 ICANN Confirms: New gTLD Contracts Permit .tv style pricing
posted by Mueller on Thursday August 24 2006, @10:54AM
GeorgeK writes "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.
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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 at:
http://www.icann.org/announcements/announcement-2- 28jul06.htm
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:
http://www.icann.org/general/litigation-cfit.htm
http://www.icann.org/legal/cfit-v-icann/icann-repl y-on-cfit-26may06.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 at:
http://www.icann.org/announcements/announcement-2- 28jul06.htm
(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"
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