Now, if you want a stark definition of self-defeating, here is one:
The gTLD Registries Stakeholder Group (RySG), which is an association representing the interests of generic top level domain name administrators is asking ICANN for a temporary reduction of the new gTLD registry fees citing lack of demand. Why are you surprised there is no demand when you price a second rate new gTLD at $60 or $300 per year?
Currently, the more than 1000 new gTLD registries are required to pay ICANN a registry fixed fee of $25,000 per year which is paid quarterly in fixed amounts of $6,250. Additionally, ICANN demands that the new gTLD registries that complete 50,000 transactions in any quarter pay a transaction fee of $0.25 per domain name.
This fee structure is only applicable to the registries under the new gTLD contract. The letter from RySG Chairman Paul Diaz states that only 63 new gTLD registries have so far registered over 50, 00 domain names. Hundreds more of new gTLD registries have fewer than 10,000 domains registered in their namespaces.
If a registry has to pay $25,000 fixed fee annually to ICANN, it is easy to see what it costs it to register a single name. If the registry, for example, has 1000 domain names under management, they have to pay ICANN $25 per domain name every year. Registries that have managed to register more domain names probably fare much better. With 50,000 domain names, the registries have to pay ICANN only $0.5 per domain name. Legacy gTLDs like .COM of course have different contract terms with ICANN. Verisign only has to pay ICANN $0.25 per domain name registered.
The new gTLD registries argue that a fixed contract fee of $25,000 will prevent them from offering end users competitive pricing for the new gTLD domain names. I think here is where you can spot their hypocrisy. They were not offering those “competitive prices” right from the beginning. The registries showed bad faith right from the word go. These are guys who decided they were going to exploit end users right from the launch date of their top level domain names in order to recoup their investments as quickly as possible.
The reason why the new gTLD registries are feeling the pinch is because they have priced themselves out of the market. The average global end user for a domain name is looking for a price in the region of $5 to $12 at the higher end. Now the new gTLD registries want you to pay anywhere from $50 to $300 for the .ooo .ninja .sucks domain names. A well managed domain namespace is eventually going to turn you a profit; you just have to be patient and have some business sense. Price the domain names right, do lots of promotions and bring out the value proposition and also be prepared to play the long game. A perfect example is .SHOP. They invested more than $40 million in their new gTLD address, they have a long term vision of the TLD and they are not looking at recouping their investments in the first year or first five years. They are playing the long game and building an enduring business. But many of these upstarts want to break even in the first year!
Paul Diaz wants the new gTLD registries to be given the same terms as .COM which pays ICANN $0.25 per domain name registered. But Verisign has hundreds of millions of domains under .COM. There were 126 million .COM domains registered by the end of 2016 so at a price of $0.25 per domain, Verisign was paying ICANN at least $31 million from domain registrations alone. Besides, it should be emphasized again, they new gTLDs knew they were participating in a new top level domain name allocation program with a new set of rules and obligations so clutching onto that Verisign excuse doesn’t mean much here.
The new gTLD registries knew they were going to pay ICANN $25,000 per year in fixed registry fee no matter how they performed. So why should the rules be changed because of their poor business decisions?
ICANN to Promote New gTLDs?
It doesn’t stop there. The sense of entitlement continues. The new gTLD registries not only want ICANN to reduce their fixed registry fees, they also want it to set up a $3 million global fund to promote the new gTLDs to end users globally. ICANN could draw the money from its pool of application fees collected over the past 4 years, they say, and take them under their arms, subsidising their operations as they rip off end users with registration fees of $50 to $300 per year for the .ooo .ninja .horse etc
That is not ICANN’s damn job! That is the job of the new gTLDs themselves. Every registry must devote proceeds from its overpriced domain names to do the promotion or simply fold and ship out. These guys are forgetting that they are running a business in which end users have plenty of options. The world will not stop because a new gTLD has collapsed. Users have hundreds of options to pick from. It is upon the new gTLD registries themselves to justify their existence.
It is not the fault of ICANN that the new gTLD registries are underperforming. Many of them don’t have the right business model or don’t even understand the registry business at all. Some of them invested in the registries because it was touted in many news channels like CNN as the “next internet goldrush” so they pumped money into the scheme hoping to make billions-like in the .COM boom-within a year or two only to be faced with the reality of $60,000 in annual revenues from domain registrations. They hoard premium domain names and list them for sale for tens of thousands of dollars or hundreds of thousands of dollars instead of selling them reasonably to end users who will develop them and increase the popularity of their namespace. It is not right to help these guys. Let them retune their business model and respond better to the realities of the domain name market and for those who can’t, let them choke on their greed.