Verisign CEO’s comments suggest price increases are on the way.
Verisign (NASDAQ: VRSN) held its quarterly investor call yesterday, and it seems that ICANN is about to give Verisign the price increases it wants for .com.
The U.S. Department of Commerce updated its agreement with Verisign last year, allowing it to raise .com prices by up to 7% in four of six years. However, this is only if ICANN agrees to allow the increases.
On the investor call yesterday, Verisign CEO James Bidzos said:
We believe these discussions with ICANN are nearly complete. While it will be inappropriate at this time to provide more details, I can say that we were satisfied with the results so far. As noted, this is an ICANN process and we expect that before long ICANN will be publishing for public comment the documents we have been discussing.
Verisign won’t be satisfied without the full increases.
And while the updated contract will go out for public comment, ICANN is likely to ignore any comments opposed to the price increases. That’s what it did when it unilaterally decided to remove price caps on .org and .biz domain names.
ICANN says it wants to get out of the price-regulating business, so it’s logical to assume it will defer to the U.S. government on .com pricing.
No competition, only a giant unending shameful monopoly.
Is the cost of computer technology and during a death spiral there is no reason for cost to actually go up as these companies have no increased costs other than paying themselves higher and higher salaries and profits it’s a shame the US government allowed any price increase it should have been a downward prices
Talking about killing the goose that lays the golden egg… Greed killed .net, it will lead to an .org decline and a total of 30-40% price hikes over a period of 5 years will also lead to a decline in .com registrations…
Alan Dodd says
The crossroads is upon us. I wonder what the EU will make of all this?
I once had 25,000 domains, renewing year after year… without parking revenue and prices increasing (until they were forced to stop) I dropped 20,000.
That is ok for Verisign (and ICANN), that made a lot of money from me but still insult investors. USA may be land of the free, but not of free business when at a certain level. No competitive bidding for .com but still not happy, they want all of it. Disgusting greed.
it’s the logical consequence of capitalism. as a company you have to grow, constantly have to show increase in revenues and earnings. once the low hanging fruits are gone you have to be creative. in this case “being creative” means you talk to ICANN and lobby a non-profit organisation for approval to raise prices on your product. A product on which you habe a monopoly by the way…
That is correct.
That’s neoliberism, where monopolies and abnormal concentration of wealth are the norm.
Free market is based on rules, designated to protect people from big corporates abuses, while neoliberism is a degeneration of free market, where deregulation, privatization (privatization of profits and socialization of losses …) are wildly applied, thanks to corrupt governments and “authorities”, to benefit the usual élites and their accomplices, at the expense of anyone and anything else …
Neoliberism devastates society … and history will repeat itself …
Rubens Kuhl says
The drop of registrations is factored in every price raise.
Let’s say that 50% of the domains are in the hands of end-users, 50% are in the hands of investors; if a registry increases price by 20%, end-users will keep registering and renewing their domains. Investors will drop their registrations proportionally, spending the same dollar amount. The end result is a 10% increase in revenue, even with a drop in registration numbers.
Rubens – you are mistaken.
Go back and look at .com pricing history. Verisign increased its prices 4 times between 2006 and 2012 (it took every price hike it was allowed – proving there is no “market” to discipline prices.)
Each time Verisign increased its prices – it did not have any corresponding impact to the base of domain names. The base of domain names continued to grow at the same rate and the renewal rate remained exactly the same. Actual registration data (available on the ICANN websites) proves .com domains are highly inelastic. They are not interchangeable. They are not portable.
Each 7% price had no corresponding impact as you suggest. .com continued along the very same trajectory.
One of the core reasons why .com domains are inelastic is because registrants are locked-into .com domains and have no alternative. They are held hostage to their domain names (I be happy to go into more detail if you wish.) In 2008, the DOJ Antitrust Division determined domains are not substitutes for one another. It is virtually impossible for registrants to give up their .com domain names. Consumers DO NOT switch. In the few rare cases where consumers have switched domains – they still maintain the old domain registration for search engine purposes an continued receipt of emails. It is also impossible to recall offline media and old business cards – which use the old web/email address. And it becomes quite a technical challenge to move everything over to new domain and requires planning and coordination.
Two recent studies in 2016 commissioned from ICANN reiterate high switching costs.
Analyst Group – In both our Phase I and Phase II Assessments, we found no aggregate (worldwide) effect of new gTLD entry or registrations on legacy TLD registrations: registrations of legacy TLDs continued to follow the same pattern before and after the beginning of the New gTLD Program. This is consistent with new gTLDs generally not being treated as substitutes for legacy TLDs.
Neilson conducted two separate surveys to registrants on behavior with new gLTDs. In Neilson’s final ICANN Global Registrant Survey Wave 2 Survey (August 2016) – Neilson found that out of a total 723 registrants that were surveyed for registering a new gTLD domain name, 0% said they gave up all their legacy gTLDs.
Will they start charging premium prices on renewals as well soon? That seems to be where we are headed.
Mark Thorpe says
Verisign and ICANN, you know what you can do with your .COM price increases!
LOL, FRANK Shilling did 1000% increase to his loyal ‘early’ investors. THINK about that!! Click my name to find out more.
You know who! says
Ohhh i forgot, this is one of the SHILL moderated sites that only LETS *approved* .COM propaganda though.
GO TO HELL. seriously. Snake.
Even though there must be a single database with no duplication there is no reason that there could not be multiple registries who compete. The registries would simply have to coordinate a single shared database. A person who owns a .com could transfer to a registry that has lower costs or better terms.
It was a failure of imagination by ICANN to grant monopoly registry status on all the extensions. It is a small technical problem to require all authorized registries cooperate in maintaining one master database to be entered into the root nameservers.
Rubens Kuhl says
Verisign is the SRS you described. It’s not a small technical problem, it’s actually impossible in DNS technology to operate without a single authority.
Rubens – I respectfully disagree. It is possible to operate a shared registry. You say it is “impossible” and that means you are not open to change. That is a dangerous mindset to immediately say something is “impossible” without hearing what others have to say.
The technology exists and this can be done via several mechanisms. I’m not talking blockchain – although I find this fascinating and extremely relevant to the DNS.
Back in 1996, Jon Postel discussed the idea of having a “shared registry” and concluded it was feasible.
When asked about “sharing a TLD among several registries” during a conservation on creating competition in the DNS – Jon responded and said:
“This is a very interesting idea and i’d like to see it made workable, but i don’t think it is essential to get some simple competition off the ground. We can add it later. I agree that we have the technology to do this. I don’t understand the business model.”
Quite remarkable Jon suggested “we can add it later” yet ICANN has not explored this topic any further.
Rubens Kuhl says
Science is not about mindset; either something can be done, or can not. If you have a solution to this problem, just go the IETF and expose the possible solution to peer review.
Trying to read between the lines of what someone deceased said doesn’t count as science.
It’s called blockchain. It is a perfect example and technology for powering DNS.
Andrew Allemann says
David, can you explain specifically how blockchain would work for DNS? It seems like a horribly inefficient technology for DNS.
More or less, managing a registry is managing a pretty simple database with a relatively low volume of changes and a requirement for high availability, up-time and global redundancy. It truly is a perfect technology for blockchain, and not inefficient at all.
There are a dozen ways to go at it. However you worked it, you could have 3 or 6 or 10 organizations that all charge a fair market value for what they do. Each could still be ICANN regulated. And through blockchain technology all domains would be managed in a decentralized database, not controlled by any one monopoly with omniscient power and greed for more profit. If that monopoly is charging too much (I’ll use Bitcoin as an example, as that is most familiar to people.) Then instead of overpaying to keep your coins at ABC exchange, you move your domains to XYZ exchange. You therefore are not locked in. As blockchain is a distributed ledger system, it is perfectly suited for the domain name system. (Note, not saying DNS as in powering DNS lookups of single domains, that would be up to each “exchange” or node of the decentralized network.) The technology is truly here today. Unfortunately, Verisign has zero incentive to evolve and provide better services for cheaper prices. Because they are a monopoly with their sole purpose to be profit. Therefore, it is not being a good steward to the community, and only here to pilfer and take from registrants worldwide. Why are we getting higher prices when prices truly should be going down due to evolution of technology? The reason is that Verisign has “captured” the market and has an extremely tight hold on it, and zero incentive to innovate. It is also the same reason ICANN does not protect end users and grants no-bid contracts, only protecting Verisign and itself and their combined stronghold on the market.
Getting rid of a centralized Registry and using Registrars as nodes seems to make sense. But there are big challenges porting something like SRS/DNS to blockchain. Search is horribly inefficient, availability checks would take several minutes (and could collide with new registrations), and deleting a domain is impossible (deleted names just hang around with some kind of a DEL flag).
Transfers would be more secure, tho. Or at least as secure as a bitcoin wallet.
Rubens Kuhl says
Verisign is not the one that should bring such an innovation; it could be ICANN, and ICANN did have an effort called Identifier Technology Innovation Strategy Panel a few years ago. But it doesn’t need to be ICANN, since Internet standards are permission-less. And yet, no solution appeared to replace the 1987 technology we still use today…
Time to overthrow ICANN when they work more for their buddies like Verisign than they do the people.
Shameful to say the least …
That’s what happen when you have a web monopoly and a “controller/authority” (ICANN) which is not acting as an independent controller anymore, instead as a cash-hungry corporation …
ICANN should be deeply reformed, managed by a multi-nations committee and .com/.net should be granted through a transparent public auction, open also to foreign registries.
Price increases should be capped to inflation rate.
Its insanity to allow registries to charge what they want for domains. It will destroy the use of the domain name system.
What is the value of the renewal of google.com? or facebook.com? Either company would have to pay millions of dollars or more yet the registry did nothing to create the value of the name. In fact the registry added no more value to those registrations than it did to historyblock.com, which is selling for $10 at namesilo It is purely legal extortion. Nice business you have there . . .
Andrew Allemann says
The legacy ones aren’t allowed to charge whatever they want on renewals of specific domains. And .com won’t be uncapped (at least for now)
Rubens Kuhl says
I think you just described the business model of domain investors.
However investors have to compete, while Verisign does not. Just a guaranteed cash cow, decade after decade.
Also, ICANN may be non-profit, but the wages paid there far exceed what most of us would dream to earn.
Operating income of $205 million on $308 million in revenues in just three months. Any company would kill for these type of margins.
Verisign will generate more than $800 million in income in 2019 on revenues of $1.2 billion – while .com wholesale prices have been capped at $7.85 since 2012 because it was determined it was “in the public interest.”
But the Trump Administration just did the unthinkable – gave ICANN the power to modify its contract with Verisign early – to enable a 31% price increase on the wholesale cost of domain names (every six years – for eternity.)
The current .com Registry Agreement has prices capped at $7.85 through 2024. ICANN and Verisign agreed to this consumer protection provision back in 2016. ICANN must honor that commitment and ICANN is *not* required to amend the .COM Registry contract early – despite the pressure Verisign is putting on ICANN. Verisign is claiming ICANN is “obligated” to do this. This is not true. The Department of Justice Antitrust Division also said prices would be caped at $7.85 through 2024.
There is no reason to amend this contact more than 4 years early to increase prices on registrants.
Worst part – there is no justification for any price increase on 142 million registrants.
If anything, prices should be going down.
One of ICANN’s core values is “to promote and sustain a competitive environment.” See ICANN Bylaws Article I, Section 2.6 (Core Values). This core value is reflected in the Memorandum of Understanding between the Commerce Department and ICANN, which outlines ICANN’s operating principles. Under the MOU, ICANN and the Commerce Department agreed to promote the management of the DNS in a way that will allow market mechanisms to support competition to “lower costs, promote innovation and enhance user choice.”
This is a defining moment in ICANN’s history. ICANN has two options. 1.) take into consideration the interest of 142 million registrants and keep prices capped at $7.85 because Verisign is swimming in mountains of cash and there is no justification for imposing supra-competitive pricing on consumers 2.) show the world it is truly a cartel – handing out no-bid monopoly registry contracts (which exclude all forms competition) and funnels billions and billions excess profits to its largest ratepayers.
Ladies and gentleman. The multistakeholder model has failed. It was a great test and it was fun while it lasted – but when you have one overly powerful and dominate player generating the lion share of profits – who uses money and power to influence and capture every single working group and tentacle within ICANN, it is no longer functional.
ICANN board – the decision is yours. The fate of ICANN lies in your hands. We have come a long way and made a lot of progress over the years. Do you really want to let all of this work go to waste?
None of the 142 million registrants want to pay more money for a domain registration or renewal.
Only ONE (1) stakeholder wants this price hike – Verisign.
Prove to the world that the multistakeholder model works.
Or prove ICANN is a cartel – and watch it facilitate one of the greatest transfers of wealth from the public at large into the pockets of one for-profit company (billions and billions of dollars) without any justification whatsoever. All at the detriment of 142 million worldwide registrants.
“Worst part – there is no justification for any price increase on 142 million registrants.
If anything, prices should be going down.”
Yes, this is only common sense. ICANN should be taking bids on who can run the registry the most efficiently without any need to increase price. Verisign has gotten lazy and greedy and it has seemingly become a relationship where Versign just assumes ICANN should be handing them a sweetheart deal that makes them rich while doing very little for it.
Here is what two analyst said:
Following Q3 2017 earnings release, The Nation Reported: Normally, companies with regulated prices aren’t profit-making juggernauts. But in the third quarter of 2017, Verisign’s operating income as a percentage of revenue hit 61.9 percent, putting it near the top of all companies in the S&P 500. This number has climbed steadily since 2006. If the trend continues, sometime in the next decade Verisign will post the highest rate of profitability of any public company on earth.
Saber Capital Management said: Verisign is the exclusive registry for domain names ending in .com and .net (among a few others), an extremely attractive and enviable competitive position that could be likened to a monopoly within the .com and .net TLD’s. The margin on this recurring revenue is extraordinarily high, and there is very minimal need for cash in this business. The high margin recurring revenue and the low capital requirements lead to stable and predictable free cash flow, which the company uses almost exclusively to buy back stock.
ICANN, if you allow Verisign to increase .COM prices, that will be the last decision you ever make !
Mark my words.
There will be an up-rising, ICANN will be dismantled and you’ll have to wave goodbye to your astronomical wages !!
No there won’t, nothing at all will happen. The US govt is the only party regulating this.
Pointless talking about lobbying Icann. They will rubber stamp whatever VeriSign suggests – it is an example of regulatory capture.
I also use the name Jack when posting on domain blogs…
John Colascione says
Just as I thought in “Why Verisign ‘NASDAQ:VRSN’ Will Inevitably Get Its .COM Domain Price Increase Sought” https://www.strategicrevenue.com/verisign-nasdaqvrsn-will-inevitably-get-its-com-domain-price-increase-sought/
One of the most dangerous things I see is some people in important positions to say or possibly even do something good apparently believing there is any good faith or any potential for good faith dialog whatsoever on the part of the members and “leadership” of ICANN at all. Nothing could be more duped and naive if they do. If you have ever had to deal with organizational corruption you would know better, but I think the problem is that many perhaps have had a little too much success in their lives and fairly “charmed” lives in that regard which prevents them from fully accepting or seeing the reality.
That goes for seeing certain realities about other types of organizations in the industry most such people are generally “in bed with” in one form or another too.
This gives you opportunity to do the same and increase aftermarket names price by 10% + . Follow the river.
Maxitrol Creme says
I can’t be more than happy. Bought VRSN stock few years ago. Tripled in 5 years. Just be smart and buy the stock and be happy if domain prices get more expensive!