Pricing Could Lower the Cost of Domain Name Registration — How Tiered

…for some domains, anyway.

A lot of the talk around fresh top level domain names is the lack of pricing controls on providers. A firm that launches a fresh TLD can set prices still they wish, and owners of existing TLDs worry that this idea would then be applied to their domains. Have a successful domain? You could get hit with a $1,000 renewal bill.

But let’s look at the other side for a moment. My guess is VeriSign would like to offer variable pricing — on the downward side. There are literally millions of .com domain names that could earn pay-per-click revenue each year, but not enough to cover the $6.86 (plus 18 cent ICANN fee) to justify registering the domain name. As a result, instead of getting at least some of the value, VeriSign gets $0 from these unregistered domains.

What if VeriSign could offer some of these domains for less than $6.86 (or $7.34 starting in July)? It could capture the value from these millions of domains, even if it’s not the full amount. If a domain makes $4 a year, it could sell the registration for $2. It could even work out a revenue share deal with registrars.

Think this is crazy? Well, one domain name registrar (that has its sights on the registry market) has received a patent on this idea. Demand Media, owner of eNom, got a patent last year for such a system.

In Demand Media’s model, there would be multiple tiers of registration. So if I’m paying $2 for a low tier registration, and someone comes along willing to pay full price, they could get the domain. But in the meantime, the registry is earning $2 and I’m earning $2+ in pay-per-click.

Of course, the politics of this may make it difficult for VeriSign to pull this off. If they can offer one type of .com domain for $2, couldn’t they offer all domains for that price? More likely would be “volume” deals with certain registrars, as most registries offer today. Or perhaps another variation on this model would be less controversial.