[council] .biz/info/org proposed contracts - pricing implications

["Philip Sheppard" <philip.sheppard@xxxxxx>]

For the information of Council
I pass on a list message from the BC list relevant to the .biz/info/org 
contract renewals.
 

  _____  

From: BC secretariat [mailto:secretariat@xxxxxxxxxxxx] 
Sent: Wednesday, August 23, 2006 3:15 PM
To: BC List
Subject: Vint Cerf/ICANN confirm my interpretation of .biz/info/org proposed 
contracts --
tiered/differential domain pricing would not be forbidden


>From George Kirikos

Hi folks,

I finally got the "official" word from Vint Cerf of ICANN, "on the record", 
who confirmed that my interpretation is correct, that differential/tiered 
pricing on a domain-by-domain basis would not be forbidden under the 
.biz/info/org proposed contracts. This means that the registries could 
charge $100,000/yr for sex.biz, $25,000/yr for movies.org, etc. if they 
wanted to -- it would not be forbidden the way the proposed contracts are 
currently written. This would represent a powerful pricing weapon for 
registries, and a fundamental shift in possible domain name pricing, that 
could lead them to emulate .tv-style price schedules.

One can read the proposed contracts at:

http://www.icann.org/announcements/announcement-2-28jul06.htm

Vint said it would be "suicide" for a registry to do it, because there'd be 
the 6-month notice period to raise prices and the ability for registrants 
to renew for up to 10 years at "old prices", that supposedly "protects" 
registrants. Personally, as a business, my time horizon is a lot longer 
than 10 years. I wonder if Vint felt introducing "SiteFinder" was suicide, 
too....history has shown registries will do whatever they can get away 
with, in order to maximize profits long-term and short-term.

I don't think Vint understands the business at all, to think that a lag of 
10 years will deter a profit-maximizing registry, esp. VeriSign should it 
try to match this contractual precedent in .com (and history shows VeriSign 
will always try to get "more", especially if "another registry" is able to 
do something -- they used that tactic in .com renegotiations, saying 
various terms were already in the .net contract, for instance).

Just to show one possible future, if PIR feels pressure or has a desire to 
clean up porn from .org, it could announce that pussy.org (check its Alexa 
ranking) will have its renewal price be $1 billion/yr. If it takes 10 years 
to do it, many would wait, and it would not be considered "suicide" for 
PIR. Who will stand against that as "we're protecting the internet and 
children from porn", PIR might argue? Leaving this temptation in the 
contract will likely become a slippery slope, in my opinion, leading to 
profit-maximizing behaviour by registries to emulate .tv. Acting in the 
interests of their shareholders, registries are *compelled* to maximize 
profits.

  It can be used as a political weapon, too. If a registry disagreed with 
the views or content of a website for which they were the registry, they 
could raise the renewal price to $100 billion/yr. 10 years later, that 
website would not exist at that address, and nothing in the contracts would 
forbid this pricing behaviour. More likely, it would be used for profit 
maximization (if Google.com is a $100 billion company, "certainly they are 
benefiting from their domain name, and can afford our $1 billion/yr renewal 
fee" one might say -- see the net neutrality debate and tiered pricing for 
websites that phone and cable companies are pushing....). How far away is 
tiered domain name pricing??

ICANN would be opening up a Pandora's Box through this contractual 
loophole, to not forbid .tv style pricing. The mistake would not be able to 
be corrected, as the contracts explicitly say that Consensus Policies do 
not apply to pricing issues. Since presumptive renewal exists in these new 
deals, the contracts are essentially going to live with ICANN forever, if 
approved.

If this pricing power eventually got extended to .com, nothing would 
prevent the renewal fee for Yahoo.com, GoDaddy.com, Google.com, Tucows.com, 
Business.com, Sex.com or any other domain in a registry with similar terms 
to reach $1 billion per year, or any other price that VeriSign or other 
registry operators wanted to maximize its profits (net-neutrality debate is 
similar, for bandwidth pricing to websites). You can imagine my 
VeriSignSucks.com won't last longer than 10 years, if VeriSign had the 
power to raise the renewal fee to $1 billion/year. :)

I believe that it is very important that this loophole be closed, in order 
to not create the precedent that VeriSign could later exploit for .com, and 
to protect registrants of .biz/org/info. If it is "suicide", as Vint 
suggested, then surely a registry that would supposedly never use the power 
would agree to remove the temptation by adding an appropriate term to the 
contract. A registry not willing to add that term....well, you know what 
they might be tempted to do later. If your business horizon is the next 
quarter, this won't impact you. If it's beyond 10 years, it could impact 
you. Can you live with that uncertainty??

Feel free to spread the word on the mailing lists or media, and contact 
Vint (vint@xxxxxxxxxx) or John Jeffrey (jeffrey@xxxxxxxxx) or other ICANN 
staffers if you want to confirm things and voice your concerns. Time is of 
the essence, as the public comment period ends next Monday. Registrants DO 
NOT know what is coming (the public comment board is almost empty), as it's 
the summer holidays! (typical ICANN tactic, introduce 500+ page contracts 
for public comment when everyone is on holiday)

Public comments can be sent using the addresses at:

http://www.icann.org/announcements/announcement-2-28jul06.htm

(be sure to send to all 3 email addresses for all 3 contracts, and also 
click the link in the email ICANN will send you to authenticate your email 
address, otherwise your comment doesn't get received)

There are a lot of other reasons to be opposed to the proposed contracts, 
such as the presumptive renewal, the ability to sell traffic data, the 
removal of price caps, etc. I will be writing a longer document soon, but 
wanted to give everyone a heads-up, so that you can take appropriate action 
on your own now, and corroborate things independently with Vint Cerf, John 
Jeffrey or other ICANN people.

These are fundamentally flawed contracts, and should not be approved by 
ICANN. The precedents these contracts would create are ominous, even worse 
then the .com proposed settlement agreement (that the DoC has yet to 
approve). Why is ICANN even renegotiating these registry agreements, when 
the existing terms don't expire for several years in some cases, and the 
GNSO PDP process for registry services is ongoing??

Sincerely,

George
416-588-0269