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Schilling: big price increases needed to keep new gTLDs alive

Uniregistry is to massively increase the price of some of its under-performing new gTLDs in an effort to keep them afloat.

Sixteen TLDs from the company’s portfolio of 27 will see price increases of up to 3,000% starting September 8, CEO Frank Schilling confirmed to DI today.

“We need more revenue from these strings, especially the low volume ones, without question,” he said. “We can’t push on a string and stoke demand overnight. So in order for that string to survive as a standalone it has to be profitable.”

While domainers have taken to new gTLDs in greater numbers than Schilling anticipated, demand among worldwide consumers has been slower than expected, Schilling said.

“If you have a space with only 5,000 registrations, you need to have a higher price point to justify its existence, just because running a TLD isn’t free,” he said.

The alternative to repricing would be to sell the TLD in question to a competitor, which in turn would then be forced to reprice anyway, he said.

The TLDs seeing the biggest price hikes are .hosting and .juegos (Spanish for “games”) which are going up from about $20 retail and about $10 retail respectively to about $300 apiece.

Schilling said he believed that true web hosts could afford the new pricing. The .juegos increase is modeled on what Uniregistry has been doing with .game, which currently retails for closer to $400.

At the budget, sub-$10 end of the portfolio, .click and .link are to see fees rise by a buck or two per year.

Names in .audio, .blackfriday, .diet, .flowers, hiphop .guitars and .property, currently priced in the $10 to $25 range, will all start retailing for about $100 per year.

The other affected TLDs are .christmas, .help, .sexy and .tattoo, which will all see big increases but stay in the sub-$100 range.

The TLDs seeing the biggest price increases are among the ones with the fewest registrations — .juegos has about 1,000 names in its zone, while .hosting has fewer than 6,000. Most of the 16 TLDs have fewer than 10,000 names in their zones.

Uniregistry is no stranger to highly-priced domains. It runs .cars, .car and .auto, where it sells every domain at $2,888 a year retail (with no reserved premiums) but has fewer than 500 names in each zone.

Schilling said that in some ways he prefers this model to the more standard model of low-price base fees with high-price premiums.

The higher prices will likely lead in the short term to lower registration numbers (as speculators flee) but will give Uniregistry more cash to invest in marketing.

“That metering effect of high prices, we like that, in terms of trying to grow the namespace, and it gives us money we can use to try to market the strings to prosperity,” Schilling said.

“At a higher price point, the marketing can scale, but we just can’t do it on base registrations of ten bucks or twenty bucks,” he said.

He added that the higher base fee gives Uniregistry more flexibility to provide periodic discounts.

ICANN rules make it much easier to have a high base fee and keep it regularly discounted than to periodically increase fees, which requires six months notice.

“Between renewals promotions and pricing promotions, a lot of the effects of the price increases will be moot,” Schilling said.

Because the new prices don’t kick in until September, registrants are able to lock in pricing at current levels by renewing for up to 10 years.

While the price increases and Schilling’s relatively gloomy commentary will certainly fuel opponents of new gTLDs, whom are legion, Schilling is still bullish on the market, which he continues to characterize as a marathon rather than a sprint.

“Within ten years, will it be bigger? Absolutely. It’ll be quintuple what it is today,” he said. “But we need to get to 10 years, and to keep the lights on between here and there we need higher prices, without question.”

Verisign announces .net price increase

Verisign has just announced that prices for .net domains are going up again this coming February.

Announcing its second-quarter earnings, the company revealed plans to raise its registry fee from $7.46 to $8.20, effective February 1, 2017.

That’s the maximum 10% price hike it’s allowed to claim under its .net Registry Agreement with ICANN.

Raising .net prices has become a bit of an annual tradition with Verisign, one of the few gTLD registries to still have its prices regulated by ICANN.

The company had about 16.2 million .net domains under management at the last formal, published count in March. Its daily “domain base” has .net at 15.7 million names today.

Verisign loses right to increase .com prices

Kevin Murphy, November 30, 2012, Domain Registries

Verisign has sensationally lost the right to increase .com prices under a new deal struck with the US Department of Commerce.

In a statement to the markets just now, the company announced that the .com contract approved by ICANN earlier this year has now also been approved by Commerce, but with no more price increases:

Verisign’s current pricing of $7.85 per domain name registration will continue for the six-year term of the Agreement. Second, Verisign no longer has the right to four price increases of up to seven percent over the six-year term.

The company will only be able to increase prices with prior Commerce approval in response to “extraordinary” circumstances such as a security problem, or when the competitive landscape changes.

For example, if .com loses its “market power”, pricing restrictions could be lifted entirely, subject to Commerce approval.

Similarly, if ICANN approves a Consensus Policy that changes Verisign’s cost structure, the company could apply for price-increasing powers.

The deal is a huge blow for Verisign’s shareholders, wiping tens — potentially hundreds — of millions of dollars from the company’s top line over the coming six years.

Its share price is sure to nose-dive today. It’s already trading down 15% before the New York markets open.

It’s also an embarrassment to ICANN, which seems to have demonstrated that it’s less capable of looking after the interests of registrants than the US government.

That said, the new contract appears to have kept ICANN’s new fee structure, meaning the organization will be about $8 million a year richer than before.

In a Securities and Exchange Commission filing, Verisign said the new pricing provisions came in Amendment 32 to its Cooperative Agreement with Commerce:

Amendment 32 provides that the Maximum Price (as defined in the 2012 .com Registry Agreement) of a .com domain name shall not exceed $7.85 for the term of the 2012 .com Registry Agreement, except that the Company is entitled to increase the Maximum Price of a .com domain name due to the imposition of any new Consensus Policy or documented extraordinary expense resulting from an attack or threat of attack on the Security or Stability of the DNS as described in the 2012 .com Registry Agreement, provided that the Company may not exercise such right unless the DOC provides prior written approval that the exercise of such right will serve the public interest, such approval not to be unreasonably withheld. Amendment 32 further provides that the Company shall be entitled at any time during the term of the 2012 . com Registry Agreement to seek to remove the pricing restrictions contained in the 2012 .com Registry Agreement if the Company demonstrates to the DOC that market conditions no longer warrant pricing restrictions in the 2012 .com Registry Agreement, as determined by the DOC. Amendment 32 also provides that the DOC’s approval of the 2012 .com Registry Agreement is not intended to confer federal antitrust immunity on the Company with respect to the 2012 .com Registry Agreement and extends the term of the Cooperative Agreement through November 30, 2018.

On a conference call with analysts, Verisign CEO Jim Bidzos said that the deal was in the best interests of the company. It still gives the company the presumptive right for renewal, he said.

Growth, he said, will come in future from an expansion of its .com installed base, new IDN gTLD variants, and providing back-end registry services to other new gTLDs.

“We’re still a growth company,” he said.

“We have a patent portfolio we haven’t really exploited,” he said, referring to about 200 patents granted and pending. “We think there’s a revenue opportunity there.”

Larry Strickling, assistant secretary at Commerce, said in a statement:

Consumers will benefit from Verisign’s removal of the automatic price increases. At the same time, the agreement protects the security and stability of the Internet by allowing Verisign to take cost-based price increases where justified.

The full Amendment 32 is posted here.

Verisign defends .com price increases

Kevin Murphy, November 2, 2012, Domain Registries

Verisign has assured investors that it is confident its .com registry agreement is not in jeopardy, after seeing its stock plummet due to uncertainties over the deal.

In a statement yesterday, the company also defended the planned continuation of its price-raising powers.

It emerged last week that the US Department of Commerce is looking into the pricing arrangements of the new .com deal, which ICANN approved back in June.

Commerce has the right — in consultation with the Department of Justice and others — to approve or reject the contract based on its security/stability and pricing terms.

Whatever happens, it’s virtually unthinkable that Verisign will lose the contract. The company said:

While the review process with the Commerce Department may extend beyond Nov. 30, 2012, it could also be concluded by Nov. 30, 2012. In either case, Verisign expects to continue to run the .com registry.

It also said that its ability to increase prices by 7% in four of the six years of the contract is in fact in the public interest, saying in a lengthy statement:

The .com registry has an unequaled record of achievement, with full availability of DNS resolution in .com for more than 15 consecutive years. The economic activity supported by the .com registry is significant by any measure in an environment where the consequences of a failure of even a very short duration or degradation of the Domain Name System (DNS) resolution service, due to either a cyber attack or failure of hardware, software, or personnel, would have significant economic and non-economic impacts to the global economy.

The level of security and stability offered by Verisign is only possible with investments in overcapacity and redundancy, network security, intellectual property (IP) and in human capital: The engineers and employees at Verisign who operate the .com registry and ensure its security and stability. The pricing terms of the .com Registry Agreement enable Verisign to make these investments, develop the necessary IP, know-how and purpose-built systems, respond to new threats to stability as they emerge, and recruit and retain the specialized talent necessary to maintain our network, including dozens of globally distributed constellation sites and data centers in the U.S. and elsewhere.

In essence, Verisign is saying that the security and stability record — which Commerce evidently has already reviewed to its satisfaction — are inextricably linked to its ability to raise prices.

The company’s share price fell 18% in the aftermath of last week’s news, but recovered slightly yesterday — gaining about 11% — after the statement was released.

VeriSign scores big win in .com pricing lawsuit

Kevin Murphy, February 14, 2011, Domain Registries

VeriSign has successfully had an antitrust lawsuit, which claims the company has been raising .com domain name prices anti-competitively, dismissed by a California court.

While it’s encouraging news if you’re a VeriSign shareholder, the Coalition for ICANN Transparency, which filed the suit, will be allowed to amend and re-file its complaint.

The basis for the dismissal (pdf) goes to the central irony of CFIT – the fact that, despite its noble name, it’s not itself a particularly transparent organization.

CFIT was set up in 2005 in order to sue ICANN and VeriSign over their deal that gave VeriSign the right to raise the price of .com and .net domains, and to keep its registry contracts on favorable terms.

While it was cagey about who was backing the organization, those of us who attended the ICANN meeting in Vancouver that year knew from the off it was primarily a front for Momentous.ca, owner of Pool.com and other domainer services.

In dismissing the case last Friday, Judge Ronald Whyte decided that CFIT’s membership is vague enough to raise a question over its standing to sue on antitrust grounds. He wrote:

By failing to identify its purported members, CFIT has made it impossible to determine whether the members are participants in the alleged relevant markets, or whether they have suffered antitrust injury. Because the [Third Amended Complaint] identifies no members of CFIT, it must be dismissed.

While CFIT had disclosed some time ago Pool.com’s involvement, it recently tried to add uber-domainer Frank Schilling’s Name Administration Inc and iRegistry Corp to the list of its financial supporters.

But Whyte was not convinced that the two companies were CFIT “members” with standing to sue.

Whyte decided that CFIT’s complaint, “fatally fails to allege facts showing that iRegistry or Name Administration were financial supporters or members at the time the complaint was filed”.

He also denied CFIT’s demand for a jury trial.

CFIT wants VeriSign to return all the excess profits it has made on .com registrations since it started raising its prices above $6.

If CFIT were to win, it would severely curtail VeriSign’s ability to grow its registry business, and could lead to billions being wiped off its accounts.

The organization has been given leave to file a fourth amended complaint, so it’s not over yet.

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