RE: [ga] ICANN Board can intervene to stop domain tasting for 1 year

[George Kirikos <gkirikos@xxxxxxxxx>]

Hello,

--- Roberto Gaetano <roberto@xxxxxxxxx> wrote:
> Dominik Filipp wrote:
> I fully agree. $0.20 re-registration fee is an insufficient solution.
> I am
> always feeling some sort of domain speculation in mind when listening
> to
> such proposals. If I cannot order a pizza and then cancel the order
> just
> paying $0.20 fine, why should have I an extra privilege regarding
> domain
> names? 
> 
> Agree.

The economics of pizzas and domain names are entirely different. A
pizza has labour, material and delivery costs that are far above 20
cents. A domain name is an electronic record in a database where the
marginal costs are close to zero for the registry operator, far below
20 cents.

A 20 cent fee would make any speculation totally uneconomic for domain
names. This is borne out by the fact that on the order of 99%+ of
tasted domains get deleted during the AGP.

Suppose that one tastes 1 million names. If 99% are deleted, and 1% are
kept:

A] Tasting is free:
Cost to taster is 10,000 * $6.62 + 990,000 * $0 = $66,200
(in first year).

B] Non-refundable 20 cent fee:
Cost to taster is 10,000 * $6.62 + 990,000 * $0.20 = $264,200

The cost to the taster has increased by 300%. On a per successful name
basis, the average cost is now $26.42.

The numbers are even more horrible to the taster if the ratio is 99.7%
(i.e. 1 in 300 profitable names), etc.

The risk/reward is also entirely different. Under "A", there is
essentially zero risk to the taster, because suppose that less than 1%
of the names were profitable, then their costs scale linearly with the
number of good names they discover. Under "B", if in a scan of 1
million names they find a tiny amount of good names, they're still on
the hook for a minimum of $200,000. Now the payoff is entirely
non-linear, and the risk/reward ratio is terrible.

PIR has essentially eliminated tasting in .org with their
non-refundable fee. The same would happen in .com/net should ICANN move
forward. It's simple economics, which the automated tasters understand,
but it seems some folks don't.

Sincerely,

George Kirikos
http://www.kirikos.com/