[ga] WLS - Better Margins for Registrars

["Eric Schneider" <eric@unames.com>]

I wish to provide recommendations during the comment period ending January
18, 2002 as requested by VeriSign, Inc. regarding their paper describing the
proposed Domain Name Wait Listing Service (WLS) published on December 30,
2001.  The WLS proposal can be accessed from the following link:
http://www.icann-registrars.org/pdfs/verisign_wls.pdf

Registrars are concerned about how they can make money from WLS without
having flashbacks of the cut throat thin margins of providing domain name
registration services.  The burning question is how can registrars and for
that matter all constituencies get paid fairly from this newly proposed
service?

The purpose of my response is to propose a pricing model to demonstrate how
the above requirement can be met.  It is my hope that registrars will find
merit in this proposed model and come to the table to get more serious about
evaluating the WLS proposal.

A CASE STUDY
There are two kinds of registrants.  There are those registrants who have
secured their ideal dotcom name of choice and there are those registrants
who have settled for a dotcom name close enough to their ideal name of
choice.

Take the case of the fictitious corporation, Amazon Music Company, who has
settled with registering "amazonmusiccompany.com", but would have preferred
to have registered "amazon.com" instead.  Though the addition of gTLDs might
provide consolation, Amazon Music Company has no interest in registering
"amazon.biz" and would rather back-order "amazon.com" for $69 from
Snapnames.

Snapnames has proven over the last year that there is a viable niche market
for back-ordering domain names, however back-order renewal data does not
exist as of yet and it will remain unclear for at least the next 6-12 months
whether back-order registrants are willing to continue paying a hefty
premium on renewals.

WLS PROPOSAL
It's common for anything new to get bashed by an existing system that
perceives the new as threatening or disruptive.  This seems to be the case
for the WLS proposal.  It is my opinion that the community is over reacting
to this proposal.  Though, I as 'Joe Consumer', have less at stake than most
of the other comments and postings that are representative of competing
registrars, I do have respect for those who have voiced opposition to the
proposal by default, but yet remain open minded that there may be further
serious consideration if the WLS proposal is tweaked or fine tuned.

REUSABILITY
A domain name can be considered an object having the properties of
resolvability, availability, and reusability.  To date, all registries have
managed the functions of resolvability (TLD zone files) and availability
(WHOIS database) only.

We are at a unique point in history.  No registry has ever managed the
reusability (Parallel Registry) aspect of a domain name.  Like a mobius
strip or ouroboros, I believe it is not only the obligation, duty, and
responsibility but also the time for a Registry to come full circle and
provide reusability services.  If you disagree that it is not the Registry's
responsibility to manage such services then I encourage you to run your own
Registry and elect not to.

COMPETITION
Just because WLS, if implemented, may stifle other secondary market models
does not mean in the slightest that WLS stifles competition amongst
registrars.  Currently, secondary market models and proposals other than WLS
seem only interested in solving the problem of recycling domain names upon
or after the domain name expiry date.  By nature, there is little
flexibility of any model that manages domain name reusability before the
expiry date.  The bottom line is that there are only so many ways to
roll-out a WLS type service and I challenge anyone to propose new models
that solve the issues of reusability before expiration.

Face it, registering a domain name or registering a back-order is a vanilla
process where the dimension of competition is limited only to price.  True
creative competition in this high volume thin margin game comes from
marketing, distribution, partnering, and providing bundled and/or value
added services during and/or after the point of registration/renewal.

Personally speaking, I am in disgust over the devolved science of the insane
free-for-all hoarding of dropped domain names like a gold rush in the wild
west while being patronized by the propaganda of registrars claiming that
they are doing this on my behalf, for my benefit, the consumer.  Grow up and
stop belittling the consumer by assuming that the only substantial market
group is that of a speculator.  Keep your eye on the ball stupid and
remember that you are in the subscription business, the first rule of which
is to retain subscribership.

SUBSCRIBERSHIP
For example, when registrants become educated to the introduction of a WLS
type service, there will be a significant decrease in domain name
expirations.  Registrants that truly want to keep their names will recognize
the cost benefit of purchasing longer term subscriptions at a comparatively
lower price, providing opportunity for registrars to keep customers and
retain subscribership.

WILL WLS WORK?
Hell yeah it can work.  I think the model is sound, except for the concept
of fixed rate.  Here are my comments and suggestions to fine tune the WLS
proposal.

Currently the risk of a back-order purchase is time dependent.  Risk
gradually reduces over time, but as the expiry date approaches and occurs,
the risk of purchase becomes exponentially reduced.  For example, there is a
greater likelihood that a back-order would be purchased for say $100 after
the expiry date than before the expiry date.

The solution to this is to PROVIDE A FIXED RISK RATHER THAN A FIXED RATE.
By so doing, a purchase becomes time independent enabling anyone to feel
free to purchase a back-order at any time regardless of the expiry date.
Simply put, price should be event based rather than time based.  There are
two event types; a renewal event and an expiration event.

For instance, a $100 back-order price should be the same regardless whether
a domain name expires in three weeks, three months, or three years.  By so
doing, the registrant's risk is constant and if they truly wanted to pay
such a substantial price, they would not hesitate in the slightest as to
when to purchase it.  This will allow the back-order registry to populate
more quickly, more evenly spread the distribution of purchases over time,
significantly reduce the possible free-for-all of first purchasing a
back-order registration when an expiration event occurs.  When a back-order
is not registered upon the occurrence of an expiration event, the purchase
price may be set to say $150 to offset the reduced risk as a result of such
expiration.

If there is a renewal event, then the back-order registrant may then pay $80
to keep their subscription.  For the next renewal event the price may be $65
with the price scaled down per each renewal event to some minimum of say
$20.  Again in this case price is not fixed because a renewal event can
occur each year or every three years depending upon the registrant of the
domain name.

Personally, I think that the first-time purchase of a back-order should be
treated as a fixed expense of sorts.  There should be no price competition
between registrars for the initial purchase with the price set at $100 for
anyone, anytime, and anywhere.  By so doing all constituencies including
ICANN, Registry, and Registrar get paid fairly.  Price competition can occur
by scaling back price on back-orders after each renewal event or such
competition can occur by paying a minimum annual maintenance fee between
$15-$30 per year before the occurrence of a renewal event (e.g., registrant
back-orders "example.com" which can potentially expire in three years --
registrant pays $100 up front and pays an additional $15-$30 minimum
maintenance fee as set by a given registrar).  The maintenance fee can be
waived upon the occurrence of a renewal event.

A fixed price does not in this case mean price fixing.  I am not a cost
accountant but I do not see issues of monopoly or antitrust, simply because
it remains unknown for how long the fixed price will keep the back-order
protection in place and it remains unknown when the back-order registrant
decides to purchase the back-order product.

IN SUMMARY: THE END GAME TO MAKE WLS WORK IS TO PROVIDE A FIXED RISK RATHER
THAN A FIXED RATE.

Kind Regards,
Eric Schneider


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