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Donuts’ new 50% price hike explained

Kevin Murphy, June 3, 2016, 06:24:39 (UTC), Domain Registries

Donuts’ new pricing model for 10 of its new gTLDs, announced yesterday, has caused some confusion for registrants and will make life more complex for registrars.
The company said yesterday that from October it plans to raise its wholesale fee by 50% for new registrations in .camera, .camp, .cleaning, .dog, .glass, .kitchen, .plumbing, .shoes, .solar and .toys.
It’s a substantial increase for domains that typically retail for between $25 and $40, and Donuts has clearly got an eye on profitability rather than volume.
But, crucially, the increased fees will not apply to renewals of existing registrations.
This introduces an unfamiliar pricing paradigm to the domain name industry — the notion of variable renewal pricing for non-premium domains.
Let’s do an example, assuming the wholesale fee is currently $10 (it isn’t, but Donuts does not disclose its wholesale fees).
If you were to register example.dog today or before October 1, the wholesale renewal fee for that domain would be $10 for as long as you held that domain. In 20 years, you’d still be paying Donuts $10 a year in renewal fees.
But if you were to register the same domain name after October 1, you’d be paying Donuts $15 a year in renewal fees.
Donuts told DI last night that the only way an already-registered domain in one of the affected gTLDs would see an increased fee is if it deletes and is re-registered.
The current, lower, wholesale fee will continue to apply if you transfer your domain to a new registrar. It will even apply if you sell your domain to a new registrant, according to Donuts.
In practice, how much you actually pay depends on your registrar, of course.
Registrars may decide to have variable renewal fees at the retail level too or, probably more likely, they may apply a uniform renewal price. In the latter case, current .dog domains would be 50% more profitable than domains registered from October 1.
Under the hood, the new model introduces complexities for registrars, described to DI by one registrar as a “pain”.
They’ll need to update their systems to account for the varying rates and will need to pass data about renewal tiers between each other when domains are transferred.
If Donuts were to raise prices every two years, and applied the hike to more gTLDs, pretty soon there’ll be a lot of tiers to track.
But variable pricing is not completely unheard of, and is regulated to an extent by ICANN.
The standard Registry Agreement, which applies to all Donuts’ gTLDs, forbids registries from charging some registrants higher renewal fees than others.
But there are exceptions. If the registrant explicitly agrees to the renewal fee at the point of registration, it’s legit. Donuts and others already use this exception in order to charge higher prices for premium name renewals.
The purpose of that part of the contract “is to prohibit abusive and/or discriminatory Renewal Pricing practices”, preventing registries imposing higher fees on customers that are using domains very profitability, for example.

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Comments (4)

  1. Gerry says:
    June 3, 2016 at 8:34 am

    Good read, but who cares since the gtld boat is sinking faster that the Titanic carrying a large cargo of lead.

    Reply
  2. John says:
    June 3, 2016 at 1:16 pm

    Reading news like this and seeing registrations for cents, surely the smartest desicion is to stay with the .com

    Reply
  3. Andrew says:
    June 3, 2016 at 1:21 pm

    Of course, Donuts can also increase the renewal rates on the existing registrations over time. It just needs to provide notice. So the hypothetical $10 renewal per year can still go up, even if it’s not as much as the $15 renewals.

    Reply
  4. Urs says:
    June 6, 2016 at 6:18 am

    Why not increase the fun for the registrars?
    In addition to different renewal prices for each domain, use different renewal periods. Shorten the renewal periods from 12 month to 11, 10, 9. And force the receiving registrar to accept this.

    Reply

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