Even if ICANN gives the company the nod, it won’t raise prices this year.
In an announcement on its blog, the company announced the price freeze in response to the COVID-19 pandemic.
As of right now, Verisign can’t raise prices on .com anyway. However, ICANN is widely expected to allow Verisign to increase .com prices 7% this year. It’s not known if ICANN planned to delay its decision due to the pandemic.
Freezing .com prices for the year won’t have much of an impact on Verisign’s bottom line for the current year. Even if ICANN decided next month to allow the company to raise prices, it would have to wait 6 months before implementing the change. At the earliest, it would be able to raise prices in October.
What remains to be seen is if Verisign will ask for the right to increase prices twice (or double) next year due to this year’s freeze. That might require approval by the U.S. National Telecommunications and Information Administration (NTIA). [Update: Kevin Murphy points out that the “year” for Verisign’s first price increase doesn’t begin until October 20, anyway. So Verisign can initiate its first price increase for anytime between then and October 20, 2021.]
The company is also rolling out a program to registrars that may help registrants keep their domains if they aren’t able to pay for them due to the pandemic.
BREAKING : Verisign will not increase prices next years either because the US will have another president and this unbelievable monopoly (that already lasted much too long) will come to an end.
“The company is also rolling out a program to registrars that may help registrants keep their domains if they aren’t able to pay for them due to the pandemic.”
I will believe it when i see it.
April fools day get moved up this year?
Over the years companies have become very greedy, and slowly lessened the grace renewal window which is 45 DAYS, for all who didn’t know, I mean back to 18 days, which is about 40% of what is allowed.
When times were good many companies kept squeezing their customers for more, and more, and now times might be tough for a while, so let’s see how much these companies really give back.
Yes GoDaddy has been among the most aggressive in reducing grace periods on their customers.
Other registrars such as Dynadot, Namebright and Network Solutions, among others, still allow registrants 30 days or more past expiration.
Why does a monopoly operator have the ability to raise prices on its captive base of users – when its actual costs are going down? The .COM namespace has massive market power and benefits from network effects of everyone using the most popular domain extension in the world – including 494 out of the Fortune 500.
NTIA and ICANN claim there is “more competition” from gTLD’s. This is why Verisign should be allowed to increase prices.
However, an economist, Greg Rafert, Ph.D. recently concluded “based on my training as an economist, review of the available evidence, and experience with ICANN and the TLD marketplace, I conclude that there is no economic rationale for Verisign to increase prices for .COM and that increased prices will very likely harm consumers”
https://mm.icann.org/pipermail/comments-com-amendment-3-03jan20/attachments/20200214/153335a1/RafertResponsetoProposedAmendment3tothe.COMRegistryAgreement.pdf
Indeed, if there was more competition, Verisign would want to lower prices to compete in the marketplace. Not increase prices.
Verisign is the sole sourced provider – in a perpetual contract that will never be subject to competitive bids.
VeriSign was handed this this perpetual contract as a result of strong-arm litigation against ICANN – and it forced ICANN’s hand into one of the most lucrative and anti-competitive contacts in the modern world. If you want to learn more – simply search for CFIT vs Verisign.
Thus, consumers will never realize the benefits of competition. And somehow, both NTIA and ICANN will allow Verisign to increase its prices on a captive base of customers – which 74% of them automatically renew each year.
NTIA and David Redl did not do the proper work. Had David Redl and his staff actually done ANY work – they would have concluded no price hike was justified – and that any price increase would cause harm to 144 million registrants by forcing them to pay higher prices.
Did David Redl realize between 2011 and 2019 Verisign’s:
-base of domains increased from 113.8 million to 158.8 million?
-revenue increased from $771 million to $1.231 billion?
-costs decreased from $442 million to $425 million?
-gross margins increased from 78.6% to 85.3%?
-operating margins increased from 42.7% to 65.5%?
-net income increased from $141 million to $612 million?
-free cash flow has increased from $336 million to $714 million?
-employee headcount decreased from 1,009 to 872 employees
-spent more than $6.1 billion in share repurchases from $5.5 billion in free cash flows (meaning Verisign spent more money purchasing its own stock that what it generated in free cash flow during the same period of time.)
Bottom line – because of VeriSign’s no-bid, monopoly contract, which will last in perpetuity – its net income and free cash flow have skyrocketed.
Verisign generates so much free cash flow – it is swimming in piles and piles of cash – and it has nowhere to hide all of its extra money. Thus, it continues to repurchase its own stock at an unprecedented levels. Name any other company in the world that spends more money in stock repurchases than what it generates in free cash flows!!!
If Verisign was a good steward of the Internet – it would invest more into its infrastructure. But Verisign is not doing this.
Don’t take my word for it – pay attention to what John Huber, Managing Member of Saber Capital management had to say about Verisign in 2016:
“Verisign’s position could be considered a “toll road” of the internet. The company makes money mainly by collecting $7.85 per year for each .com domain name that is registered, and there are around 127 million .com domain names. The company also gets paid a similar fee for each of its roughly 16 million .net domain names. 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.”
Oh how nice of them. They are deferring price increases by 2 months. Ha.
This is a dog and pony show. Just like Verisign to try to be a good guy when they are really the monopolist who threatens and sues to get what they want. A really bad and evil company! Need to be regulated with a stiff upper hand!!