Value of VeriSign’s Monopoly — Understanding the
The definition of a cash cow.
Just how valuable is VeriSign’s monopoly on .com and .net domain name registrations? With rumors that the firm is seeking a buyer for its security group, leaving it basically with just registry services, the monopoly is being thrust back into the spotlight.
At latest count there are roughly 87 million .com domains registered and 13 million .net domains. As of July 1, the price VeriSign charges on .com will be $7.34 and .net to $4.65. Do the math:
.Com domain base x $7.34 = $640 million
.Net domain base x $4.65 = $60 million
The base of domains changes from month-to-month thanks to fresh registrations and expirations. But there’s a lot of money in this monopoly. For the right to run these registries, VeriSign paid $18 million to ICANN for the non-profit’s 2010 financial year for .com and 75 cents for each .net transaction.
To put the value of this in perspective, Trefis has an interesting modeling tool. You can change the trendline of what you think will happen to overall domain registrations (not just .com and .net) and see what this would (supposedly) do to VeriSign’s stock price.
There are two main threats to VeriSign’s monopoly. The first is that .com will be forced to be put out to competitive bid. There’s a lawsuit pending to try to make .com lower its prices (retroactively) to what they would have been had .com been put out to competitive bid. A competitive bid would likely drive the .com price down to anywhere from $2.00 to $4.00 per year.
Second — albeit a stretch — is a proposal circulating to share the duties of back end registry services. This would create true competition at the registry level, which was one of the requirements of ICANN in the Memorandum of Understanding with the U.S. government. ICANN interpreted that to mean introducing fresh TLDs. But the real solution was probably much simpler.
