ICANN’s decision to remove price controls will have a long term impact on the domain name industry.
The biggest story in the domain name industry in 2019, and the one that will have the most impact in years to come, is the removal of price caps.
Historically, some domains have had price caps and some haven’t.
Country code domains have no caps.
Legacy global top level domains including .com, .net, .org, .info and .biz had price controls.
New top level domains never had price controls.
There is a reason that only the legacy gTLDs have/had price controls. In the case of ccTLDs, ICANN’s role is really just to delegate it to the country. It’s up to the country to determine how to allocate the domains. For new top level domains, they were created by the applicant registry, which sometimes had to pay millions of dollars to secure the rights of the domains.
Legacy gTLDs are different. In the case of .com, .net and .org, the companies that now run them are merely stewards for the domains. Or at least, that’s what the idea was. They would provide the technical services for these domain names and generate revenue by doing so.
Over time, however, ICANN has shifted the positioning of these domains to something that the registries own, just like new top level domains. This year, the domain industry regulator removed price caps on .org, .info and .biz—without the registries even asking for it. The registries that run these domains can now charge whatever they want for each incremental year someone uses the domains.
The U.S. government plays a unique role in the .com contract. In 2018, it agreed to allow Verisign to increase .com prices by 7% per year in the last four years of each six-year renewal. All signs point to price increases beginning in 2020.
Lax price controls are good for the companies that run these domains and their shareholders, but consumers and the stability of the domain name system are negatively impacted.
Few people will shed a tear over domain name investors having to pay higher fees to maintain their domain portfolios. The issue is end-users and longterm stability.
ICANN’s role is to provide security and stability to the DNS. Price controls are one way of doing this.
I frequently think about the future of the domain name industry. I look for the challenges the industry will face. And a lack of price caps scares me.
While domain names remain a critical component of using the web, this could change in the future.
Consider people using social media accounts instead of websites. The domain name industry points to what Facebook did with its newsfeed algorithm as proof that you need to have your own domain and website. Facebook encouraged businesses to grow their followers on Facebook, only to change midstream and start charging them to reach the very audience they built.
So what happens when someone using a domain is suddenly hit with a renewal bill that’s 10 times as much as the previous year?
They don’t have much choice but to pay the fee. Yes, they can switch domains, but it’s an expensive and time-consuming process. So they suck it up and pay the higher bill.
Over time, this will make people think domain names are a less stable option than other ways customers might interact with them. They begin to look at domains like they look at Facebook. Will the registry screw them after they spend years building up their presence on their top level domain? You can view top level domain names now sort of a like a platform that you build your site on.
This is the long-run importance of price caps. For whatever reason, ICANN is abdicating its role in keeping domain prices stable. This is going to come back to haunt both ICANN and the domain name industry.
Joseph B Mizereck says
Spot on, Andrew.
Well said, Andrew.
This appalling change for the worse presents huge implications for economic freedom and commerce, as the little guy/gal is faced with a more and more unreliable expense possibility or outright expensive barrier to entry, in a world in which those at the top began as the little guy/gal themselves with no such barrier or cost and the kind of great opportunity they enjoyed which now others won’t. I.e., just another case of the rich getting richer and the poor getting poorer by design in favor of the rich and powerful, and progressively choking off others from having the same kind of opportunities and the harm to society that entails.
Since money/income is one of the principal ways in which censorship and suppression is committed, including by social media monopolies like youtube/google/alphabet, this terrible change for the worse in society presents huge implications for free speech, and by extension every aspect of a free and positive society.
Both the removal of price caps and the pending .org disaster could not have “flown under the radar” were it not for the removal of US oversight. And even though many in the US would be pushing for both, as these terrible phenomena could not have been ignited under a rock it is also the case that as such they could not have been considered “politically feasible” even if some of the “powers that be” had even wanted to railroad them onto the public and the world. We have our own cauldron of corruption here in the US without any doubt, but the bottom line is that regardless none of these “abominations” could have occurred under continued US oversight which was: not broken; did not need fixing; and was, as usual, the subject of lying propaganda nonsense in order to bring about its end to begin with.
Ergo, it may very well be that the removal of US oversight from ICANN is really the “biggest” change in the last 10 years.
As a practical matter, you also do *not* have to be a “domainer” or “domain investor* in order to need to have and use large quantities of domain names. There is no “one and only way” of doing business or operating on the Internet, and people can easily need to use large quantities of domain names as a legitimate end user for both commercial and non-commercial purposes, not just as a “domainer.” That is certainly my business model and has been for years.
This is pathetic and crazy, domain names are expensive as it is and they will now make it worse.
Lets hope the .org case fire spreads further onto the Verisign crazy profits as well.
John Poole says
Andrew, what authorities or sources can you cite in support of your statement that “ICANN has shifted the positioning of these [legacy generic top-level] domains to something that the registries own, just like new [generic] top level domains [new gTLDs]” — i.e., when did ICANN overturn RFC 1591 and the continuous position of the United States, historical steward of the DNS from the time of its creation, that TLDs are global public resources, NOT the property of ICANN (successor to IANA) nor ANY registry operator — see the US Amicus Brief in the Weinstein case (2015) https://www.icann.org/en/system/files/files/litigation-haim-et-al-us-brief-amicus-curiae-29dec15-en.pdf which cites and relies on RFC 1591 https://tools.ietf.org/html/rfc1591 (written by Jon Postel, founder of ICANN and the Internet Society) as continuing authority re TLDs, and the US DOJ Antitrust Division advice to NTIA & ICANN in 2008 (pp. 4-11) specifically in regard to ALL gTLDs re: pricing, competition, market power, benefits to registrants (consumers) https://www.ntia.doc.gov/files/ntia/publications/icann_081218.pdf .
While it may be the intent of corrupt or inept ICANN leadership, past or present, to facilitate the largest theft of global public resources in history, please cite where and when the ‘shift in positioning’ was formally approved as formal ICANN policy to negate RFC 1591 both as to new gTLDs and legacy gTLDs, and who at ICANN claims to have sanctioned it on behalf of the global internet community as being in the “global public interest.” Thank you for your continuing coverage on these matters.
ICANN has entirely abandoned the multi-stakeholder model. Its decisions are not in line with the bottom-up, consensus process. ICANN only makes decisions which benefit its two largest ratepayers – and completely forgets about end user registrants and the public at large.
ICANN ignored 3,200 comments – even labeled them as “spam” and decided that it was going to side with the 5 public comments that were in favor or removing price caps. 3 of the 5 comments in favor had ties to the registry organizations.
As a result, ICANN is directly facilitating suprcompetitive pricing 160 million registrants – who are held captive to paying whatever amount the registries charge – where substitutes do not exist.
The new .ORG contract allows the prices to potentially go up to $250 or even $25,000 per year to renew your existing domain name. There are zero price protections in place for consumers. ICANN decided to abolished all pricing caps – despite the fact they have been in place for more than 20 years for consumer protection.
Thus, ICANN is telling the entire industry they could give a sh*t what the cost is to register or renew a .ORG domain name.
The US Government said ICANN is not immune from Antitrust laws. When prices increase (because of ICANN’s specific actions to remove pricing caps despite 99% opposition) – ICANN will be directly responsible for facilitating supracompetitive prices on registrants at large. All fingers point back to ICANN.
The US Government has also said the registries themselves do not have Antitrust immunity.
And in Amendment 35 – NTIA specifically said Verisign is not immune from antitrust liability.
Ethos is telling ICANN to “trust us” – we will not raise prices unreasonably. But what does a verbal commitment actually do?
Pricing caps should be in the contract – they should be legally binding – and they serve the all-important consumer protection purpose.
Pricing caps must be in the contract and operator must agree.
They are designed to project consumers at large and make sure the registries do not act opportunistically on its captive base of users.
Without pricing caps – means consumers will most likely be harmed by paying higher, unjustifiable prices to renew their existing domain names.
ICANN also has the opportunity to recognize its mistake and make it right. Or it can worry about antitrust scrutiny in the future.
Possibly one reason why ICANN is making these decisions that only favor its contracted registries – it fears legal liability from the registries more than any of the other stakeholders?
If you manufacture a product, you need real estate, brick and mortar building, raw materials, labor, physical inventory, etc etc before you sell your first product.
Registries like ,com , ,org , ,info , (and others) sell a product made from nothing. All they are doing is leasing for ONE YEAR , the right to use a product made out of ‘thin air’. Plus, raise the price on ‘thin air’ on their whim. Moreover, they have the right to take it away from you for whatever excuse they care to give.
Now, they are demanding from Icann the need to increase prices on ‘thin air’.
And, the registries and Icann call domainers the ‘bad guys’.
This is a “stick-it” to a specific .org holder who helped the government figure out how to tax ICANN and control it.
A few things that are food for thought to the thoughtful:
1. Businesses and orgs have increased costs as the years go by. Utility, insurance, wages… all go up.
2. Almost the entirety of the negative consequence here hits domainers in their portfolio costs – an unfortunate, instant tax. Renewals go up without the ability to pass on those additional costs to buyers because there is no value add.
3. As much as folks will say that this is going to hurt mom and pops (in the same way that people were shouting “how dare they increase .org prices and hurt the Red Cross”… an extra $5, $10 or $20/year isn’t going to affect a charity in the slightest) now people may claim an extra $2.50 for .com renewals will crush a business. The reality is, it won’t hurt end users and also when it hurts domainers who have stockpiled .coms and are now having a total 30% increase on portfolio price, they’ll send more to the drops and more end users will have the chance to own these domains.
This may be an unpopular opinion amongst domain investors but I believe it’s accurate and the smartest domainers will adapt and benefit from the disruption. They’ll have leaner portfolios. They’ll participate in the drops that other investors make. Perhaps they’ll even develop more of the domains they own.
Change is a good thing. It brings new opportunity.