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ICANN Confirms: Tiered Pricing Not Forbidden in New .BIZ, .INFO and .ORG Contracts

Vint Cerf/ICANN confirm my interpretation of .biz/info/org proposed contracts — tiered/differential domain pricing would not be forbidden

I finally got the "official" word from Vint Cerf of ICANN, "on the record", who confirmed that my interpretation is correct, that differential/tiered pricing on a domain-by-domain basis would not be forbidden under the .biz/info/org proposed contracts. This means that the registries could charge $100,000/yr for sex.biz, $25,000/yr for movies.org, etc. if they wanted to — it would not be forbidden the way the proposed contracts are currently written. This would represent a powerful pricing weapon for registries, and a fundamental shift in possible domain name pricing, that could lead them to emulate .tv-style price schedules. It doesn't mean they will necessarily do it, but it's not forbidden. When a contract doesn't forbid something bad, it implicitly allows it.

One can read the proposed contracts here.

Vint said it would be "suicide" for a registry to do it, because there'd be the 6-month notice period to raise prices and the ability for registrants to renew for up to 10 years at "old prices", that supposedly "protects" registrants. Personally, as a business, my time horizon is a lot longer than 10 years. I wonder if Vint felt introducing "SiteFinder" was suicide, too....history has shown registries will do whatever they can get away with, in order to maximize profits long-term and short-term.

I don't think Vint understands the business at all, to think that a lag of 10 years will deter a profit-maximizing registry, esp. VeriSign should it try to match this contractual precedent in .com (and history shows VeriSign will always try to get "more", especially if "another registry" is able to do something — they used that tactic in .com renegotiations, saying various terms were already in the .net contract, for instance).

Just to show one possible future, if PIR feels pressure or has a desire to clean up porn from .org, it could announce that pussy.org (check its Alexa ranking) will have its renewal price be $1 billion/yr. If it takes 10 years to do it, many would wait, and it would not be considered "suicide" for PIR. Who will stand against that as "we're protecting the internet and children from porn", PIR might argue? Leaving this temptation in the contract will likely become a slippery slope, in my opinion, leading to profit-maximizing behaviour by registries to emulate .tv. Acting in the interests of their shareholders, registries are compelled to maximize profits.

It can be used as a political weapon, too. If a registry disagreed with the views or content of a website for which they were the registry, they could raise the renewal price to $100 billion/yr. 10 years later, that website would not exist at that address, and nothing in the contracts would forbid this pricing behaviour. More likely, it would be used for profit maximization (if Google.com is a $100 billion company, "certainly they are benefiting from their domain name, and can afford our $1 billion/yr renewal fee" one might say — see the net neutrality debate and tiered pricing for websites that phone and cable companies are pushing....). How far away is tiered domain name pricing??

ICANN would be opening up a Pandora's Box through this contractual loophole, to not forbid .tv style pricing. The mistake would not be able to be corrected, as the contracts explicitly say that Consensus Policies do not apply to pricing issues. Since presumptive renewal exists in these new deals, the contracts are essentially going to live with ICANN forever, if approved.

If this pricing power eventually got extended to .com, nothing would prevent the renewal fee for Yahoo.com, GoDaddy.com, Google.com, Tucows.com, Business.com, Sex.com or any other domain in a registry with similar terms to reach $1 billion per year, or any other price that VeriSign or other registry operators wanted to maximize its profits (net-neutrality debate is similar, for bandwidth pricing to websites). You can imagine my VeriSignSucks.com won't last longer than 10 years, if VeriSign had the power to raise the renewal fee to $1 billion/year. :)

I believe that it is very important that this loophole be closed, in order to not create the precedent that VeriSign could later exploit for .com, and to protect registrants of .biz/org/info. If it is "suicide", as Vint suggested, then surely a registry that would supposedly never use the power would agree to remove the temptation by adding an appropriate term to the contract. A registry not willing to add that term....well, you know what they might be tempted to do later. If your business horizon is the next quarter, this won't impact you. If it's beyond 10 years, it could impact you. Can you live with that uncertainty?

ICANN went even further than the .com proposed settlement with VeriSign, and gives these registries removal of price caps "following extensive consideration and discussion" (I don't recall any such public discussion or consultation with the ICANN community and stakeholders). However, take note of ICANN's statements in the CFIT litigation regarding pricing caps on May 26th [PDF].

"in a single supplier market, price caps are, if anything, procompetitive (Mot. at 13-14);" [page 1 of the document, line 13, page 6 of all 15]

"Nowhere does CFIT address the fact that, at this point in time, all that ICANN and VeriSign have done is propose future price limits for .COM domain names, which cannot be implemented until the DOC approves the .COM Extension. (Mot. at 20-22.) And, as ICANN explained in its opening brief, price caps in a single supplier market are considered pro-competitive. (Mot. at 13-14.)" [page 8 of the document, line 14, page 13 of all 15]

So, you have ICANN lawyers telling the court that price caps are pro-competitive in these single supplier markets (i.e. where registries are the single suppliers for each TLD). Indeed, it is part of ICANN's mission to promote competition.

Yet, we have ICANN removing all price caps entirely on .biz, .info and .org with these proposed new contracts. Something is amiss. Wouldn't that contradict everything their lawyers said to the court??

Feel free to spread the word on the mailing lists or media, and contact Vint (vint AT google.com) or John Jeffrey (jeffrey AT icann.org) or other ICANN staffers if you want to confirm things and voice your concerns. Time is of the essence, as the public comment period ends next Monday. Registrants DO NOT know what is coming (the public comment board is almost empty), as it's the summer holidays! (typical ICANN tactic, introduce 500+ page contracts for public comment when everyone is on holiday)

Public comments can be sent using the addresses here.

(Be sure to send to all 3 email addresses for all 3 contracts, and also click the link in the email ICANN will send you to authenticate your email address, otherwise your comment doesn't get received)

There are a lot of other reasons to be opposed to the proposed contracts, such as the presumptive renewal, the ability to sell traffic data, the removal of price caps, etc. I will be writing a longer document soon, but wanted to give everyone a heads-up, so that you can take appropriate action on your own now, and corroborate things independently with Vint Cerf, John Jeffrey or other ICANN people.

These are fundamentally flawed contracts, and should not be approved by ICANN. The precedents these contracts would create are ominous, even worse then the .com proposed settlement agreement (that the DoC has yet to approve). Why is ICANN even renegotiating these registry agreements, when the existing terms don't expire for several years in some cases, and the GNSO PDP process for registry services is ongoing??

Sincerely,

George Kirikos

By George Kirikos, President, Leap of Faith Financial Services Inc.

Related topics: DNS, Domain Names, ICANN, Net Neutrality, Telecom, Top-Level Domains

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Comments

Re: ICANN Confirms: Tiered Pricing Not Forbidden in New .BIZ, .INFO and .ORG Contracts Frank Schilling  –  Aug 24, 2006 4:43 PM PDT

The combination of "presumptive renewal" and the "lifting of price controls on registry services" is incredibly dangerous.

Imagine buying a home, taking on a large mortgage, remodeling, moving in, only to be informed 6 months later that your property taxes will go up 10,000% with no better services offered by local government. The government doesn't care if you can't pay your tax/mortgage because they don't really want you to pay your tax… they want you to abandon your home so they can take your property and resell it to a higher payer for more money, pocketing the difference themselves, leaving you with nothing.

This agreement as written leaves the door open to exactly that type of scenario. Domain registrants accustomed to paying $8 or $10 may suddenly be faced with a bill for $500.00 per name year or more because their name is desired by more than one party. Profitable sites such as Google.biz could get renewal bills of $100,000 per year.. or 1 million per year. The registry doesn't care — if the registrant fails to renew the name they can offer a domain parking service to monetize latent traffic from the former registrant's activity.

A registry changing the rules in the sandbox, usurping the rights of the registrants it was meant to serve, creating fiefdoms in the name of profit for the registry operator.. The scenarios just described are wide open for implementation if this agreement passes unchanged.

It is troubling that in 2006 ICANN still consistently fails to take into account the mercantilist instincts of its for-profit registry partners. This agreement should never have made it to this comment phase as written. ICANN's time horizon is much shorter sighted than the registry operator. It is profoundly troubling that no-one at ICANN has thought to build the simplest of safeguards to protect small business people and end users from the wholesale change in pricing structure, left open in these agreements.

I urge ICANN to reject this agreement as written, to modify the salient points relating to price control in order to provide certainty and assurance for the registrants of this name-space.

Registry operators would be well served to model the successful registries. The largest most thriving name-spaces are those with consistent, predictable and moderate pricing. Where registrants of all kinds can grow their businesses without the heavy-hand of intervention or price manipulation. Namespaces are remarkably similar to "countries" in that those that foster low taxes, liberty and opportunity for all, are those that attract the best, brightest; and ultimately thrive to the envy of others.

Sincerely,

Frank Schilling.

Re: ICANN Confirms: Tiered Pricing Not Forbidden in New .BIZ, .INFO and .ORG Contracts Thomas Kühne  –  Aug 25, 2006 5:36 AM PDT

I could understand and support auctioning of the initial registration:

1) interested party wants to register an unregistered domain
2) allow bidding for that domain name by everyone
3) close auction after 48h without any new new bids

Renewal and transfer prices should never be on a domain-by-domain basis, otherwise domain registration becomes the perfect black mail market.

Re: ICANN Confirms: Tiered Pricing Not Forbidden in New .BIZ, .INFO and .ORG Contracts George Kirikos  –  Aug 25, 2006 8:58 AM PDT

Network Solutions has posted their official comments arguing strongly that the contracts should not be renewed at this time.

Many others have also posted their comments in opposition to the contracts if one reads the archives.

Re: ICANN Confirms: Tiered Pricing Not Forbidden in New .BIZ, .INFO and .ORG Contracts Andrew Moulden  –  Aug 25, 2006 9:28 AM PDT

The lifting of price controls could spell disaster for smaller website developers, who need to be able to plan well beyond ten years. The fact there can be only one registry for each TLD is precisely why ICANN must retain strict pricing controls. I am beyond dismayed that rather than undergo a full consultation to establish firm policy in this area, the ground seems to be slipping from under our feet each time an agreement is due for renegotiation (first .net 10% increments, now this). I fail to see why registry and ICANN fees cannot be indexed to inflation, a basket of stockmarkets or other suitable economic indicator. The registry should be free to generate more income, in real terms, through encouraging registration of greater numbers of domains, not through near-blackmail of existing registrants.

I would urge readers of George's article to email their comments to ICANN immediately.

Re: ICANN Confirms: Tiered Pricing Not Forbidden in New .BIZ, .INFO and .ORG Contracts Des Donnelly  –  Aug 25, 2006 10:12 AM PDT

This is not acceptable and has the potential to turn registration into a travesty like telephone charges.

It is like buying a house in a new development and then X years later there is a City or Town representative standing at your door with their hand out saying now you must pay for access to your home.

Worst of all you cannot call the cops because when they take their masks off they are the cops.

I think that ICANN is perhaps the worst possible things that could have happened to this industry.

The unwilling, appointed by the unable, to do the unnecessary.

Des Donnelly

Re: ICANN Confirms: Tiered Pricing Not Forbidden in New .BIZ, .INFO and .ORG Contracts Dan Sunt Eu  –  Aug 25, 2006 11:49 AM PDT

Wouldn't registering the name as a trademark prevent the registrar from using your name?

For example if I make Example.Com a trademark will the registrar be able to sell that domain name to somebody else? (or: Who will buy example.com knowing that I can sue them?)

Re: ICANN Confirms: Tiered Pricing Not Forbidden in New .BIZ, .INFO and .ORG Contracts George Kirikos  –  Aug 25, 2006 12:17 PM PDT

If you register the name as a trademark, it's typically only in one country, in a small number of business categories. Almost every dictionary word has a trademark of some sort already. However, the owner of a particular generic domain name does not have to be the same as the owner of a trademark. For example, I own Seeds.com, and am using it to promote Seeds products/companies.

I just did a quick search of the USPTO database, and see that there are some TM registrations for "Seeds", including this one for "cosmetics, non-medicated toiletries, non-medicated skin care preparations, potpourri and perfume". I'm not losing any sleep at night thinking they might sue me, as I registered the domain name in good faith, and for an entirely different use (namely for its generic meaning, for seeds used in planting, gardening, agriculture, etc.).

Folks could always register the domain and use it in a different business category, or be from a different country than that of a registered trademark (e.g. is your US trademark going to protect you if the registrant is from Japan?).

Furthermore, if you bring a UDRP, and you "win" the domain name, you'd be subject to paying the high renewals on it (unless you ask that the domain be deleted, then it could always be registered by someone else; rinse, repeat).

The registries don't care if they get the extra money from a trademark holder, or from Offshore Typosquatter Pay-Per-Click Parking Inc.

Why are trademark registration prices not tiered, taking the argument one step further? If you follow ICANN's logic on this issue, the USPTO should be charging Coca Cola $1 billion/yr for their trademark, instead of charging them the same as everyone else. If we introduced "tiered pricing" into the trademark system, imagine all the money governments can raise! Instead of paying only $300 or so, we can make a lot of money from Yahoo, Google, Microsoft, Xerox, IBM, and all other Fortune 500 companies who benefit from their trademark registrations to a great degree.

Fixed costs, first come first served, non-tiered? If it's good enough for the USPTO, it's good enough for VeriSign, Neustrar, Afilias, PIR, and other registries.

Re: ICANN Confirms: Tiered Pricing Not Forbidden in New .BIZ, .INFO and .ORG Contracts Miles Wolbe  –  Aug 25, 2006 5:14 PM PDT

THANK YOU for bringing this to the attention of domain name owners everywhere. Here is an email I sent to Vint, Jeffery, and the 3 addreses listed on the ICANN site you linked to:

Subject: A question about tiered pricing…

Why is it fair for a registrar to charge me $50,000 (or whatever)
to renew a domain name (TinyApps.Org) I've built up over the years?
It just doesn't make sense.

ICANN OKs Tiered Pricing for .org/.biz/.info
http://yro.slashdot.org/yro/06/08/25/0611209.shtml

Vint Cerf/ICANN confirm my interpretation of .biz/info/org proposed contracts — tiered/differential domain pricing would not be forbidden
http://www.circleid.com/posts/icann_tiered_pricing_tld_biz_info_org_domain/

Sincerely,

Miles Wolbe
miles at tinyapps dot org
http://tinyapps.org/

Re: ICANN Confirms: Tiered Pricing Not Forbidden in New .BIZ, .INFO and .ORG Contracts YangMyung Kim  –  Aug 25, 2006 10:59 PM PDT

Such an idea is tantamount to degrading the Registry to a Monarch wielding absolute power to whimsically reformat the Internet topolgy periodically. This is to be archaived as the most fatal disaster imaginable deliberately brought by the so-called "Internet governing body".

Re: ICANN Confirms: Tiered Pricing Not Forbidden in New .BIZ, .INFO and .ORG Contracts Andrew Moulden  –  Aug 26, 2006 12:12 AM PDT

Caution:

By focusing on the fact that tiered pricing is not written out of the current drafts, we are in danger of undermining broader arguments against these proposed agreements. I even see some posts on ICANN's forum that seem to have been written by people who are assuming that tiered pricing is actually written into the agreements! As in the past, such erroneous submissions will hand ICANN staffers an opportunity to disparage opposition views when they summarize the comments for the BoD.

Far more likely than tiered pricing is that registries would hike prices across the board, and this is currently receiving scant attention.

Re: ICANN Confirms: Tiered Pricing Not Forbidden in New .BIZ, .INFO and .ORG Contracts Tom Webmaster  –  Aug 27, 2006 7:52 AM PDT

I for one think the greater danger is what is being addressed, and that's the possibilty of .tv style pricing for domains. It's unlikely domains will have prices lifted by say $50 across the board. My fear is that a domain I registered for $8 will cost hundreds of times that at renewal, because it is now considered a premium name by the registry. If your gonna raise general registration prices by say $20, per year, that would suck, but it would still be affordable. .TV style pricing is a far worse prospect in my opinion.

I think addressing the lifting of price controls addresses both concerns in any case.

Re: ICANN Confirms: Tiered Pricing Not Forbidden in New .BIZ, .INFO and .ORG Contracts George Kirikos  –  Aug 27, 2006 8:52 PM PDT

There is at least 1 supporter of the proposed .biz/info/org contracts....Chuck Gomes of VeriSign!! See here:

Ensuring the continued security and stability of its infrastructure is critical to the continued growth of the Internet. That is why VeriSign supports the proposed new registry agreement for .biz. The agreement closely mirrors the model registry agreements that ICANN has already used or proposed for .com, .info, .mobi, .net, and .org.

These agreements strike the important balance between protecting Internet users and providing registry operators with the incentives and flexibility to continue to invest in the Internet infrastructure.  They also create a level playing field for all the registries.

He posted similar comments for .info and .org.

It would not surprise me if VeriSign is salivating at the prospect of these contracts being approved, so that it creates a precedent for future .com/net renegotiations.

Re: ICANN Confirms: Tiered Pricing Not Forbidden in New .BIZ, .INFO and .ORG Contracts Leonard Holmes  –  Aug 28, 2006 1:51 PM PDT

People get really creative with loopholes like this.  Domain "tasting" is just one example.  George is right.  The contract needs to be rewritten specifying prices for domains - as has always been done in the past.

Re: ICANN Confirms: Tiered Pricing Not Forbidden in New .BIZ, .INFO and .ORG Contracts EP  –  Aug 28, 2006 1:57 PM PDT

Correct me if I'm wrong, but won't the stiff competition from other registrars keep the prices of lucrative domain names at a minimum?  I can see a strong incentive for a registrar to assure that their prices will not differ based on the domain name.  Registrants will always have the choice to transfer registrars should prices their registrar increase the asking price.  We’ve already seen dramatic shifts in the domain name registrar market due to certain companies coming out with bottom-of-the-barrel pricing.

Re: ICANN Confirms: Tiered Pricing Not Forbidden in New .BIZ, .INFO and .ORG Contracts Frank Schilling  –  Aug 28, 2006 2:19 PM PDT

Unfortunately the Registrars only act as facilitators, in effect selling the Registry's services. In fact prices on domain names are so low today BECAUSE there are so many registrars competing for registrant business.

The registry on the other-hand has a monopoly, so if any "Registry" is able to stipulate an annual sales price of $500 per name year, the best the "registrar" can do is tack 20 cents or a dollar on top (or loose the business to a competing registrar). The concern is that the agreements as written give the Registries unprecedented power to manipulate pricing at the 'wholesale level' to the detriment of all registrants; AND the registrar's competing for that registrant business.

Re: ICANN Confirms: Tiered Pricing Not Forbidden in New .BIZ, .INFO and .ORG Contracts Paul Jones  –  Aug 30, 2006 3:31 AM PDT

Afilias is incompetent and should have the .info registry taken away from them upon expiry.  Many of the best .info's are still locked 5 years after the
Sunrise fiasco (some have even expired).  Even some of the .info's that were successfully challenged with valid trademarks under the Sunrise Challenge procedure through the WIPO and were then transferred, are still locked (examples are: bike.info, cms.info, datadepot.info, theweb.info).  It is almost
as if Afilias does not want its best .info's being used as strange as it sounds.  Maybe Verisign who initially put the consortium of 19 registrars together set it up like this at the onset?

Possibly this very unfair and ridiculous new pricing proposal is just a distraction to get Afilias their renewal so that the outcry from the internet
community will not be about the fact that Afilias should even be renewed. Not withstanding, there is no need to renew any of the registry contracts this
early - unless of course the registries are all ICANN listens to.

Re: ICANN Confirms: Tiered Pricing Not Forbidden in New .BIZ, .INFO and .ORG Contracts George Kirikos  –  Sep 11, 2006 12:44 PM PDT

ICANN has posted a draft summary of the public comments.

In addition, they noted "Staff reported during the Board meeting that negotiations with the registries are already underway regarding clarification of the issues surrounding differential pricing."

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