Repeats the registry competition fallacy — ISOC CEO

There is no competition for domain renewals.

Internet Society CEO Andrew Sullivan has responded to some of the uproar regarding his non-profit selling Public Interest Registry to a for-profit private equity firm. In his response, he repeats the ICANN-given line regarding how registries can’t drastically increase their prices since of competition and temporary restrictions:

There is a high degree of competition in the TLD space – a fact that was not true when .ORG was awarded to PIR back in 2002. While all standard registry agreements with ICANN today no longer include price restrictions, and thus ICANN’s removal of .ORG’s was not unique to .ORG, there are market constraints in place. Given registries must announce any price increases for renewal 6 months in advance, paired with the fact that domains can be registered at current prices for up to 10 years, any operator seeking to increase prices dramatically would certainly lose clients without producing any increased revenue.

Sullivan is correct that there’s a high degree of competition for non-.com registrations of fresh domains, but there is essentially no competition for renewing domains. The switching costs of moving from one domain to another are significant. Some organizations spend hundreds of thousands, if not millions, of dollars on making a domain switch. It can still end badly.

Renewing a domain ten years in advance only kicks the can down the road. Eventually, the firm or non-profit will have to pay a significantly higher price to renew its domain.

Also, you can argue that .org has little competition in the non-profit space. Non-profits feel that they need a .org domain.

Sullivan also points to Ethos Capital’s fresh statement regarding pricing:

Ethos is committed to keeping .ORG accessible and reasonably priced for all, in line with PIR’s longstanding purpose-driven mission.

The current price of a .ORG domain name is approximately $10 per year. Our plan is to live within the spirit of historic practice when it comes to pricing, which means, potentially, annual price increases of up to 10 percent on average – which today would equate to approximately $1 per year.

Even if you take Ethos’ at its word and believe it won’t substantially increase pricing, what regarding the next owner of .org? Ethos is a private equity firm. Its backers require a return on their investment. This likely involves selling .org to another firm down the line, and that firm may well jack up prices.