Re: [ga] Afternic Auctioning register.com expireds

[Andy Gardner <andy@navigator.co.nz>]

At 10:33 AM -0400 19/10/01, L Gallegos wrote:
>Of course it's a violation.  Does tha make any difference?  ICANN
>has not enforced any contractual obligations yet, so why would
>you think they would do so now?  Since the only enforcement
>would have to come from ICANN based on its own contracts with
>the registries, it's rather moot, unless ICANN can be forced to
>enforce its own contracts.  DoC could probably do that, but it won't.

I was under the (possibly mistaken) impression, that ICANN's mandate was to
introduce competition at the registrar level, to ensure customers are
supplied domain names at appropriate fee levels.

This move by register.com is anti-competitive (other registrars cannot
supply names previously supplied by register.com), and certainly jacks up
the price of a domain name for registrants, with no one benefiting except
for RCOM stockholders.

I guess after paying such a ridiculous price for Afternic in the first
place ($10 million in cash and 4,378,289 RCOM shares), it's only right that
they should use it to circumvent the system in order to prop up their stock
price.

From August 13, 2001 REGISTER COM INC (RCOM) Quarterly Report (SEC form 10-Q):

"Our number of paid domain name registrations, including renewals and
transfers, has decreased sequentially each quarter since the first quarter
of 2000. We believe that the high growth rate experienced in the domain
name registration market in late 1999 and 2000 is not an indication of
anticipated future growth rates."

"We also believe that a large number of the names registered in 1999 and
2000 were registered by domain name speculators who register names with the
intention of reselling them rather than putting them to use. As a result,
we expect that a significant percentage of the currently existing domain
name registrations will not be renewed and will be allowed to lapse. Over
time, as the percentage of names held by speculators decreases, we expect
to see an increase in renewal rates across the industry. Taking into
account all of these market dynamics, we anticipate that revenues from
domain name registrations will continue to be the largest component of our
revenues and will increase over time. "

Must be some tricky logic involved in coming up with the "will increase
over time" bit tacked onto the end of that statement, especially when they
also say...

"This decrease was primarily the result of the decrease in paid new domain
name registrations since March 31, 2000 as compared to the increase in paid
new domain name registrations for the periods prior to March 31, 2000, as
well as the decrease in the average registration term since January 2000."


Of course, if you're planning to hold expired domain names hostage...

It appears (to my non-accountant brain) that register.com only managed to
declare a profit due to "deferred revenue" from it's initial 2 year domain
registrations - which it admits were mostly by speculators and have all but
dried-up.

Also:"Cost of Domain Name Registrations. Cost of domain name registrations
increased 55% from $5.3 million for the three months ended June 30, 2000 to
$8.2 million for the three months ended June 30, 2001. The dollar amounts
of registry fees paid were lower in the current period. This decrease was
offset by the recognition of a significantly greater amount of prepaid
registry fees during the three months ended June 30, 2001 as compared to
the amounts recognized for the three months ended June 30, 2000"

What register.com fails to tell its stockholders here is that these
"prepaid registry fees" that it shelled out to verisign.com are for domain
names that the registrant no longer wants. Register.com has paid for all
these names in the hope that it will recover the funds by auctioning the
names off via afternic.com

It astounds me that in they admit that the speculation market has dried up,
but seem to be under the misapprehension that although these speculators
are no longer willing to pay register.com $35 to renew these names, they're
going to flock to afternic.com to buy them up at inflated auction prices -
$35 minimum bid - see http://members.afternic.com/reservations for the
current list of names they will allow you to "reserve" (thus forbidding
other registrars the chance to sell the name). Such doozies as
"ebadcreditloans.net", "clicks-and-mortar.net" and "click2etalk.com" can be
yours!

RCOM's quartely report is chock full of bad news: "We anticipate that our
renewal rates will be affected by the high number of speculative
registrations which occurred during the initial growth stage of the domain
name registration industry in 1999 and 2000. In addition, during the third
and fourth quarters of 2000 we offered one-year registrations at no charge
or at significant discounts to our standard registration fees. Given their
nature, we anticipate low renewal rates for these registrations. If we are
unable to increase our number of new registrations, the combination of our
customers deciding not to renew their registrations through us and the
increase we have experienced in the transfers of registrations to other
registrars will have the cumulative effect of decreasing the number of
domain names under our management. This could cause our revenues from
domain name registrations to decrease and would materially adversely affect
our business, financial condition and results of operations."


My guess is that RCOM is going to have a very sick balance sheet very
shortly, once they've run out of "deferred revenue". If I had RCOM stock
(and hadn't sold it already) I know what I'd be doing with it RIGHT NOW.

On the GA side of things, if the GA wants to get involved in complaining
about their anti-competitive practices, is there any conflict-of-interest
that needs to be declared here?


-- 
Andrew P. Gardner
barcelona.com stolen, stmoritz.com stays. What's uniform about the UDRP?
We could ask ICANN to send WIPO a clue, but do they have any to spare?
Get active: http://www.tldlobby.com
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