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New gTLDs bring back tiered renewal pricing

Kevin Murphy, November 10, 2013, 13:08:44 (UTC), Domain Registries

Only one mass-market TLD used it, and it’s often considered a bad idea, but variable pricing for domain name renewals is making a comeback with the launch of new gTLDs.

What Box? and Plan Bee are the first two new gTLD registries to start selling domains with tiered renewal fees, in .menu and .build respectively, via Go Daddy.

If you pay Go Daddy $189.99 for a “Priority Rre-registration” in .build, your annual renewal fee if you secure the name will be be $149.99, instead of the $99.99 other pre-registrants will pay.

Similarly, a Priority Pre-registration in .menu will set you back $199.99 a year, forever, instead of $49.99.

I understand that the standard Go Daddy initial registration fee for these two TLDs during general availability will also be $99.99 and $49.99 respectively.

The other two new gTLDs with announced pricing, .uno and .luxury, do not appear to be charging tiered rates.

Go Daddy confirmed that the renewal pricing will be permanently higher in the .build and .menu, telling us:

The industry is starting to move toward a tiered pricing system. As such, some registries have elected to make renewals higher on domain names captured during the priority pre-registration period.

It’s actually permitted under ICANN’s standard Registry Agreement.

Generally, the RA prevents registries charging variable renewal fees. If you find yourself running a successful business in a new gTLD, the registry is not allowed to gouge you for higher renewals.

There’s a provision in section 2.10 of the contract that is designed to “prohibit abusive and/or discriminatory Renewal Pricing practices imposed by Registry Operator”.

But the rule does not apply if you’re told at the point of registration that your renewal pricing will be higher.

The contract states that “Registry Operator must have uniform pricing for renewals of domain name registrations”, but grants this huge exception:

if the registrar has provided Registry Operator with documentation that demonstrates that the applicable registrant expressly agreed in its registration agreement with registrar to higher Renewal Pricing at the time of the initial registration of the domain name following clear and conspicuous disclosure of such Renewal Pricing to such registrant

The only major TLD to try variable pricing before now was .tv, which Verisign currently operates.

The .tv registry held back thousands of desirable strings when it launched in 2000. Instead of auctioning them, it priced these names to sell, but with renewal prices matching the initial registration fee.

If you bought a premium .tv name 10 years ago for $10,000, you’ve been paying $10,000 a year ever since.

This proved very unpopular — especially with domain investors, who continue to moan about the high carrying cost of .tv names bought years ago — and Verisign scrapped the policy on new registrations in 2010.

Some say tiered renewal pricing is the main reason .tv isn’t nearly as popular as it arguably should be.

But will it work in 2014?

Tiered renewal fees seems like an excellent way to discourage domainers from participating in your launch.

Would you be willing to pay higher renewal fees ad infinitum just for the chance for first dibs on the new gTLD domain name you want?

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Comments (7)

  1. Drewbert says:

    Isn’t greed lovely?

  2. AM says:

    greed? I have never met any more a greedy group than domainers.

    • Drewbert says:

      When you register your child’s name, does the registry get to charge you more if you pick a popular name for your baby?

  3. George Minardos says:

    Kevin, I think you’ve picked this up correctly and it is important to learn from other prior tld’s past results, even though the rules and new tld’s may be operating in a different environment today, albeit with even more competition.

    The idea of tiered pricing and the possibility of tiered renewal rates is a sound business practice if exercised fairly in the marketplace. It is not greedy to price real estate differently based on better location or metrics, nor should it be with domains. There is a fair balance that can be reached between elevated pricing / renewals that still allows for speculation and trading by domainers and creates value for the registry and for the end user or registrants.

    Lastly, in your example of. .tv the initial registration and renewal price are the same amount of $10,000. There could be a model that evolves where the two prices , while higher than the GA price for most sld’s, are not equal.

  4. Phil Buckingham says:

    Competition will be very tough.The market flooded with so many alternatives. It is going to be critical to get the end user on board from launch. Price/volume relationships and renewals rate will be critical to a TLD success. Think we will see will alot more innovative variable pricing points /strategies/models to try to add value down the vertical. As for domainers …..

  5. Scott Alliy says:

    Get your fellow domainers contact info now be ause with prices like these the domain investor pool will get real shallow, real quick IMO.
    Ready or not the future is coming and many current domainers aren’t going to be happy nor around.

    What you will see IMO is new marketing and investment groups announced along the lines of Internet REIT, Marchex, Huge Domains, and Mike Manns former company who will spring fore initial investment on premium names and use them to monetize and resell IMO.

  6. ChuckWagen says:

    Domainageddon.

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