[CPWG] The crux of the COM issue

John McCormac jmcc at hosterstats.com
Sun Jan 5 21:00:17 UTC 2020

On 05/01/2020 17:09, Jonathan Zuck wrote:
> My point, to be clear, is that these price hikes really only affect the 
> investor community and will, as Evan has suggested, help clear some 
> clutter out of the secondary market.

You and Evan are wrong. These price hikes affect all registrants of and 
some of them have built their presence on a TLD and cannot afford to 
rebrand. The secondary market of a gTLDs actually self-declutters. With 
.COM, over 2 million domain names are deleted each month. Some of these 
deletions are due to natural attrition but some of them are speculative 
registrations being dropped. TLDs without secondary markets tend to 
remain small. Price increases introduce instabilities into a domain name 
market and affect registrant confidence in a TLD.

Much of the .ORG's registrations are brand protection registrations by 
registrants who have registered the same name across other TLDs. The 
.ORG is, by country of registrar, an overwhelmingly US-centric gTLD.

There is a secondary market in .ORG but it is relatively small compared 
to that of .COM. Many of the domain names that have been washing out of 
the .ORG zone over the last year were discounted registrations which had 
zero chance of renewing.

Discounting is a far greater threat to the stability of a TLD than any 
secondary market. In reality, unfettered discounting destroys the 
credibility of a TLD.

It was unfortunate that ridiculously low "parking" rates (and therefore 
high levels of usage) were being claimed for some of the new gTLDs in 
the CCT-RT report. Over 80% of those new gTLD domain names were deleted 
within a year. For some domain names in the "parking" survey that CCT-RT 
used, over 95% of the domain names in the survey were deleted by the 
second renewal. (I included those stats on deletion rates and which 
usage categories had the highest deletion rates in the Domnomics book on 
the chapter on web usage and "parking".) This is a classic zonefile 
stuffing pattern where domain names are registered for a highly 
discounted fee in order to make a gTLD look big to the public but web 
usage rarely follows. These discounted registrations are then dropped 
when it comes time for them to be renewed at full fee.

Healthy TLDs like .ORG do not have nearly complete zonefile replacement 
within a year. The .ORG is one of the most stable of the legacy gTLDs. 
People registering their domain name in .ORG tend to keep it. People who 
don't work with domain name statistics and web usage just don't 
appreciate how different the .ORG is to other gTLDs.

The .ORG registry has made the right decisions in stopping volume 
discounting. This improved the quality of the TLD and the .ORG the most 
ccTLD-like of the main legacy gTLDs in that the registrants have an 
almost ccTLD-like loyalty to the .ORG in that they believe that it is 
*their* TLD much like ccTLD registrants identify with their ccTLD.

The strange idea that the secondary market is some big, bad ogre 
devouring all the domain names in a TLD is wrong. The reality is quite 
different. The secondary market for most healthy TLDs is only a small 
percentage of the number of domain names registered in that TLD. That's 
because only a small percentage of generic domain names are targeted by 
domain name investors and speculators.

The .ORG, in terms of investors, is an acquired taste as most of the 
speculation is confined to .COM because it is the biggest market. People 
see a few high value .ORG sales and assume that there's a big market. It 
is not. The reality is that most speculative registrations drop without 
ever being receiving an offer.

All registrants are affected by price increases. Faced with increasing 
prices, some registrants will make plans to shift to other more stable 
TLDs and the shift will take approximately five years. The .ORG is 
currently being overtaken by ccTLDs. The bulk of its registrations are 
US but it has become increasingly irrelevant in most country level 
markets where the local ccTLDs have become the main TLD in the market. 
Even the .COM is struggling in some of these country level markets. Some 
ccTLD registries have historically offered free registrations for 
do-gooder and charity ventures.

Price increases make registrants reconsider their registrations. I've 
been watching this trend hit the non-core legacy gTLDs for a few years 
now. Investors can generally hang on for longer.

The real danger to .ORG is that price increases will start to affect 
development and usage in the TLD. Once that happens, websites stop being 
developed and developed ones are abandoned or redirected to the 
registrant's primary website in another TLD. But it is only those of us 
who run web usage surveys and who are actually part of the domain name 
industry will see this as declining usage and fewer newer registrations 
before it becomes widely evident.

It would be great if more end-users got involved in ALAC as it seems 
that end-users are almost entirely absent and they are the ones will 
will be hit hardest by price increases. ICANN will probably form another 
CCT-RT to find out where all the domain names and registrants have gone 
but by then it will be too late. The answer will be simple: ccTLDs.

There is a crisis of credibility for gTLDs and price increases are 
perhaps the worst threat to healthy gTLDs because they force the 
registrants of the same name in multiple TLDs to make that decision to 
develop or drop. ICANN screwed up badly with Domain Tasting and it 
kickstarted the growth in ccTLDs because ICANN didn't take action 
quickly enough. Over 1,000,000,000 .COM domain names were registered and 
deleted while ICANN wasted years debating what to do next. With the sale 
of .ORG, the gTLD runs the risk of genericisation and it is at risk of 
losing that special something that made it different from other gTLDs. 
The focus on secondary markets and speculation in .ORG are just 

As for .COM, its one year renewal rate is around 57% at the moment. It 
has used discounting but with the rise of the ccTLDs, the .COM is not 
quite as important as it was ten years ago. In most country level 
markets, the bulk of new registrations have shifted to the ccTLD. Price 
increases may, in some cases, accelerate that shift. What some people 
seem to miss is that an increase in the wholesale registration/renewal 
fee is higher by the time it gets to the registrant. Most registrants do 
not register domain names at the wholesale fee.

John McCormac  *  e-mail: jmcc at hosterstats.com
MC2            *  web: http://www.hosterstats.com/
22 Viewmount   *  Domain Registrations Statistics
Waterford      *  Domnomics - the business of domain names
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