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ICA finally comments on .com pricing talks

Kevin Murphy, August 28, 2024, 10:52:31 (UTC), Uncategorized

With the latest public debate about whether Verisign is ripping off registrants with its .com pricing now into its third month, one voice has been conspicuously absent.

But the Internet Commerce Association, which represents domain investors and domaining registrars, has now publicly called for .com wholesale fees to continue to be capped and Verisign’s profit margins to be tempered.

Issuing a statement late last week, the ICA revealed that it has participated in talks with the US National Telecommunications and Information Administration regarding its upcoming renewal of the .com Cooperative Agreement.

ICA said it is “encouraging NTIA to focus on ensuring that price caps have some relation to both the cost of operating the .com registry and a reasonable, if not healthy operating margin”, adding:

We believe that it in the absence of actual competitive market forces determining price, it is crucial that an economic study be conducted to determine what a reasonable price would be for .com registrations, having regard to the costs of operating the .com registry on behalf of ICANN while also taking into consideration the need to make a reasonable profit from the exclusive license. As a trade association focused on Internet commerce, although we are generally uncomfortable with determining prices by any method other than via a competitive marketplace, this method is the next best thing in the circumstances.

The statement completely ignores Verisign’s attempt to preemptively flip the debate on its opponents when it recently claimed that the true price gouging occurs in the “unregulated” retail and secondary markets.

The .com pricing debate first came back into the public sphere in July, when three campaign groups called on NTIA to cancel the Cooperative Agreement and allow the .com registry contract to be open for competitive bidding.

The agreement, terms of which routinely make their way into ICANN’s Registry Agreement with Verisign, allow the company to raise prices 7% in four of each six-year term, options Verisign habitually exercises.

The result is a .com registry that generates the company operating margins in excess of 60%, returning mountains of cash to investors.

Three Republican lawmakers then raised the issue with NTIA and NTIA later said that it intended to renew the Cooperative Agreement, but that it had invited Verisign to talks focused on pricing.

In apparently coordinated statements, both parties said the talks would also extend to pricing in the retail channel and secondary market, which should have made ICA members nervous.

Verisign even put out a lengthy statement calling out registrars and domain investors for selling .com domains at hugely inflated prices, conveniently ignoring the facts that the registrar market is genuinely competitive and that domainers shoulder the risk that the domains they pay annual rent to Verisign for very probably will not ever sell.

Verisign’s arguments are sufficiently flawed that it’s perhaps surprising on the face of it that ICA’s new statement completely fails to address or challenge them.

The fact that Verisign is prepared to throw its most dedicated customers under the bus without too much fear of retaliation — something it does every time .com pricing comes up for debate — is perhaps indicative of its market power.

It’s the only dealer in town, and it knows it can say whatever it wants about the crackheads who frequent its corner.

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Comments (1)

  1. Ryan says:
    August 28, 2024 at 12:34 pm

    That the ICA is talking to the NTIA directly is pretty huge. Hopefully that means the NTIA is serious about actually getting some concessions out of Verisign.

    The Verisign ‘myths’ article was pretty thoroughly debunked by Andrew on DomainNameWire. It felt like they just copied and pasted an article from 6 years ago.

    Reply

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