[At-Large] ICANN Announcement on Domain Tasting

[Karl Auerbach]

On 08/12/2009 11:39 PM, Patrick Vande Walle wrote:

>> $6.86 for .COM and $4.98 for .NET.
>
> Allow me to be the devil's advocate here.
>
> In a capitalist environment, market prices are based on supply and
> demand. As long as customers are willing to pay the price being
> asked, there is no reason why VRSN would lower its prices. That is
> what a VRSN shareholder expects the company to do.

I have long held a position similar to the one you suggest - that
registries can charge what the market will bear - but only on certain
limited conditions:

- That such rates not be imposed on those already locked in and only
be imposed on those who are coming anew into the TLD.

- That customers be able to lock-in their initial terms for very long
periods of time, i.e. have a right to renew at the lesser of the current
contract fee schedule or the rate being offered to new customers.

I would suggest that we examine your premise, i.e. of a free marketplace
in which customers have a choice.

You are assuming that TLDs are fungible - that .com and .biz are
equivalent in the eyes of our customers - and that the costs of making a
change are negligible.

Yet neither is true.

TLDs are not fungible. In the eyes of many consumers, companies
(particularly ones, such as mine with three-letter names) in .com are
perceived as having more substance than those in TLDs such as .biz or
.bz. So for us to move out of .com would mean a reduction in our
perceived business reputation.

Changing TLDs is not something for the feint of heart - for many
businesses it would be effective suicide. In my case changing to a new
TLD would require me to abandon all of the recognition - including all
of the search engine material and all of the URL's that currently point
to me.

As a US appellate court recently found, the space within a TLD is not a
marketplace subject to competitive pressures. Customers are locked in.
Absent an enormous burden neither IBM nor Cavebear (or AT&T or
Microsoft or Google or ... the list goes on and on) is going to leave
.com - we have all built internet presence and reputation and the loss
of accumulated "goodwill" and the cost of changing far exceeds the fiat
registry fee.

In other words, voting with our feet is not a realistic answer for those
millions upon millions of people who are already made their TLD choice.

The name of the most commonly used DNS software is "BIND" - and that
reflects what happens at the instant one selects a TLD and begins to
build an internet presence: One becomes bound to that TLD and change
becomes increasingly expensive.

Suppose your state's utility commission should say that you now are
required to pay $50/month surcharge - would your answer be that you can
vote with your feet and live off the electrical grid? Or suppose you
are sitting on a ship half way to Hawaii and the captain comes on and
says "We are pleased to announce that all passengers are now subject to
a $1000 docking fee." You could vote with your feet and jump off and
swim 2000km to shore. Few people would take that option. And few would
consider that they had a realistic choice.

The simple fact is that while there is a valid argument that *before* a
consumer chooses a TLD there is a competitive situation. But once the
choice is made the consumer is stuck.

I know for a fact that I have never had a choice about the registry
component of the price for my names in .com - the registry fee component
was simply dictated by ICANN unto me and I had a blunt choice: pay or
abandon my names in .com.

		--karl--