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presumtive renewal and pricing

  • To: <revised-settlement@xxxxxxxxx>
  • Subject: presumtive renewal and pricing
  • From: "Jeff Field" <jfield@xxxxxxxxx>
  • Date: Fri, 17 Feb 2006 08:03:20 -0600

Two major issues in this matter are:

1) presumtive renewal
2) pricing

In that regard, the revised proposed .COM Agreement makes the following
changes:

1) presumtive renewal

- no change

2) pricing

- VeriSign is allowed to increase the registry fee up to 7% in 4 of the 6
years instead of every year

ANALYSIS

ICANN did not negotiate any changes to the presumptive renewal clause.

As for the pricing issue...

According to Webhosting.info, as of 02/13/2006, there were 47,576,292
registered .COM domain names
(http://www.webhosting.info/registries/reports/domains/COM/).  Assuming a
very conservative 10% yearly increase in the total number of .COM domains
(which is significantly below the current growth rate), here are some
revenue figures:

First proposed .COM Agreement:

Year     Price   # Domains    Revenue        Cumulative Revenue
----   -----   ----------   ------------   ------------------
2006   $6.00   47,576,292   $285,457,752   $285,457,752
2007   $6.42   52,333,921   $335,983,774   $621,441,526
2008   $6.87   57,567,313   $395,452,902   $1,016,894,428
2009   $7.35   63,324,045   $465,448,066   $1,482,342,494
2010   $7.86   69,656,449   $547,832,373   $2,030,174,867
2011   $8.42   76,622,094   $644,798,704   $2,674,973,571
2012   $9.00   84,284,303   $758,928,074   $3,433,901,645

Revised proposed .COM Agreement:

Year   Price   # Domains    Revenue        Cumulative Revenue
----   -----   ----------   ------------   ------------------
2006   $6.00   47,576,292   $285,457,752   $285,457,752
2007   $6.42   52,333,921   $335,983,774   $621,441,526
2008   $6.87   57,567,313   $395,452,902   $1,016,894,428
2009   $7.35   63,324,045   $465,448,066   $1,482,342,494
2010   $7.86   69,656,449   $547,832,373   $2,030,174,867
2011   $7.86   76,622,094   $602,249,659   $2,632,424,527
2012   $7.86   84,284,303   $662,474,625   $3,294,899,152

In perhaps easier to understand terms, under the first proposed .COM
Agreement, VeriSign's total revenues would be $3.43 billion dollars.  Under
the revised proposed .COM Agreement, VeriSign's total revenues would be
$3.29 billion dollars.  The difference between the two is $140 million
dollars, or 4%.

While VeriSign being allowed to increase the registry fee up to 7% in only 4
of the 6 years instead of every year might seem like a significant change
(after all, that's a 40% reduction), the likely real net effect is a paltry
4% savings in cost to registrars (and then presumably consumers) over the
length of the Agreement.

CONCLUSION

In regards to the issues of 1) presumtive renewal, and 2) pricing, there is
no significant change between the first proposed .COM Agreement and the
revised proposed .COM Agreement.

--
jeff field
952-848-7626
408-228-5202 fax
jfield@xxxxxxxxx <mailto:jfield@xxxxxxxxx>
-----



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