[alac] Differential Domain Pricing

[Bret Fausett <bfausett@xxxxxxxxxxxxxxxx>]

George Kirikos has done an analysis of the ORG, BIZ and INFO proposed
contracts and picked up a problematic issue with differential domain name
pricing: the contracts don't prohibit the practice. In other words, the
registries could charge a premium for specific strings (e.g. SHOW.BIZ will
cost $1,000/year) or older registrations (names first registered before 1996
cost $1,000/year). By permitting differential pricing, the registries will
be able to exact a premium from those registrants least able or willing to
move. This strikes me as an issue we should take up.

Please take a look at the details below. Perhaps we can invite George to
make a special presentation to the ALAC on our next conference call.

   -- Bret

-------- Original Message --------
Subject:  Vint Cerf/ICANN confirm my interpretation of .biz/info/org
proposed contracts -- tiered/differential domain pricing would not be
forbidden
Date:  Tue, 22 Aug 2006 22:28:55 -0400
From:  George Kirikos <George@xxxxxxxxx>
To:  gkirikos@xxxxxxxxx

Hi folks,

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. 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.

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??

Feel free to spread the word on the mailing lists or media, and contact
Vint (vint@xxxxxxxxxx) or John Jeffrey (jeffrey@xxxxxxxxx) 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
416-588-0269







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