I think the both of you are
somewhat myopic in your analysis of the business plan. Most companies try to
use a longer vision than 1-2 years, and that is particularly the case for an internet
registry. Say it costs them $6 per customer in marketing costs and they get
$6 in revenue from that customer in year 1, they don't have to spend that marketing
cost to get that customer to renew in year 2, or year 3, etc. That is why when
you look at any of these applications, they forecast large net income numbers by
years 3,4, and 5. If a company is capitalized well enough to absorb those early
losses, it is clearly a very sound business plan to "buy" customers in year 1 if
the expected net future value of the cash flows of the customer (include a reasonable
renewal rate) exceeds the cost of buying the customer and a reasonable profit margin.
You will note that Network Solutions has been very profitable charging $6 registry
fee for the .com, .net,.org because it is further along in the cycle (i.e., getting
renewals). That being said, I think the $15 registry fee proposed by IOD is
excessive and, (if .web is awarded, I feel it should be IOD), I hope they would reduce
this before going live for new registrations.
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