Verisign gets its price hikes: Year in Review
The U.S. Government gave the green light to increase prices on .com domain names.
It’s an obscure contract issued by the U.S. government. For the domain industry, it means a lot.
On November 1, The U.S. National Telecommunications and Information Administration (NTIA) amended and extended its Cooperative Agreement with Verisign (NASDAQ: VRSN) for running .com.
Think of the Cooperative Agreement as a check on the contract between ICANN and Verisign for .com.
The NTIA’s role in this agreement was rather trivial for a while. Then in 2012, the NTIA effectively overruled a contract extension that ICANN and Verisign agreed to that would have allowed Verisign to increase .com prices 7% per year for four out of six years of the contract. That was the status quo from the previous contract, but NTIA questioned why price increases were justified.
Prices have been fixed at $7.85 ever since.
But the amended agreement restores price increases of 7% in four out of six years, although not until the last four years of each six. ICANN doesn’t have to agree to the price increases, but if it does then Verisign will be able to charge $10.29 per domain six years from now.
That might not seem like much, but it represents hundreds of millions of dollars directly to Verisign’s bottom line (and out of consumers’ pockets). Verisign’s competitors would gladly offer significantly lower prices if they could bid on the contract.
You would think Verisign would jump for joy following the contract amendment. So it was surprising when Verisign published an inflammatory article the very next day criticizing domain investors for their role in the market. Yes, the same group of people that Verisign has been marketing to for the past decade so it could sell more .com domain name registrations.
