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The problem with price hikes on legacy TLDs

ICANN logoIt should not be a goal to align legacy TLD policies with new TLD policies.

ICANN dropped a bombshell yesterday: it’s planning to remove all price controls on .org and .info domain names.

The organization justified this move by saying:

This change will not only allow the [.org/info] renewal agreement to better conform with the base registry agreement, but also takes into consideration the maturation of the domain name market and the goal of treating the Registry Operator equitably with registry operators of new gTLDs and other legacy gTLDs utilizing the base registry agreement.

The proposed agreement also adds Uniform Rapid Suspension, a trademark rights protection mechanism that was created as part of the new top level domain program. It allows trademark holders to quickly take down domains that are alleged to be cybersquatting. ICANN has previously added URS to several other top level domain contracts as they have renewed.

ICANN’s justification seems to be that all registries should play by the same rules. But this ignores the environment in which these domain names were launched and registered by customers. It is, in effect, a retroactive change to policy.

It’s true that new top level domain registries can jack up their prices as much as they want. However, compared to legacy TLDs, these price increases were allowed from the start. The most recent .org and .info registry agreements had price controls baked in that only allowed prices to increase 10% per year. That’s a lot, but it’s not unlimited.

So people who have registered .org and .info domains with the understanding that price increases would be capped are suddenly using domains that could theoretically cost thousands of dollars to renew.

While I doubt that Public Interest Registry (.org) and Afilias (.info) will increase prices that much, history tells us that the existing customers are the ones that will end up paying the higher prices. Registries generally discount first-year registrations, not renewals. So it’s reasonable to expect that these registries will increase the base cost going forward but then offer specials on new registrations.

ICANN notes that “Protections for existing registrants will remain in place, in line with the base registry agreement.” These protections are just allowing existing registrants to renew their domains for up to 10 years at current prices before price hikes take effect. That just kicks the can down the road.

One of ICANN’s missions is the stability of the DNS. Allowing uncapped price changes adds instability to the market behind it.

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  1. Charles Christopher says

    My first thought when I read this yesterday is that ICANN did not come up with this on their own. Likely Verisign “motivated” this as it sets the stage for them to have their price caps removed.

    In other words “nobody else has prices caps, why do we?”

    I think domain year fees could easily go to $100 per year and have no effect on “end users”. It will only affect domain investors, who the rest of the industry dislikes.

    Think of it this way, how much does a small business pay for their phone each month? Likely more than $100. The increase will not be appreciated, but it will also have little effect on end users.

    Time to buy the stock of back end registries ….

    • Richard says

      Of the roughly 155 million .com domains that are currently registered how many are hold by speculators and domain investors? I’d say around 70%. Will these names be deleted at $20? Probably not, maybe 10%, at $50 probably 30%, at $100 per year, Verisign will likely lose 100 million .com domains under management. It will be an interesting business case to see…
      But if they think they can raise prices to $50-60 p.a. and maintain the current registration level, then they are just as detached as the guys from ICANN.

      • snoopy1267 says

        Verisign are running a monopoly, demand will not decrease in line with price increases. This is why it needs price caps in the first place, because users have little opportunity to move to a competitor without majorly disrupting day to day business.

        Verisign would be eyeing the largest price increases they can politically get away with (without risking the whole contract being lost).

  2. JZ says

    Correct me if I am wrong but legacy tlds should not be compared to these privately owned tlds. PIR and Aflias are simply running the registries. They don’t own .info and .org same as versign doesn’t own .com. ICANN is supposed to be non profit while a new tld company like Donuts is not. There should be no reason they should ever be “aligned”..

  3. Samit says

    Basically the registries and registrars want to take over the profits that the investors were making till now. What they don’t realise is that without investors, they’d have to foot the entire marketing bill and need manpower which will be many multiples of the entire workforce of all of them combined today. And like one of the comments mentioned above, they will effectively get rid of their largest user base and revenues therein. Good luck with that.

  4. Mark Thorpe says

    “It should not be a goal to align legacy TLD policies with new TLD policies.”

    Exactly, it should be the other way around. But, this is ICANN we are talking about. Backwards thinking.

  5. steve says

    I own only 600 domains.Most are .com.
    But this could really hurt people who have large domain portfolios — some have over 10 K .com domains.

  6. C.S. Watch says

    This exposes the new management’s ineptitude at .org. Of course an easy victim in Verisign’s long game would be the public interest sector.

    If you inventory your college friends, the dullest knives in the drawer always find their teat in non-profits and education. It is a democrat’s agony that non-profits are invariably too dim to defend themselves (and our tax dollars).

    Verisign laid the groundwork for this months ago by disingenuously villainizing domain investors. The message was, ‘You need to protect yourself from speculation in the .org space by jacking up your prices, that’s what’s best, Dearie.’ But the market itself protects .org, by way of public opprobrium and shallow pockets. That’s not in question, we have decades of proof of it.

    If .org’s management had any tech competence (always in short supply in the public interest sector), they would see how they’re being used as part of Verisign’s long con. A freefall into irrelevance is the trajectory of every single nTLD, and why does everyone in tech warn end users against nTLDs? It’s not just because they are a danger flag to internet users, it’s also because of nTLDs’ bipolar pricing batsh*ttery. Nobody smart builds on shifty ground.

    Dot-org needs to panic pivot or they will wake up to find that they’ve relinquished their heritage blue chip status. ‘Good morning, you’re just another of hundreds of forgettable nTLD pariahs.’

    Non-profits already try to lock down their .com when they can. Verisign sees this sweet potentiality, and is stealthily dropping breadcrumbs to lead .org down the path to its own demise.

  7. John says

    1. Notwithstanding how there is plenty of corruption and evil to go around in our own beloved country where almost anything is possible, i.e. here in the US, what is the likelihood this travesty would even be on the table nonetheless if there had not been the great “transition” from US oversight?

    2. “but also takes into consideration the maturation of the domain name market and the goal of treating the Registry Operator equitably with registry operators of new gTLDs and other legacy gTLDs utilizing the base registry agreement”

    With that kind of bamboozling bulls**t justification of something so clearly evil re legacy TLDs, for all the reasons famous people in domaining have already expressed, TLDs which are (supposed to be) a public trust that registries do not even own, then clearly there would be no reason for the .com registry to be denied the same. They’re just setting the stage for that.

    Does anyone remember Rick’s post about bulls**t in recent months, by the way? They are selling something there, and obviously it is bulls**t.

    3. If that were to occur with .com, how would it affect .US? Would it cause .us adoption, awareness and use in the US to explode? Are there price controls on .us? If so, would an oligarchical plutocracy minded and well lobbied government simply decide to do the same with .us anyway?

    • John says

      So to summarize, we have ICANN using the same old page from the same old playbook that government uses all the time:

      1. We want to do something evil.

      2. First we need to sell a bogus narrative to manufacture public consent.

  8. James Kite says

    Donuts should be looking at this as prime opportunity to lock in the non profit sector by promising them security which icann just stripped from .org

  9. VZK says

    Glad I got out of domain investing a few years back (only have about 20 domains left, good ones that are worth quite a lot). The future for domainers looks murky at best. Wouldn’t surprise me a bit if .com’s are $500/year someday.

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