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/a...-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/a...-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

Frank Schilling has posted very eloquent comments too, at:

http://forum.icann.org/lists/biz-tld.../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, folks.

Originally posted by GeorgeK
Frank Schilling has posted very eloquent comments too, at:

http://forum.icann.org/lists/biz-tld.../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, folks.

Thanks for your leadership on this George.

have not commented publicly on ICANN/registry/registrar policies for several years, but would like to offer the following comments on the contract changes that would apparently allow the option of differential registration prices for different domains within the .INFO, .ORG, and .BIZ tlds. It is useful to distinguish and consider the (1) distributive and (2) creative effects of these proposed changes.

With respect to distributive effects, this proposal would pretty clearly redistribute wealth. The “wealth” involved is the value of some domains above their current, fixed registration cost. This wealth can also be viewed as consumer surplus – the value of something to a consumer above the price that the consumer pays. The general issue is how much of this value should be kept by the seller (along upper portion of the distribution chain from ICANN to registry to registrar) and how much of this value should be obtained by the buyer (along the lower portion of the distribution chain that includes the final registrant, but can also include intermediaries). Some registrars seem to have begun playing both roles in middle.

Many of the debated issues concerning how expiring names should be distributed and, in the current context, whether there should be differential prices for continuing name registration, seem to have at their core the issue of which parties get what portion of the consumer surplus. It seems pretty clear that differential registration pricing would transfer wealth upwards in the distribution chain. Thus, one can expect folks along the upper portion to generally support it and folks along the lower portion to generally oppose it. From this perspective, one can argue that it is good or bad from the perspective of one group or the other, but it is less clear whether it is good or bad overall for these TLD namespaces (i.e. the market overall). I will now try to tackle the issue of whether it is good or bad overall.

One way to try to tell whether something is a good or bad idea overall is to look at its overall effect on the health of these TLDs? Probably just about everyone would agree that it is good and healthy for a TLD space to have substantive and informative site development and content. What would be the effects of differential pricing on substantive development and use of websites in these TLDs? The following are potential positive and negative effects.

The main positive effect might happen if raising prices raises the cost of domain speculation so that registrants who hold domains and do not develop them find this to be too costly. This could result in less domain name speculation and more domains finding their way into the hands of people who will actually develop them into useful sites. This would be healthy for the TLDs in the long run.

There could also be a negative effect of differential pricing on site development. Allowing differential pricing for domains, particularly allowing changes in registration prices over time, could provide a strong disincentive for people to develop domains if the value of their creative work can be siphoned off by a (quasi)-monopoly supplier. Consider the analogy to patents and trademarks. One of the reasons why companies put lots of money into R&D is that they can get a return on their investment by exclusive use of the resulting products through a patent. (Or advertising investment in trademarks) If the USPTO required differential patent and trademark renewal fees that could be adjusted upwards to reflect the increased value of those patents or trademarks due to the company’s efforts, then companies would have much less economic incentive to invest in research (patents) or advertising (trademarks). This would be harmful for the market. By analogy, if up-stream parties in the domain distribution stream (e.g. ICANN, registry, registrar) are able to siphon off value created by developers, then this could result in a less-developed, less-healthy TLD namespace – particularly in the long run.

Thank you for your consideration of these comments.

Not only is ICANN proposing to allow the removal of price caps, they have included a proposal to line their own pockets with additional ICANN fees to the detriment of the public. What have they done since they instituted the 25 cent fee to justify this increase? Are the luxury waterfront offices in Marina Del Rey now inadequate?

It's been mentioned here before that if the domainer community acted together, we could easily get a message out to the public using the millions of domains under our collective control.

Perhaps, we can start a petition similar to the one George had regarding Sitefinder a few years ago.

It costs money for ICANN to fly board members to Europe for "retreats":

http://blog.veni.com/?p=94

Especially when you're not flying coach!

http://www.icann.org/announcements/a...nt-22jun06.htm
http://forum.icann.org/lists/budget-comments/
http://forum.icann.org/lists/budget-.../msg00001.html
http://forum.icann.org/lists/budget-.../msg00000.html

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no feedback on my proposed comments

are they any good? any flaws? Thanks

Originally posted by DomeBase
no feedback on my proposed comments

are they any good? any flaws? Thanks

Only criticism I have is that it's not pointed enough, otherwise I agree with what you said and would point out everyone's taking the "No Way" position versus trying to offer other options.

I again think a price increase is not a bad thing, however no ceiling is very bad and the ability for arbitrary pricing of keywords is more than scary.

I'm not sure George's worst case is reasonable since the "high valued targets" George mentioned would use the courts before paying such amounts -- Not saying they'd win, only saying laws really mean nothing when you can pay far less for a law firm to *DESTROY* the other party. That said smaller companys do not have such resources and thus are easy targets no to mention the political aspect George presents.

Seems clear to me the intent here would be to address issues like domain tasting and speculation that can be handled other ways although with much more dificulty.

In the end we're all bitching without making any real recommendations as to what common ground might exist == Make alternative suggestions. As I've said the idea of pricing going up is one I've been expecting for a while so no real surprise for me other than the angle from which it seems to be occuring. So since *I* beleive this is enevitable what alternative suggestions should be made *WITH* the above comments everyone has made? My suggestions:

1) Price *SHALL* be the same for all domains at a given registry although the exact price is totally up to the registry == This means the reg count *WILL* go down as the price goes up so the "small fry" (which I think is critical for a registry to survive / be legitimate) will naturally pull the pricing down if the registry gets too greedy

2) Some maximum alowable ratio, which may be renegotiated in the future, between the highest and lowest priced domain must be adhered to. The registry could have a lower ratio but can't go above the limit. This lets the registry gain more benefit (I'm not opposed to the registry's making some money and perhaps doing that which everyones bitches about: Not promoting themselves) from the domains with the higest value. Of course this gets dangerious and complex so there would have to be lots of other rules to go with this one; can't keep changing the prices around (ie raise it for domains just about to expire), some reference list of prime keywords would have to be defined (like registries now have reserved lists) which are in scope of the higher fees and all other domains as the default fees, and I'm sure I could come up with a dozen other requirements as well. Again, the second you have the .TV pricing structure everthing gets ugly including the back end admin.

3) Introduce a standard, but high, domain transfer fee. This immediately harms all forms of the secondary market *AND* allows the registrys to surgically gain benefits form those soley focused on flipping domains while minimally harming those that are using domains with no intent to flip them.

I'm sure we could come up with lots of other ideas *IF* we could agree the registries (Versign aside) should be able to access more $ benefits *AND* if we actually had any influence on the system.

...........

I've posted an article at CircleID:

http://www.circleid.com/posts/icann_...fo_org_domain/

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

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.

Hopefully a Slashdot editor finds it worthy.

Originally posted by GeorgeK
...
If you think it's a good story, please "digg" it.

dugg it

Slashdot editors rejected it, grrrr.

If anyone wants to use the story I wrote for Slashdot (that was rejected) in their blog or something, given it was at a less technical level than the CircleId version, I've attached a text document with it nicely formatted with the links, etc.

Please link back to this thread, though, if you do use it.