-----Original Message-----
From: Peter Girard [mailto:peter_girard@yahoo.com]
Sent: Tuesday, January 08, 2002 3:06 PM
To: Ron Wiener; icann-delete@total.confusion.net
Cc: ga@dnso.org
Subject: RE: [icann-delete] Proposal: Registry Re-circulation System
Hello Ron,
I think you misread the Afternic RRS proposal, confusing some elements with Afternic's previously published pre-delete solution. (Mea culpa, we've got multiple balls in the air.)
It must have been a remnant from your last draft. It's right on page one of the RRS proposal document.
To your first point, RRS does not require this permission. I know Chuck Gomes has weighed in with a landlord analogy with which I agree, concerning the right of the registry to resell deleted names. And that's what these are--post-deletes. To sell pre-deletes at any time, the registrant must become the de facto seller. Policy experts seem clear on this (same for 1b). But as a post-delete proposal, the RRS suggests neither contacting former-registrants nor selling names in a limited window (ie. 45-day grace period).
Let's assume it is post-delete, then, and current registrant's permission is not required. (I still would like to understand though, would you employ a XFER command or DEL command?)
What is to prevent a registrar who does not want to participate from running his own auction on his inventory of post-delete names? This, in fact, is what several registrars have either been starting to do or have been testing with the intention of rolling out their own systems shortly. In so doing they in effect anoint themselves as a "non-accredited registry" for a portion of the market represented by no more than the names they themselves currently have under management, and they exclude competition from other registrars for these names.
In other words, any system which relies upon the cooperation of a registrar to actually send the delete command down on an expired name and potentially lose that customer to another registrar (e.g. another registrar gets the winning bid in the RRS model) leaves itself exposed to abuse. Only with the accredited registry's involvement and enforcement of compliance to established procedures can fair redistribution of domain names amongst ALL registrars be assured.
You bring up a valid point in (1a). Publically available knowledge that another person wants your domain name (WLS, RRS, etc.) might influence your decision to renew it. It's possible that this will keep a percentage of registered names from end users. Can we stop this? Should we? You dispute that the RRS eliminates some first mover advantage and high-tech gaming, but I'm not sure what you mean. Clever speculators are the ultimate first-movers--they saw value in domain names before anyone else. They know the value of WLS, and they'll use it and maybe game it, and I don't think that's necessarily illegal. But RRS places them in competition with their target customers. And we all benefit whenever an end user buys a domain name, regardless of how or from whom.
This brings up another point, somewhat related: An unfortunately large number of SnapNames customers are people who lost their domain name because of accidental non-payment, who were then told by their registrar to contact us because the delete command had already been sent down the pipe, and the name would purge out 5 days later. It's bad enough that with a 70% present efficacy rate, 30% of the time we have to tell that registrant that their name is now in the hands of someone else. I can show you a hundred letters from such customers upset about the fact that there is no 100% secure method for getting back their own name. Their recourse is generally to negotiate with the speculator who got the name, unless they have a strong enough trademark (rare) to file a UDRP claim. I cannot imagine the outrage of customers in a situation being told that - even worse than a 70% efficacy situation - they would have to enter a competitive bid to get their own name back. From our experience with thousands of customers in this situation, as the only vendor offering a "rescue service" in this case, if you will, there is at least one significant constituency of domain name consumers out there who would scream at the notion of having to compete with swift or robotic counter-bidders. Or, as is often the case, would have their lawyers scream on their behalf.
I really question your defense of the consumer, though. "Goaded into paying unwarranted prices?" What's an unwarranted price? For some names, the dearth of consumer demand suggests that $6 is too much. Some have warranted thousands. But of all the warrantors of value in the marketplace, a "quasi-professional speculator" might be the least attactive to the consumer. Unless you disincentivize speculation, speculators will identify attractive names, buy low and sell high, and their customers will determine what are warranted prices.
I was merely pointing out the historical issues that eBay has encountered with the FTC in this regard. We can't pretend that domain names are "different" from other goods and services and somehow would not be subject to similar phenomenon. Perhaps you can speak to this in regard to Afternic's own experience? Have you ever been threatened with a law suit, actually sued, or been investigated by the FTC based on such consumer claims? If not, I'll retract the argument in whole.
And if the arbitrary price for an attractive registration rises, whether to $40 or $99, those names considered by end users to be worth less than that price will not be registered. Demand will soften. And if demand softens, registrars will find little comfort in knowing ahead of time that their queued re-registrations represent a fraction of last year's registration volume. You're right that my parent company, Register.com, may be less damaged initially by the loss of volume vs. the increase in price than would some registrars, but there is some concern industry-wide that the upside might not compensate for the loss.
Names that don't have a perceived value at or above the WLS retail price would naturally be deleted in the normal fashion they are today. All the existing "choices" that George and Harold referred to will still be there for picking up those names, probably with a single ping. Many of the largest speculator operations are focused entirely or predominantly on these lower-value names, and would have a very easy time of getting them (particularly since if this WLS system is enacted, SnapNames would - by contractual agreement with VGRS - no longer be servicing COM and NET names in any other way, I'm sure to the pleasure of our competitors). Statistically, 99% of the 100M-some daily SRS pings are transmitted in order to capture high-value names. If the high-value names are all dealt with by WLS subscriptions, all of the registry's load problems would immediately be resolved. I don't follow where the loss of volume would come from. What I can see is higher "inventory turns" and higher revenue for registrars as a result of waiting list positions being sold all year long.
I appreciate your commentary. We must find a satisfactory solution, and only through dialogue can we develop consensus. I know Harold Whiting commented (with quotes) that I have positioned my idea as "the only one worth looking at," but I assure you, that is not my position.
I didn't think that was your position, don't worry. Again, thanks for the refreshing "healthy" debate style.
Thanks,
Peter
Ron Wiener <Ron@Snapnames.com> wrote:
Peter,
I enjoyed reading your proposal, and have admired the way you continue to carry the flag for a variable-priced auction mechanism. If you please, I have a couple of questions followed by a few general comments:
- If you are requiring the permission of the former registrant in order for the auction to "close"...
- ...are you not then in effect alerting him or her to the fact that their name may have some value, and encouraging them to renew rather than allow the name to expire? This may be a brilliant scheme for goosing up renewal rates, but how does it help registrars and registries gain any upside that they would presumably only enjoy if the name actually changed hands?
- Correct me if I'm mistaken, but the reason you NEED the current registrant's permission is that in order to circumvent the registry, you want to be able to use the XFER command instead of actually deleting the name. I suspect the IP constituency might have some serious heartburn over this as it creates all sorts of liability problems when the creation date of a domain name record is not reset upon a new registrant receiving the name. Using the XFER command in this way exposes the new registrant to potential litigation from the prior registrant who may claim the registrar did a lousy job of tracking him down with a renewal notice "because they'd make a lot more money auctioning off my name than letting me renew it." The original transfer date matching his filed invoices could imply that the name is still his since apparently it was never deleted.
- It's also not clear to me that registrars Terms & Conditions extend the current registrant's rights to the domain name past the actual expiration date and into the grace period. If this is the case that the current registrant's rights have already ended then the registrar would essentially be warehousing and speculating with this name during the grace period. Perhaps someone from ICANN or VGRS can clarify this for us. Dan or Chuck?
- It seems to me that there is a distinction between the WLS (as proposed) and the RRS (as proposed), in that the WLS allows registrars to capture "backup demand" for any name throughout the entire year. The RRS only allows the capture of demand during a portion of the 45-day grace period window, which inherently means it would be primarily of interest to, and accessible to, speculators, not mainstream consumers.
Mainstream customers are unlikely to happen to discover a need for a domain name during any particular 45-day period, learn how to search for it from about 1.5M names that would presumably be up for auction during such period, learn how the bidding mechanism works, dig in their pockets for a credit card to pay a $2 fee (smacks a bit too much of $2 .biz lottery fees - yikes - bad memories!), and sit around to monitor the whole thing. Odds are 9:1 that the discovered need for a name would happen sometime other than that 45-day window. (I'm simplifying this by assuming the average registration is about one year in term anyway.) The RRS proposal states that consumers would have "open, fair access to deleting domain names in an environment free from high-tech gaming and first-mover advantage" but the method described doesn't seem to meet this definition.
Consumers are not likely to want to participate in an auction process which can easily be gamed, much like eBay auctions often are, with shill bids. Witness the thick file at the FTC and the number of lawsuits that were generated. In fact, a savvy speculator could whip up a robotic algorithm to outbid others milliseconds before auction close, or to pump fraudulent bids into the system using stolen credit card numbers - a problem already plaguing too many registrars and secondary name sites.
Consumers are also not likely to wait anywhere from 1 to 344 days to then have to monitor an auction process, and then be prepared to spend an undefined amount of money to get the name. I can see speculators being willing to do this all day long - they're good at it - but mainstream consumers? For them I believe this type of mechanism would be deemed yet another "game of chance" with $2 betting fees, and could become a lightning rod for litigation against registrars, ICANN, VeriSign, et al. Speculators may be just fine with the game of change (some seem to even thrive on it) but mainstream customers would be anything but enamored by the prospect of it.
Further, while I fundamentally agree that variable-pricing makes a lot of sense in the long run, it's extraordinarily tricky getting it right when it comes to domain names, and now doesn't seem the right time to implement such an advanced marketplace concept. Witness the number of different models that have been tried and abandoned by some of the ccTLDs - a perfect one is yet to be found. One concern from an FTC standpoint is that uninitiated domain name buyers might be goaded into paying unwarranted prices for domain names because of the heated action of an auction. This is where sites like NameWinner are actually safer, because everyone there is at least a quasi-professional speculator and knows how to appraise the value of a name. If unwitting consumers are successfully drawn into an active bidding event for domain names, they could potentially be misled into paying exorbitant prices. One benefit of the flat pricing of the WLS structure is that it eliminates the possibility of this sort of complex and problematic consumer experience. Again, you might ask the FTC how many such complaints they've received from eBay customers over this sort of thing.
Finally, putting on my Wall Street hat for a moment, the RRS lacks two especially nice financial features of the WLS which is that it provides no forward visibility on certain revenues (i.e. if 60% of my registrants do not renew next year I know that x% of the names in question would automatically go to a wait listed customer) and no growth in deferred revenue, a key valuation driver. For public companies (there are currently six publicly-held registrars) this is particularly important, as it is for the valuation of any registrar that hopes to be acquired someday.
Cheers,
Ron
Ron Wiener, Chairman and CEO
SnapNames.com, Inc.
115 NW First Avenue, Third Floor
Portland, OR 97209
tel: 503-219-9990 x222
cell: 503-502-5016
fax: 503-274-9749
mailto:ronw@SnapNames.com
http://www.SnapNames.com
-----Original Message-----
From: Peter Girard [mailto:peter_girard@yahoo.com]
Sent: Monday, January 07, 2002 11:27 AM
To: icann-delete@total.confusion.net
Subject: [icann-delete] Proposal: Registry Re-circulation System
With the help of several members of the registrar community, we have migrated our dynamically priced delete proposal to a registry-level service in which the bulk of the revenue opportunity goes to the registrars. This system would be cheaper, fairer, more transparent, and better for Internet growth than earlier proposals. Perhaps most important, it would reward the sector of this industry (registrars) that faces market risks and creates value.
I have attached a Word document. If this is problematic, I will happily provide an alternative format.
Peter Girard, Afternic.com
Do You Yahoo!?
Send FREE video emails in Yahoo! Mail.
Do You Yahoo!?
Send FREE video emails in Yahoo! Mail.