ICANN confirms: Tiered (.tv style) pricing would not be forbidden in .biz/info/org

[GeorgeK]

Vint Cerf/ICANN confirm my interpretation of .biz/info/org proposed contracts -- tiered/differential domain pricing would not be forbidden


Hi folks,

I finally got the "official" word from Vint Cerf of ICANN, "on the record", who confirmed that my interpretation is correct, that differential/tiered pricing on a domain-by-domain basis would not be forbidden under the .biz/info/org proposed contracts. This means that the registries could charge $100,000/yr for sex.biz, $25,000/yr for movies.org, etc. if they wanted to -- it would not be forbidden the way the proposed contracts are currently written. This would represent a powerful pricing weapon for registries, and a fundamental shift in possible domain name pricing, that could lead them to emulate .tv-style price schedules.

One can read the proposed contracts at:

http://www.icann.org/announcements/announcement-2-28jul06.htm

Vint said it would be "suicide" for a registry to do it, because there'd be the 6-month notice period to raise prices and the ability for registrants to renew for up to 10 years at "old prices", that supposedly "protects" registrants. Personally, as a business, my time horizon is a lot longer than 10 years. I wonder if Vint felt introducing "SiteFinder" was suicide, too....history has shown registries will do whatever they can get away with, in order to maximize profits long-term and short-term.

I don't think Vint understands the business at all, to think that a lag of 10 years will deter a profit-maximizing registry, esp. VeriSign should it try to match this contractual precedent in .com (and history shows VeriSign will always try to get "more", especially if "another registry" is able to do something -- they used that tactic in .com renegotiations, saying various terms were already in the .net contract, for instance).

Just to show one possible future, if PIR feels pressure or has a desire to clean up porn from .org, it could announce that pussy.org (check its Alexa ranking) will have its renewal price be $1 billion/yr. If it takes 10 years to do it, many would wait, and it would not be considered "suicide" for PIR. Who will stand against that as "we're protecting the internet and children from porn", PIR might argue? Leaving this temptation in the contract will likely become a slippery slope, in my opinion, leading to profit-maximizing behaviour by registries to emulate .tv. Acting in the interests of their shareholders, registries are *compelled* to maximize profits.

It can be used as a political weapon, too. If a registry disagreed with the views or content of a website for which they were the registry, they could raise the renewal price to $100 billion/yr. 10 years later, that website would not exist at that address, and nothing in the contracts would forbid this pricing behaviour. More likely, it would be used for profit maximization (if Google.com is a $100 billion company, "certainly they are benefiting from their domain name, and can afford our $1 billion/yr renewal fee" one might say -- see the net neutrality debate and tiered pricing for websites that phone and cable companies are pushing....). How far away is tiered domain name pricing??

ICANN would be opening up a Pandora's Box through this contractual loophole, to not forbid .tv style pricing. The mistake would not be able to be corrected, as the contracts explicitly say that Consensus Policies do not apply to pricing issues. Since presumptive renewal exists in these new deals, the contracts are essentially going to live with ICANN forever, if approved.

If this pricing power eventually got extended to .com, nothing would prevent the renewal fee for Yahoo.com, GoDaddy.com, Google.com, Tucows.com, Business.com, Sex.com or any other domain in a registry with similar terms to reach $1 billion per year, or any other price that VeriSign or other registry operators wanted to maximize its profits (net-neutrality debate is similar, for bandwidth pricing to websites). You can imagine my VeriSignSucks.com won't last longer than 10 years, if VeriSign had the power to raise the renewal fee to $1 billion/year.

I believe that it is very important that this loophole be closed, in order to not create the precedent that VeriSign could later exploit for .com, and to protect registrants of .biz/org/info. If it is "suicide", as Vint suggested, then surely a registry that would supposedly never use the power would agree to remove the temptation by adding an appropriate term to the contract. A registry not willing to add that term....well, you know what they might be tempted to do later. If your business horizon is the next quarter, this won't impact you. If it's beyond 10 years, it could impact you. Can you live with that uncertainty??

Feel free to spread the word on the mailing lists or media, and contact Vint (vint AT google.com) or John Jeffrey (jeffrey AT icann.org) or other ICANN staffers if you want to confirm things and voice your concerns. Time is of the essence, as the public comment period ends next Monday. Registrants DO NOT know what is coming (the public comment board is almost empty), as it's the summer holidays! (typical ICANN tactic, introduce 500+ page contracts for public comment when everyone is on holiday)

Public comments can be sent using the addresses at:

http://www.icann.org/announcements/announcement-2-28jul06.htm

(be sure to send to all 3 email addresses for all 3 contracts, and also click the link in the email ICANN will send you to authenticate your email address, otherwise your comment doesn't get received)

There are a lot of other reasons to be opposed to the proposed contracts, such as the presumptive renewal, the ability to sell traffic data, the removal of price caps, etc. I will be writing a longer document soon, but wanted to give everyone a heads-up, so that you can take appropriate action on your own now, and corroborate things independently with Vint Cerf, John Jeffrey or other ICANN people.

These are fundamentally flawed contracts, and should not be approved by ICANN. The precedents these contracts would create are ominous, even worse then the .com proposed settlement agreement (that the DoC has yet to approve). Why is ICANN even renegotiating these registry agreements, when the existing terms don't expire for several years in some cases, and the GNSO PDP process for registry services is ongoing??

Sincerely,

George

 

[WhoDatDog]

I believe you are technically correct. The potential for exploitation is there; however, practically speaking, it is like shorting a stock....they say your potential losses are "infinite", but are they really infinite in practical terms?

They should close the loopholes to avoid the potential for abuse....you are right about that.

 

[GeorgeK]

Exactly my point, if registries say they'll never do it, they should have no problem agreeing to close the loophole.

If a registry refused to close the loophole, it should be a strong signal that they value the ability to price on a domain by domain basis, like .tv, and might do it in the future.

 

[WhoDatDog]

Exactly my point, if registries say they'll never do it, they should have no problem agreeing to close the loophole.

If a registry refused to close the loophole, it should be a strong signal that they value the ability to price on a domain by domain basis, like .tv, and might do it in the future.

The crazy thing about this business is that it is so new...yet so huge in that it actually will help shape mankind for a long time. I believe that the people who buy and sell the best domain names have more of an idea about the big picture than anybody else in the world. I am glad you are on top of things because potential control of access to the Internet is too much to give away on a technicality or loophole.

The power to price people out of the market would be worth untold amounts of money if they wanted to take a stand and try to ruin somebody....almost like blackmail.

 

[Ian]

Great info George. Thanks for posting it here. It would only be fair if all registries played by the rules of the game for everyone to have same chances to register names.

 

[GeorgeK]

Frank Schilling has posted very eloquent comments too, at:

http://forum.icann.org/lists/biz-tld-agreement/msg00005.html

If this is an important issue for Frank, ask yourself if it's an important issue for you....let's start sending the feedback to ICANN, folks.

 

[carlton]

Frank Schilling has posted very eloquent comments too, at:

http://forum.icann.org/lists/biz-tld-agreement/msg00005.html

If this is an important issue for Frank, ask yourself if it's an important issue for you....let's start sending the feedback to ICANN, folks.

Frank's analogy with the home mortgage is good. He paints a clear picture. Proposed contract changes such as you've outlined shine a bright light on how corrupt people look to exploit and steal through any opening they can find. The domainer community has fed the registrars. Let's see how many of the registrars remember that. This is one of those rare situations where it will be necessary to know on which side of the fence everyone stands.

There is self-interest ... and then there's just unbelieveable greed. You're right about the need to be vocal. Only public outcry will push slicksters back on their heels.

Interestingly, quite a few members around turn of the year were expressing concern about an increase in forthcoming abuses as a result of the media attention and focus on big money. The domain industry is now contending with new level of underhandedness.

 

[whitebark]

I wonder what the bigger legalities are. Let's say I run a small or medium sized internet business and they find that my domain name is attractive and raises the renewal fees to such a level that it puts me out of business. How many times would that happen before people clamoured for someones head on a platter? They would and could essentially put reputable honest hard-working people out of business to satiate their own personal greed.

 

[David G]

This agreement makes all the com guys who always say buy nothing but com's brilliant since only large owners of biz info and org are effected by no future price caps being allowed since a removal of fixed prices does not apply to com, right?

Beginning to think I should possibly sell my many org's rather than be faced with high renewal fees in the future if the registry realizes you get some traffic or have a valuable website, and decide they can hold the domain ransom, as is very likley to occur.

If this is approved there will be little incentive to buildup good websites with those extensions and perhaps be faced with a $10k/year or more renewal fee in a few years or less. If you don't pay the registry may get the name back and sell it for more than 10k so they can come out ahead either way at expense of the domain owner who wasted his time making the site valuable.

Hard to believe ICANN wants to push this thru to most everyone's detriment. IMO, a problem is the cozy relationship they have with the registrars and registries.

 

[Theo]

I smell panic. You can jump overboard, if you must. The last rat onboard eats all the cheese.

 

[GeorgeK]

I've posted an article at CircleID:

http://www.circleid.com/posts/icann_tiered_pricing_tld_biz_info_org_domain/

It's on Digg.com too. http://digg.com/tech_news/Tiered_pricing_coming_to_top_level_domain_names

If you think it's a good story, please "digg" it.

I've also submitted an article to SlashDot.org, rewritten a little bit for the non-technical audiences. I'll post that article in the next message.

 

[GeorgeK]

Slashdot Article -- title = "Tiered pricing coming to top-level domain names?"

Imagine, you've built a great website, and are on top of the world due to all the incoming visitors and sales revenues. Your competitors envy you, as do your neighbours. Your online brand has become very valuable, and when people think of widgets, the first website that comes to mind is your site. Life is good.

You open the mail, though, and see a renewal notice for your domain name that is $75,000/yr, instead of the $10/yr that you were used to. You call up your registrar, thinking "this must be a typo". But, instead, you are told, "due to the success and high value you are receiving from your domain, the renewal fee really is $75,000/yr."

Sounds impossible and outlandish? Not so, if proposed new top-level domain contracts are approved by ICANN.

With parallels to the network neutrality debate, ICANN is set to approve new registry agreements for .biz, .info and .org that do not forbid differential/tiered pricing on a domain-by-domain basis. The public comment period ends on Monday.

When ICANN's Board approved a highly controversial new .com agreement with VeriSign earlier in 2006 (which thankfully the Department of Commerce has yet to approve) as settlement for the SiteFinder lawsuit, other registries wanted to get the same spoils that VeriSign received, including presumptive renewal and the ability to raise domain prices. VeriSign's price increases for .com would be capped at 7% per year, though. These new proposed contracts leapfrog VeriSign, and shockingly propose to remove all pricing caps entirely. The only protection existing domain registrants would have is the 6-month notice period, and the ability to renew their domains at the old price for up to 10 years from the present.

A loophole in the contract, which ICANN has confirmed exists would go even further and create an ominous scenario, though. It would not forbid registries from charging different renewal or registration prices on a tiered/differential domain-by-domain basis. This would be comparable to the .TV registry pricing model. Thus, for example, the renewal fee for Sex.biz could be raised to $100,000/yr, for movies.info $25,000/yr, for Google.org $1 million/yr, and so on -- whatever would maximize the profits of registries.

Registries have seen what DSL and cable companies are trying to do, to break network neutrality and charge discriminatory prices to maximize their profits at the expense of website operators (for example, charge higher rates to Google or Yahoo or Microsoft, for access to their subscriber base, knowing that Google, Yahoo and Microsoft are very profitable). Registries are very shrewd, and these new contracts would not forbid them from discriminatory pricing to emulate what ISPs would like to do.

If these flawed contracts are approved for .biz, .info, and .org, it would not be a huge leap to think that VeriSign might take advantage of the precedent, and attempt to achieve the same pricing power for .com and .net through future contractual negotiations with an ICANN that has routinely failed to protect domain registrants' interests.

Network Solutions CEO Champ Mitchell said that the .com deal "shocks the conscience." These new contracts are infinitely worse, and create dangerous new precedents. Read over the contracts and public comments yourself, and then tell ICANN whether these new changes are acceptable to you. The deadline for comments is Monday.

It turns out, Slashdot rejected it. Grrrrr.

 

[bdss]

Very good article George, I am trying to understand the ICANN philosophy behind this. Could you clear my doubts here?


Verisign were always after money, but now it seems others are doing the same.
ICANN instead of being a regulatory body are actually supporting these deals/contracts.
Wasnt the intiation of ICANN, formed on the basis that it will help the internet community and regulate policy/procedures in the favour of internet users. (do correct me if I am wrong )
Was ever money the criteria?
looks like in present day they dont seem to be happy with their .25 per domain share.
Also could someone tell me, how much does ICANN get on the Premium(higher priced) .TV domains?
.Tv domains are priced as you all know at premium rates which are way to high over the reg fee for .Tv.

Does ICANN get .25 cents per domain from .TV as well..i..or do they get more based on the price of the premium domain or they dont get anything ?

if they get more than .25 cents on these premium domains, then it explains their support of tier pricing models.
thanks

 

[Wot]

A public domainer / outcry has seen a partial turn around by eurid going after "grey" registrars - the same outcry could stave off this potential disaster.

 

[actnow]

The domainer community has fed the registrars. Let's see how many of the registrars remember that. This is one of those rare situations where it will be necessary to know on which side of the fence everyone stands.

At first, I thought you were complaining that the registrars were the ones
instituting this. But, what you were saying, is that, will the registrars stand up for domainers and also fight this proposal.

Affilas is the main one behind this. And, they are also the registry releasing .mobi shortly.

As we know, the only thing that makes Icann function ethically is when a spotlight
is shined on the topic by publicity and out cry.

And, the DOC only takes action (or no action) when the U.S. Congress begins
to inquire about Icann's dealings.

This is an election year for all of the congressmans and 1/3 of the senators.
If you want to make Icann to act in the best interest of stakeholders, contact your representative and let them ask DOC "What is happening at Icann with these contracts?"

 

[GeorgeK]

bdss: ICANN doesn't make money from ccTLDs (i.e. country code), like .tv. Any contributions to the ICANN budget from those nations is voluntary.

ICANN is supposed to promote competition. Removing price caps is anti-competitive in a single-supplier market, which follows what they've said in court in the CFIT case. They're hypocrites.

http://forum.icann.org/lists/biz-tld-agreement/msg00009.html

 

[carlton]

At first, I thought you were complaining that the registrars were the ones
instituting this

Not directly, but each registrar will play an important role. My comment about let's see on which side of the fence everyone falls means this:

People will be lined up to stick their hand in your pocket. It's about pointlessly squeezing more money out of domain registrants in a bullsh*t political manuever. The proposal of removing registration caps means that ICANN and the registries (and a select few domain industry players) are in bed together to siphon more money out of the domain market via top name holders. Those with influence will likely receive an offer for "a cut of the action" as an incentive to garner their support and push this through (to the obvious detriment of domainers and end users who make these damn extensions work in the first place, i.e who created the market this proposal will further exploit).

Individual registrars will hopefully see this as improper with a long-term downside and choose to take a stand against it ... hopefully. The proposal I assume has only come to life because of the domain industry's growing financial success and a few vultures have concocted a way (via the .TV precedent) to generate more income above well-established registration fees.

I apologize for my tone. I aim to get a more full and complete understanding of the proposal and its implications. My recent experience with registries is they do nothing to represent domainers and have done less than nothing to promote the extensions they sell. My experience with registrars is some are honest and many are outright crooks. So the field of players runs the gamut from honorable to the worst you can imagine. If you've spent years building a portfolio and more time/money building and promoting website services around a name you acquired through much work, then you take proposals like these very seriously. They amount to others trying to capitalize on your work and success through dishonest means. I'm glad George has brought this to the attention of the domain community. So abusive policies won't get slipped in under radar.

 

[hugegrowth]

If you have any top tier domains in these extensions maybe it's a good idea to go for the ten year reg right now. I realize though that some people probably have too many to do this.

 

[GeorgeK]

Network Solutions has posted their well-written comments opposing the contracts:

http://forum.icann.org/lists/biz-tld-agreement/msg00022.html

I tossed in some humour in another comment, in reply to a post on the ICANN GA list, that pokes fun at how ICANN negotiates:

http://forum.icann.org/lists/biz-tld-agreement/msg00021.html

 

[Theo]

George, you should write theatrical plays.