Domain name prices to go up this year

[261275]

The annual price of a .com or .net domain name will almost certainly rise this year, according to Stratton Sclavos, chief executive of VeriSign Inc, which runs the two namespaces.
The increases per-domain will be tiny in dollar terms, and will most obviously impact only those with very large domain name portfolios. But the aggregate positive impact for VeriSign will be substantial.

"As it relates to .com, I think our expectation is that we'll have some action here in the first-half of the year," Sclavos told analysts on Wednesday, as VeriSign reported its fourth-quarter sales.

"We were able to raise prices in .net as of January 1 2007, so that clock is ticking as well," he added. "We're in the final process of determining our strategy there, but it is likely that it would happen simultaneously."

The company signed a revised .com contract with industry regulator ICANN and the US Department of Commerce late last year. It allows the company to raise prices in .com by 7% a year. An earlier contract allows it to raise .net prices by 10%.

Because VeriSign sells domain names through registrars such as Network Solutions and GoDaddy, it will be up to those registrars to determine whether price increases are passed on to end users.

But it's a near certainty that high-volume, low-price registrars, most of which fought the price increases tooth and nail last year, will be forced to increase prices.

A rise of 7% on $6 means the wholesale price of a .com cannot rise to more than $6.42 per domain this year. For .net, the price could go up 10% from $4.25 to $4.67 per domain per year.

Clearly, the increases would be of no pressing importance to most registrants.

But those organizations with very large portfolios of domain names that they intend to keep long-term would be wise to lock down their current prices with a multi-year registration, which are usually available for up to 10 years.

For VeriSign, which had 65 million .com and .net domains in its database at the end of 2006, an extra 42 cents on each domain would mean up to $27.3m of found money, or up to $35.5m if the size of the combined namespaces continues to increase at 30% a year.

But the company will take a gross margin hit in the short term. The .com contract also makes the company pay an extra $10m to ICANN this year, and VeriSign has to give six months public notice before increasing prices, giving them time.

"It's likely that any benefit from a potential price action would really start to flow through no earlier than Q4, Q1 of next year," Sclavos told analysts.

The company is allow to raise prices by the same amount every year of its two contracts.

Source: http://www.cbronline.com/article_new...5-359B4EC8E9B2

[Drewbert]

Screwed again, by ICANN and Verisign.

[Lidador]

As long as they don't start aplying the same price policy to .coms as they do to the .tv...

[boca]

No real surprise here is there? they now have the right to raise prices and what do you know?

[IDNMillenium]

Its really wrong since Versign doesn't provide customer service to all the .com holders worldwide. If there are price increases it should go to Moniker and Domainsite who actually have to pay support. Both hardly make any margin as it is.

[Rubber Duck]

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[boca]

Originally Posted by IDNMillenium

Its really wrong since Versign doesn't provide customer service to all the .com holders worldwide. If there are price increases it should go to Moniker and Domainsite who actually have to pay support. Both hardly make any margin as it is.

Quite touching that you feel sorry for those poor registrars, but it's actually a golden opportunity for them. The ones still looking to increase market share will hold the line and limit the increase to $0.42 or even absorb some of it, like run promos offering .com registrations for $6 or $7.

The registars content with their share can use this as an opportunity to increase operating margins, which are painfully low. If a .com goes from $6 to $6.42 they can raise retail pricing from $7 to $7.50, or whatever applies in their specific case.

[IDNMillenium]

lol i mean that verisign doesn't need the extra money - they already make big enough profit margins