Fresh TLDs and a lack of price caps
Registries can jack up prices, but they must give notice.
One issue many people think may be a ticking time bomb with consumers and fresh top level domain names is a lack of price controls. I was reminded of this today by some comments on another post.
Most existing gTLDs have restrictions on how much the registry operator can increase prices each year. Fresh TLDs don’t. Here’s the contract language:
(b) With respect to renewal of domain name registrations, Registry Operator shall provide ICANN and each ICANN accredited registrar that has executed the registry-registrar agreement for the TLD advance written notice of any price increase (counting as a result of the elimination of any refunds, rebates, discounts, product tying, Qualified Marketing Programs or other programs which had the effect of reducing the price charged to registrars) of no less than one hundred eighty (180) calendar days. Notwithstanding the foregoing sentence, with respect to renewal of domain name registrations: (i) Registry Operator need only provide thirty (30) calendar days notice of any price increase if the resulting price is less than or equal to (A) for the period beginning on the Effective Date and ending twelve (12) months following the Effective Date, the initial price charged for registrations in the TLD, or (B) for subsequent periods, a price for which Registry Operator provided a notice pursuant to the first sentence of this Section 2.10(b) within the twelve (12) month period preceding the effective date of the proposed price increase; and (ii) Registry Operator need not provide notice of any price increase for the imposition of the Variable Registry-Level Fee set forth in Section 6.3. Registry Operator shall offer registrars the option to obtain domain name registration renewals at the current price (i.e., the price in place prior to any noticed increase) for periods of one (1) to ten (10) years at the discretion of the registrar, but no greater than ten (10) years.
In other words, fresh TLD operators can raise their prices to whatever they want as long as they give the registrar 6 months’ notice.
Unfortunately there’s no requirement I can find that the registrar pass this information along to the registrant. But if history is a guide, the registrar will give some sort of heads up to registrants that the price is going to increase and suggest they they renew early for up to 10 years.
This provides some level of protection to registrants. Even if the price gets jacked up you can use the domain at current prices for up to a decade.
Registries can increase the price annually with only 30 days notice for as much as they increased it within the previous 12 months. For example, if .guru increases its wholesale price by $5 next year, it doesn’t have to give 6 months’ notice to raise it another $5 in the subsequent year. (Note that most gTLD contracts to date have percentage increases. The fresh TLD contract language suggests the maximum increase without 6 months’ notice is the same nominal amount, not percentage.)
Let’s think regarding this practically.
Is .guru going to raise renewal prices to $500/year in 2015? That would be a poor business decision. Most people would let their domains drop. Some would renew for a decade. The registry wouldn’t see much revenue from it and would lose in the long run.
The more likely scenario is that registries layer in modest increases each year once their domains get established. They’ll offer discount programs for first year registrations and slowly increase renewals. They want to keep their registration base, not lose it.
I don’t like the lack of price caps. For some registry out there, it’s going to make sense to do a hefty price increase at the expense of a “locked in” consumer. That’s why you ought to consider the registry operator when selecting domain names.
That stated, it’s notable to understand exactly what is allowed and the requirements for increasing prices.
