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2020 in Review: Price hikes on the way

Domain investor costs are about to increase.

Blue and yellow graphic stating "2020 top stories: price hikes"

This is the fifth in a series of posts about the domain name industry in 2020. Read the others here.

.Com prices are going up.

ICANN agreed to a contract extension with Verisign (NASDAQ: VRSN) in 2020. The extension allows Verisign to increase the wholesale price of .com domains by 7% per year in the last four years of each six-year contract extension. The first year for potential price increases began in October.

Verisign has postponed rate hikes during the pandemic but says it plans to enact the first price increase by October 2021.

7% might not seem like much, but it adds up. The owner of 1,000 domain names can expect to pay about $2,400 per year in additional renewal fees by the fourth increase.

And to Verisign, it’s a lot of money. There are 151.75 million .com domains registered. Upon renewal, the first 7% increase adds over $80 million of pure profit to Verisign’s bottom line.

(Domain owners will likely face price hikes in other extensions, too. ICANN lifted all price restrictions on most top level domains in 2019, including .org, .info, and .biz.)

And thus continues the love/hate relationship between domain investors and Verisign. Domain investors spend time propping up the value of .com on domain blogs and in forums, all the while fighting against price increases.

Just a handful of years ago, Verisign wined and dined domain investors. Then it threw them under the bus.

But Verisign has also taken steps to try to placate registrars and big investors this year. This year, it ran marketing promotions that discounted the price of .com domains that were just dropped, padding the profit of drop catchers.

One thing is certain: expect Verisign to take full advantage of the price hikes it has been afforded. And that means rising costs for domain name owners.

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  1. Gregg says

    “The extension allows Verisign to increase the wholesale price of .com domains by 7% per year in the last four years of each six-year contract extension. The first year for potential price increases began in October.”

    What does that mean? If they increase 7% this year, when is the next time they could increase 7%?

  2. John says

    Let’s not forget the original source of the 7% price hikes.

    Verisign used litigation to obtain a perpetual, no-bid contract with ICANN – which gave Verisign the ability to increase prices by 7% in 4 out of 6 years between 2006 and 2012.

    Verisign is still on the hook for Antitrust violations:

    “The Ninth Circuit held that CFIT’s allegation of a conspiracy between VeriSign and ICANN to restrain competition by imposing higher prices than a competitive market rate, and an allegation of harm to competition by eliminating the competitive bidding process, were sufficient to state a claim under Section 1. The Ninth Circuit also held that CFIT met the Section 2 requirements for stating an attempted monopolization claim with its allegation that VeriSign’s predatory activities were aimed at coercing ICANN to perpetuate VeriSign’s position as the exclusive operator of the .com domain name registry.”

  3. krish says

    If WEB also falls in Verisign’s lap, it is another 10M+ add to it’s bottom line from year-1. I expect it’d stock to zoom into 300s.

  4. Scott says

    And don’t forget Verisign’s other perennial cash cow – dot net.

    In terms of mind share & market share – especially compared to the new gtlds – dot net’s power is not to be underestimated.

  5. k. says

    The way Verisign runs its business disgusts me. It is not a steward to the .com extension, only exists to pilfer from the extension. IMO it is a corrupt organization and the way it does business needs serious scrutiny. I will relish in the day that comes to fruition…

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