Three weeks ago, the Internet Corporation for Assigned Names and Numbers, known to its few friends as ICANN, made a decision
that has a lot of domain registration services spitting mad. You can practically hear the flecks of foam flying from the mouths of certain interested parties
, and they have a point.
But don't go thinking that ICANN is cutting sweetheart deals with VeriSign because they're in love with each other; nothing could be further from the truth.
ICANN has the unenviable task of setting policy for the domain-naming space, a highly competitive business that provides a healthy living for many companies and that made one in particular extremely rich. The core of the domain business works like this: You go to a domain registrar and pony up money for a dot-com domain. The registration goes to the central dot-com registry, which is administered by VeriSign. VeriSign takes its fee, the registrar takes the rest of your money, and the domain is yours.
Here's the problem. In a new agreement
approved by ICANN, VeriSign will be able to raise its rates by 7 percent within any four of the next six years. VeriSign can do this without having to justify the cost, and domain resellers can't do a thing about it except pay up and either raise their rates or take a cut in revenue.
With very narrow margins for registration at discount domain registrars such as GoDaddy, you're likely to see the price of dot-com domains go up. The grudge match
But don't go thinking that ICANN is cutting sweetheart deals with VeriSign because they're in love with each other; nothing could be further from the truth. In effect, this whole affair is a big legal grudge match between the two most important bodies in the dot-com domain field.
In the blue corner sits the bantamweight ICANN. Since its inception eight years ago, ICANN has been the technical coordinating body for the domain registration space. It's a private-sector entity brought into being to create and administer policy for the Internet's naming and address allocation systems, and its first major task was to dismantle Network Solutions' monopoly in the dot-com, dot-net, and dot-org domain registration space.
With the kind of pressure that this kind of money can exert in the legal system, is it any surprise that ICANN cut the deal?
In the red corner sits sumo-heavyweight VeriSign, the digital certification company that bought Network Solutions. Almost immediately after ICANN was formed, it began restricting Network Solutions' business. ICANN was designed
to do that. Before the late 1990s, the only place you could go to register a dot-com, dot-net, or dot-org domain was Network Solutions' Web site. ICANN oversaw the transition to a market with many domain retailers, all using a single domain registry, which remained under Network Solutions' control.
Network Solutions lost a chunk of its retail business to discount retailers such as Tucows and Dotster, and to more-recent rising stars such as GoDaddy. Then ICANN started to eat away at its registry administration business, spinning off the dot-org registry and making Network Solutions put up the dot-net domain registry for competitive bids. Network Solutions ended up retaining control of the dot-net registry, but this little upstart coordinating body continued to try to tie the big registry's hands.
Matters came to a head in 2003, when VeriSign/Network Solutions introduced a little feature called the Site Finder
. When people entered any domain name that didn't exist in their Web browser, VeriSign kicked up a handy (and revenue-generating) page to help people locate what they were seeking, instead of a generic Page Not Found error message. Search engine vendors, fearing an unfair advantage, cried foul, and ICANN backed them up.
That was when things started to get nasty between VeriSign and ICANN. VeriSign filed a 43-page legal brief in a California court listing grievances with ICANN, which had, they said, acted like a "de facto regulator of the domain name system," instead of a coordinating body. VeriSign alleged breach of contract and antitrust violations and accused ICANN of having inappropriately vague and murky ways of reaching its decisions. The little martinet that couldn't
VeriSign had a point. ICANN was saddled with a massive administrative task that guaranteed that it would make unpopular decisions. Running interference between a registry administrator and hundreds of smaller retail registrars is no small task, especially in a money-crazed environment where every decision affects stock prices and company profits. Then ICANN had to deal with domain-poaching grievances, set up all manner of policies, and then enforce them. Inevitably, it became involved in many lawsuits. Small wonder, then, that ICANN turned into a bit of a bureaucratic bully.
None of this is terribly good news for consumers in the domain market.
But even if it did act that way, ICANN didn't exactly steal everybody's lunch money. The organization was terribly underfunded from the beginning. For instance, within two years of its inception, ICANN was almost a million dollars in debt and saddled with huge legal fees. It solicited money from retail registrars on a voluntary basis. To market yourself as an ICANN-accredited registrar, you must pay a $2,500 registration, a $4,000 annual fee, and 25 cents for every domain registered or transferred. (As a measure of how unpopular even this mild transaction fee is, GoDaddy doesn't include it in its dot-com and dot-net prices, treating it instead like a tax by adding 25 cents to the quoted figure.)
As a point of comparison, VeriSign makes six bucks for every domain registered or transferred or renewed. At the end of January, the company announced 14 percent growth in quarterly sales, rising from $342.9 million in growth the previous quarter to $392.1 million in the most recently reported quarter.
With the kind of pressure that this kind of money can exert in the legal system, is it any surprise that ICANN cut the deal? The law is an ass
None of this is terribly good news for consumers in the domain market. Even though the price-hike powers that ICANN has granted VeriSign amount to less than 50 cents per hike, it will eat into narrow domain retailer margins and accrue a vast pool of cash at VeriSign. And that's really not how it should be. People like GoDaddy's president Bob Parsons
suggest that consumers should mount a written campaign to congressional representatives and senators to turn up the political heat.
Frankly, I think that ICANN has taken enough heat over the past eight years and has far too little support and backing to do its job well. It faces formidable opponents with much deeper pockets, and it gets far too little respect for its efforts.
If political pressure can give ICANN the teeth it needs to take on its many wealthy opponents, then so be it. But let's lay off dissing these people for not doing a good enough job. It takes more than one stone to knock down Goliaths in the domain market. Does Matt Lake need a regulating body to suggest policy for his opinions? Should he register his thoughts in a different domain space? Let him have it in the feedback section below.