[CPWG] Communication to ICANN GC

[John McCormac]

On 27/08/2023 11:28, Evan Leibovitch via CPWG wrote:
> 
> You speak of the dot-com price increase of $2 over five years, and 
> potential future increases as if they're a bad thing. I come from the 
> opposite PoV, that they're way too cheap. The starting point of my 
> solution is that retail domains should be at least $15 to $25, based on 

Just a few points, Evan,
Some registrars use a low first year registration fee as a loss-leader 
and that's why the $9 or below registration fee offers appear. The 
renewal fee iis typically higher. Not all registrars offer a low new 
registration fee.

> Of course, raising the price will also lower the volume of domain 
> purchases and renewals, which I also think is a Very Good Thing. The 

The link between renewals and increased fees is counterintuitive. A 
higher renewal fee can encourage the registrant to consider the domain 
name to be worth renewing especially if they have renewed it for a few 
years previously. (The Sunk Cost fallacy.)

The renewal rate of TLDs is also dependent on the economic conditions in 
country of the registrant. The .COM and other gTLDs may appear to be one 
single market but they are actually composite markets of a small global 
market and many country level markets. Even the business model of 
registrars affects renewal rates of domain names registered through 
those registrars.

This talk of registration fees being too low is all well and good for 
people in the developed countries with good incomes but it puts those in 
underserved and developing countries at a serious disadvantage because, 
in real terms, the cost of a gTLD registration will be a higher 
percentage of the registrant's income.

> status quo means that many sensible domain names are scooped up by 
> speculators whose only "added value" is being in the queue first. I find 
> the domain-resale industry, by and large, at the same ethical level as 
> concert ticket scalpers. And the ticket-scalper analogy is very useful 
> when you look at how ticket prices have skyrocketed for in-demand 
> concerts. Far better for the artist to get the proceeds of that 
> demand-induced price boost than the scalper.

Approximately 9% of the .COM is currently on sale (I run a full gTLD 
website/IP survey each month as part of the monthly HosterStats 
Registrars and Resellers report and it breaks down the gTLD websites by 
some categories. PPC and Sales are two of them.) The domain names that 
are on sale typically have a higher rate of non-renewal than ordinary 
domain names. There is a core of domain names that are on sale that will 
continually renew as they are considered premium domain names. For-sale 
domain names are often confused with undeveloped domain names that have 
been parked by the registrars or owners.

> Higher domain prices will have negligible effect on domain consumers but 
> I suspect it would have a significant effect on those keeping portfolios 
> of speculative domains. Scores of domains that are of borderline value 

It would primarily affect those with lower quality domain names but many 
of those lower quality domain names would be deleted after a year. Even 
with domain names parked for the PPC advertising, a similar deletion 
effect happens with non-performing domain names.

> fewer domains. An added bonus from higher fees could be a drop in the 
> purchases of one-time "burner" domains obtained for the purpose of abuse.

Much of this type of DNS Abuse has shifted to some new gTLDs where the 
first year reg fee is less than $5 or even around $1. The heavy 
discounting model of some new gTLDs has changed the economics of DNS 
Abuse. Ironically, it was the classic economic substitution effect where 
a new gTLD was chosen instead of a legacy gTLD by registrants. It wasn't 
quite the one envisaged by ICANN.

> PS: Don't get me started on the disparity between gTLDs and ccTLDs. 
> ICANN has FOREVER had a responsibility to inform the public what the 
> difference is.
> - How is dot-com different from dot-co?
> - Why is there still a dot-su TLD?
> - Is my use of bit.ly <http://bit.ly> for URL shortening really sending 
> my data through Libya?
> - Why can I buy a .me domain if I don't live in Montenegro?

The ccTLDs got a credibility boost in the mid to late 2000s when ICANN 
delayed taking any action on Domain Tasting until it was too late. Over 
1,000,000,000 .COM domain names were registered and deleted during 
large-scale Domain Tasting period.

Arguably, Domain Tasting created the appearance of a demand for new 
gTLDs because people could not register the domain names they wanted in 
.COM/NET/ORG as most of the good deleting domain names were being 
immediately reregistered by drop catcher registrars (the majority of 
ICANN registrars are still drop catch registrars that do not sell 
directly to the public). When there was legal action taken against some 
of the main registrars involved in Domain Tasting, Google decided to 
stop monetising these five day Add Grace Period domain names, and ICANN 
finally added a "restocking" fee on AGP deletions, the large-scale 
Domain Tasting business collapsed. Much of the demand for new gTLDs 
disappeared too but the ICANN train was trundling down the tracks to the 
2012 round launch. ICANN's projections for the first year registration 
volume for the new gTLDs were badly wrong.

Registrants in countries outside of the US shifted to their local ccTLD 
because they found that they could register the domain name they wanted 
in their local ccTLD. The effect of this was severe for the gTLDs in 
that some of the legacy gTLDs like .NET/ORG/BIZ/INFO are now at 
replacement level in various countries where the ccTLD is the first 
choice TLD. The new registrations in the local ccTLDs often outnumber 
those in .COM (locally) by 2:1 or more. The ccTLD regisries and 
registrars are often very good at catering for their own markets.

I'm not sure how ICANN educating people about the differences between 
gTLDs and ccTLDs would be perceived in ccTLD markets. Education may be 
good but it is a big world. The typical registrant may not even know 
that ICANN exists. The ccTLD community might not be so eager to see 
ICANN intruding. For many of the developed ccTLD markets, it is way too 
late for ICANN to try anything like that.

The people in some of the countries that are ccTLD-positive now consider 
their local ccTLD to be *their* TLD in a way that .COM is not. The 
Internet (the domain name registration part of it) went local. The main 
driver in .COM, and the other legacy gTLD markets is the US market as 
the .COM is, in reality, the de facto US ccTLD. The market changed but 
ICANN's reactive nature was too slow to adapt and that's why the more 
nimble ccTLDs took over their markets eventhough .COM is still the 
global king of TLDs.

The antitrust issues are very important but the market has changed in 
the last few years and growth in .COM has almost plateaued for the last 
two years. Getting rid of speculation or PPC is not going to solve that. 
This isn't the 1990s market from which ICANN emerged.

The decision to allow registries to own and operate registrars a few 
years ago may have unintentionally created some possible antitrust 
issues if pricing is being discussed amongst registrars and the 
registry's registrar(s) is part of such a conversation.

Regards...jmcc
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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
Ireland        *  https://amzn.to/2OPtEIO
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