than that, many times by a couple dollars.
Brad
@ Brad
Registrars have to be challenged to make their position clear on which side they are on.
.Com is becoming less and less attractive by the day.
And
.Co
is becoming more attractive.