Re: Alternative Domain Name Distribution Models

Hi Michael,

Giving away a product for free or at cost does not mean that
there is no 
opportunity to make money. Companies like Lexmark, Epson,
HP, Canon and 
Brother have successful business models selling cheap
printers at near cost 
and earning the bulk of their income from replacement ink
cartridges.

Likewise, it is important to bear in mind that registrars
have been 
diversifying their income sources over the last few years.
In some cases, 
domains are sold as loss leaders to open up opportunities
for upsell 
products and services. Registrars can earn money from web
hosting, web 
design, domain parking, WHOIS privacy protection, email
services, shopping 
carts, SSL certificates, domain aftermarket sales, etc.

Sincerely,
Ted
Prophet Partners Inc.
http://www.ProphetPart
ners.com
http://www.Premiu
m-Domain-Names.com


----- Original Message ----- 
From: "Michael D. Palage" <mikepalage.com>
To: <gagnso.icann.org>
Cc: "'Elisabeth Porteneuve'"
<elisabeth.porteneuvecetp.ipsl.fr>
Sent: Wednesday, September 05, 2007 9:53 AM
Subject: [ga] Alternative Domain Name Distribution Models


> Elizabeth,
>
> ICANN was born against a back drop when there was a
monopoly within the
> name space, as .COM, .NET and .ORG were king and NSI
held the keys to
> all three. At that time ccTLDs provided no real
alternative in the
> marketplace, although today .DE and .CN are the second
and third largest
> TLDs in the world behind only .COM. So change can and
does happen.
>
> Here is the reality of the marketplace, all the Big
Registries seek to
> cut deals with the Big Registrars to get priority
placement on the pull
> down menus or tick boxes on the registrar's home page.
Much like in the
> retail marketplace, there is a limited amount of
premium shelf space on
> that registrar's home page, and the big registries
structure deals so
> that premium shelf space goes to the established brands
or those willing
> to make it financially attractive to the registrars.
The problem as
> identified in Danny's most recent example, is that some
registries are
> not-for-profit and serve small communities. Thus they
have a slim chance
> of ever appearing on GoDaddy's or TUCOWS homepage.
>
> This is why as in the case of .MUSEUM I believe the
proposed alternate
> language strikes the proper balance between preserving
the existing
> registry/registrar dichotomy and allowing a registry to
represent and
> serve the interests of that community.
>
> Now while this further explanation may not address
Elizabeth's specific
> concerns, it is important to discuss how the proposed
recommendations
> that have been discussed in the registrar community
will not address her
> concerns either. As previously mentioned, ICANN
accredited registrars
> have advocated removing the restrictions regarding
ownership of an ICANN
> accredited registrar by a registry. In the Google
hypothetical discussed
> previously, the new Google registry would simply use
the existing Google
> registrar. If the domain names were given away for
free, it is highly
> doubtful that any ICANN competitive registrar would
even bother
> providing an interface where the profit margin would
likely be near
> zero.
>
 <snipped>
>
> Best regards,
>
> Michael
>
<snipped> 

Prophet Partners Inc. wrote:

> Giving away a product for free or at cost does not mean
that there is no 
> opportunity to make money.

I agree.  Particularly if the registry fee structure is not
inflated by 
a factor of roughly 300x over actual costs, as they appear
to be in 
ICANN's existing general TLDs.

There are very definite opportunities for making money.

One, which is more available to a registry than a registrar,
is simple 
data mining of the DNS query packets that arrive at the
servers.  Since 
the query packets usually contain the full domain name being
requested, 
not merely the root/TLD part, there is ample opportunity to
apply simple 
statistical analysis to derive a very valuable real-time
stream of 
"what's hot and what's not" on the internet at any
given moment.  And 
the registry can increase the number of queries it receives,
and thus 
improve its statistical accuracy, by cranking down the TTL's
on the 
responses it gives.

And, of course, certain national governments are probably
quite willing 
to pay money to receive that kind of data, as long as nobody
mentions 
that they are getting it.  (There is probably a profit to be
made in 
correlating with other data sources and providing modified,
or simply 
slow, DNS responses [with very low TTL values] to query
sources that are 
considered "enemies".)

And there is opportunity for specialized services, such as
localized 
servers to give better response to communities willing to
pay (although 
any smart community could do the same for not a lot of money
simply by 
going through their own caching server.)  But there is also
the 
opportunity for localized processing, like tuning the
response so that 
the address RR records returned point to places
topologically near the 
query source.  (Not always a good strategy if the queries
are coming 
from an intermediary resolver that isn't close to the actual
user.)

There is also a potential market for names of short duration
- a few 
weeks or months - or of very long duration.  ICANN's mandate
of name 
rental for 1 to 10 years in one year increments is
completely arbitrary.

And in my .ewe TLD the business model is for inexpensive
registrations 
that cover storage, network, and server costs for an
estimated 100 year 
period with a pay-for-service model in which there is a
service fee for 
updating name server records and the like.

And as you mention, using domain names as a loss leader to
get people to 
buy SSL certificates and other goodies seems to be working
well.

But ICANN, like a puritan patriarch, seems excessively
intent on 
imposing its own view of how domain name businesses should
operate.

		--karl--