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Breaking: ICANN and Verisign agree to .com extension with 7% price hikes

The only surprise was how fast it happened after the comment report was published.

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Did you have time to digest ICANN’s staff report on comments about the .com price hike? It was published yesterday. Today, Verisign (NASDAQ: VRSN) and ICANN agreed to the amendment as planned.

The agreement will allow Verisign to increase the price of .com domains by 7% per year in the last four years of each six-year extension. The first price increase would be allowed at the end of October 2020, but Verisign has already stated it won’t raise prices during this calendar year.

Verisign also agreed to pay ICANN an additional $4 million per year for five years beginning January 1, 2021.

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  1. CF

    Does anyone have details/options on the agreement on this “Verisign also agreed to pay ICANN an additional $4 million per year for five years beginning January 1, 202……… Crazy whats going on with these back end deals…. ? Verisign tells you, Prices will not increase this year… they will do it three months later on Jan 2, 2021, a day after they pay the $4 million bribery fee…. Crazy times ahead for sure…

  2. Nuno

    Disgusting and disturbing how easy it is to keep a never ending monopoly where you raise prices for no reason other than you can… but the customers cannot choose nor globally ask for the contract to go for competitive bidding. Worse, offend your best clients while you laugh with your pockets full of money. OUR MONEY!

    • Nuno

      The whole connection between the two entities and the complete sense of impunity leads to this, when you don’t have any honest hierarchy supervising what they are doing.

      • John

        They are co-conspirators.

        ICANN is a cartel.

        ICANN hands out no-bid, monopoly contacts, which last in perpetuity, and extracts out monopoly rents from those contracts over time.

        ICANN only makes decisions in the best interest of the registries – and it gives zero thought to all other stakeholders.

        ICANN ignored the United States Department of Justice Antitrust Division recommendations – specifically telling ICANN it should put its contracts out for competitive bidding at the end of each term – so consumers can realize the benefits of competition.

  3. Nuno

    One of my biggest regrets in life was to dedicate more than 20 years to domains, invested all I had and lost so much while helping to pay the wages of both companies… are they thankful? No, they even offend.

  4. Samer

    If Verisign exercises right to 7% .Com annual increases next four years, .com would still less than half .co price today! That’s *not* counting waived first year. Who knows what happens 3 years, starting 2021?

    Relax people, What’s 7% increase year, when ngtlds +%xxxx?

    This outrage feels like it’s coming from people who own thousands names.

    Samer

  5. John

    Remarkable ICANN had Verisign contractually obligatged to maintain prices at $7.85 through 2024 for consumer protection. The 2016 version of the .COM Registry Agreement capped .COM prices at $7.85 through November of 2024.

    But ICANN is walking back on this significant pricing concession – MORE THAN 4 YEARS EARLY – to facilitate supracompetitive pricing on a captive base of 144 million registrants. There was zero justification for any increase in prices.

    ICANN and VeriSign are causing direct harm to 144 million registrants – and forcing them to pay more money – without any proper justification.

    Verisign is already swimming in piles and piles of money – and it has nowhere to put that money other than massive share buybacks.

    Furthermore, ICANN is claiming it is not a price regulator…..which is hogwash. Everyone in this industry knows ICANN has always been a regulator and it engages in price regulation. ICANN claiming it is not a regulator is completely misguided and 100% contrary to its actions in the past.

    • John

      Do you have a copy of that link to the contract where The 2016 version of the .COM Registry Agreement capped .COM prices at $7.85 through November of 2024.

      If that is true, I am in for a class action law suit against these two companies. All we need is 6 parties as plaintiff.

  6. Samer

    Doesnt Verisign need to be best behavior, to seal next .com contract?

    How would increasing prices on cash cow, win the public?

    If .com contract put to tender, could be even cheaper, theoretically.
    Verisign needs to be on their best behavior… it’s not the end of the world.
    What if Verisign agrees to forgo 7% increase for *another* .com extension?
    They are hated enough! A lot can happen in the next four years.

    Samer

  7. Domainer

    “Verisign also agreed to pay ICANN an additional $4 million per year for five years beginning January 1, 2021.”

    Didn’t we just go thru an impeachment proceedings over ‘quid pro quo” ???

  8. Fleeced

    It would be interesting to forensically trace the genesis of this decision & announcement. We can imagine Verisign strategists saw a window of opportunity during the virus scare and before Public Interest Registry blowback grows larger. ICANN has no need for haste — only catering to Verisign corruptly. Classic institutional capture, and we can even follow (some of) the money in the $20 million transfer! Operators of public heritage generic top-level domains .com, .net & .org should be chosen via open bid contracts!

  9. John

    ICANN has always been a regulator. ICANN is also a “pricing regulator.” Despite the fact ICANN is telling the world it no longer wants to price regulate.

    Furthermore, ICANN took on a significant regulatory role when it flat out – rejected DOJ Antitrust Division advice –which was to put each TLD contract out for bid at the end of each term; thus having a mechanism in place to discipline wholesale pricing from a monopoly operator.

    .COM has massive market power. It is the oldest, and most well-known legacy TLD with far more registrations than any other TLD – currently sitting at 144 million domains. 494 out of the Fortune 500 use a .com domain name. And it is nearly impossible for companies to switch domain names – because of the “lock-in effect” with search engine rankings and use of email. Hardly any companies switch away from .com domains to other extensions. And in the rare few cases where companies have switched domain names – they are forced to continue paying to maintain their old registration for search engine redirects and continue receipt of email. This is why registrants are locked-in and held hostage to their domain names. This is why pricing for domains is extremely inelastic – consumers are locked-in and don’t have any alternatives.

    Now we have a disastrous situation – because .com has no competition and because there is nothing in place to discipline pricing – Verisign’s financials are extraordinary. It now has a 85.3% gross margin and a 65.5% operating margin. It has purchased $5.2 billion of its own stock over the past 7 years alone – while only spending $299 million in capital improvements. Verisign’s R&D spend has declined. It’s sales and marketing expenses have declined. Its employee headcount declined from 1,100 to only 872. Bottom line – the cost to operate the Verisign registry business ARE GOING DOWN.

    Actual cost to operate Verisign (figures includes stock-based compensation):

    2009 – ($455,989,000)
    2010 – ($448,295,000)
    2011 – ($442,589,000)
    2012 – ($416,265,000)
    2013 – ($436,855,000)
    2014 – ($445,690,000)
    2015 – ($453,420,000)
    2016 – ($455,595,000)
    2017 – ($457,373,000)
    2018 – ($447,577,000)
    2019 – ($425,534,000)

    BUT the base of domains continues to rise each and every single year (price each year) and so does Verisign’s reveues:

    2009 – 86.0 million (x $6.42)
    2010 – 93.7 million (x $6.86)
    2011 – 101.6 million (x $7.34)
    2012 – 108.5 million (x $7.85)
    2013 – 114.3 million (x $7.85)
    2014 – 119.0 million (x $7.85)
    2015 – 126.6 million (x $7.85)
    2016 – 131.3 million (x $7.85)
    2017 – 135.0 million (x $7.85)
    2018 – 142.0 million (x $7.85)
    2019 – 145.4 million (x $7.85)

    Thus, this gives you the following revenues:
    2009 – $615,947,000
    2010 – $680,578,000
    2011 – $771,978,000
    2012 – $873,592,000
    2013 – $965,087,000
    2014 – $1,010,117,000
    2015 – $1,059,366,000
    2016 – $1,142,167,000
    2017 – $1,165,095,000
    2018 – $1,214,969,000
    2019 – $1,231,661,000

    Even though .com wholesale prices have been fixed at $7.85 since 2012 for consumer protection – Verisign’s Net Income has soared:
    2009 – $87,931,000
    2010 – $58,152,000
    2011 – $141,141,000
    2012 – $322,728,000
    2013 – $323,953,000
    2014 – $355,347,000
    2015 – $374,241,000
    2016 – $441,185,000
    2017 – $457,760,000
    2018 – $582,619,000
    2019 – $612,489,000

    Unbelievable how much Verisign’s profits has grown – while .com wholesale price has been capped at $7.85 – because of economies of scale.

    But now ICANN is THROWING gasoline on this fire and pumping significantly more profits into Verisign’s’ business – billions and billions more – without any proper justification. Verisign is simply announcing it no longer wants to price regulate (despite the fact it is price regulating today) and that it will not conduct an economic study. WTF does ICANN actually do and how is it protecting registrants and the various stakeholders? Its actions only benefit one party – Verisign.

    ICANN is captured and is only making decisions that benefit its contracted party (and largest ratepayer) and is giving zero consideration to all other stakeholders and if the prices consumers will pay is reasonable.

    This is not a multi-stakeholder model. This is a Verisign model – where the goal is to pump as much money into the Verisign business as possible. And ICANN is playing right along….

    BTW – ICANN collecting an extra $20 million from Verisign to make this all happen is disgusting. This is quid pro quo. And is yet another example of how ICANN has been captured. ICANN’s position: sure Verisign – we will let you overcharge 144 million registrants and collect billions more in monopoly rents – but you need to pay us $20 million to do so……

    I’m dumbfounded ICANN claims it is not a pricing regulator – yet, in this very contract, it requires Verisign to pay an extra $20 million fee. Touché.

    This situation is ripe to be challenged…..

    • Lifesavings.online

      Wait until starlink is finished. There will be no need for cell service. Everyone will have free VoIP everywhere they go.

      Verisign, under pressure, will need to make revenue somehow.

      What do you think they’re planning to do?

      Same model as nTLD forthcoming.

      And domaining let Frank Schilling get away with rising prices up to 3000% instantly. That’s despite his application obligations of “no material increases” for 5 years. Domaining was silent.

      Ya’s already let them walk all over domains.

      Next.

  10. John

    During this unprecedented time in the history of mankind, they raise price?

    If it is true that the 2016 version of the .COM Registry Agreement capped .COM prices at $7.85 through November of 2024, then it’s time for a class action law suit against these two organizations.

    I believe we just need 6 parties as plaintiffs to start a class action. What do you all think?

    • Andrew Allemann

      Their argument is that the 2016 contact had a provision in which they would negotiate should the terms in the Cooperative Agreement change. The terms in that agreement changed with regards to pricing.

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