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ICANN expects to lose 750 registrars in the next year

Kevin Murphy, July 5, 2017, 20:41:52 (UTC), Domain Registrars

ICANN is predicting that about 750 accredited registrars will close over the next 12 months due to the over-saturation of the drop-catching market.
ICANN VP Cyrus Namazi made the estimate while explaining ICANN’s fiscal 2018 budget, which is where the projection originated, at the organization’s public meeting in South Africa last week.
He said that ICANN ended its fiscal 2017 last week with 2,989 accredited registrars, but that ICANN expects to lose about 250 per quarter starting from October until this time next year.
These almost 3,000 registrars belong to about 400 registrar families, he said.
By my estimate, roughly two thirds of the registrars are shell accreditations under the ownership of just three companies — Web.com (Namejet and SnapNames), Pheenix, and TurnCommerce (DropCatch.com).
These companies lay out millions of dollars on accreditation fees in order to game ICANN rules and get more connections to registries — mainly Verisign’s .com.
More connections gives them a greater chance of quickly registering potentially valuable domains milliseconds after they are deleted. Drop-catching, in other words.
But Namazi indicated that ICANN’s cautious “best estimate” is that there’s not enough good stuff dropping to justify the number of accreditations these three companies own.
“With the model we have, I believe at the moment the total available market for these sought-after domains that these multifamily registrars are after is not able to withstand the thousands of accreditations that are there,” he said. “Each accreditation costs quite a bit of money.”
Having a registrar accreditation costs $4,000 a year, not including ICANN’s variable and transaction fees.
“We think the market has probably gone beyond what the available market is,” he said.
He cautioned that the situation was “fluid” and that ICANN was keeping an eye on it because these accreditations fees have become material to its budget in the last few years.
If the three drop-catchers do start dumping registrars, it would reveal an extremely short shelf life for their accreditations.
Pheenix upped its registrar count by 300 and DropCatch added 500 to its already huge stable as recently as December 2016.

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Comments (6)

  1. Frank Michlick says:
    July 5, 2017 at 9:08 pm

    Kevin, when you say that an ICANN accredited registrar costs $4000 per year, you’re missing the quarterly fees that depend on the size of the registrar and usually range from $800-$1000 USD per quarter.

    Reply
  2. Charles Christopher says:
    July 6, 2017 at 4:12 am

    Frank,
    Quarterlies a fee split based on the current number of registrars. This monthly cost has dropped dramatically. Our last variable fee was $320 per quarter (we are in the drop pool).
    Roughly speaking, if a third of registrars go away that cost goes to ~$400.
    One year ago the variable fee was $450 per quarter.
    So right now figure ~$5200 per year “ICANN Existence Tax” per registrar.
    Charles

    Reply
  3. Geoff Goedde says:
    July 17, 2017 at 12:40 pm

    And the registrants are expected to go where? Will ICANN publish a list of those registrars that will be shut?
    Geoff

    Reply
    • Kevin Murphy says:
      July 17, 2017 at 4:47 pm

      I believe these registrars don’t have registrants in the conventional sense. If they do, the registrars belong to huge registrar families and it would be trivially easy to transfer names to another accreditation in the same stable.

      Reply

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