| | At Large Membership and Civil Society Participation in ICANN |
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 ICANN’s Fee Structure Promotes Monopolization
posted by michael on Wednesday March 30 2005, @02:30PM
Robert Fox writes "ICANN has introduced a “Per Registrar Variable Fee” in addition to their transaction based fee. The transaction-based fee is a per domain name registered fee and currently stands at $0.25 per domain per year registered. (A fair fee: the more we register, the more we pay)
The per-registrar variable fee is $3,800,000 raised from the number of active ICANN registrars.
The fee for Dec/Nov 2004 was $3,893.44 making an approx. $23,000 per year per registrar. This effectively forms a 300% additional fee over our previous year's fee. A hefty increase from last year, especially as it has to be paid by all, both big and small. You won’t hear larger registrars complaining about this."
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The issue is what happens next year after the smaller registrars who cannot afford this fee fold. They will not be able to compete because, having to average the fixed cost over a small number of registrations, they in effect pay more for their names than the larger registrars. Simply unfair!
Fewer registrars means higher fees. If half go bust or give up as a direct result of this, the fee next year will be $46,000 dollars, and this will encourage more business failures. In turn the fee will rise again and more registrars will go bust.
Instead of encouraging competition, ICANN are encouraging the monopolization of the industry by a few.
ICANN may not be aware but attempting to create a monopoly is an offense under US federal law.
I would love to hear any comments on this,
Robert Fox
Managing Director
bob@nominate.com
www.nominate.com
ICANN registrar since 2000.
[Editor's note: unless it could be shown that ICANN entered into this fee structure in collusion with large registrars, I doubt there's a plausible anti-trust claim here. First thing I'd want to know is who participated in the decision.
But even if it's not illegal, it seems like a pretty bad idea on competition grounds... Even if the goal may be to weed out the paper registrars who exist only to game the system on dropped and landrush names, is this really the best way to go about it? And will it work if there's money in gaming the system or just push out the small honest registrars? -mf]
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ICANN’s Fee Structure Promotes Monopolization
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From the point of view of the domain name consumer, the fact that the choice to impose this fee was made with the participation of all the registrars is rather irrelevant.
From the point of view of the consumer, ICANN is an industry gathering, in which all of providers of domain name products gather and agree among themselves - whether some disagreed is not really important - to set product specifications, terms of sale, and base pricing.
That's not a lot different than all of Mr. Rockefeller's oil refiners gathering together and setting standards for oil products, setting the sales terms, and setting prices.
Both are, from the point of view of the domain name consumer, an evil thing.
To my mind both are combinations in restraint of trade. Whether the ICANN one is illegal is, to my mind, an open question.
But there is no doubt, that the collusion that ICANN facilitates between domain name providers has cost consumers hundreds of millions of dollars in artifically inflated domain name fees.
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Thankfully for us, a small Registrar that does NOT participate in the deleted names market, ICANN "forgives" two-thirds of the Per-Registar Variable fee. It is obvious that ICANN saw a large segment of the industry making substantial margins in the repurchase of deleted domain names and decided that they needed to get their piece of the pie.
I am astounded by the growth in ICANN fees over the years. In the past 12 months, ICANN's "taxes" on Registrars have gone up 300%. They are adding huge "taxes" on new sTLD contracts and trying to negotiate additional per-domain fees at the Registry level into the new .NET contract. It is clear that Registries are going to pass these fees on the the Registrars who, to survive, are going to have to find additional sources of revenue and/or raise fees to consumers. Even GoDaddy is already passing the 25 cent transaction fee on to the consumer as a separate line item above their advertised purchase price.
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