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.Com price doubling? Here’s what all that talk is about

Could the price of .com domain names skyrocket in a couple years?

You might have received a couple of emails from Domaining.com this week (or seen a post on its site) suggesting that the price of .com’s might double in 2018, and urging you to comment on the proposed .com contract extension. (The comment period ends today.)

Here’s what all of the discussion is about.

ICANN is extending Verisign’s contract to run .com from 2018 to 2024. Even though the contract doesn’t expire for another couple of years, the extension is being granted to tie the dates of the .com extension to the new root zone maintainer agreement between ICANN and Verisign.

The root zone agreement was previously part of the Cooperate Agreement between Verisign and the National Telecommunications and Information Administration (NTIA). It is being shifted to a contract directly with ICANN as part of the transition of IANA functions (commonly referred to as “The U.S. giving up the internet”).

The .com contract extension extends the existing contract, which freezes domain prices at $7.85.

But it’s a bit more complicated than that. My understanding is that pricing is really controlled by the Cooperative Agreement, so it’s possible Verisign and the NTIA can negotiate new prices in 2018, when Verisign would have certainly asked for an increase.

The bigger concern put forth by some in the community, and the reason for the Domaining.com headlines, is this: Does Verisign really need to keep any sort of Cooperative Agreement with the U.S. government? Could they just nix it and set their own prices in the future?

I asked the NTIA about its role in pricing back in June, and it said that the transition of the root zone contract doesn’t affect the NTIA’s role in the rest of the relationship, i.e. pricing. I reached out again for clarification a couple of days ago and have not yet heard back.

But…it’s all a bit confusing, and some ICANN policy wonks I’ve spoken to don’t have a clear answer about how the U.S. government can control wholesale .com pricing in the future.

When I asked ICANN why Verisign would still have an incentive to continue the Cooperative Agreement, it told me to ask Verisign. (I didn’t contact Verisign about this story because it takes a while for the company to get press responses through its legal department.)

The answer may lie in the lawsuit settlement between ICANN and Verisign, which dates back to Verisign’s SiteFinder service. The settlement set forth Verisign’s perpetual contract for .com. There’s also the anti-trust element to Verisign’s monopoly on .com.

The wholesale price of .com domain names is critical to many domainers’ businesses, so this is certainly an issue domainers should understand. Unfortunately, I can’t give you a cut-and-dried answer today. So it’s probably worth commenting today about the contract renewal to make sure that someone gets to control wholesale .com pricing.

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  1. JZ says

    if verisign wants to keep increasing .com’s numbers at the great rate they have been, it would be in their best interest not to raise prices.

  2. Mike says

    The thing is, those holding lots of domains with hope to sell them will HAVE to offload a lot of their stock if prices increase and that will mean that the stats at Verisign will show downwards trend, BT ONLY after it is too late to stop price increase. Maybe someone can point that out to Verisign.

    • Andrew Allemann says

      My guess is Verisign would phase in price increases if they were given the option. The 7% annual raises they previously received gave them a way to show increasing annual income and cashflow, and the “slow cut” against domain owners was easier to accept compared to increasing prices by a few bucks in one year.

  3. Domainer says

    1. If Trump wins, can he clawback the Icann/IANA agreement?

    2. Does Icann receive a fee/payment for extending the .com contract?

    3. Many people seem to forget, managing the com registry is almost poor profit. Verisign is not manufacturing anything that involves material cost. Like, a car, 1 ltr of Pepsi, refrigerator, men’s suit, etc. Verisign is creating domains out of thin air.
    Their only responsibility is to manage and maintain the security of the .com registry. And, maintain relationships with Icann, US Govt, and registrars. We assume it is very expensive to maintain a relationship with Icann. ( It is against U.S. law for a U.S. corporation to bribe a person or business entity no matter where they are in the world.)

    4. Why would Verisign increase prices at the possibility of losing registrations?
    Because, they know they will make more revenue in the future.
    They know they might lose some registrations in yr 2. (Maybe, lose 20-30% depending on the amount of increase.) But in yr 3 and later, they know registrations will increase.
    People might be mad but who can they complain to? Icann – falls on deaf ears. U.S. gov’t – “we have no control over Icann or Verisign” Registrars – “we have to pay what Verisign says”.

    Possible revenue scenarios – (registrations, price, revenue)
    Yr 1-A 100,000,000 $8.00 $800,000,000
    Yr 3-A 80,000,000 $12.00 $960,000,000
    Yr 5-A 100,000,000 $12.00 $1,200,000,000

    Yr 1-B 100,000,000 $8.00 $800,000,000
    Yr 3-B 65,000,000 $15.00 $975,000,000
    Yr 5-B 100,000,000 $15.00 $1,500,000,000

    5. They know they will lose some registrations to the new gtlds. But they also know people will continue to register new domains. (new customers entering the market.)

  4. Nick says

    Domaining.com does not have make up a crazy stupid headline to get their worries across. They actually got people believing Verisign will double the price. The chances of that are ZERO PERCENT.

    • Domainer says

      It would not surprise me to see .com cost rise 50% over 5 yrs.
      (rounding numbers – $8 to $12).

      • Nick says

        I won’t happen. It’s just bad business. The outcry would be to large, and would guarantee they would not get another extension of the contract after this one. They care about always getting an extension of the contract more than anything.

  5. Ryan says

    Why is everything in the domain space out of wack.

    Usually businesses work with inflation, and other costs around their specific industry.

    The internet is supposed to make things cheaper, take out the manual labor out of processes.

    Why the hell are we seeing insane price increases, when we have 1000 man made strings going live.

    We are seeing the gtlds basically drop now, the sensation for them is wearing out even their biggest cheerleaders who are running around trying to sell their names to pay for renewals.

    it is just a set of binary code, no reason to jack prices in a monopolistic fashion.

    • Nick says

      Which is why prices for .com will never be jacked up. Just attention whoring from Domaining.com , Verisign never said the would double prices and they never will double prices. Such a stupid move would assure they would never get a renewed contact again,

    • Bob says

      Perhaps they’re striving to match the rate of increase of US College Education, that bastion of fiscal responsibility…..

    • Gerry says

      Go Ryan. YES, the new G’s suck and YES, people are dumping them and YES, they suck big time and YES, that will give Verisgn the ability to raise prices. YES, go out and register a bunch of the New G’s to do your part while they still exist.

  6. jennnifer says

    from what Im hearing, they want a price around $29.00 annually, which would be almost a 400% increase and also inline with some other popular extentions. I am getting out of the domain business starting next week. The greed in this industry is beyond comprehension, and the profit margin for me atleast has been slim to none over the last few years. I just can’t deal w/ the crooked corporations anymore. Good Riddance!

    • Sam says

      You heard that from the voices in your head right? Cause nobody else has ever said that, which is why you can’t supply and evidence.

      • Domainer says

        That is very cruel.
        Has Jennifer made a case somewhere else but is not willing to supply evidence? Not that she has to.

        You don’t need to defend Verisign. They have a large dept that does just that. Or, do you work for that dept?

        • Sam says

          What is cruel is people flat out lying and getting other people to believe complete lies. You are well aware that nobody from verisign said there would be 400% increase , or even a 100% increase. There are tons of valid reasons to criticize verisign, people making up these flat out lies makes real issues seem fake to. Just stop lying and make truthful statements and real problems can be fixed.

    • Ian Ingram says

      If your profile is accurate and you are Jennifer R./Juan R. (if you are not, please disregard – no offense intended), here is the best advice you will ever get: start deleting all of the domain typos you own for Twitter, Facebook, Instagram, Yandex, etc. I won’t list them all here but you should know that a private Whois will not help you.

      If I were you, I’d get out now, not next week. Cybersquatting penalties can be up to 100k per domain…

      http://www.cnn.com/2014/03/01/studentnews/trump-cybersquatting-lawsuit/

  7. Joseph Peterson says

    I see a lot of knee-jerk reactions here. People ought to slow down, research the facts, and ask around before fleeing the industry as if it’s on fire!

    François, who wrote the attention-grabbing headline in Domaining.com, is a friend of mine; and I’ve spoken with him about it. His goal, of course, was to raise awareness about the long-term potential for price increases. Not “attention whoring”, as Nick claims.

    Few domainers pay attention to anything beyond their own sales efforts. So I understand that François needed to use some scare tactics to grab people’s attention. He’s pointing to a worst-case long-term scenario – not because it WILL happen but because it’s more likely to happen while domainers fail to pay attention.

    Nobody credible is actually claiming that .COM prices are about to double. They’re not. They’re still contractually frozen 2012-2018. Even though Verisign might like to increase prices (as any company in their position would), I imagine that any sharp increase in the future would attract regulatory oversight. And that could ultimately jeopardize Verisign’s stewardship of .COM. Ask yourself: Would they really double prices tomorrow at the risk of losing the lucrative contract to run .COM altogether?

    I agree with everybody else that price increases are bad for domainers – whether that’s .COM going up or the .HORSE you’ve bet on being bumped up into a premium price tier while you sleep.

    What’s the lesson here? You’ve got 2 choices:

    (1) Freak out. Right now. Punch your neighbor in the face if his knee-jerk reaction isn’t like yours.

    (2) Pay attention. Join the ICA. ICA members discuss these policy topics all the time. In detail. Phil Corwin, Nat Cohen, and other serious domain investors actually read the contracts, study the issues, participate in conference calls with ICANN, write letters, and get things done.

    It’s scary when domainers don’t pay attention to the long-term issues affecting their own industry. Price increases are 1 issue. UDRP reform is another.

    The ICA actually took a position on this .COM registry agreement extension. Domainers ought to understand what that position is and WHY. Because there’s another MAJOR issue not being addressed by anybody’s knee-jerk reaction here.

    That’s the URS (Uniform Rapid Suspension). Imagine if the URS could be applied to .COM domains, giving people a faster cheaper alternative to the UDRP with which to take away your property. The URS has been snuck into other registry contracts. So one very compelling reason to support this contract extension for .COM is to safeguard .COM domains against the URS.

    I’ll say it again: Pay attention. Join the ICA. $50 per month isn’t a lot.

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