ICANN to review differential pricing

[labrocca]

I noticed from the minutes this week ICANN has voiced themselves over the issue.

Economic Study of Proposed Registry Agreements

Whereas, proposed new registry agreements between ICANN the operators of the .BIZ, .INFO, and .ORG registries have been posted for public comment and presented to the Board.

Whereas, the proposed new agreements were the subject of a substantial number of comments, especially concerning competition-related issues such as differential pricing.

Whereas, ICANN's Core Values include:
Preserving and enhancing the operational stability, reliability, security, and global interoperability of the Internet.
Where feasible and appropriate, depending on market mechanisms to promote and sustain a competitive environment.
Introducing and promoting competition in the registration of domain names where practicable and beneficial in the public interest.

Whereas, the Board has carefully considered the proposed new agreement, and the public comments and the registry responses, and finds that approval of the proposed new agreements would be beneficial for ICANN and the Internet community, provided that ICANN and the registry operators are able to agree to appropriate revisions to the proposed agreements to address competition-related issues such as differential pricing.

Whereas, the GNSO is currently conducting a policy-development process that includes study of some of these issues, but ICANN has pressing operational questions relating to its bilateral contracts with registry operators that need to be resolved, separate from any generally applicable new policies on this subject that might be recommended through the GNSO process.

Whereas, the domain registration market is very complex and producing reliable analysis and findings will require high-levels of economic expertise.

Resolved (06.___), the President is directed to commission an independent study by a reputable economic consulting firm or organization to deliver findings on economic questions relating to the domain registration market, such as:
whether the domain registration market is one market or whether each TLD functions as a separate market,
whether registrations in different TLDs are substitutable,
what are the effects on consumer and pricing behavior of the switching costs involved in moving from one TLD to another,
what is the effect of the market structure and pricing on new TLD entrants, and
whether there are other markets with similar issues, and if so how are these issues addressed and by who?

Resolved (06.__), after having considered the public comments and the responses from the registries, the President and the General Counsel are hereby requested to renegotiate the proposed agreements relating to: competition-related concerns (in particular price increase restrictions); traffic data and review mechanisms resulting from the introduction of new studies or additional information.

http://www.icann.org/minutes/resolutions-18oct06.htm

It looks like our collective voices were heard.

 

[Lasher]

I hope this brings some sanity to the situation. If the registries aren't breaking even or better and can justify a fixed price increase to maintain their service levels I'm fine with that, but variable pricing is just a minefield.

Watching this situation very closely and ready to do 10 year renewals on some of my better long term investments if that is what it takes, but rather not have to..

 

[labrocca]

I am suprised this thread is so dead.

 

[amosba]

So ICANN are going to pay some high-priced consultants to study the domain market, the results of which study are likely to be along the lines of: "The costs of moving a domain to a different TLD are extraordinarily high, therefore domain owners will be happy to pay extra to stay in the TLD they are currently in, ergo differential pricing is a good thing." Or even, "There's money to be made from raising registration fees and introducing differential pricing."

Call me skeptical, but I can only see bad news coming from a consultant's report. Common sense would have led ICANN to either reject differential pricing out of hand, or to place strict conditions on the calculation of differential pricing. Making it clear how the price is to be calculated up front and making sure that the price doesn't jump too high too fast would at least provide some degree of certainty.

IMHO, adding an extra $1 fee to all registrations would likely provide more income to the registries. Make the $1 a non-refundable component and you would stamp out domain kiting into the bargain.

Charging a premium for "premium" domains is only fair if it is done from day one, as happens with new TLDs nowdays. Introducing retrospective "premium" names is decidedly unfair - especially without some form of grandfathering clause.

 

[Kate]

Agree with the above.
Maybe ICANN is beginning to listen but I'm still skeptical on the outcome. We need to keep the pressure.
IMO part of the problem is that ICANN is naive and do not fully understand the financial implications of this business. They need to understand that domains are not only technical stuff for techno geeks but also a fully-fledged industry with its lobbies and conflicting interests.

 

[Lasher]

Personally, and maybe I'm naive, I think the board is quiet on this because if it were to go through and registries start to abuse it, they're going to face massive legal challenges.

Take Google.com for example, worthless domain before 1997, couple of guys start a business based on a new search algorithm and over the next 10 years turn it into a 100 billion dollar market cap market leader. They're not going let their legal departments sit idle and watch while Verisign tries to charge them a premium for value they created in the first place. I know it doesn't include .COM yet, but it's pretty much a given that it will if this passes for org/biz/info.