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These people support scrapping .org price caps

Kevin Murphy, April 29, 2019, 17:59:37 (UTC), Domain Registries

The first examples of people supporting the scrapping of price caps in .org have emerged.
ICANN’s Business Constituency and Intellectual Property Constituency have both in the last few hours filed comments on the proposed renewal of Public Interest Registry’s .org contract, which includes the controversial removal of the current 10%-a-year price caps.
The BC expresses outright support for the end of caps — the first example I’ve seen of explicit support for the move — while the IPC utterly fails to address it.
A prominent US antitrust lawyer has also weighed in to claim that approving the new provisions would not raise competition concerns.
Both the IPC and BC seem happy to accept the proposed pricing regime, given that PIR’s new contract will also include new rights protection mechanisms, such as the Uniform Rapid Suspension process.
The BC wrote in its comment to ICANN:

Given the BC’s established position that ICANN should not be a price regulator, and considering that .ORG and .INFO are adopting RPMs and other registrant provisions we favor, the BC supports broader implementation of the Base Registry Agreement, including removal of price controls

Seemingly uninterested in price caps whatsoever, the IPC wrote:

The IPC applauds Public Interest Registry and other Registry Operators that choose to implement enhanced rights protection mechanisms for third party trademark owners, and to take on enhanced responsibilities for the Registry Operator to prevent use of registrations for abusive purposes, including but not limited to violations of intellectual property rights.

From outside the ICANN community, Washington DC-based antitrust attorney David Balto, a former Federal Trade Commission official, has submitted a brief analysis in which he finds little to be concerned about from a competition perspective. He writes:

An analysis of the .org gTLD under competition would likely find that it has little market power, and thus would be unable to unreasonably raise prices. Any attempt to do so should result in users defecting to alternative gTLDs.
Users have ample protections in the form of marketplace competition and contract provisions that allow users to be notified of price increases and lock in rates for up to ten years.

These arguments stand in stark contrast to those made by many in the domainer community, such as in Andrew Allemann’s post today.
Balto says that “market power” — a legal test under US competition law — starts to kick in at about 30% market share. But .org only has about 5.5%, he wrote.
The lawyer does not identify a client affiliation in his letter.
With just a few hours left on the clock before public comments close, there have been 3,129 submitted comments, the vast majority coming from domain investors.
Some non-profit groups have also registered their objections.

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Comments (7)

  1. Nat Cohen says:
    April 29, 2019 at 6:49 pm

    Balto’s letter seems quite helpful on the legal antitrust analysis but out of touch with the facts on the ground for those using .org domain names. When the facts are corrected, Balto’s letter becomes a strong argument that there is market failure and that price controls are needed.
    If the relevant market for analysis is non-profits, not-for-profits and other volunteer organizations, it appears that .org has a greater market share in that world than .com has in the commercial world.
    The DOJ found that multiple TLDs had market power back in 2008, not only .com. A non-scientific recent review of a sample of 88 non-profits demonstrated that .org had over a 90% share of the domain names used for those non-profits’ websites.
    Balto makes light of the costs involved with rebranding, but the comments from the non-profit groups mentioned in the article, recognize that the reality of rebranding from a long-held domain name is so onerous and expensive that the costs far outweigh the price difference between even a very expensive .org domain name and a cheap alternative domain name.
    Lost in the glib arguments about how easy it is to rebrand on a different domain name is that even if a non-profit rebrands to avoid confusion with its old brand it likely needs to continue renewing the old, .org domain in any case. Even if the Red Cross switched from redcross.org – they still need to renew redcross.org for the foreseeable future – imagine the confusion and potential for abuse if someone else started using redcross.org.
    The arguments about ease of switching are not credible. There is tremendous lock-in.
    Under the legal analysis submitted by Mr. Balto, when there is market power, and lock-in, as is the case with the relationship of non-profits to their .org domain names, there is market failure and a need for price constraints to protect registrants.
    In short, good legal analysis, bad facts. When the facts are corrected it is clear eliminating price caps creates serious antitrust concerns.

    Reply
  2. Zak Muscovitch says:
    April 29, 2019 at 7:39 pm

    I wish to acknowledge and commend the IPC on taking their expected stand on IP rights, while apparently conscientiously and prudently, NOT expressing support for the removal of price caps.
    It is apparent that support for additional rights protections need not necessarily come at the cost of exposing .org registrants to the possibility of unlimited price hikes.
    Surely ICANN could have taken a similar approach and negotiated a proposed contract that provided additional rights protections that the IP community wanted, without agreeing to the removal of all price caps.

    Reply
  3. Andrew says:
    April 29, 2019 at 7:41 pm

    I found the BC’s comments interesting. Although they said they don’t want price regulation, they concluded by saying they hope the registries that become unrestricted don’t make them look bad by raising prices a lot.

    Reply
    • Kevin Murphy says:
      April 29, 2019 at 8:40 pm

      Everyone seems to be assuming PIR will do this, despite the fact that it’s a non-profit with a mission statement about how it’s duty-bound to serve fellow non-profits.

      Reply
  4. Snoopy says:
    April 29, 2019 at 11:29 pm

    “Any attempt to do so should result in users defecting to alternative gTLDs.”
    David should rethink this, the cost of switching for established non profits would be huge. The registry is a monopoly position here once organisations have established themselves on an extension. It is not like people can easily switch without majorly disrupting their operations.

    Reply
  5. Dave Tyrer says:
    April 30, 2019 at 10:14 am

    I just checked the prices at one registrar, and the price of a .org domain is $14.88 while the price of a .charity is $29.88.
    The current price controls over legacy domains act as a check on the pricing of new gTLDs. It’s a simple case of market forces and the laws of supply and demand at work.
    If the price of a .org domain rises to $50, then there will no longer be much downward pressure on the .charity registry not to raise their price to $40, $50 or more. (Without having checked the .charity registry’s policies.)
    This would defeat David Balto’s argument.
    I strongly agree with Nat Cohen’s points that the switching costs would be onerous and that in any case, it would be critical for charities to continue to register their old .org domains.

    Reply

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