Mike and I were discussing the VeriSign blog post today and the subsequent outrage in the domain investor community.
Mike might be onto something though, these were his takes about the post, the disparaging language of calling some of your biggest customers “scalpers.” and the long game for Verisign.
The long game for VeriSign is about removing price caps, while these increases are nice, it’s nothing compared to removing price caps.
The new gtld’s are partially the problem
The new gtld’s have nothing remotely resembling standard pricing. From .01 specials to tiered pricing for what they deem premium names. I remember saying years ago, Verisign invented this model with .tv.
I wrote an article in 2014 when .TV premiums came back,
Verisign they were saying “WTF”. They took a lot of complaints and criticism for the premium renewal price on domains that were premium names.
So now as we have all these extensions, with no price caps, has this allowed Verisign to set the stage for their ultimate goal?
Mike said they want to replace the domain investor, that was something I used to say about .tv back on Namepros many years ago.
People were like I love .tv and hate Verisign and their pricing. I said they loved .tv so much they bought the whole registry, they want to be your competition, why let you reg for $20 and sell for $2,000? When they can just price it at $1,500 and get all the money and keep out most speculators.
George Kirikos wrote a great article a decade ago about this very topic.
From a CircleID post:
In my opinion, VeriSign (and other existing gTLD operators) are almost being invited to ask for their contracts to be amended to get the “same treatment” as new gTLDs in regards to the elimination of pricing caps. This once again could re-open the issue of tiered pricing that most have fought very hard against in order to protect registrants.
I believe the language of these proposed new gTLD contracts needs to have hard caps in place to protect existing gTLD registrants. New gTLDs are not effective substitutes for existing gTLDs, and thus “competition” isn’t going to keep VeriSign’s pricing power in check. Even with a 10-year transition period, it would shock the conscience if VeriSign was permitted to arbitrarily and unilaterally raise the renewal price of .coms to millions or billions of dollars per year (say $1 billion/yr for Google.com, $10 million/yr for Hotels.com, $50 million/yr for Cars.com, $30 million/yr for Games.com, or whatever the market would bear), effectively re-auctioning the entire list of premium domain names to the highest bidder, removing the existing registrant and replacing things with .tv style pricing.
Mike felt they purposely used the term scalpers as it will be needed to vilify the rightful owners of the domain names they seek to charge whatever price.
It will be a political battle and by arguing these scalpers add no value will make their case seem more righteous.
The other point Mike made was what are people going to really do? If a big holder wants to drop a ton of valuable names there will be buyers and VeriSign knows that. Even better yet in a world with no price caps they get to be the speculator and charge whatever they like.
This would be years away but still something to think about and Mike also mentioned that he thought most big holders should absolutely have always owned some VeriSign stock as a hedge.
excellent insight, you guys are kicking ass today. Thx.
That can never be allowed, that’s frickin nuts. Thanks for the update Michael.
U2 Raymond
There is 0% chance VRSN assigns different renewal rates to 135M global .coms. .TV is no comparison, small country code exploited for marketing purposes, was not invented to represent global “commerce” or television programming.
.Com is home to several million small businesses around the world and stable pricing has been pillar to .com adoption. Would be obvious discrimination and breach of consumer trust for VRSN to arbitrarily assign .com renewal rates based on an algorithm. They wouldn’t be in business very long regardless of what their “contract” says. VRSN’s largest shareholder is Berkshire, they aren’t into committing suicide for short term gain.
You don’t think businesses would pay $100-200 for their .com? I think they may lose business from some mom and pop shops, but for medium to large businesses, I’m sure they’ll retain them. Also, with the business they lose from the small mom and pop shops, they’ll make up for it through increased reg prices.
This “plan” of theirs seem plausible.
I didn’t say that. I said I don’t think small businesses would allow for variable pricing at this point in the ball game. There are many countries where $100-200 is a lot of money, and these businesses also use .com.
How much will VRSN charge Warren Buffett’s Richline Group to own Jewelry.com each year? Buffet is VRSN’s largest shareholder. A private entity is not going to be allowed to charge variable rate pricing on 135M global .coms, unless governments establish the pricing and get some portion of proceeds. And then that would be for all domains, not just .com. There is 0% chance small businesses are going to allow a private company to dictate how much they pay for their .com compared to other .com owners.
This line of thinking is similiar to those who said that apps would make domains irrelevant 10 yrs ago, new Gs will replace .com 5 yrs ago, or RealNames will replace domains 18 yrs ago. Just not understanding long term consumer behavior and logic. 135M .coms owned across the world. VRSN is not bigger than .com, they are the current custodian. They abuse this custodianship they lose custody.
I missed the variable pricing part. Yeah, that definitely wouldn’t fly with a lot of businesses.
Well RP the point is this is what angers Verisign, that Donuts has no price caps and they do. They don’t want price caps, let’s just say no price caps means they don’t lose their mind, like you mentioned and charge $500 but they charge $50? That’s still a lot of increased profit.
The difference is that VRSN did not invent or pay to launch the “.com” extension. They won the contract. Donuts invented/bought their own TLDs. VRSN makes plenty of money and fully understands they are custodians, not owners. I like VRSN, they got a stolen domain back for me. I think they are good custodians that will respect small business. I think it’s OK if they raise prices gradually because of inflation regardless of their current margins.
I don’t disagree that ultimate long term goal could be variable pricing over .com, and if I were a shareholder I would expect management to have this type of goal, but its clearly not going to happen. I doubt Berkshire would even support that type of radical decision. Could potentially even disrupt Buffett’s other businesses that are very dependant on small business and overall economy.
If we are looking 6 years out, and max 7% hikes in years 3-6, what is .com at $10.15 or so? Not such a big deal for me. For others I understand it is a big deal, and I respect that.
The .com pricing mechanisms and price caps have served the global economy and VRSN shareholders well. Everyone wants to fight for more of the pie, but at the end of the day what isn’t broke isn’t going to be fixed by radicalization.
I also don’t see VRSN entering into the differentiated renewal pricing model; it doesn’t scale. But they could enter the differentiated initial pricing model, by running their own drop-catch service.. and if registrars got enough return from it, they could promote it among their customer base, leading to more drop domains going to end-users instead of first thru domain investors.
i chuckle when i read mrs jeannie mcpherson state `This secondary market is as old as the domain name system itself.` she conveniently does not cite that verisign did not create .com domain names and only started managing .com domain names LONG after the this secondary market existed. verisign somehow things it is the king of .com. however it really only took that position long after the .com market existed. verisign is a monopoly running something it did not create, and this is likely the reason for its lashing out at domainers, registrars and domain companies when it sees pushback on it trying to flex its monopolistic and predatory pricing on the world
Verisign just doesn’t like doman investors (not scalpers) and other registries/registrars making money with domains, just like ICANN doesn’t like it either. They both want the whole pie, just not a bigger piece of it.
Both of them are a lot worse than domain investors! If we are domain scalpers, then they are domain dictators.
No, Verisign is the domain parasite sucking on the host that is the .com brand equity it did not create. It is simply a rent seeking entity.
From https://www.investopedia.com/terms/r/rentseeking.asp
“How Rent-seeking Works
Rent-seeking occurs when an individual or business attempts to make money from its resources without using those resources to benefit to society or generate wealth. One of the most common ways companies engage in rent-seeking is by using their capital to influence politicians. Politicians decide the laws and regulations that govern industry and how government subsidies are to be distributed. If a company succeeds in receiving subsidies or in getting laws passed that restrict competition and create new barriers to entry for an industry, it has increased its share of existing wealth without increasing the total of that wealth. Moreover, it has earned income without being productive or putting its capital at risk.”