[registrars] Regarding taxes

[Larry Erlich]

JP wrote:
> 
> Larry:
> 
> > That is a business choice that they have made. If their costs
> > go up they need to reevaluate that choice. That is not the same as
> > a small registrar having to pay quad the fees.
> 
> €€€ Can you explain this to Me, because I see it exactly the other way
> arround.

I have explained it. We see it differently. There is no
reason to ever guarantee customers that a variable cost
won't change unless you have a contract with someone
else stating that the variable cost won't change. Then I guess
it would be reasonable to guarantee the variable cost.
This isn't the case with ICANN fees and I thought there were
ways for even Verisign to increase the $6 rate. We don't
take money in advance from customers so this isn't an issue
for us and additionally we don't sell domains for small amounts
over cost.

I note from your web page that you offer
"1000 domain packs" for $6.99. So what I think is going
on here is that you have sold packs that obviously have
unused domain registrations. You may have sold tens or hundreds
of these. Or you may have sold hundreds of domain packs of lesser quantities
like 250 for $7.99. 

Your registration agreement is ambiguous as to whether you
can pass the fees along to customers. It says that you
can change or add fees at any time but I don't know if
that is for new packs or legacy packs.

In any case, good news and bad news.

The good news is that I think you and others have a good
case to have a certain amount packs that you sold grandfathered
if there could be a reasonable way to show that you had sold the
packs with the expectation that the price wouldn't change. You would
have to proove that. I could argue that either way. But in the end
ICANN should probably grandfather some past sales. 

The bad news is that it certainly makes selling future packs
less attractive if you have to say something like "by the way
we are selling you domain packs at $7.25 but if our cost go
up you won't be able to register as many names." But you should
be able to find a creative way to bury this somewhere.

(Probably more advice than you want to hear on a public list.)

> 
> > The only way that the increase in transaction fees will kill
> > a large registrar is if they have contracts with customers that
> > specify their cost will always be, say $6.50 (or whatever).
> 
> €€€ I can not speak for other registrars, but it will badly hurt us.
> >
> > Another example of a registrar that might need to eat
> > the fee might be Godaddy. The site advertises $7.95 and $8.95
> > for transfers/new registrations. If a per domain fee of .25 is
> > added, they can't maintain those prices and those magic numbers.
> 
> €€€ Please, visit our website and check our prices.
> >
> > I think that if a registrar makes a choice to sell domains so close
> > to the cost, then take a risk if fees are increased. That is a risk
> > of the business model they have chosen. It is not the same
> > as, once again, a small registrar being hit with an extra $19,000.
> >
> €€€ Again how come it is unfair only one way. There is an increase on the
> variable fee, and it is substantial, as Kurt said yesterday, MOST of the
> funds come from the increase in the PER TRANSACTION fee.
> 
> What you are advocating for is that ALL the funding should come from a per
> transaction.

I am not advocating that all of the funding come per a per
transaction. 

I am advocating:

1) See if DOC really needs all these things done
on the schedule that is laid out in the MOU that was
"just signed"
2) Analyze and reduce expenses possibly by 
outsourcing.
3) Find some reasonable combination of fixed and variable
fees. 

In the end I don't think it's unreasonable that costs be
assigned on both a per registrant and per registration and
per registrar basis.
Actually that's a new idea. Find some way to attach a cost
to a "registrant" since 1 registrant with 100,000 names is certainly
less work for everyone than 100,000 registrants with 1 name each.

> I not only think it is unfair, I can tell you it will completely cripple our
> business, and our ability to provide a large number of customers with
> registrations at an affordable price, customers, that because of the
> increase might not be able to pay for those registrations...

I still don't see that. If your costs go up on a per transaction
basis and your competitors costs go up how will that cripple you?

Can you give an exact example of some of these customers
that would stop registering names if the variable cost increased?

> 
> Our "choice" of model has always been to provide more for less, and it
> proved successful. I do not think your idea of killing our model in favor of
> smaller, "boutique" , "specialty" or even non registering registrars is
> fair; As for the registrars that have a VIABLE, REAL, registration business
> going on, there is relief from the fee.

As I mentioned I think it would be reasonable, even though it wouldn't
benefit us, to have any legacy sales excluded if there is a way to
do that. 

Larry Erlich

-----------------------------------------------------------------
Larry Erlich - DomainRegistry.com, Inc.
215-244-6700 - FAX:215-244-6605 - Reply: erlich at DomainRegistry.com
-----------------------------------------------------------------


> 
> Regards,
> 
> JP
> 
> 
> >> The bottom line is that there is an large overall increase in fees for
> >> registrars as a whole, and nobody  (big or small) is happy with the
> >> increase they have to pay individually.
> >
> >
> >>
> >> Regards,
> >> Bruce
> >
> > --
> -----------------------------------------------------------------
> Larry Erlich - DomainRegistry.com, Inc.
> 215-244-6700 - FAX:215-244-6605 - Reply: erlich at DomainRegistry.com
> -----------------------------------------------------------------