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Questioning Innovation: An Interview with Bob Parsons

Bob Parsons

In a press release issued Wednesday, March 03, 2004, Go Daddy Software, Inc., defended ICANN's right to regulate VeriSign's registry services and called for a formal review of the company's position as an "exclusive registry." This announcement from Go Daddy, which comes one week after VeriSign filed a lawsuit against ICANN, pledges $100,000 to ICANN for its defense of the VeriSign lawsuit. Go Daddy, which ranks among the top 3 largest domain name registrars in the world and one of VeriSign's largest customers, has also sent a letter to both the U.S. Department of Commerce (DOC) and the Internet Corporation for Assigned Names and Numbers (ICANN) strongly urging both groups to undertake a formal review of VeriSign's registry position.

In this special interview, CircleID has caught up with Bob Parsons, President and Founder of Go Daddy, where he provides in-depth discussions of Internet Innovation, ICANN, VeriSign's Global Registry Services, Top-Level Domains and the current legal battles.

CircleID: Let's talk business for a moment. I'd like to read you a quote directly from VeriSign Chairman and CEO, Stratton Sclavos, regarding the commercialization of Internet infrastructure:

"A transition needs to occur, going from purely academic and public sector funded to something that is now a mix in between. ...The statistics are saying it's going commercial in a big way. It is the foundation for our economy in the next couple of decades. We are at that incredible pivotal point where we have to make a transition to commercial entities running this and having the ability to create innovative new products and get paid for them."


Looking at this from a business point of view, many might say that VeriSign is simply doing what any other publicly traded company would do responsible for profitably running the .com and .net registry (In other words, developing profitable registry services)?

Bob Parsons: Actually our internet infrastructure is already commercialized. The transition has already happened. Introducing free enterprise into the domain name registrar system is a fine example of that taking place. And the company that runs the biggest domain name registry? Well that's VeriSign and if any company ever was run on a for-profit basis, it would certainly be them. So the transition that Sclavos seems worried about is already history. What Sclavos is saying now is nothing more than spin and smoke. The reality is that he's not worried about doing the internet any favors (SiteFinder which VeriSign tried to force on the internet a while back and WLS, which they are trying to get away with now both attest to this). His idea of commercialization is for VeriSign to be able to use it's monopoly position to force services (regardless of the benefits they actually offer) upon the internet community. His real interest is to deliver huge profits to VeriSign. When it comes to delivering new innovations that are good deals that benefit the internet community, VeriSign's track record hasn't been good. Consider the following three additional services they have so far conjured up:

1. Consolidate: This is the only one of VeriSign's "new services" that is live now. And it's patently a bad deal. In fact it's such a bad deal that Go Daddy refuses to sell it. What this service does is to consolidate all of a customer's domain names so they all expire on the same date. Sounds like a good idea, right? Not after VeriSign injects its greed. A new domain name registration costs $6. But the consolidate service costs $2 plus $1 for every month someone needs to move the expiration date. So if the expiration date needs to move 9 months, the fee to the registrar is $11 instead of the $6 for a new registration. This is typical VeriSign. Keep in mind that it costs them next to nothing.

2. SiteFinder: We all know what VeriSign tried to pull off with this move. Their contract as the registry gives them the right to register up to 5,000 domain names on their own. After that, they must use the services of an accredited registrar to register any additional names. With SiteFinder they redirected (and benefited) from over 100 million free domain names by redirecting users who mistyped addresses to their paid advertising page, but ignored the requirement to register those names with an accredited registrar. No doubt they had big plans for this service and stood to make a fortune if they pulled it off. Instead, VeriSign caused disruption throughout the internet, user resentment and had to be told by ICANN to withdraw the service. By misusing their registry position, they were quite willing to interfere with search services offered by Google, Yahoo and others (that people access when they actually request a search service) and an assortment of other services by force-feeding their own service on unsuspecting users. When you get right down to it, putting an asterisk into the zone file is just not innovation. Go Daddy and many others believe this was an incredible abuse of their registry position. But again, it was typical VeriSign.

3. WLS: This also is an example of why VeriSign requires strict regulation. The WLS program VeriSign plans to offer is again patently a bad deal. I remind you that this program was designed by VeriSign and is their idea of innovation. You be the judge. The regulated price for a domain name is $6. Managing the WLS will cost VeriSign no more and we suspect less than their normal domain registry business. Unbelievably the price VeriSign chose for offering WLS backorders is $24. This is four times the regulated price. Also their WLS backorders expire each year (even if you order a backorder for a domain name that has 9 years to go on its registration).  So, in this example, unsuspecting consumers would get snared with the price 9 years in a row, and to boot would have no guarantee of getting the name. Plus if the customer actually gets the name, under WLS they then need to pay to register it. That cost isn't included.  Presently there is a whole industry that has grown up around back ordering domain names. This industry offers a myriad of options to customers, most of which are based on the idea of "pay for performance." WLS will pretty much decimate this entire industry and replace it with VeriSign's "pay regardless of performance" model. Basically WLS means that we're replacing "pay for performance" with "pay VeriSign." VeriSign is only able to offer this service because it has the monopoly position of managing the .com and .net registries. Under WLS, as VeriSign envisions it, because they are the registry their program will take priority over that offered by any other company. It's important to realize that VeriSign has delivered no innovation here. In fact VeriSign wants to do just the opposite. They want to offer an inferior program and do it with substantially higher costs. So you see, like all of VeriSign's other "new" services WLS is a very bad deal for everyone but VeriSign, and of course, it's typical VeriSign.

To answer the rest of your question where you ask, isn't VeriSign doing what any public company does? Aren't they simply trying to deliver profits? In that respect I have to say yes, but I would also add that in doing so, they are using their monopoly position to eliminate competition, force inferior products into the market, and attempting to do so at substantially higher prices. Quite frankly this is not what makes our economy work. What makes our economy work is innovation and a fair playing field. Both of these are things VeriSign doesn't seem to be familiar with and with regard to the fair playing field, most certainly doesn't want.

VeriSign is the classic case of why monopolies are frowned on in our economy. Monopolies discourage innovation and result in worse services and higher prices to end users. VeriSign is guilty of a lot of things in the way in which they've thus far managed the registry, but one thing no one's accused them of, at least no one that I know, is of being innovative. That's why we regulate monopolies.

CircleID: Back in October 14, 2002, the operation of the .org registry, previously managed by VeriSign, was handed over to Public Interest Registry (PIR). What has Go Daddy's experience been, and those of its customers, dealing with PIR as compared to the time when VeriSign was in charge of the .org TLD?

Bob Parsons: There has been a big difference. The most significant difference is we no longer worry about the registry position for the .org directory being abused. Moving the .org registry over to PIR was a good move. I think the entire internet community would be served well if we followed suit and also moved the .com and .net registries over to a less profit driven operator.

CircleID: What about the introduction of new top-level domains (TLDs)? Many are complaining about the lack of them and the time it takes ICANN to approve new TLDs. What's your take on the current TLD situation? What kind of hopes do you have for the future?

Bob Parsons: The current TLD situation is just fine. I believe that we have all the TLDs we presently need. Instead of worrying about something that we don't need, what we need to do is to take care of existing business. We need to look very closely at how the .com and .net registry is being managed and the potential for abuse. We need to make sure that VeriSign (if it is allowed to keep these important registries) is very closely monitored.

CircleID: Some have expressed concerns regarding the challenges VeriSign is facing from ICANN and Internet communities when it comes to introducing "innovative services" that are tied to the .com/.net registry. Obviously registries managing other TLDs today, or planning to in the future, are watching these (perhaps discouraging) issues closely. What kind of impact do you think these barriers that VeriSign is facing today might have over the long-term availability of new TLDs (and registries who will need to manage them) from a business standpoint? Wouldn't you say it is somewhat negative?

Bob Parsons: To be blunt, so far VeriSign Global Registry Service hasn't introduced any services that have been innovative. In some cases, the new services they attempted to offer were a step backward. In all cases, their new services have been a bad deal to the end user. If the playing field was level and registrars (for which there is huge competition) attempted to implement services with lack of innovation and the high prices we're seeing from VeriSign, customers would simply shake their heads and walk the other way.

I'm also in favor of other services being offered by registries provided that the services are innovative and a good deal for the internet community. To make sure this is the case, there needs to be oversight. Also we must never lose sight of the fact that the primary job of the registry is to manage the registry. Each registry gets paid well to do this, certainly VeriSign does.

CircleID: Has Go Daddy ever considered becoming a registry operator for any particular TLD?

Bob Parsons: Go Daddy is on record as saying that it has no interest in ever becoming a registry. We are dedicated to dealing directly with the end user and internet community. Being a registry would be counter to serving our customers. We do much better for the internet community as a watch dog of what the various registries are doing.

CircleID: Obviously if VeriSign gets its way in this current lawsuit, ICANN is going to need a lot more than $100,000 that Go Daddy has offered towards the coverage of its legal bills. Are you hoping that other registrars will join you in this cause?

Bob Parsons: We would like to see other registrars step up and help ICANN financially. Whether they will or not is anybody's guess. Since this announcement we have heard from a number of other registrars who will provide support in other ways. One of the key ways they will be supporting ICANN is through promoting the website dedicated to this issue. A petition is available at www.recallverisign.com. Anyone who cares about the well being of the core of the internet should visit that site and sign the petition. This petition will be provided to ICANN, the Department of Commerce, and the appropriate committees in Congress.

CircleID: Last year, Go Daddy was one of the registrars that sued ICANN in order to block VeriSign's Wait Listing Service (WLS). Today you are supporting ICANN, not only verbally, but also financially. Is this the case of a strategic move to support the better of the two evils or does Go Daddy genuinely believe that ICANN is reforming and indeed headed in the right direction?

Bob Parsons: That lawsuit has been dismissed. Since that time we've noted that ICANN is making a genuine effort to do its job. We do not consider ICANN an evil. We're not so sure we can say the same thing about VeriSign. All we ever wanted, and all we want now, is for ICANN to do the job it was created to do. That job is to make sure that the domain name system and the various registries operate fair and equitably. With the new administration at ICANN, they've been trying to do that job (which of course is exactly why VeriSign has filed suit against them).

The internet is for everyone. The purpose of the internet is not to deliver huge profits to VeriSign. The internet needs to provide an even playing field to everyone. As ICANN stands up to VeriSign they can count on Go Daddy's zealous support.

CircleID: Is there anything else you would like to say to our readers?

Bob Parsons: We all have to remember that the purchase of Network Solutions by VeriSign is one of the remaining big mistakes from the dot com bubble and subsequent burst. VeriSign paid approximately $21 billion dollars for Network Solutions. This was a huge price even for that time. At the end of last year VeriSign dumped the registrar operation (which now has the Network Solutions name) for only $100 million dollars (and kept a 15% interest in the company).

All VeriSign has to show for this $21 billion dollar purchase is the registry. Repeatedly during their earnings calls, and in their quarterly reports, they have used the possibility of offering "end-user registry services" and monetizing their registry position as a major platform for growth to encourage analysts. We believe that, given VeriSign's low level of innovation they will not be able to deliver on this promise if they are subject to the proper regulation. Ultimately this is what the lawsuit is about.

It was clever for Sclavos to spin the resistance against VeriSign to be just a few hundred individuals in the scientific and technical community. That, of course, is simply not the case. Mr. Sclavos would like us to think that whatever is good for VeriSign is good for the internet. I would like to think that we are smarter than that.

Go Daddy sees this issue in very black and white terms. Either the internet community will win. Or VeriSign will win. VeriSign must not be allowed to win. 

By Bob Parsons, President & Founder
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Re: Questioning Innovation: An Interview with Bob Parsons Christopher Ambler  –  Mar 04, 2004 1:37 PM PST

Mr. Parsons says that he thinks we have enough TLDs right now. Sir, how can you be so against Verisign as a monopoly, while apparently saying that it is simultaneously allright for ICANN, the monopoly root provider, to exclude new competition at the registry level?

Verisign has such a dominant position (which, as you contend, they abuse) simply because there is a great lack of credible competition.

If ICANN would allow any company that could show technical and financial stability to compete in the registry space, Verisign's market dominance would diminish considerably.

I'm certain that you must have simply not considered this position, as it appears that the two issues are sides of the same coin.

Re: Questioning Innovation: An Interview with Bob Parsons Faisal  –  Mar 05, 2004 8:39 AM PST

I don't think the general welfare of netizens is the primary focus on Bob's mind, but his points re Verisign are valid. Verisign has shown in recent times that all they care for is jacking up their profits, and to that wit they will do whatever it takes.

Faisal

Re: Questioning Innovation: An Interview with Bob Parsons Joseph Simmons  –  Mar 05, 2004 10:07 AM PST

Godaddy is anything but a "bare bones" registrar.  One visit to their site will show you that they provide a ton of products and services.  I've been a customer for years now, and I use everything from registration and privacy services, to hosting and email.  Bob kept talking about the need for innovation, and that seems to be a big part of the plan at Godaddy.  It seems like every time I go there, there is a new product or service. That doesn't even mention the 24/7 support they offer for all the services. (And I needed a lot in the beginning)

I don't think Bob is saying that any type of business model is the only "acceptable" method.  That's the whole point of the lawsuit.  There shouldn't be any one type, and they can't be allowed to dictate ho the internet is going to be run for the rest of us.  Competition and free enterprise have helped revolutionize domain registration since the old days when the only option was Network Solutions, and you had to pay out the nose for a domain name. Now there are lots of options.  If someone wants a "bare bones" domain name, there are several places they can go.  If someone wants the whole package from start to finish, they can choose to do that too… As for me and my money, we're going to Godaddy.

Great Article guys… Thanks!

Re: Questioning Innovation: An Interview with Bob Parsons Adam Beecher  –  Mar 08, 2004 4:13 AM PST
Re: Questioning Innovation: An Interview with Bob Parsons Bear  –  May 05, 2004 8:03 AM PST

ICANN's agreement to "indefinitely" vest the .com TLD with VeriSign must be subject to minimal performance requirements and penalties for any activity that abuses its monopoly position as registrar.  Arguably, .com is the most recognized and valued TLD of all of them and with that, accountability and fairness rules applicable to VeriSign should be state-of-the-art since they will likely establish a standard for all the other TLDs to follow, or emulate, as well.

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