RE: [registrars] ICANN Proposed budget is out for public comment
I have read with interest the various postings on this issue. I look forward to the conference call on this, which will continue to clarify the issues. At this point, I see a couple of key topics: 1) Is the new ICANN Budget level too high, too low, about right? No doubt, it is a very large increase - almost double. However, I believe that a strong ICANN that has the resources to do the work we want it to do is important to us. Registrars have been pushing for policies from Whois privacy to transfers and part of the problem is lack of institutional resources to drive these home. 2) Another concern has been lack of contract implementation - why should registrars that follow ICANN policies and contractual requirements "pay" with bad press and consumer concerns caused by a few unscrupulous players. Again, a strong ICANN with adequate compliance resources is important. 3) Are all stake holders paying their fair share? No doubt, Registrars carry the majority of the burden. However, this budget shows doubling of ccTLDs and RIRs. The gTLD registries should also contribute proportionately more, and ICANN should charge a fee for new registry services. 4) The registrar fee. If ICANN were to get rid of the annual fee, it would have to raise the proposed $.25/transaction to $.36/transaction in order to make up for the difference. This would double the current fee. Several suggestions have been made to try to even out the effect on the smallest registrars: capping fees for the future so they are predictable, instituting graduated transactional fees, creating "scholarships" per ICANN's footnote. But, we need to be honest that while some small registrars truly operate solely as registrars, others make very large margins by selling connections or other services for which domain names are simply loss leaders, and they will not be impacted by a nominal annual fee. Registrars have for years carried the weight of the ICANN budget. It has been based on the domain name alone, which does not correlate to whether ICANN's work benefits other constituencies or is driven by non-compliance. For these reasons, I believe that ICANN's approach to look for more funding from other groups and to correlate fees with accreditation, not just the size of the business is the right direction. I would like to see ICANN be even more creative in their search for other funding sources that better match the benefits it brings to other stakeholders. Elana Broitman Register.com 575 Eighth Avenue New York, NY 10018 Phone (212) 798-9215
EFax (800) 886-2716 Fax (212) 629-9309 ebroitman@register.com
-----Original Message----- From: owner-registrars@gnso.icann.org [mailto:owner-registrars@gnso.icann.org]On Behalf Of Jay Westerdal Sent: Tuesday, May 18, 2004 1:03 PM To: 'Registrars Constituency' Subject: RE: [registrars] ICANN Proposed budget is out for public comment Dear fellow Registrars, Yes, I see the elephant in the room. However there is no way to get rid of it until WLS eats the elephant whole. If the $19,000 a year extra is there to annoy the elephant, yes the fee will do that. But once WLS rolls out it will reveal a landscape of only big registrars. The smaller registrars holding elephants will leave, and the true victim of a high barrier of entry will only be smaller registrars wanting to compete on traditional registrar services. Pulling up the rope ladder and closing the tree house door may be exactly what large registrars want. Some experts in 2000 claimed there would be a huge consolidation in the market. How could registrars survive on several dollar margins. Well over the last 4 years we have seen the market grow several fold. And now the question is how can registrars survive on dollar margins? Well, the only solution is to force the consolidation and reward the larger registrars. At $19,000 x 200 registrars it comes out to $3,800,000 a year. Two years after WLS, I predict the number of registrars will be cut in half. So the fee will double, because there are half the registrars, That would be $38,000 a year. Then one year later, there will be 50 registrars, so fee according to the purposed budget would be $76,000 per year. Today to be in the top 100 Registrars in the world, your company must have over 13,229 domains registered. When the 100 Registrar day comes, you will need to make $38,000 on 13,229 domains, you need to make about $2.85 per domain year. Or $6.00 + $0.25 + $2.85 = $9.10 per domain to break even on fees. Then comes cost of employees, rent, computers, etc... A new registrar would be lucky to be able to sell a name at $12.00 a domain and still make money. Smaller registration companies will be forced into reseller programs. Perhaps this is a good thing if you have a reseller program. When the 50 registrar today arrives (current number #50 has 71,776 domains) the math would be like this: $76,000 on 71,776 would be about $1.10 a domain. That would be $6.00 + $0.25 + $1.10 = $7.35 per domain year. So, in three years, the biggest registrar will have a huge competitive advantage. Hence rolling up the ladder. It seems to me that $0.49 a domain to ICANN would be more fair. The smaller registrars will be paying an extra $1.10 per domain. And the largest registrars (assuming about 7MM domains) will be paying only an extra $0.01. This is a plan to get rid of smaller registrars. That is my two cents on this situation. I would vote for $0.49 per domain flat, rather then making the smallest registrar in 2007 paying $1.35 for each of their 70,000 domains. Jay Westerdal Name Intelligence, Inc. http://www.nameintelligence.com -----Original Message----- From: owner-registrars@gnso.icann.org [mailto:owner-registrars@gnso.icann.org] On Behalf Of Tim Ruiz Sent: Tuesday, May 18, 2004 6:54 AM To: 'Registrars Constituency' Subject: Re: [registrars] ICANN Proposed budget is out for public comment Rick and All, When I asked for the opportunity to represent the RC on the Budget Advisory Group (BAG) I stated that I felt there were three primary areas of concern: 1. Reexamining the registrars' funding model. 2. ICANN's future, which I believe affects our businesses' future. 3. Alternative forms of funding. I believe the proposed budget addresses these concerns, keeping in mind that it is part of a three plan. 1. Reexamining the registrars' funding model. --------------------------------------------- The current funding model, based on names under management, is neither predictable nor sustainable. When we sell a multiple year registration we really have no idea what the true cost is because we cannot predict what our fees to ICANN will be next year, or ten years from now. The transactional model will help solve that. First, we will know precisely the cost of registrations. If we sell a ten year registration today we will pay the current transactional fee and be done with it. Second, it allows us to more accurately set our pricing and pass the true cost on to registrants. I understand the concerns of some of the smaller registrars regarding the per registrar portion of the variable fee. This is the feedback the reps on the BAG need now. If registrars would prefer to see a higher transactional fee in return for a lower per registrar variable fee I am confident that your reps on the BAG, including myself, would represent that concern to the ICANN staff and rest of the BAG. I will point out however, that we have also heard concerns about accreditations being acquired simply for the purpose of renting out connections. Without commenting pro or con to such a business model, a higher per registrar variable fee would ensure that such registrars pay an appropriate portion in ICANN fees since the number of names under management by such registrars is relatively very low. A significant portion of the expense created by registrars does not depend on the number of transactions or the number of names under management, but is roughly the same across all accreditations. It seems appropriate that that portion be allocated equally across all registrars, regardless of business model. 2. ICANN's future, which I believe affects our businesses' future. ------------------------------------------------------------------ Do we believe that ICANN is important to the future of the DNS and our industry? If so: --They need to be able to meet the requirements of the MoU. --They need to be able to address threats such as law suites, the WSIS, etc. --They need to be able to enforce their agreements. The next three years' budget should reflect the ability to appropriately address those issues. I believe the level of this years' budget is appropriate based on those goals. Note, it has been reduced at least twice based on feedback and concerns expressed by various stakeholders, primarily registrars. 3. Alternative forms of funding. -------------------------------- Again, this year's budget proposal is part of a three year plan. You will note that it fixes the transactional fee at the proposed level over that three year period, relying instead on increases in transactional activity. Since transactional fees are based on realized revenue, increases in transactional activity will somewhat increase funds to ICANN yet have much less impact on registrars. By holding this fee steady, ICANN will also be motivated to meet appropriate goals in acquiring funding from alternative sources. Your reps on the BAG, as well as numerous other stakeholders, have suggested many alternative funding ideas to the ICANN staff, as well as encouraged increased funding from ccTLDs and the RIRs. While we do not see the level of funding from these sources increasing as much as we would like in this years budget, there are reasons to be encouraged that that will change over the next two years of this three plan. The RIRs funding has increased over 50% this year, and holding steady on the level of the registrar transactional fee will motivate ICANN to pursue its commitment to increase RIR funding to more appropriate levels. The establishing of the NRO and its MoU with ICANN will also put ICANN in a better position to pursue that goal. The formation of the ccNSO also creates a better situation for ICANN to pursue agreements with ccTLD operators and increase funding from them over the coming years. There will be new agreements with new sTLD and gTLD operators over the next few years. The ICANN staff has indicated that consideration will be given to increased funding from these new TLDs: increased fees; fees associated with new registry services, etc. As existing TLD agreements come up for renewal they can be brought into line with such additional sources. ICANN has committed to pursuing funding opportunities associated with other stakeholders and commercial entities that benefit from ICANN functions. Again, funding from these sources is not at the level we would like to see in this year's budget proposal. But I am encouraged from the level of participation that the ICANN staff has sought this year in formulating its budget. I am encouraged by having seen them make numerous adjustments to the budget based on feedback and input from numerous stakeholders, including registrars. And I believe we will see the same level of commitment in the upcoming years as ICANN pursues and increases these other areas of funding. I encourage all registrars to study the entire proposal carefully and submit your comments, concerns, and questions to your BAG reps (Rob, Elana, and myself). Tim -----Original Message----- From: owner-registrars@gnso.icann.org [mailto:owner-registrars@gnso.icann.org] On Behalf Of Rick Wesson Sent: Monday, May 17, 2004 8:58 PM To: Jean-Michel Becar Cc: 'Registrars Constituency' Subject: Re: [registrars] ICANN Proposed budget is out for public comment would those that have served on the budget committee provide specific comments on just what they did? It appears that the registrars burden will have increased 150% and I'm doubting that our reps did the registrars any good. would the reps on the budget committee please provide specific comments on just how they "helped" us this time? thanks, -rick Jean-Michel Becar wrote:
Dear fellows registrars,
The ICANN proposed budget for 2004 just get out for public comment. Enjoy the reading. Jean-Michel
4) The registrar fee. If ICANN were to get rid of the annual fee, it would have to raise the proposed $.25/transaction to $.36/transaction in order to make up for the difference.
I would appreciate it if you did not overlook the fact that that is exactly what the new budget is doing. It is increasing the per domain fee of SMALLER Registrars by $0.60 and above while not doing the same to larger Registrars. It is quite easy to make the above statement when Register.com is going to have a less than 1 cent impact on their per domain cost
to be honest that while some small registrars truly operate solely as registrars, others make very large margins by selling connections or other services for which domain names are simply loss leaders, and they will not be impacted by a nominal annual fee.
Until WLS (which incidentally has been approved) comes in. So what is the recourse now - * the backorder money that smaller registrars were making now goes to Verisign Registry * the legitimate money that smaller registrars were making now cant be made because suddenly their cost has shot through the roof So in two consecutive quarters ICANN has decided to cut out the smaller registrars completely by stifling all possible sources of making operational profit bhavin
1) Is the new ICANN Budget level too high, too low, about right? No doubt, it is a very large increase - almost double. However, I believe that a strong ICANN that has the resources to do the work we want it to do is important to us.
I think this is a key thought. This budget in and of itself cannot guarantee a strong ICANN. From my position, it simply looks like an ever-growing bureacracy. Until ICANN is willing to publicly release a strategic plan that documents the WHAT, WHEN and WHY for the things it has to do to be effective, doubling its budget is premature. By the time it figures out the WHAT, WHEN and WHY, the "revenues" planned in the current budget will have been spent on administrative bloat (and legal fees) and the fees will have to go up again. Budgetted ICANN Expenses by year: --------------------------------- 2001-2002: $5m 2002-2003: $6m 2003-2004: $8.3m 2004-2005: $15.8m This increase is too much too soon. Regards, Mike Lampson The Registry at Info Avenue, LLC -----Original Message----- From: owner-registrars@gnso.icann.org [mailto:owner-registrars@gnso.icann.org]On Behalf Of Elana Broitman Sent: Tuesday, May 18, 2004 1:44 PM To: Jay Westerdal; Registrars Constituency Subject: RE: [registrars] ICANN Proposed budget is out for public comment I have read with interest the various postings on this issue. I look forward to the conference call on this, which will continue to clarify the issues. At this point, I see a couple of key topics: 1) Is the new ICANN Budget level too high, too low, about right? No doubt, it is a very large increase - almost double. However, I believe that a strong ICANN that has the resources to do the work we want it to do is important to us. Registrars have been pushing for policies from Whois privacy to transfers and part of the problem is lack of institutional resources to drive these home. 2) Another concern has been lack of contract implementation - why should registrars that follow ICANN policies and contractual requirements "pay" with bad press and consumer concerns caused by a few unscrupulous players. Again, a strong ICANN with adequate compliance resources is important. 3) Are all stake holders paying their fair share? No doubt, Registrars carry the majority of the burden. However, this budget shows doubling of ccTLDs and RIRs. The gTLD registries should also contribute proportionately more, and ICANN should charge a fee for new registry services. 4) The registrar fee. If ICANN were to get rid of the annual fee, it would have to raise the proposed $.25/transaction to $.36/transaction in order to make up for the difference. This would double the current fee. Several suggestions have been made to try to even out the effect on the smallest registrars: capping fees for the future so they are predictable, instituting graduated transactional fees, creating "scholarships" per ICANN's footnote. But, we need to be honest that while some small registrars truly operate solely as registrars, others make very large margins by selling connections or other services for which domain names are simply loss leaders, and they will not be impacted by a nominal annual fee. Registrars have for years carried the weight of the ICANN budget. It has been based on the domain name alone, which does not correlate to whether ICANN's work benefits other constituencies or is driven by non-compliance. For these reasons, I believe that ICANN's approach to look for more funding from other groups and to correlate fees with accreditation, not just the size of the business is the right direction. I would like to see ICANN be even more creative in their search for other funding sources that better match the benefits it brings to other stakeholders. Elana Broitman Register.com 575 Eighth Avenue New York, NY 10018 Phone (212) 798-9215
EFax (800) 886-2716 Fax (212) 629-9309 ebroitman@register.com
-----Original Message----- From: owner-registrars@gnso.icann.org [mailto:owner-registrars@gnso.icann.org]On Behalf Of Jay Westerdal Sent: Tuesday, May 18, 2004 1:03 PM To: 'Registrars Constituency' Subject: RE: [registrars] ICANN Proposed budget is out for public comment Dear fellow Registrars, Yes, I see the elephant in the room. However there is no way to get rid of it until WLS eats the elephant whole. If the $19,000 a year extra is there to annoy the elephant, yes the fee will do that. But once WLS rolls out it will reveal a landscape of only big registrars. The smaller registrars holding elephants will leave, and the true victim of a high barrier of entry will only be smaller registrars wanting to compete on traditional registrar services. Pulling up the rope ladder and closing the tree house door may be exactly what large registrars want. Some experts in 2000 claimed there would be a huge consolidation in the market. How could registrars survive on several dollar margins. Well over the last 4 years we have seen the market grow several fold. And now the question is how can registrars survive on dollar margins? Well, the only solution is to force the consolidation and reward the larger registrars. At $19,000 x 200 registrars it comes out to $3,800,000 a year. Two years after WLS, I predict the number of registrars will be cut in half. So the fee will double, because there are half the registrars, That would be $38,000 a year. Then one year later, there will be 50 registrars, so fee according to the purposed budget would be $76,000 per year. Today to be in the top 100 Registrars in the world, your company must have over 13,229 domains registered. When the 100 Registrar day comes, you will need to make $38,000 on 13,229 domains, you need to make about $2.85 per domain year. Or $6.00 + $0.25 + $2.85 = $9.10 per domain to break even on fees. Then comes cost of employees, rent, computers, etc... A new registrar would be lucky to be able to sell a name at $12.00 a domain and still make money. Smaller registration companies will be forced into reseller programs. Perhaps this is a good thing if you have a reseller program. When the 50 registrar today arrives (current number #50 has 71,776 domains) the math would be like this: $76,000 on 71,776 would be about $1.10 a domain. That would be $6.00 + $0.25 + $1.10 = $7.35 per domain year. So, in three years, the biggest registrar will have a huge competitive advantage. Hence rolling up the ladder. It seems to me that $0.49 a domain to ICANN would be more fair. The smaller registrars will be paying an extra $1.10 per domain. And the largest registrars (assuming about 7MM domains) will be paying only an extra $0.01. This is a plan to get rid of smaller registrars. That is my two cents on this situation. I would vote for $0.49 per domain flat, rather then making the smallest registrar in 2007 paying $1.35 for each of their 70,000 domains. Jay Westerdal Name Intelligence, Inc. http://www.nameintelligence.com -----Original Message----- From: owner-registrars@gnso.icann.org [mailto:owner-registrars@gnso.icann.org] On Behalf Of Tim Ruiz Sent: Tuesday, May 18, 2004 6:54 AM To: 'Registrars Constituency' Subject: Re: [registrars] ICANN Proposed budget is out for public comment Rick and All, When I asked for the opportunity to represent the RC on the Budget Advisory Group (BAG) I stated that I felt there were three primary areas of concern: 1. Reexamining the registrars' funding model. 2. ICANN's future, which I believe affects our businesses' future. 3. Alternative forms of funding. I believe the proposed budget addresses these concerns, keeping in mind that it is part of a three plan. 1. Reexamining the registrars' funding model. --------------------------------------------- The current funding model, based on names under management, is neither predictable nor sustainable. When we sell a multiple year registration we really have no idea what the true cost is because we cannot predict what our fees to ICANN will be next year, or ten years from now. The transactional model will help solve that. First, we will know precisely the cost of registrations. If we sell a ten year registration today we will pay the current transactional fee and be done with it. Second, it allows us to more accurately set our pricing and pass the true cost on to registrants. I understand the concerns of some of the smaller registrars regarding the per registrar portion of the variable fee. This is the feedback the reps on the BAG need now. If registrars would prefer to see a higher transactional fee in return for a lower per registrar variable fee I am confident that your reps on the BAG, including myself, would represent that concern to the ICANN staff and rest of the BAG. I will point out however, that we have also heard concerns about accreditations being acquired simply for the purpose of renting out connections. Without commenting pro or con to such a business model, a higher per registrar variable fee would ensure that such registrars pay an appropriate portion in ICANN fees since the number of names under management by such registrars is relatively very low. A significant portion of the expense created by registrars does not depend on the number of transactions or the number of names under management, but is roughly the same across all accreditations. It seems appropriate that that portion be allocated equally across all registrars, regardless of business model. 2. ICANN's future, which I believe affects our businesses' future. ------------------------------------------------------------------ Do we believe that ICANN is important to the future of the DNS and our industry? If so: --They need to be able to meet the requirements of the MoU. --They need to be able to address threats such as law suites, the WSIS, etc. --They need to be able to enforce their agreements. The next three years' budget should reflect the ability to appropriately address those issues. I believe the level of this years' budget is appropriate based on those goals. Note, it has been reduced at least twice based on feedback and concerns expressed by various stakeholders, primarily registrars. 3. Alternative forms of funding. -------------------------------- Again, this year's budget proposal is part of a three year plan. You will note that it fixes the transactional fee at the proposed level over that three year period, relying instead on increases in transactional activity. Since transactional fees are based on realized revenue, increases in transactional activity will somewhat increase funds to ICANN yet have much less impact on registrars. By holding this fee steady, ICANN will also be motivated to meet appropriate goals in acquiring funding from alternative sources. Your reps on the BAG, as well as numerous other stakeholders, have suggested many alternative funding ideas to the ICANN staff, as well as encouraged increased funding from ccTLDs and the RIRs. While we do not see the level of funding from these sources increasing as much as we would like in this years budget, there are reasons to be encouraged that that will change over the next two years of this three plan. The RIRs funding has increased over 50% this year, and holding steady on the level of the registrar transactional fee will motivate ICANN to pursue its commitment to increase RIR funding to more appropriate levels. The establishing of the NRO and its MoU with ICANN will also put ICANN in a better position to pursue that goal. The formation of the ccNSO also creates a better situation for ICANN to pursue agreements with ccTLD operators and increase funding from them over the coming years. There will be new agreements with new sTLD and gTLD operators over the next few years. The ICANN staff has indicated that consideration will be given to increased funding from these new TLDs: increased fees; fees associated with new registry services, etc. As existing TLD agreements come up for renewal they can be brought into line with such additional sources. ICANN has committed to pursuing funding opportunities associated with other stakeholders and commercial entities that benefit from ICANN functions. Again, funding from these sources is not at the level we would like to see in this year's budget proposal. But I am encouraged from the level of participation that the ICANN staff has sought this year in formulating its budget. I am encouraged by having seen them make numerous adjustments to the budget based on feedback and input from numerous stakeholders, including registrars. And I believe we will see the same level of commitment in the upcoming years as ICANN pursues and increases these other areas of funding. I encourage all registrars to study the entire proposal carefully and submit your comments, concerns, and questions to your BAG reps (Rob, Elana, and myself). Tim -----Original Message----- From: owner-registrars@gnso.icann.org [mailto:owner-registrars@gnso.icann.org] On Behalf Of Rick Wesson Sent: Monday, May 17, 2004 8:58 PM To: Jean-Michel Becar Cc: 'Registrars Constituency' Subject: Re: [registrars] ICANN Proposed budget is out for public comment would those that have served on the budget committee provide specific comments on just what they did? It appears that the registrars burden will have increased 150% and I'm doubting that our reps did the registrars any good. would the reps on the budget committee please provide specific comments on just how they "helped" us this time? thanks, -rick Jean-Michel Becar wrote:
Dear fellows registrars,
The ICANN proposed budget for 2004 just get out for public comment. Enjoy the reading. Jean-Michel
Mike Lampson wrote:
1) Is the new ICANN Budget level too high, too low, about right? No doubt, it is a very large increase - almost double. However, I believe that a strong ICANN that has the resources to do the work we want it to do is important to us.
I think this is a key thought. This budget in and of itself cannot guarantee a strong ICANN. From my position, it simply looks like an ever-growing bureacracy. Until ICANN is willing to publicly release a strategic plan that documents the WHAT, WHEN and WHY for the things it has to do to be effective, doubling its budget is premature. By the time it figures out the WHAT, WHEN and WHY, the "revenues" planned in the current budget will have been spent on administrative bloat (and legal fees) and the fees will have to go up again.
I agree with this. Who provides the oversight to see if the increase in costs are necessary? The budget isn't detailed enough to provide any clue as to how reasonable any of their requests are. (Costs are lumped together). ICANN is operating like a regulated utility. * Who gets all the increased legal fees? Jones Day? * Are they going to consider other firms and get competitive pricing? * Who audits the legal bills? * Can they outsource some of the items that they think they need more full time staff for? It seems that everybody is fighting over who should pay for what ICANN wants instead of whether it is even necessary. (Like two divorced parents arguing over what share they should each pay of their child's new Mercedes.) Larry Erlich
Budgetted ICANN Expenses by year: --------------------------------- 2001-2002: $5m 2002-2003: $6m 2003-2004: $8.3m 2004-2005: $15.8m
This increase is too much too soon.
Regards,
Mike Lampson The Registry at Info Avenue, LLC
-----Original Message----- From: owner-registrars@gnso.icann.org [mailto:owner-registrars@gnso.icann.org]On Behalf Of Elana Broitman Sent: Tuesday, May 18, 2004 1:44 PM To: Jay Westerdal; Registrars Constituency Subject: RE: [registrars] ICANN Proposed budget is out for public comment
I have read with interest the various postings on this issue. I look forward to the conference call on this, which will continue to clarify the issues.
At this point, I see a couple of key topics:
1) Is the new ICANN Budget level too high, too low, about right? No doubt, it is a very large increase - almost double. However, I believe that a strong ICANN that has the resources to do the work we want it to do is important to us. Registrars have been pushing for policies from Whois privacy to transfers and part of the problem is lack of institutional resources to drive these home.
2) Another concern has been lack of contract implementation - why should registrars that follow ICANN policies and contractual requirements "pay" with bad press and consumer concerns caused by a few unscrupulous players. Again, a strong ICANN with adequate compliance resources is important.
3) Are all stake holders paying their fair share? No doubt, Registrars carry the majority of the burden. However, this budget shows doubling of ccTLDs and RIRs. The gTLD registries should also contribute proportionately more, and ICANN should charge a fee for new registry services.
4) The registrar fee. If ICANN were to get rid of the annual fee, it would have to raise the proposed $.25/transaction to $.36/transaction in order to make up for the difference. This would double the current fee. Several suggestions have been made to try to even out the effect on the smallest registrars: capping fees for the future so they are predictable, instituting graduated transactional fees, creating "scholarships" per ICANN's footnote. But, we need to be honest that while some small registrars truly operate solely as registrars, others make very large margins by selling connections or other services for which domain names are simply loss leaders, and they will not be impacted by a nominal annual fee.
Registrars have for years carried the weight of the ICANN budget. It has been based on the domain name alone, which does not correlate to whether ICANN's work benefits other constituencies or is driven by non-compliance. For these reasons, I believe that ICANN's approach to look for more funding from other groups and to correlate fees with accreditation, not just the size of the business is the right direction. I would like to see ICANN be even more creative in their search for other funding sources that better match the benefits it brings to other stakeholders.
Elana Broitman Register.com 575 Eighth Avenue New York, NY 10018 Phone (212) 798-9215
EFax (800) 886-2716 Fax (212) 629-9309 ebroitman@register.com
-----Original Message----- From: owner-registrars@gnso.icann.org [mailto:owner-registrars@gnso.icann.org]On Behalf Of Jay Westerdal Sent: Tuesday, May 18, 2004 1:03 PM To: 'Registrars Constituency' Subject: RE: [registrars] ICANN Proposed budget is out for public comment
Dear fellow Registrars, Yes, I see the elephant in the room. However there is no way to get rid of it until WLS eats the elephant whole. If the $19,000 a year extra is there to annoy the elephant, yes the fee will do that. But once WLS rolls out it will reveal a landscape of only big registrars. The smaller registrars holding elephants will leave, and the true victim of a high barrier of entry will only be smaller registrars wanting to compete on traditional registrar services. Pulling up the rope ladder and closing the tree house door may be exactly what large registrars want.
Some experts in 2000 claimed there would be a huge consolidation in the market. How could registrars survive on several dollar margins. Well over the last 4 years we have seen the market grow several fold. And now the question is how can registrars survive on dollar margins? Well, the only solution is to force the consolidation and reward the larger registrars.
At $19,000 x 200 registrars it comes out to $3,800,000 a year. Two years after WLS, I predict the number of registrars will be cut in half. So the fee will double, because there are half the registrars, That would be $38,000 a year. Then one year later, there will be 50 registrars, so fee according to the purposed budget would be $76,000 per year.
Today to be in the top 100 Registrars in the world, your company must have over 13,229 domains registered. When the 100 Registrar day comes, you will need to make $38,000 on 13,229 domains, you need to make about $2.85 per domain year. Or $6.00 + $0.25 + $2.85 = $9.10 per domain to break even on fees. Then comes cost of employees, rent, computers, etc... A new registrar would be lucky to be able to sell a name at $12.00 a domain and still make money. Smaller registration companies will be forced into reseller programs. Perhaps this is a good thing if you have a reseller program.
When the 50 registrar today arrives (current number #50 has 71,776 domains) the math would be like this: $76,000 on 71,776 would be about $1.10 a domain. That would be $6.00 + $0.25 + $1.10 = $7.35 per domain year.
So, in three years, the biggest registrar will have a huge competitive advantage. Hence rolling up the ladder. It seems to me that $0.49 a domain to ICANN would be more fair. The smaller registrars will be paying an extra $1.10 per domain. And the largest registrars (assuming about 7MM domains) will be paying only an extra $0.01.
This is a plan to get rid of smaller registrars. That is my two cents on this situation. I would vote for $0.49 per domain flat, rather then making the smallest registrar in 2007 paying $1.35 for each of their 70,000 domains.
Jay Westerdal Name Intelligence, Inc. http://www.nameintelligence.com
-----Original Message----- From: owner-registrars@gnso.icann.org [mailto:owner-registrars@gnso.icann.org] On Behalf Of Tim Ruiz Sent: Tuesday, May 18, 2004 6:54 AM To: 'Registrars Constituency' Subject: Re: [registrars] ICANN Proposed budget is out for public comment
Rick and All,
When I asked for the opportunity to represent the RC on the Budget Advisory Group (BAG) I stated that I felt there were three primary areas of concern:
1. Reexamining the registrars' funding model. 2. ICANN's future, which I believe affects our businesses' future. 3. Alternative forms of funding.
I believe the proposed budget addresses these concerns, keeping in mind that it is part of a three plan.
1. Reexamining the registrars' funding model. --------------------------------------------- The current funding model, based on names under management, is neither predictable nor sustainable.
When we sell a multiple year registration we really have no idea what the true cost is because we cannot predict what our fees to ICANN will be next year, or ten years from now. The transactional model will help solve that. First, we will know precisely the cost of registrations. If we sell a ten year registration today we will pay the current transactional fee and be done with it. Second, it allows us to more accurately set our pricing and pass the true cost on to registrants.
I understand the concerns of some of the smaller registrars regarding the per registrar portion of the variable fee. This is the feedback the reps on the BAG need now. If registrars would prefer to see a higher transactional fee in return for a lower per registrar variable fee I am confident that your reps on the BAG, including myself, would represent that concern to the ICANN staff and rest of the BAG.
I will point out however, that we have also heard concerns about accreditations being acquired simply for the purpose of renting out connections. Without commenting pro or con to such a business model, a higher per registrar variable fee would ensure that such registrars pay an appropriate portion in ICANN fees since the number of names under management by such registrars is relatively very low. A significant portion of the expense created by registrars does not depend on the number of transactions or the number of names under management, but is roughly the same across all accreditations. It seems appropriate that that portion be allocated equally across all registrars, regardless of business model.
2. ICANN's future, which I believe affects our businesses' future. ------------------------------------------------------------------ Do we believe that ICANN is important to the future of the DNS and our industry? If so:
--They need to be able to meet the requirements of the MoU. --They need to be able to address threats such as law suites, the WSIS, etc. --They need to be able to enforce their agreements.
The next three years' budget should reflect the ability to appropriately address those issues. I believe the level of this years' budget is appropriate based on those goals. Note, it has been reduced at least twice based on feedback and concerns expressed by various stakeholders, primarily registrars.
3. Alternative forms of funding. -------------------------------- Again, this year's budget proposal is part of a three year plan. You will note that it fixes the transactional fee at the proposed level over that three year period, relying instead on increases in transactional activity. Since transactional fees are based on realized revenue, increases in transactional activity will somewhat increase funds to ICANN yet have much less impact on registrars. By holding this fee steady, ICANN will also be motivated to meet appropriate goals in acquiring funding from alternative sources.
Your reps on the BAG, as well as numerous other stakeholders, have suggested many alternative funding ideas to the ICANN staff, as well as encouraged increased funding from ccTLDs and the RIRs.
While we do not see the level of funding from these sources increasing as much as we would like in this years budget, there are reasons to be encouraged that that will change over the next two years of this three plan.
The RIRs funding has increased over 50% this year, and holding steady on the level of the registrar transactional fee will motivate ICANN to pursue its commitment to increase RIR funding to more appropriate levels. The establishing of the NRO and its MoU with ICANN will also put ICANN in a better position to pursue that goal.
The formation of the ccNSO also creates a better situation for ICANN to pursue agreements with ccTLD operators and increase funding from them over the coming years.
There will be new agreements with new sTLD and gTLD operators over the next few years. The ICANN staff has indicated that consideration will be given to increased funding from these new TLDs: increased fees; fees associated with new registry services, etc. As existing TLD agreements come up for renewal they can be brought into line with such additional sources.
ICANN has committed to pursuing funding opportunities associated with other stakeholders and commercial entities that benefit from ICANN functions.
Again, funding from these sources is not at the level we would like to see in this year's budget proposal. But I am encouraged from the level of participation that the ICANN staff has sought this year in formulating its budget. I am encouraged by having seen them make numerous adjustments to the budget based on feedback and input from numerous stakeholders, including registrars. And I believe we will see the same level of commitment in the upcoming years as ICANN pursues and increases these other areas of funding.
I encourage all registrars to study the entire proposal carefully and submit your comments, concerns, and questions to your BAG reps (Rob, Elana, and myself).
Tim
-----Original Message----- From: owner-registrars@gnso.icann.org [mailto:owner-registrars@gnso.icann.org] On Behalf Of Rick Wesson Sent: Monday, May 17, 2004 8:58 PM To: Jean-Michel Becar Cc: 'Registrars Constituency' Subject: Re: [registrars] ICANN Proposed budget is out for public comment
would those that have served on the budget committee provide specific comments on just what they did?
It appears that the registrars burden will have increased 150% and I'm doubting that our reps did the registrars any good.
would the reps on the budget committee please provide specific comments on just how they "helped" us this time?
thanks,
-rick
Jean-Michel Becar wrote:
Dear fellows registrars,
The ICANN proposed budget for 2004 just get out for public comment. Enjoy the reading. Jean-Michel
-- ----------------------------------------------------------------- Larry Erlich - DomainRegistry.com, Inc. 215-244-6700 - FAX:215-244-6605 - Reply: erlich@DomainRegistry.com -----------------------------------------------------------------
participants (4)
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Bhavin Turakhia -
Elana Broitman -
Larry Erlich -
Mike Lampson