Re: [gnso-vi-feb10] RE: Economists

[Eric Brunner-Williams <ebw@xxxxxxxxxxxxxxxxxxxx>]

Milton,

As often as anyone points out that VGRS has market power, that's not
quite a proof that no other registry, even a hypothetical one, which
is about all the "new gTLDs in 2010" amount to, won't be able to set,
rather than take, prices in the inventory Jon originally, and now Jeff
E., propose to allocate to the registry operator.

I removed the not-dotcom entries from the data I found, for
consistency, but as comparable values exist for .de and .co.uk, as I
mentioned, the presumption that the beneficiary of the 100k initial
allocation won't have the ability to set, not take, prices, for this
inventory seems likely to be wrong.

Part of our problem with Salop and Wright is that they are not looking
at the possibility that market power, price setting rather than price
taking, exists with every registry, even if only transitionally.

Absent registry policy, e.g., .cat, .coop, .museum, ..., or a DRP,
brand owners would be paying whatever price each registry sets, not
the other way around. They still pay a price for the convenience of
some brand owner, rather than a non-owner, own the names that could
infringe upon a brand, if not promoting another brand, and they don't
set that price, they've merely moved the cap down from "very dear" to
"barely tolerable wastage".

Absent registry policy, e.g., .cat, .coop, .museum, ..., for generics
like sex, fund, hotel, ... there is ample experience that where the
registry chooses to extract the value, it is the registries which set
the price, through auction, they do not take the first offer.

As an academic exercise, what do you suggest is the correct
characterization of a registry which can set prices for some, but not
all of its inventory? Is "market power" transitional? Won't the 15th
gTLD, no matter what it is and no matter who operates it, assuming
that it does not have a policy, like .cat, .coop, .museum, ..., have
"market power" for many thousands of domains? Won't the 16th? The
17th? ...

A reasonable answer, and the one I expect Salop and Wright would offer
is that they are not concerned with mere thousands, even tens, or
hundreds of thousands of domains and their "premium value" in a market
of more than a hundred million domains. So if you don't care what
happens in the first year, just in the long run (when we're all dead
as Keynes noted), that would be reasonable. Competition policy is not
primarily about preventing transitional exceptional profit taking,
however large such a motivation may be to start registries.

You've addressed (b), this unfortunate registry needs ICANN's help to
get started, for some cash value of help. What is left is (a), our
other problem. Why does ICANN need to create this unfortunate
registry, which needs this grant of benefit?

You may of course, like Salop and Wright, overlook this too, as the
market will sort this all out. Which still leaves us trying, since
2004, to get the 15th registry agreement signed and the delegation
made and domains being allocated to registrants.

Eric

On 5/5/10 9:02 AM, Milton L Mueller wrote:
> 
> Eric: 
> How many of these names attracting high values were not in .com? 
> Hmm, by your own stated examples I see....none were.
> .Com has market power. There is no debate about that. 
> 
> <Sigh. How many times do I have to point this out?>
> 
>> -----Original Message-----
>>
>> sex.com went for $14m, fund.com went for pennies under $10m, porn.com
>> went for $9.5m, {business and diamonds}.com went for $7.5 each, and
>> beer.com went for $7m. AsSeenOnTV.com went for pennies over $5m, and
>> {korea, casino and seo}.com went for $5m each.
>>
>> The price points for each of these for the random standard 2010 (or
>> whenever) application going through sunrise and landrush will be lower
>> than for .com, but significantly higher than the price point for any
>> remaining strings after the first 100k have been harvested by the
>> business entity ICANN selects as the registry operator and which has
>> this one-time value extraction permit.
>>
> 
> 
> 


On 5/5/10 7:11 AM, Eric Brunner-Williams wrote:
> Jeff E,
> 
> You asked if there were concerns about your plan, the former Jon
> Nevett plan, to allow a registry operator to self-sale the first
> 100,000 names.
> 
> sex.com went for $14m, fund.com went for pennies under $10m, porn.com
> went for $9.5m, {business and diamonds}.com went for $7.5 each, and
> beer.com went for $7m. AsSeenOnTV.com went for pennies over $5m, and
> {korea, casino and seo}.com went for $5m each.
> 
> The price points for each of these for the random standard 2010 (or
> whenever) application going through sunrise and landrush will be lower
> than for .com, but significantly higher than the price point for any
> remaining strings after the first 100k have been harvested by the
> business entity ICANN selects as the registry operator and which has
> this one-time value extraction permit.
> 
> Salop and Wright did not address this, though for this portion of any
> domain name inventory, the registry sets the price, and it is above
> six dollars, it does not take a price, one at or below six dollars.
> Using the .com data, with some variation in value due to the historic
> recession beginning in December, 2007, between 50 and 100 domains have
> had values in excess of $1m. So that's a cool $200m on the first 50
> names, times whatever the discount is for .foo, relative to .com.
> 
> The value for the same names in the .de and co.uk inventories suggests
> that the discount is significantly closer to 1.0 than to 0.1.
> 
> The curve above the $1m price point continues below it.
> 
> Stephane Van Gelder can correct me, he blogs about the high value
> domain name market. And he's just commented in the thread.
> 
> Recalling that the excuse for this is (a) ICANN needs to create this
> registry for some purpose, and (b) this unfortunate registry needs
> ICANN's help to get started, until it too can set, rather than take,
> prices, how much is 100,000 domains in time?
> 
> We're selling about 1k domains per month in .cat to Catalans, starting
> with a $2,000 marketing budget. The unfortunate registry which needs
> ICANN's help must have similar, or even slower, uptake. So ignoring
> the sunrise and landrush phase, which might sell half of the
> privilege, the unfortunate registry will have no registrars for four
> years, more or less. That is, not before 2015.
> 
> So, when we say 10k or 100k, as an exception, and without price caps,
> and for the standard (no significant restrictions other than the
> UDRP), we are talking either about a $100m gift to the applicant,
> times the discount rate relative to .com, or the number of years the
> registry operator is intentionally without registrars, or both.
> 
> Eric