ICANN posts Economic Studies justifying new gTLDs & Price Caps as unnecessary

[gpmgroup]

http://www.icann.org/en/announcements/announcement-04mar09-en.htm

http://www.icann.org/en/topics/new-gtlds/prelim-report-consumer-welfare-04mar09-en.pdf

V. CONCLUSION
52. The benefits of free entry are well-recognized and the introduction of new gTLDs is likely to benefit consumers by subjecting .com and other gTLDs to increased competition, widening choice available to consumers, and facilitating innovation. At the same time, claims that the introduction of new gTLDs will necessitate widespread defensive registrations appear to be exaggerated and are inconsistent with the oft-noted observation that there have been a limited number of registrations on gTLDs introduced in recent years. Existing legal framework and ICANN-established procedures provide mechanisms for protecting trademarks and addressing concerns about consumer confusion. If necessary, various additional mechanisms could be created by ICANN to protect against abuse of existing trademarks.

53. Together, these factors imply that consumer welfare is likely to be harmed if the deployment of gTLDs is restricted or delayed by requiring ICANN or others to provide an affirmative justification to permit entry. Placing such a burden on ICANN or other parties is inconsistent with the general approach to antitrust policy in a wide variety of industries.

http://www.icann.org/en/topics/new-gtlds/prelim-report-registry-price-caps-04mar09-en.pdf

“I conclude that price caps or ceilings on prices charged by operators of new gTLD registries are unnecessary to insure competitive benefits of the proposed process for introducing new gTLDs. I further conclude that imposing price caps on the registries for new gTLDs could inhibit the development and marketplace acceptance of new gTLDs by limiting the pricing flexibility of entrants to the provision of new registry services without generating significant benefits to registrants of the new gTLDs.”

 

[GeorgeK]

I was simply disgusted by the report/analysis. I've spent the last little while preparing my initial comments, which I just submitted to their comments forum. Here it is:

------

Hello,

The reports and analysis by Dr. Dennis Carlton at:

http://www.icann.org/en/announcements/announcement-04mar09-en.htm

are deeply, deeply flawed. I will prepare a long rebuttal to it in the coming weeks, but wanted to go on the record early as to its weaknesses. The analysis appears to be based on a very limited review of the market for domain names, and utilizes little actual data. It fails to even consider how nuanced the market for domain names has become, and how registry operators can exploit those nuances, including tiered-pricing.

In paragraph 11 of:

http://www.icann.org/en/topics/new-gtlds/prelim-report-consumer-welfare-04mar09-en.pdf

Dr. Carlton writes:

"Switching costs faced by registrants may create incentives for registries and registrars to act opportunistically by raising prices. However, ex ante competition to attract new registrants, as well as harm to the reputation of the registry and/or registrar limits their ability to engage in such conduct."

This is naive, and simply does not capture the real nature of the market for domain names and the ability to find substitutions. Here are some examples of *real* domain name transactions, to provide a reality check:


1) Fund.com -- USD $10 million

http://www.fund.com/aboutus/investors/faq.aspx#7

2) DataRecovery.com -- USD $1.7 million

http://www.pr.com/press-release/74545

3) Kredit.de -- 892,500 Euros: (in German)

http://www.sedo.com/presse/presse.php?tracked=&partnerid=&id=249&language=d

4) Vibrators.com -- USD $1 million:

http://www.priveco.com/whydidthbuyd.html

5) YP.com -- USD $3.85 million:

http://biz.yahoo.com/e/081229/live10-k.html

6) Erotica.com -- USD $850,000

http://www.thedomains.com/2009/01/19/eroticacom-sold-for-850000/

7) Fly.com -- USD $1.76 million

http://biz.yahoo.com/prnews/090130/ny64932.html?.v=1

8) Toys.com -- USD $5.1 million

http://news.bbc.co.uk/2/hi/technology/7923433.stm

These transactions were all relatively recent, too. If profit-maximizing monopoly registry operators had no price restrictions in place, they would not, as is implicit in Dr. Carlton's analysis, charge the same price for each domain name. That would not be profit-maximizing. Instead, they would price each domain differentially, based on its implicit "value" in the marketplace (price discrimination based on different "grades" of domain names, and their brand equity/goodwill). So, the renewal cost of Toys.com would be much higher than that for xyztoys.com, to give a simple example. The renewal fees of Sex.com, Hotels.com, Google.com, Yahoo.com, Microsoft.com would be much higher than that of an inferior domain name such as CompassLexecon.com (the domain name of the firm that produced the deeeply flawed report).

This is not some theoretical example, as this happens in reality in the dot-TV namespace which is operated by VeriSign (who also happens to manage .com). For example, at the time of this post, business.tv is priced by the registry at $500,000 per year.

http://www.enomcentral.com/domains/tv_names_browse.asp
http://www.webcitation.org/5f26XytBW

real.tv is priced at $150,000 per year, and so on. Dot-TV is widely considered inferior and less desirable to dot-com. If price controls did not exist in the dot-com registry, it is not a huge leap to realize that the renewal fees for currently registered quality domain names would skyrocket and this would *not* be affected by so-called "competition" to attract new registrants or reputational effects. Monopolists spend little time worrying about their reputation. Ask VeriSign and ICANN about SiteFinder, if you have any doubts.

If switching costs are truly "low", I offer to purchase the CompassLexecon.com (a very inferior domain name, but that of the report author's company) for $2000 (offer good until the end of the comment period plus 30 days, to permit the author to accept our offer). Note that even with simple assumptions of inflation and interest rates, a rejection of our offer of $2000 implies that they'd be willing to pay renewal costs of $100+ per year (far higher than the $7/yr VeriSign currently charges at wholesale, or under $10/yr they can pay at retail), i.e. what is the annuity value of their switching costs, if they were "only" $2000. A rejection of our offer indicates that switching costs for even such an inferior domain name, out of 80 million dot-coms and unlimited alternate domains in .info, or other gTLDs) are higher than $2,000.

Perhaps the author of this report can then document what the actual costs would be on their firm of switching to a different domain for even such a low value domain name in most people's eyes. That would be the tip of the iceberg, though, compared to the switching costs of a Hotels.com, Games.com (owned by AOL, after a large acquisition), or owners of millions of domain names.

If they reject our proposal to buy their domain name for $2,000, I'd like the author of the report to create a counter-offer price open for acceptance for an equal amount of time as my offer ---- if they price it too low, they bear the risk of me and friends of mine accepting their offer, in order to put their feet to the fire, so to speak, and face the "switching costs" that they perceive as only a theoretical possibility. Let me make it more real for them, by allowing them to name their price, after putting some thought into it.

I suspect the author of the report will refuse to name a price for their company domain name, rather than reveal to all the truly high value they place on it (one that would illustrate the enormous switching costs involved that they've severely misanalyzed in their report).

If ICANN truly believes switching costs are low, I offer to acquire the ICANN.com/net/org domain names, and all associated trademark registrations for $10,000, under the same time frame as above (end of this comment period plus 30 days). If ICANN truly believes switching costs are low, they will accept my offer. Or, as before, they can name their counterprice --- and be sure not to price it too low, or I just might accept it. Most folks would not consider "ICANN.com/net/org" to be desirable domain names, either.

The switching costs are not in the ballpark of a person switching their home address, or even switching their telephone number. For many individuals and businesses, their domain name *is* their internet identity. It would be costlier than switching even their personal name (e.g. asking the recognizable "Tom Cruise" who has invested in his personal "brand" to switch to the name "John Smith" and start over from scratch wouldn't even begin to measure the cost of asking Amazon.com to switch to something like NewCo.web), and would destroy years of goodwill investment. It would represent bankruptcy for many.

Has the author of this report even provided one piece of survey data from companies asking what they place the value of their own domain names, to ascertain switching costs? No.

Has the author of this report discussed the possibility of tiered pricing? No. [You can bet that those salivating at the prospect of running new gTLDs, or would benefit if price caps are removed from existing gtLDs, are well aware of that possibility.]

Does the author of this report appear to even be aware of the "equal treatment" clause of the current gTLD contracts, which would provide existing gTLDs like dot-com the ability to have price controls lifted if new gTLD receive that right? No. Indeed, the author makes the flawed assumption of the opposite in paragraph 20 of:

http://www.icann.org/en/topics/new-gtlds/prelim-report-registry-price-caps-04mar09-en.pdf

suggesting that

"The fact that major TLDs are currently subject to price caps further
constrains the ability of new gTLD registry operators to charge non-competitive prices......While the appropriateness of these price caps may be debatable, the existence of the caps limits the prices that new gTLDs can charge by capping the price that the major registry operators can charge."

In other words, the author seems completely unaware of the fact that eliminating price controls for new gTLDs triggers the equal treatment clause in the "major TLDs," which eliminates price caps for these *existing* gTLDs. This is not some theoretical example, either. Neustar is on public record stating:

http://www.icann.org/en/topics/new-gtlds/agv1-analysis-public-comments-18feb09-en.pdf (page 123)

"Any material changes for the newer, no-price capped TLDs regarding vertical separation and equal access in general must be applied to NeuStar – this is required under the .biz Registry Agreement and ICANN's Bylaws. Price caps are appropriate for larger TLDs that have a much higher percentage of the market and are not appropriate for gTLDs that do not have any real market power."

And the author implicitly seems to be aware that unlimited price increases for renewals is a tactic that could be employed by registry operators, note o paragraph 9 of:

http://www.icann.org/en/topics/new-gtlds/prelim-report-registry-price-caps-04mar09-en.pdf

"For example, some new gTLD operators might offer significantly lower initial prices without restricting their ability to increase prices in the future (whereas the existence of price caps likely would inhibit the introduction of extremely low initial prices). Some consumers may prefer to trade off a lower initial price for a potential future price increase."

I believe I can speak for most domain registrants in .com that this is not a fair tradeoff! It's asking the registry to "tax" them after they've achieved success, and tax them they will, more than you and I would want to know!

There are so many other points that are simply wrong in this report, that I'll have to leave to a longer future comment. But, I did want to mention:

a) the significant costs of domain name abuse (e.g. cybersquatting, counterfeiting, defensive registrations) are dismissed without any quantitative analysis. These are real costs that are simply not analyzed. I'm tempted to typosquat on the author's company's domain name as an experiment, so they can see firsthand what the cost is (is it worth them to spend the legal costs to fund a UDRP or lawsuit), but I'll leave that as a "thought experiment" for them to perhaps think through instead, for now. I find it ironic that a firm that owns the relatively worthless and undesirable "CompassLexecon.com" domain name would have defensively registered both CompassLexecon.net AND CompassLexecon.org. Defensive registrations are very real, even for worthless undesirable domains (to most people) like CompassLexecon.com.

b) we actually found a so-called "expert" who appears against competitive tenders for government procurement! See footnote 7 on page 6 of

http://www.icann.org/en/topics/new-gtlds/prelim-report-consumer-welfare-04mar09-en.pdf

"The DOJ suggestion, however, does not address how ICANN should evaluate bidders that offer a low price by offering low quality service and those that offer higher quality/higher price services."

Hmmmm, registry operations are essentially a commodity. Whether Afilias or Neustar or VeriSign offer .com, .info or .biz or .store or .snafu or .junk, it is trivial for them to change a few lines of interface code to run a new TLD. It's like asking the publisher of the New York City White Pages directory whether they are able to publish the Atlanta City White Pages directory. It's a book with telephone numbers! All that's different is the cover and the contents/numbers inside. It's like Toyota offering blue cars vs. red cars, all from the same assembly line, or Taco Bell adding a new franchise location in New York vs. Boston vs. Cleveland vs. Miami using the same "business formula."

In the domain name space, just like any other procurement contract for Army Boots, laserprinting toner, paper, staplers, etc., one simply sets standards of performance (which are so low in the ICANN contracts that there is almost no risk of any entity failing to meet them) for name additions, deletions, DNS resolution, and other quality of service metrics. These are the same kinds of procurement contracts that exist for the management of the telephone database, for example (and if one goes to www.sms800.com and reads the Tariff Documents, under competitive tenders toll-free number costs are 13.13 CENTS per month, far below that in the monopolist and oligopolistic domain name registration business).

I believe the authors lost all credibility when they actually seemed to support ICANN using highest-bid auctions with the proceeds going to ICANN, instead of a lowest price auction benefiting consumers as the DOJ suggested, by criticizing the DOJ's thoughtful recommendations which have proven themselves in most procurements. From one economist to another, they should simply know better. Indeed, even Neustar won the .us registry contract via a tender process:

http://www.ntia.doc.gov/ntiahome/press/2007/Neustar_101907.html

I challenged Neustar to declare whether NTIA's process for .us was superior or inferior to that of ICANN's proposed ascending price mechanism:

http://gnso.icann.org/mailing-lists/archives/ga-200709/msg02660.html
http://gnso.icann.org/mailing-lists/archives/ga-200709/msg02693.html

It's been several weeks, and they've failed to respond. It is very clear that the NTIA process, or that of the DOJ with a lowest bid mechanism, maximizes consumer welfare, instead of lining ICANN's pockets. Of course, it was ICANN, and not consumers, who paid for this "expert report."

In conclusion, this one-sided report could have been written by VeriSign or ICANN itself, given its deeply flawed analysis and conclusions, and should be disregarded by the community, and more importantly the NTIA/DOJ (who were spot on in their original analysis). I'll have far more detailed analysis of this report in the coming weeks, going through it paragraph by paragraph.

Sincerely,

George Kirikos
http://www.leap.com/

 

[Sonny Banks]

I was simply disgusted by the report/analysis. I've spent the last little while preparing my initial comments, which I just submitted to their comments forum. Here it is:

------

Hello,

The reports and analysis by Dr. Dennis Carlton at:

http://www.icann.org/en/announcements/announcement-04mar09-en.htm

are deeply, deeply flawed. I will prepare a long rebuttal to it in the coming weeks, but wanted to go on the record early as to its weaknesses. The analysis appears to be based on a very limited review of the market for domain names, and utilizes little actual data. It fails to even consider how nuanced the market for domain names has become, and how registry operators can exploit those nuances, including tiered-pricing.

In paragraph 11 of:

http://www.icann.org/en/topics/new-gtlds/prelim-report-consumer-welfare-04mar09-en.pdf

Dr. Carlton writes:

"Switching costs faced by registrants may create incentives for registries and registrars to act opportunistically by raising prices. However, ex ante competition to attract new registrants, as well as harm to the reputation of the registry and/or registrar limits their ability to engage in such conduct."

This is naive, and simply does not capture the real nature of the market for domain names and the ability to find substitutions. Here are some examples of *real* domain name transactions, to provide a reality check:


1) Fund.com -- USD $10 million

http://www.fund.com/aboutus/investors/faq.aspx#7

2) DataRecovery.com -- USD $1.7 million

http://www.pr.com/press-release/74545

3) Kredit.de -- 892,500 Euros: (in German)

http://www.sedo.com/presse/presse.php?tracked=&partnerid=&id=249&language=d

4) Vibrators.com -- USD $1 million:

http://www.priveco.com/whydidthbuyd.html

5) YP.com -- USD $3.85 million:

http://biz.yahoo.com/e/081229/live10-k.html

6) Erotica.com -- USD $850,000

http://www.thedomains.com/2009/01/19/eroticacom-sold-for-850000/

7) Fly.com -- USD $1.76 million

http://biz.yahoo.com/prnews/090130/ny64932.html?.v=1

8) Toys.com -- USD $5.1 million

http://news.bbc.co.uk/2/hi/technology/7923433.stm

These transactions were all relatively recent, too. If profit-maximizing monopoly registry operators had no price restrictions in place, they would not, as is implicit in Dr. Carlton's analysis, charge the same price for each domain name. That would not be profit-maximizing. Instead, they would price each domain differentially, based on its implicit "value" in the marketplace (price discrimination based on different "grades" of domain names, and their brand equity/goodwill). So, the renewal cost of Toys.com would be much higher than that for xyztoys.com, to give a simple example. The renewal fees of Sex.com, Hotels.com, Google.com, Yahoo.com, Microsoft.com would be much higher than that of an inferior domain name such as CompassLexecon.com (the domain name of the firm that produced the deeeply flawed report).

This is not some theoretical example, as this happens in reality in the dot-TV namespace which is operated by VeriSign (who also happens to manage .com). For example, at the time of this post, business.tv is priced by the registry at $500,000 per year.

http://www.enomcentral.com/domains/tv_names_browse.asp
http://www.webcitation.org/5f26XytBW

real.tv is priced at $150,000 per year, and so on. Dot-TV is widely considered inferior and less desirable to dot-com. If price controls did not exist in the dot-com registry, it is not a huge leap to realize that the renewal fees for currently registered quality domain names would skyrocket and this would *not* be affected by so-called "competition" to attract new registrants or reputational effects. Monopolists spend little time worrying about their reputation. Ask VeriSign and ICANN about SiteFinder, if you have any doubts.

If switching costs are truly "low", I offer to purchase the CompassLexecon.com (a very inferior domain name, but that of the report author's company) for $2000 (offer good until the end of the comment period plus 30 days, to permit the author to accept our offer). Note that even with simple assumptions of inflation and interest rates, a rejection of our offer of $2000 implies that they'd be willing to pay renewal costs of $100+ per year (far higher than the $7/yr VeriSign currently charges at wholesale, or under $10/yr they can pay at retail), i.e. what is the annuity value of their switching costs, if they were "only" $2000. A rejection of our offer indicates that switching costs for even such an inferior domain name, out of 80 million dot-coms and unlimited alternate domains in .info, or other gTLDs) are higher than $2,000.

Perhaps the author of this report can then document what the actual costs would be on their firm of switching to a different domain for even such a low value domain name in most people's eyes. That would be the tip of the iceberg, though, compared to the switching costs of a Hotels.com, Games.com (owned by AOL, after a large acquisition), or owners of millions of domain names.

If they reject our proposal to buy their domain name for $2,000, I'd like the author of the report to create a counter-offer price open for acceptance for an equal amount of time as my offer ---- if they price it too low, they bear the risk of me and friends of mine accepting their offer, in order to put their feet to the fire, so to speak, and face the "switching costs" that they perceive as only a theoretical possibility. Let me make it more real for them, by allowing them to name their price, after putting some thought into it.

I suspect the author of the report will refuse to name a price for their company domain name, rather than reveal to all the truly high value they place on it (one that would illustrate the enormous switching costs involved that they've severely misanalyzed in their report).

If ICANN truly believes switching costs are low, I offer to acquire the ICANN.com/net/org domain names, and all associated trademark registrations for $10,000, under the same time frame as above (end of this comment period plus 30 days). If ICANN truly believes switching costs are low, they will accept my offer. Or, as before, they can name their counterprice --- and be sure not to price it too low, or I just might accept it. Most folks would not consider "ICANN.com/net/org" to be desirable domain names, either.

The switching costs are not in the ballpark of a person switching their home address, or even switching their telephone number. For many individuals and businesses, their domain name *is* their internet identity. It would be costlier than switching even their personal name (e.g. asking the recognizable "Tom Cruise" who has invested in his personal "brand" to switch to the name "John Smith" and start over from scratch wouldn't even begin to measure the cost of asking Amazon.com to switch to something like NewCo.web), and would destroy years of goodwill investment. It would represent bankruptcy for many.

Has the author of this report even provided one piece of survey data from companies asking what they place the value of their own domain names, to ascertain switching costs? No.

Has the author of this report discussed the possibility of tiered pricing? No. [You can bet that those salivating at the prospect of running new gTLDs, or would benefit if price caps are removed from existing gtLDs, are well aware of that possibility.]

Does the author of this report appear to even be aware of the "equal treatment" clause of the current gTLD contracts, which would provide existing gTLDs like dot-com the ability to have price controls lifted if new gTLD receive that right? No. Indeed, the author makes the flawed assumption of the opposite in paragraph 20 of:

http://www.icann.org/en/topics/new-gtlds/prelim-report-registry-price-caps-04mar09-en.pdf

suggesting that

"The fact that major TLDs are currently subject to price caps further
constrains the ability of new gTLD registry operators to charge non-competitive prices......While the appropriateness of these price caps may be debatable, the existence of the caps limits the prices that new gTLDs can charge by capping the price that the major registry operators can charge."

In other words, the author seems completely unaware of the fact that eliminating price controls for new gTLDs triggers the equal treatment clause in the "major TLDs," which eliminates price caps for these *existing* gTLDs. This is not some theoretical example, either. Neustar is on public record stating:

http://www.icann.org/en/topics/new-gtlds/agv1-analysis-public-comments-18feb09-en.pdf (page 123)

"Any material changes for the newer, no-price capped TLDs regarding vertical separation and equal access in general must be applied to NeuStar – this is required under the .biz Registry Agreement and ICANN's Bylaws. Price caps are appropriate for larger TLDs that have a much higher percentage of the market and are not appropriate for gTLDs that do not have any real market power."

And the author implicitly seems to be aware that unlimited price increases for renewals is a tactic that could be employed by registry operators, note o paragraph 9 of:

http://www.icann.org/en/topics/new-gtlds/prelim-report-registry-price-caps-04mar09-en.pdf

"For example, some new gTLD operators might offer significantly lower initial prices without restricting their ability to increase prices in the future (whereas the existence of price caps likely would inhibit the introduction of extremely low initial prices). Some consumers may prefer to trade off a lower initial price for a potential future price increase."

I believe I can speak for most domain registrants in .com that this is not a fair tradeoff! It's asking the registry to "tax" them after they've achieved success, and tax them they will, more than you and I would want to know!

There are so many other points that are simply wrong in this report, that I'll have to leave to a longer future comment. But, I did want to mention:

a) the significant costs of domain name abuse (e.g. cybersquatting, counterfeiting, defensive registrations) are dismissed without any quantitative analysis. These are real costs that are simply not analyzed. I'm tempted to typosquat on the author's company's domain name as an experiment, so they can see firsthand what the cost is (is it worth them to spend the legal costs to fund a UDRP or lawsuit), but I'll leave that as a "thought experiment" for them to perhaps think through instead, for now. I find it ironic that a firm that owns the relatively worthless and undesirable "CompassLexecon.com" domain name would have defensively registered both CompassLexecon.net AND CompassLexecon.org. Defensive registrations are very real, even for worthless undesirable domains (to most people) like CompassLexecon.com.

b) we actually found a so-called "expert" who appears against competitive tenders for government procurement! See footnote 7 on page 6 of

http://www.icann.org/en/topics/new-gtlds/prelim-report-consumer-welfare-04mar09-en.pdf

"The DOJ suggestion, however, does not address how ICANN should evaluate bidders that offer a low price by offering low quality service and those that offer higher quality/higher price services."

Hmmmm, registry operations are essentially a commodity. Whether Afilias or Neustar or VeriSign offer .com, .info or .biz or .store or .snafu or .junk, it is trivial for them to change a few lines of interface code to run a new TLD. It's like asking the publisher of the New York City White Pages directory whether they are able to publish the Atlanta City White Pages directory. It's a book with telephone numbers! All that's different is the cover and the contents/numbers inside. It's like Toyota offering blue cars vs. red cars, all from the same assembly line, or Taco Bell adding a new franchise location in New York vs. Boston vs. Cleveland vs. Miami using the same "business formula."

In the domain name space, just like any other procurement contract for Army Boots, laserprinting toner, paper, staplers, etc., one simply sets standards of performance (which are so low in the ICANN contracts that there is almost no risk of any entity failing to meet them) for name additions, deletions, DNS resolution, and other quality of service metrics. These are the same kinds of procurement contracts that exist for the management of the telephone database, for example (and if one goes to www.sms800.com and reads the Tariff Documents, under competitive tenders toll-free number costs are 13.13 CENTS per month, far below that in the monopolist and oligopolistic domain name registration business).

I believe the authors lost all credibility when they actually seemed to support ICANN using highest-bid auctions with the proceeds going to ICANN, instead of a lowest price auction benefiting consumers as the DOJ suggested, by criticizing the DOJ's thoughtful recommendations which have proven themselves in most procurements. From one economist to another, they should simply know better. Indeed, even Neustar won the .us registry contract via a tender process:

http://www.ntia.doc.gov/ntiahome/press/2007/Neustar_101907.html

I challenged Neustar to declare whether NTIA's process for .us was superior or inferior to that of ICANN's proposed ascending price mechanism:

http://gnso.icann.org/mailing-lists/archives/ga-200709/msg02660.html
http://gnso.icann.org/mailing-lists/archives/ga-200709/msg02693.html

It's been several weeks, and they've failed to respond. It is very clear that the NTIA process, or that of the DOJ with a lowest bid mechanism, maximizes consumer welfare, instead of lining ICANN's pockets. Of course, it was ICANN, and not consumers, who paid for this "expert report."

In conclusion, this one-sided report could have been written by VeriSign or ICANN itself, given its deeply flawed analysis and conclusions, and should be disregarded by the community, and more importantly the NTIA/DOJ (who were spot on in their original analysis). I'll have far more detailed analysis of this report in the coming weeks, going through it paragraph by paragraph.

Sincerely,

George Kirikos
http://www.leap.com/

Great analysis I agree with you.

 

[GeorgeK]

Just a quick followup to my prior comments. The quote from Neustar that I referenced from page 123 of:

http://www.icann.org/en/topics/new-gtlds/agv1-analysis-public-comments-18feb09-en.pdf

was missing the most important part, namely:

"If price caps are not included for new gTLDs, then price caps must be removed from the .biz Registry Agreement."

That paragraph now makes more sense!

One last quick fix to my prior comments. It appears that the SMS800 fees for toll-free numbers are no longer 13.13 cents/month (that was in the Tariff just a few days ago, as someone had asked me about it and I downloaded the PDF). It looks like competition has driven them down to 10.49 cents/month, as seen on page 80 of the Tariff at www.sms800.com that must have just been posted in the past day or two.

 

[Gerry]

George,

Do you have a link to the piece referenced as being the analysis of Dennis Carlton?

Everything I am seeing is referring to the analysis of Prof. Carlton but I have not seen the actual report that he prepared and submitted.

Thanks

g

 

[GeorgeK]

Doc: The very first link I posted, as did the thread starter:

http://www.icann.org/en/announcements/announcement-04mar09-en.htm

ICANN commissioned an independent third-party report and retained Dennis Carlton

The two reports are:

http://www.icann.org/en/topics/new-gtlds/prelim-report-consumer-welfare-04mar09-en.pdf
http://www.icann.org/en/topics/new-gtlds/prelim-report-registry-price-caps-04mar09-en.pdf

Folks should submit comments using the info at:

http://www.icann.org/en/public-comment/public-comment-200904.html#compri

 

[Theo]

Can proactive action e.g. a lawsuit stop these imbeciles before the deed is done? We're looking at another Kentucky domain law fiasco otherwise.

 

[Gerry]

Doc: The very first link I posted, as did the thread starter:

http://www.icann.org/en/announcements/announcement-04mar09-en.htm

yes, I saw both of those links.

Unless I am missing something, both of those links actually reference Prof Carlton's points but are actually penned by "I am the Katherine Dusak Miller Professor of Economics at the University..."

Just for my own benefit, I would like to read the proposal of Carlton, not someone's interpretation of his points.

Sorry for the confusion but I did not want to be confused by someone merely mentioning him.

Here is what I am talking about:

1. Preliminary Report of Dennis Carlton Regarding Impact of New gTLDs on Consumer Welfare [PDF, 160K]
2. Preliminary Analysis of Dennis Carlton Regarding Price Caps for New gTLD Internet Registries [PDF, 56K]

When opened, they both start out the same way:

1. I am the Katherine Dusak Miller Professor of Economics at the University
of Chicago Booth School of Business.

 

[GeorgeK]

When one donates large amounts of money to a university, you often can "name" a professor title, showing who is the sponsor. "Katherine Dusak Miller" isn't the name of the author/professor, that's just the name of the endowed chair.

For example the Lucasian Chair of Mathematics is named after a "Henry Lucas"

http://en.wikipedia.org/wiki/Lucasian_Professor_of_Mathematics

That chair has been held by Isaac Newton and most recently by Stephen Hawking:

http://en.wikipedia.org/wiki/Stephen_Hawking

Folks who can't afford to have buildings, departments, or entire universities named after them can always lend their name to various professorships/chairs. :lol:

Can proactive action e.g. a lawsuit stop these imbeciles before the deed is done? We're looking at another Kentucky domain law fiasco otherwise.

It's more fruitful to focus efforts on NTIA/DOC/DOJ, in my opinion (while still rallying opposition in the ICANN comments forum from businesses and individuals who commented last time, as well as folks who are only learning about the gravity of the issue now). NTIA/DOC decide whether ICANN lives past September 2009 (when the JPA comes up for review), and so the "nuclear option" is to argue that ICANN needs to die, and that the technical coordination role performed by ICANN currently should be internalized by the government instead of being outsourced to a self-serving and incompetent organization. Given the series of failures by ICANN to represent the public interest, it's not a hard case to make that the US government can do a better job.

 

[Gerry]

When one donates large amounts of money to a university, you often can "name" a professor title, showing who is the sponsor. "Katherine Dusak Miller" isn't the name of the author/professor, that's just the name of the endowed chair.

For example the Lucasian Chair of Mathematics is named after a "Henry Lucas"

http://en.wikipedia.org/wiki/Lucasian_Professor_of_Mathematics

That chair has been held by Isaac Newton and most recently by Stephen Hawking:

http://en.wikipedia.org/wiki/Stephen_Hawking

Folks who can't afford to have buildings, departments, or entire universities named after them can always lend their name to various professorships/chairs. :lol:

Oh, well...no wonder the confusion.

I just went right into reading this and kept looking for his credentials to follow.

 

[brianluedke]

Is ICANN brain dead? For the central registry, the energy required to record a new name entry is a small fraction of one cent. They should be limited to charging a few cents for a domain name. The Internet should belong to the people, not greedy people using domains as monopolistic estates. ICANN stands on the wrong side on this issue. ICANN needs to expire when their September mandate ends, and the US government needs to take over and ensure competition and low prices.

Write to your Congressman or Member of Parliament.

 

[Sarcle]

All I see happening is people with a few million dollars will pay to apply for a new ext. They will then allow registration for all the crappy names; "Thisdomainsucks.web" can be registered for 9 dollars. This will make them back the cost of the gtld.

They will hold back the best keyword domain names - Business.web, sex.web, money.web, et cetera, and try to sell them for millions. This is pure bonus money in the pockets of the owners of the extension. $$$$$$$$$

Trademark domains will have to be registered during a sunrise period. Making corporations pay $50 dollars for registration of their own trademarks to keep them out of the hands of squatters. This is also extra cash in their pockets.

Which then just inflates the prices for the holders of .com .net .org and raises the prices of those said holders to match the rest of the industry. This will effectively collapse the entire domain industry which will effectively collapse web development which will effectively collapse the entire internet.

Or maybe it will just make com, net, org the better choices as they have always been; and the domain industry will never notice. Just like the last domain "stunts" we saw to try and whore an extension. Cough, Cough, mobwhat?

 

[tekz999]

Domainers of the world united!

 

[HuntingMoon]

the table is clearly set for rampant abuse of all of us. developed names could also be penalized for raising their own scores in the proposed grading scheme. thanks George for your thoughts on the subject.

 

[kwok]

“I conclude that price caps or ce...introducing new gTLDs"[/QUOTE] Agree :yes:

 

[mediawizard]

Assume 60% of all domains are developed. They cannot increase the prices for these retrospectively.

I think differential pricing could only be introduced for expired domains or dropped domains before renewal. Even .tv doesn't increase prices on existing domains without there being a break in registration.

I would go so far as to say this might be good for those who are holding existing portfolios as the aftermarket will be dictated by a monopoly of registries and thus cause prices to skyrocket on new drop registrations.

The drop market would cease to exist for even the drop companies - coz registry will price renewals based on traffic. Domain gets 3k visitors per month? Renewal will be $300/mo. - there goes snap/namejet/etc

So anyone looking at the aftermarket for domains would end up paying much more over a 5 yr period for dropped domains than for a domain bought from a reseller, where std pricing increase of 10% per year is applicable. This price increase has already approved by icann.

Of course, with everything that icann does, the devil is in the details... but i dont see google, yahoo and other huge portfolio owners lying down for premium renewals on existing domain regs, they should be the ones objecting tbh.

 

[nascar59]

thank you all for sharing this info it is very interesting reading

 

[GeorgeK]

Hi folks,

ICANN posted two more garbage press releases masquerading as independent economic reports about new gTLDs, see:

http://www.icann.org/en/announcements/announcement-06jun09-en.htm

Of course, to no one's surprise, the reports simply justified their original papers. They ignored and dismissed the significant concerns raised by the community, once again. ICANN never even posted a summary or analysis of the original comments that were submitted:

http://forum.icann.org/lists/competition-pricing-prelim/

The author completely ignored the issue of tiered pricing, and did not investigate the magnitude of switching costs (e.g. for a company to switch from Cars.com or Hotels.com to NewCo.cars or NewBiz.hotels if the registry operator for .com was allowed to charge different prices for each domain name, which would be the monopolist's optimal strategy if price caps were eliminated). Indeed, Dr. Carlton's entire report is based on the false assumption that all consumers would be charged identical prices. Paragraph 69 states:

"Ex ante competition serves to protect both uninformed consumers, which face greater risk of opportunistic price increases, as well as better informed consumers BECAUSE BOTH SETS OF CONSUMERS PAY THE SAME PRICES." (emphasis added)

This of course would not be the case. VeriSign would charge more for Cars.com and Hotels.com than it would for JoesUsedCars.com and SmallBoutiqueHotelInMiami.com.

In our original comments, we challenged the author, and ICANN itself, to disclose their own switching costs, by accepting/rejecting direct offers to purchase their domain names:

http://forum.icann.org/lists/competition-pricing-prelim/msg00000.html

They ignored this, and simply wave their hands and pretend that switching costs are insignificant or are exaggerated. It appears ICANN is prepared to say anything in order to justify new gTLDs.

This report is worthless, and ICANN needs to do the full and independent economic analysis to justify the introduction of new gTLDs.