How much .org would cost with 10% annual price increases – Domain Name Wire

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15 Comments January 20, 2020
If Ethos raises .org prices by 10% a year, the wholesale cost quickly rises.
Ethos Capital, the private equity company that is trying to acquire Public Interest Registry and the .org registry, says it plans to raise .org prices, on average, up to 10% per year:
That said, Ethos Capital has stated that it plans to live within the spirit of historic practice when it comes to .ORG pricing. This means, potentially, that any annual price increase could be no more than 10 percent on average — which today would equate to approximately $1 per year.
This 10% number is based on the cap in the 2006 agreement between ICANN and Public Interest Registry (PIR). The 2006 agreement allowed PIR to raise prices 10% per year starting in 2007.
But PIR rarely increased prices, let alone by 10%. Matt Riggott examined PIR’s price increases since the 2007 contract and found that there have been 7 price increases over those 13 years. Three of these price increases were 10%, and the other four were less.
The net-net is that prices have increased from $6.00 to $9.93 from 2007 to now. That’s a 4%-on-average increase. (Riggott calculates closer to 3%, but he uses the years prior to 2007 in which prices were capped at $6.00.)
Had PIR increased its prices by 10% a year starting in 2007, wholesale .org prices would currently be $20.71, more than twice the current cost.
What happens if Ethos raises prices by 10% per year? The magic of compounding makes .org prices look like a hockey stick.
As you can see in the chart above, the wholesale price of a .org would increase from $9.93 today to $28.33 in 2030. By 2040, you can expect to pay $73.48 plus your registrar’s markup.
This assumes 10% increases, but ICANN removed all price caps last year. So the sky is really the limit.
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Andrew Allemann has been registering domains for over 25 years and publishing Domain Name Wire since 2005. He has been quoted about his expertise in domain names by The Wall Street Journal, New York Times, and NPR. Connect with Andrew: LinkedInTwitter/XFacebook
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David Michaels says
January 20, 2020 at 12:54 pm
Your graph doesn’t take into account what other registries are doing with domain renewal fees to satisfy the 10% “average price increase” promise.
The ISCO statement says:
“Ethos has voluntarily agreed to policies based on the earlier guidelines established by ICANN, and has said that any increase would not be more than 10% per year on average.”
Imagine $250 renewal fees for some premium domain names and $2000 renewal fees for super premium domain names. The average .org domains will probably renew at $10 because otherwise they’ll be dropped.
Eg. The renewal fee for boxing.world is $249.99. Where does it end?
Will the renewal price for Wikipedia.org and google.org be $2000 or $10000?
MoGreen says
January 20, 2020 at 1:16 pm
The dream scenario is uncapped renewal fees.
If VRSN had no caps , they could easily charge the top 2,000 sites a renewal fee of $100K per year , that would lead to an incremental $200MM in revenue which would all flow to the bottom line as no additional costs to manage these sites
Domainer says
January 20, 2020 at 1:42 pm
That does not take into consideration the possibility of Ethos holding it for 2-4 yrs and then take it public or sell it to another private equity group. Just because Ethos said they would not increase the prices by more than 10% a year does not eliminate or commit another firm from increasing prices.
Another way of looking at the price increase is to realize it is a ‘tax’ (every year) on every non profit organization, church and religious order, youth clubs, women organizations, etc., etc. IN THE WORLD.
Global Taxation.
Andrew Allemann says
January 20, 2020 at 2:25 pm
The contract forbids them from doing this, unless the premium is disclosed when they originally registered the domain. So this won’t apply to wikipedia.org.
Domainer says
January 20, 2020 at 4:15 pm
I assume you are responding to MoGreen’s comments and not mine.
wanker says
January 21, 2020 at 7:05 am
It’s end with alternatives like namecoin. We can build a decentralized DNS today but we don’t do it because there’s little incentive to do so. Higher prices of centralized TLDs will provide us with the impetus we need to migrate to a better system. As the saying goes the cure for high prices are high prices.
wanker says
January 21, 2020 at 7:07 am
> Where does it end?
We switch to decentralized systems like namecoin that cost next to nothing. High prices for centralized TLDs will give the impetus for making this switch.
Steve says
January 20, 2020 at 1:49 pm
Most of the commentary I’ve seen does not take into account variable premium name pricing, which I would think is surely in Ethos’ long term plans since it appears permitted under the contracts. But maybe I’m wrong…
LLL.org? Why not make those $500/yr to renew.
A dictionary word? Let’s make it $1000/yr.
Run a popular website? Let’s jack your renewal up to $15,000/yr.
But sure, most of the names (non-premium) will only go up exponentially 10% per year…
Andrew Allemann says
January 20, 2020 at 2:24 pm
The contract forbids this unless the registrant expressly agreed to this at the time of the initial registration. So Ethos can’t decide to charge you a premium fee for your domain renewal. However, if a domain drops and is registered by someone else, then Ethos could charge a premium for the domain, but this has to be disclosed at the time of the new registration.
John says
January 20, 2020 at 2:06 pm
Excellent post on the revenue side. The compounding impact is significant.
If you look at the expense side – PIR put the back-end technical functions of the registry out for bid in 2016. More than 20 companies submitted bids to take over the operations of .org
(don’t confuse this with the master ICANN .ORG Registry Contract with PIR) – which ICANN refuses to put out to a competitive bidding process and it contains the “presumptive right of renewal.”
As a result, staring in 2018, PIR began to realize the benefits from competitive bidding:
Year Cost to operate the .ORG Registry
2010 $27,672,049
2011 $28,704,215
2012 $29,081,068
2013 $31,970,956
2014 $33,173,705
2015 $34,978,686
2016 $37,978,497
2017 $37,806,841
2018 $18,066,321
In 2018, PIR’s cost to operate .org were slashed in half due to the competitive bidding process. Some have suggested the cost savings will even be more profound in 2019 and beyond.
On one hand, you have your costs going down by a significant percentage – but PIR now has the ability to increases its prices however it sees fit on its captive base of users – who are held hostage to their domain name.
Ethos Capital and PIR are pitching the false narrative – if wholesale pricing goes up – registrants will switch to other domain names. But this is 100% entirely false. Registrants are locked in to their domain names – and switching is extremely time consuming and painful.
Moreover, .ORG has massive market power and .org is the only viable choice for non-profits / charities / organizations. Even if domains were substitutes (and registrants can easily switch domain names) nothing even comes close to .ORG – thus, to what other domain extension will consumers migrate to?
If true market forces were in place, PIR would feel compelled to pass along the cost savings and lower its wholesale prices because its cost to provide its services just became 50% cheaper. It would want to lower its prices to become “more competitive” and to compete for new business.
But Ethos is acknowledging it will likely increase its prices by 10% on average going forward – without any consideration to its costs.
.ORG is a monopoly – with massive market power – where substitutes do not exist – and ICANN should treat it accordingly.
But ICANN is doing exactly the opposite – and has removed all pricing caps – which were put in place for consumer protection.
Great job ICANN.
Most troubling – ICANN is essentially treating like PIR owns .org – which is not true. PIR is simply the outsourced technical provider – who is providing a very simple database service, on an automated basis for registrars. PIR does not own .org – it only has a contract to operate the back-end registry services.
John says
January 20, 2020 at 2:42 pm
ICANN’s biggest blunder – is its complete lack of understanding of how domain names work. Once someone builds an Internet presence on a domain name – it because extremely difficult to re-brand to a entirely new domain name. The switching cots are enormous!
But ICANN assumes domain names are substitutes – and if the wholesale price increases – consumers will abandon their domain names and switch to other alternatives. This is entirely false.
ICANN believes having more choices (new gTLDs) will promote competition against the legacy TLD’s such as .com and .org – but completely ignores how difficult it is to switch domain names.
ICANN has even ignored conclusions from hired economist on this topic:
“In both our Phase I and Phase II Assessments, we found no aggregate (worldwide) effect of new gTLD entry or registrations on legacy TLD registrations: registrations of legacy TLDs continued to follow the same pattern before and after the beginning of the New gTLD Program. This is consistent with new gTLDs generally not being treated as substitutes for legacy TLDs.”
*****Challenge to ICANN****** To ICANN staff and ICANN board members: Prove to the world it is easy to switch domain names. Move icann.org to another domain extension and show everyone how easy it is to abandon your existing domain names and to start using your a domain.
Prove the switching cost are small and it is easy to move to a new domain name.
Snoopy says
January 21, 2020 at 3:23 am
ICANN aren’t stupid, they know all that.
Ditto for new tlds, it was geared so they’d make a couple of hundred million even though it was a complete flop.
wanker says
January 21, 2020 at 7:10 am
Switching is expensive so they will raise prices until people do switch. Meanwhile new website builders will build on systems where they can’t be price gouged in the future. So there will be a migration eventually.
168 says
January 21, 2020 at 1:26 pm
John – there are 3 other tld’s specifically for non profit.
They have been available for a long time.
Future GRAPH doesn”t take into account
future demand price +/-controls or recession periods
No responsible person in business would believe “The sky is really the limit”
Not very representative of known economic cycles.
I doubt Ethos would be an exception to these market forces.
The money is in the services not the reg fees that non profits already pay profit pricing for.
To suggest Ethos is evil to compete (possibly for the benifit of non profits) is to also suggest any business profiting from services to non profits are evil and should be stopped.
Ergo- after market sales should also be prevented.
One should be “all in” when advocating on behalf of non profit
vs cherry picking.
Fact-
Even at the highest possible raise over 20 years…..
reg fees will remain a tiny,tiny portion of the actual cost to run any non profit.
The .org tld was never intended to be exclusive nor managed by not for profit. The original registration deliniation still intact, open to all, has first rights, not what one wants it to be now especially with no argument against for profit after market sales.
I’ve seen over half of .org regs are not non profit reported.
Reminds me of reverse hijacking-
We are ” entitled, just because ” and “our customers will be confused”, 20+ yrs later…
Cheers
joesaba2014 says
January 22, 2020 at 11:18 am
We always go to the same place where Ethos, Icann etc., they want.
We wrote many things for months and the results are always the same, there is no one who wants to get wet pants or skirts, nobody wants to cross a puddle of quicksand that would sink who tries to drag others, but nobody will because It is a great capitalist business, who would think that one day it will be paragarian for a word or two words with COM over 50 Million USD is crazy and NO! We are in the same Real Estate market and this moves large sums of money that all go to the stock market who wants to invest and who has no other places where we know without giving names.
Domain registrars are on the side of most of their Customer Accounts that are large, medium or small Domainer no matter the same, you always get a good discount, don’t fool ourselves, the more COM, NET, ORG domains you have This is so and the increase in ORG best discount and the domain market will remain the same.
I talked days ago with my Intellectual Property lawyer and trademark registration etc. in Barcelona (Spain) I replied that the entire ICANN system was created only for the Internet and that the rest that was added was patched and when these were spent come the surprises, which we now give importance and do not have it because as much as we wish We can never fight against the governments of each country and its extensions of domain TLD, ccTLD and some of the new ones the rest was only an invention for a lot of money.
He answered me when Voice.com was sold for $ 30 million, there were also those who made a profit with a very high commission and behind there was much more that we do not know, to continue when this is in NASDAQ we are talking about Venture Capital and tell me you remember the Internet bubble , I answered the same of the same now.
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