Running a whois privacy or proxy service costs money.
In the recent uproar about Name.com introducing a fee for whois privacy, a number of people have said that such a service costs the provider essentially nothing.
Without discussing the merits of Name.com’s new fee and how it communicated it, it’s worth pointing out that whois privacy does cost the registrar money.
First, there’s the legal set up fee and structure of an entity to act at the proxy. (There are two types of whois privacy services. Most are actually “proxy” services, which register the domain name and license it to the registrant.) That’s no small potatoes if done correctly. Then there’s the technology aspect.
But a bigger cost for domain privacy services is ongoing legal headaches. When a domain using a proxy service is served with a UDRP, the proxy service generally unmasks the whois information. But complainants sometimes argue that the proxy provider is actually the domain owner. Some panelists agree. Add to that frequent requests from law enforcement agencies and courts.
I was reminded of this today when I saw that a Florida man just filed a complaint in U.S. District Court against both GoDaddy and its Domains by Proxy, Inc. subsidiary. The man is claiming defamation because someone used Domains by Proxy to register a domain name that he says is being used to bad mouth his services.
So while the incremental cost of providing whois privacy for a domain name may be small, there are certainly costs.