I found the following response by Frank Schilling to the article "Domain name prices to go up this year" very interesting and I post it here with acknowledgement to Frank Schilling and Circleid.com
http://www.cbronline.com/article_news.asp?guid=FD0253D5-536B-4268-95A5-359B4EC8E9B2
Response by Frank Schilling:
Successful registries really would be well served to take a big step back from ther enterprise and ask themselves what business they are in.
Charles Revson the founder of Revlon (the make-up company) ‘got it’ when he famously said: “In the factories we make cosmetics, in the stores we are selling hope”. Domain names are alot like makeup. The registries selling domain names are selling ‘hope’. Hope for a bright future and dreams of entrepreneurial success.
20,000 names a day expire for non payment. I’ve looked through those lists for half a decade and I see hope lost. Those names expiring which were bought in a moment of excitement and represent dreams/hopes for success are entirely worthless from an intrinsic value perspective, but they are a part of a healthy cycle. There is ‘always hope’ so the cycle repeats and new ‘dreams’ get registered every day.
What the successful .COM, .NET and certain CCtld namespaces have accomplished is they have convinced millions of people that there is hope when you register a name in their space. What price increases do is they start to become a tax on hope, and as price increases start to ratchet upward compounding on previous increases, they start to become a clog on redemption of equity. They make the namespace less desirable and they drive hope away.
We are only at the top of the hill of course, but it will be interesting to see what this trip down is like.
--How will the first price increase effect the longtail of tasting portfolios? Folks making $7.00 per year on paid search revenue may stomach one price increase, but beyond that names are going to start expiring. Many millions have been registered over the last few years, and continue to be registered.
--Small single or dual name entrepreneurial registrants who make up the bulk of the names that are expiring (names from my river of broken dreams analogy above) may decide that any price increase (if it gets passed along by their registrar) is too much to pay. More conceptual names without intrinsic value will begin to expire and less new registrations taken.
--Commercial registrants long complacent and of the view that they are “dollar cost averaging” their overall name portfolio, will review the content of their portfolio and start ejecting some names that are not generating returns. These names will not get picked up by anyone else. I am speaking of the very poor quality names that are utterly worthless, which lurk in every large portfolio and have never previously been culled.
--The final question (that immediately came to mind) is at what threshold does negative push-back in the press and with lawmakers incentivise Verisign to back down on future increase. One price increase is nifty but as they start to compound will the public begin to question what they are getting for their money.
It’s Superbowl Sunday today and millions of folks will be encouraged by GoDaddy to register their own domains. Godaddy built it’s business on price and aggressive promotion to the masses. They have become a wild success in the process and are to be complimented for setting an example of how to sell hope to the masses.
I sincerely ‘hope’ that Verisign ‘gets it’ like Mr. Revson got it so many years ago, like Godaddy got it. I hope Verisign appreciates the business they are in and that it prices its products to leave hope for the small new entrepreneur and dreamer, and to solidify the belief that there is hope when you register a name in their space.
http://www.cbronline.com/article_news.asp?guid=FD0253D5-536B-4268-95A5-359B4EC8E9B2
Response by Frank Schilling:
Successful registries really would be well served to take a big step back from ther enterprise and ask themselves what business they are in.
Charles Revson the founder of Revlon (the make-up company) ‘got it’ when he famously said: “In the factories we make cosmetics, in the stores we are selling hope”. Domain names are alot like makeup. The registries selling domain names are selling ‘hope’. Hope for a bright future and dreams of entrepreneurial success.
20,000 names a day expire for non payment. I’ve looked through those lists for half a decade and I see hope lost. Those names expiring which were bought in a moment of excitement and represent dreams/hopes for success are entirely worthless from an intrinsic value perspective, but they are a part of a healthy cycle. There is ‘always hope’ so the cycle repeats and new ‘dreams’ get registered every day.
What the successful .COM, .NET and certain CCtld namespaces have accomplished is they have convinced millions of people that there is hope when you register a name in their space. What price increases do is they start to become a tax on hope, and as price increases start to ratchet upward compounding on previous increases, they start to become a clog on redemption of equity. They make the namespace less desirable and they drive hope away.
We are only at the top of the hill of course, but it will be interesting to see what this trip down is like.
--How will the first price increase effect the longtail of tasting portfolios? Folks making $7.00 per year on paid search revenue may stomach one price increase, but beyond that names are going to start expiring. Many millions have been registered over the last few years, and continue to be registered.
--Small single or dual name entrepreneurial registrants who make up the bulk of the names that are expiring (names from my river of broken dreams analogy above) may decide that any price increase (if it gets passed along by their registrar) is too much to pay. More conceptual names without intrinsic value will begin to expire and less new registrations taken.
--Commercial registrants long complacent and of the view that they are “dollar cost averaging” their overall name portfolio, will review the content of their portfolio and start ejecting some names that are not generating returns. These names will not get picked up by anyone else. I am speaking of the very poor quality names that are utterly worthless, which lurk in every large portfolio and have never previously been culled.
--The final question (that immediately came to mind) is at what threshold does negative push-back in the press and with lawmakers incentivise Verisign to back down on future increase. One price increase is nifty but as they start to compound will the public begin to question what they are getting for their money.
It’s Superbowl Sunday today and millions of folks will be encouraged by GoDaddy to register their own domains. Godaddy built it’s business on price and aggressive promotion to the masses. They have become a wild success in the process and are to be complimented for setting an example of how to sell hope to the masses.
I sincerely ‘hope’ that Verisign ‘gets it’ like Mr. Revson got it so many years ago, like Godaddy got it. I hope Verisign appreciates the business they are in and that it prices its products to leave hope for the small new entrepreneur and dreamer, and to solidify the belief that there is hope when you register a name in their space.
