Here are my thoughts after processing ICANN’s pricing decision for the past two weeks.
It’s been two weeks since ICANN quietly announced that it was going forward with removing price caps on .org, .biz and .info domain names.
The comment period was a farce. ICANN–or a few people in ICANN–decided they wanted to get out of the price control business.
What’s interesting here is that it doesn’t seem that this change was brought on by the registries that stand to benefit. Maybe they asked, but I don’t think they made a big push for price cap removal. After all, they already had generous 10%-a-year increases in their contracts.
There’s no reason to spew hate on the registries at this time. This was all ICANN.
In making the pricing proposal, ICANN stated:
This change will not only allow the .org 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
ICANN now has a goal of treating all registry operators the same, even though legacy TLDs were launched in an entirely different market. Even though current domain owners are “stuck” with the domains they have.
There is a very high switching cost to domain names. A company that has used a domain for decades could suddenly face a steep renewal fee. It then has three choices:
- Expend resources and money to switch to another domain. Change all of its email, set up SEO redirects, etc.
- Pay the higher price
- Renew now for ten years
It’s the last option that ICANN says protects domain registrants. They can renew their domain now at today’s price, assuming they realize the fees are about to increase.
But that just kicks the can down the road for ten years. It’s typical bureaucrat thinking. It will be Göran Marby’s unfortunate legacy.
In the near term, I don’t expect the impacted registries to make significant price increases. In fact, I suspect .org registry Public Interest Group may increase prices less over the next few years than it would have had it had the old 10% price increase option because now it’s under the microscope.
The long term is a different story. It’s likely that first-year prices will remain low through promotions but renewal prices will increase. And if one of these registries decides to sell itself to a private equity group or another company? All bets are off.