Re: [ga] Combined Response - Tiered (Variable) Pricing

["Prophet Partners Inc." <Domains@xxxxxxxxxxxxxxxxxxx>]

Hi Michael,

There is no misunderstanding of your proposed compromise on our end. Your
proposal says:

"Registry Operator shall not impose any tiered (variable) pricing model on
any actively registered domain name. This restriction shall not apply to any
uniformly applied fee increases imposed on all registrants, such as a fixed
percentage annual increase."

We replied that the potential for registry abuse exists even in a flat fee
environment, if the price caps are removed. Tiered / variable pricing allows
an even greater degree of registry abuse. Let's use an example of a
potential scenario that could unfold, so that there is no misunderstanding
about this issue.

For the sake of simplicity, let's say Greedy Registry has 1,000,000 domain
registrations for its .soso TLD. The average retail cost to register or
renew a .soso domain name is $10. At this time, ICANN approves several
flawed registry agreements with clauses that provides registries with
presumptive renewal rights and removes price caps on registry services. This
occurs despite a universal public consensus that bestowing omnipotent powers
on the registries is certain to invite registry abuse.

After several years of a global recession and disappointing earnings at
Greedy Registry, investors in Greedy Registry pressure management to take
action to increase revenue, profits and dividends. Domain registrations have
been stagnant over this period of time with total .soso registrations
remaining at 1,000,000.

Greedy Registry considers several alternatives to boost revenues and
earnings. Greedy Registry knows that roughly 1/2 of the .soso domains are
developed and that demand from this segment is inelastic. In other words,
demand for renewing these developed domains will remain strong despite a
significant increase in price. Greedy Registry also knows that the
registrants of many of these developed domains have invested significant
resources and capital. The many factors include, but are not limited to
buying the domain name itself, creating brand awareness, hiring a web design
and graphics company, writing editorial content, hosting the website, paying
employees, retaining web promotion / SEO consultants, developing a customer
base, building advertiser relationships, budgeting general overhead expenses
and putting in countless hours of personal time and energy. The average
amount of invested resources and capital in these domains is easily in
excess of $1,000.

Greedy Registry settles on a plan to UNIFORMLY increase all registry prices
across the board by 1,000%, so that the average retail cost of a .soso
registration or renewal rises to $100. These prices are NON-DISCRIMINATORY
and would affect EVERYONE in the .soso TLD, including landrush registrants,
recent registrants and prospective registrants.

Within 1 year of the price increase, total .soso registrations plunges by
600,000 to 400,000. The majority of the expired registrations are
undeveloped domains with the rest of the decline consisting of .soso domains
from small businesses, organizations and individuals who could not afford to
maintain their developed domains. New .soso registrations comes to a
complete halt.

Despite the steep decline in .soso registrations, the management and
investors of Greedy Registry are extremely happy as revenues have quadrupled
and earnings have quintupled. Greedy Registry then raises prices again, with
future plans for additional price increases, knowing that existing .soso
registrants have no other choice than to accept the price increase or lose
their domains.

.soso registrants are outraged that ICANN did nothing to protect them, even
though they overwhelmingly opposed and voiced their opinions to ICANN years
ago, regarding a flawed proposed .soso registry agreement that intentionally
created perpetually renewing contracts and eliminated price caps.

Again, we reiterate that it is completely unacceptable to create presumptive
renewal rights and remove price caps in a single supplier market.

Sincerely,
Ted
Prophet Partners Inc.
http://www.ProphetPartners.com
http://www.Premium-Domain-Names.com


----- Original Message ----- 
From: "Michael D. Palage" <Michael@xxxxxxxxxx>
To: <ga@xxxxxxxxxxxxxx>
Sent: Thursday, August 31, 2006 10:19 PM
Subject: [ga] Combined Response - Tiered (Variable) Pricing


> Hello All:
>
> In the interest of efficiency a combined response to the many comments
> that I have received.

<snipped>

> Response to Ted @ Prophet Partners:
>
> Ted nice to meet you and thanks for your contributions. Like many
> commentators I respect your opposition to the restriction of price caps
> from the registry contracts. However, as I have tried to articulate
> previously, I believe potential abuses by a sole source registry
> operator are best left to national competition authorities. Obviously
> this is a point which many in the community disagree. There is one
> important potential misunderstanding that I wanted to address. In your
> response you talked about how the registry could impose tiered(variable)
> pricing on a registrant at renewal. That would not be the case in my
> proposal. As long as the registrant renewed the domain name prior to the
> end of the redemption grace period, the tiered(variable) pricing would
> not apply because that would constitute a registered name. Just to make
> sure there is no confusion, as the registrant of prophetpartners.com as
> long as you maintained your registration, the only fee increased you
> would be subject to would be universal (across the board) fee increases
> such as a 7% annual fee increase. The registry would not be able to
> impose any per domain name tiered(variable) pricing on your domain name.

<snipped>

> Best regards,
>
> Michael D. Palage