PALM BEACH, FL – An important awareness message came out of The Internet Commerce Association (ICA) today, and it should make, even the least interested shopper, question whether or not price increases to consumers are justified when an item or service is purchased from a company with specific oversight from an authoritative body.
Whether it is over domain names, or anything else, the question should be, when does a company – any company, which is permitted to maintain a monopoly, be permitted to raise its prices, and if doing so, should those price increases be justified by an increase in the cost to produce or deliver, its product or service, or for shareholders alone?
The company Verisign, which is the only company in the world permitted to sell the .com domain name (an agreement governed by ICANN who was given its oversight authority by the NTIA, The U.S. Government), has received the virtual green light to raise prices on its ‘.com’ service/product – all while it maintains a monopoly over the market and its profits have never been higher. In fact, when news broke in 2018, that its contractual agreement was coming to an end, and could be renewed without previous price caps in place, the company’s stock enjoyed a healthy and steady increase. The simple reason, is that this company Verisign, will be able to raise its prices and increase its profits, with virtually no other expense.
Warren Buffet’s BERKSHIRE HATHAWAY INC. is Verisign’s largest shareholder, and he has been quoted as calling the company ‘the most profitable company you’ve never heard of’, saying:
The single most important decision in evaluating a business is pricing power,” Buffett said. “If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business.”
The single effect this will have on consumers is that they will pay more for the same service rights and use. Price cap removals involving ICANN have created what seems to be limitless questions into its practices and policies over the last year or so as many of the world’s legacy domain name contracts, such as the widely used “.org” domain name, are renewing without long-standing price-caps in place, adding millions and millions in profits to company portfolios.
Below is a portion of the message that came out of the ICA today:
Verisign is the sole-source supplier of .com domain names at the wholesale level, giving them an effective monopoly. When you register or renew a domain name through your registrar, such as GoDaddy or NetworkSolutions, $7.85 of your registration or renewal payment goes to Verisign. The actual cost to Verisign to provide the expensive infrastructure and the management of the registry has been estimated at between $2.50 to $2.90 per domain name per year. Other registries have said they can offer the same services at lower cost. But ICANN does not allow other companies the opportunity to bid to operate the .com registry, for ICANN has given Verisign the perpetual right to operate the .com registry – meaning forever!
As the cost to operate the .com registry drops lower and lower, Verisign’s profits are already rising higher and higher. Verisign already enjoys one of the highest profit margins of any company in the world. A further price increase is not justified. Yet ICANN staff has determined that Verisign should be able to increase prices on .com registrants by 7% per year from the current $7.85 to $10.26 after four years. This will impose hundreds of millions of dollars of added expense on .com registrants – simply to benefit Verisign.
ICANN is supposed to act in the public interest, and be responsive to public comment. This comment period is your opportunity to share your views with ICANN, whether you think the price increases are justified or unjustified. You can learn more about the issue in the following articles:
- Circle ID: Verisign’s Attempt to Increase its Fees Still Unjustified Despite Diversionary Tactic
- Circle ID: Hundreds of Millions of Dollars at Stake as .COM Price Freeze Set to Expire
- Domain Name Wire: .Com prices are going up after Verisign pays off ICANN
So the Question Remains, Does ICANN Exist to Serve the Public Good? What Say You?
About The Author: John Colascione is Chief Executive Officer of Internet Marketing Services Inc. He specializes in Website Monetization, is a Google AdWords Certified Professional, authored a ‘how to’ book called ”Mastering Your Website‘, and is a key player in several Internet related businesses through his search engine strategy brand Searchen Networks®