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Donuts’ new 50% price hike explained

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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Donuts to hike prices 50% on some TLDs

While some new gTLD registries are all about the giveaways and deep discounting, Donuts has taken the unprecedented decision to actually increase its prices.

The company announced today that it will add a whopping 50% to its wholesale fee for 10 of its TLDs.

The TLDs are: .camera, .camp, .cleaning, .dog, .glass, .kitchen, .plumbing, .shoes, .solar and .toys.

While Donuts does not disclose its wholesale fees, these domains typically retail for $25 to $40 for non-premiums.

We could be looking at a .dog at GoDaddy, for example, going up from $40 a year to $60 a year, if the increases are passed on proportionately.

None of the 10 TLDs in question have set the market alight, volume-wise. They’re all struggling around the 3,000 to 6,000 domains mark, according to zone file data.

Seven of the 10 zones have actually been shrinking in recent months.

All but one of them went to general availability in the first half of 2014, so have been on the market about two years.

The new prices will kick in October 1, Donuts said.

Renewal prices for domains registered before that date will renew at their original wholesale fee, the company added.

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.xyz adds 788,000 domains in a day

Blimey.

XYZ.com managed to “sell” at least 788,167 .xyz domain names yesterday, as registrars gave them away for peanuts.

According to this morning’s zone file count, the gTLD has 3,644,826 domains, compared to 2,856,659 yesterday.

And its sale is not even over until midnight tonight.

The company has pumped millions into marketing .xyz for the second anniversary of its general availability launch, and many registrars dropped their prices accordingly.

Registrars are currently selling the names for $0.02, $0.01 or, apparently in the case of at least one Chinese registrar, nothing.

It goes without saying that this is the biggest one-day spike for a 2012 new gTLD, blowing the previous record of 238,616 out of the water.

While XYZ.com no doubt gets bragging rights, one has to wonder how much value has actually been created here.

The vast majority of these names will have been acquired by investors and will sit idle before eventually dropping. It’s possible that some have also been registered for nefarious purposes.

Some number will no doubt renew, otherwise the promotion will have been a wasted enterprise.

If you look at XYZ’s first big giveaway — the controversial free push into Network Solutions customer accounts — you’ll see very low retention.

NetSol had 360,683 .xyz names under management after the promotion finished in July 2014, but that was down to 18,919 by October 2015, when most had deleted.

That’s a drop of 95%.

The difference here is of course that registrants this week have had to pick their domains and hand over nominal payment.

Investors have been known to form emotional attachments to their portfolios, which could increase renewals this time around.

XYZ.com will have to pay around $200,000 in ICANN fees for yesterday’s added domains.

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These might be the top 10 biggest new gTLD daily growth spikes

With news seeping out this evening that XYZ.com’s latest marketing blitz has very possibly added half a million domains to its .xyz gTLD today, I thought I’d knock out some data on the previous largest one-day growth spikes in new gTLDs.

With some caveats, which I’ll get to, I think these might be the top 10 growth days for new gTLDs.

TLDDateGrowth (domains)
top2016-02-16238,616
wang2016-03-02175,900
bid2016-02-18145,330
wang2016-03-03137,313
xyz2016-02-07131,375
site2016-02-24120,275
xyz2015-11-01111,160
xn--ses554g (.网址)2015-01-07109,763
wang2016-03-01107,599
xn--ses554g (.网址)2015-01-06104,548

They’re the only 10 spikes of over 100,000 domains I could confirm in the DI PRO database, at least in 2012-round gTLDs.

With .xyz reportedly adding at least 400,000 domains today, due to several registrars basically giving them away, it’s certainly going to be at the top of this table tomorrow.

XYZ is celebrating its second anniversary of general availability tomorrow, and has invested several million bucks in promotions on registrars which are in turn selling .xyz names for as little as a penny apiece.

As mentioned, there are some caveats to the data in the table above.

It’s based on the zone files published daily by ICANN’s Centralized Zone Data Service, which can be patchy.

CZDS is set up in such a way that each user has missing days here and there, and it has in the not too distant past had a tendency to balk when it receives an unexpectedly large zone file.

In other words, there’s a pretty good chance I’ve missed some spikes, but I’m confident there’s nothing else approaching 400,000 in a day.

UPDATE: .vip should be on the table, with a one-day spike of 115,245 on May 18 2016.

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ICANN proposes pricing changes for new gTLDs

Kevin Murphy, June 1, 2016, Domain Services

ICANN is to give gTLD registries greater power to change their pricing under a proposed new deal.

The organization also says it could accept reduced fees from registries under some circumstances.

These are among about 40 substantial changes appearing in a new version of the standard new gTLD Registry Agreement that has been put out for comment.

The proposed new RA was posted last night after ICANN and registries spent months negotiating the details behind closed doors.

The contract would apply to registries that have signed the base new gTLD contract, not legacy gTLDs such as .com (though, in the passage of time, leaks may occur).

Many of the changes seek to bring clarity to registries’ technical obligations, particularly during their launch phases, and their data reporting requirements.

But there are a few notable changes concerning fees.

First, it seems registrars are going to be stripped of their right to challenge registry fee increases through the ICANN process.

Currently, any substantial changes to their Registry-Registrar Agreements has to go through scrutiny by ICANN and the registrars, and the registrars are allowed to object to the changes.

We saw such objections at the start of the year with .sucks, but RRA changes usually happen a few times a month.

Under the proposed new RA, that process would no longer apply when the only change made to an RRA is to change the registry fee.

Registrars would still have to be provided with 30 to 180 days notice, depending on the extent of the fee change, but there would be no ICANN review or registrar challenge process.

ICANN reasons that this is sensible because, unlike legacy gTLDs, its new gTLD contracts don’t regulate prices anyway.

Second, ICANN has introduced a new “Fee Reduction Waiver” concept to the contract. The draft deal states:

In ICANN’s sole discretion, ICANN may reduce the amount of registry fees payable hereunder by Registry Operator for any period of time (“Fee Reduction Waiver”). Any such Fee Reduction Waiver may, as determined by ICANN in its sole discretion, be (a) limited in duration and (b) conditioned upon Registry Operator’s acceptance of the terms and conditions set forth in such waiver. A Fee Reduction Waiver shall not be effective unless executed in writing by ICANN as contemplated by Section 7.6(i). ICANN will provide notice of any Fee Reduction Waiver to Registry Operator in accordance with Section 7.9.

It’s not entirely clear who asked for this or why.

I can imagine scenarios in which struggling registries might seek a handout from cash-rich ICANN, or in which dot-brands whose registrations are not linked to revenue might ask for a waiver.

Dot-brands — that is, registries that have signed Specification 13 of the RA — also get some love in the new RA, including an effective right of veto over changes that could affect their special status.

If in future an RA change is proposed that would effectively amend Spec 13, it will not happen unless Spec 13 registries vote in favor of the change.

The vote would require a two-thirds majority, with registries voting power weighted according to how much they pay ICANN in registry fees.

The whole contract is now open for a 43-day public comment period, which you can find here.

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