Re: Oops -- [wg-c] Re: [wg-c-3] Notes on new gTLD registries

[Jonathan Weinberg <weinberg@mail.msen.com>]

	I injected a bunch of confusion into this thread at the outset.  Now that
I've caught my breath, though, I think it's far to say that the White Paper
was skeptical of nonprofit *registries* (using Kent's terminology).  Here's
the story:  The Green Paper had seen the choice as between for-profit
registries (whose profit orientation would lead them to compete
aggressively, but might also lead them to exploit their market power in
undesirable ways) and nonprofit ones (that would not have similar
incentives to compete for market share).  The Green Paper concluded that
the former choice was desirable:

	>>>>>Some have made a strong case for establishing a market-driven
registry system. Competition among registries would allow registrants to
choose among TLDs rather than face a single option. Competing TLDs would
seek to heighten their efficiency, lower their prices, and provide
additional value-added services. Investments in registries could be
recouped through  branding and marketing. The efficiency, convenience, and
service levels associated with the assignment of names could ultimately
differ from one TLD registry to another. Without these types of market
pressures, they argue, registries will have very little incentive to innovate.

	>>>>>Others feel strongly, however, that if multiple registries are to
exist, they should be undertaken on a not-for-profit basis. They argue that
lack of portability among registries (that is, the fact that users cannot
change registries without adjusting at least part of their domain name
string) could create lock-in problems and harm consumers.  For example, a
registry could induce users to register in a top-level domain by charging
very low prices initially and then raise prices dramatically, knowing that
name holders will be reluctant to risk established business by moving to a
different top-level domain.

	>>>>>We concede that switching costs and lock-in could produce the
scenario described above.  On the other hand, we believe that market
mechanisms may well discourage this type of behavior.  On balance, we
believe that consumers will benefit from competition among market oriented
registries, and we thus support limited experimentation with competing
registries during the transition to private sector administration of the
domain name system.

	The White Paper retreated from the Green Paper's endorsement of for-profit
registries, noting that "[m]any commentors voiced strong opposition" to
that approach.  Because "[b]oth sides of this argument have considerable
merit" and "[i]t is possible that additional discussion and information
will shed light on this issue," it determined that "the issue should be
left for further consideration and final action by the new corporation."
Nonetheless, the White Paper stated, the U.S. Government continued to
adhere to its view that "competitive systems generally result in greater
innovation, consumer choice, and satisfaction in the long run" and that
"the pressure of competition is likely to be the most effective means of
discouraging registries from acting monopolistically."

Jon


Jon Weinberg
Professor of Law, Wayne State University
weinberg@msen.com



At 11:48 PM 7/14/99 -0700, Kent Crispin wrote:
>On Wed, Jul 14, 1999 at 05:54:59PM -0400, Jonathan Weinberg wrote:
>> OTOH, the White Paper was skeptical of the view that registry operators 
>> should be nonprofit, as in the "public resource" model. 
>
>>From the note I sent describing the "public resource" model:
>
>  The registry is operated as a shared registry on a not-for-profit
>  cost-recovery basis.  The registry operator, however, may be a
>                        ****************************************
>  for-profit company, operating the registry under contract to 
>  ******************
>  ICANN.  The registry operator may be removed for cause, and the   
>  contract would be rebid on a periodic basis.
>
>In other words, it is not the case that the public resource model
>requires a non-profit(*) registry operator.  It calls for a
>non-profit *registry*.  This is a very important distinction -- the
>company that does the janitorial work at the Red Cross building is a
>for-profit company performing services under contract for a
>non-profit charity. 
>
>That's a hypothetical case -- I don't really know who does janitorial
>work for the Red Cross. :-)
>
>I do know, however, that Emergent, the company that built the CORE
>registry system, and who operated the prototype CORE registry for a
>time, is a for-profit company, and it operated the CORE registry
>under contract to CORE.  However, the CORE registry is a non-profit.
>
>It is indeed *highly* desirable to have competition between registry
>operators.  That is completely compatible with non-profit registries.
>
>================================================================
>
>(*)I use the term "non-profit" fairly freely above -- I'm sure there 
>are all kinds of legal subtleties.
>
>-- 
>Kent Crispin                               "Do good, and you'll be
>kent@songbird.com                           lonesome." -- Mark Twain
>
>