Hello Rick,
There is lots of literature on what happens to markets and the poor with regressive taxes, "flat taxes" have the allure of fairness which is why the rich rarely support them.
On the subject of taxes, there are two main types that I know of: Income tax on an individual or company - as I understand it, the tax is on the profit (ie revenue minus expenses earning that revenue) Value-added tax - as I understand it, it is charged on the retail price Neither tax is related to the number of goods sold. In Australia, Melbourne IT pays a tax to the Government on our profit, and we also pay 10% of our retail price to Australian customers to the Government as a value-added tax (which is applied to all goods and services) on behalf of our retail customers (ie we act as a collection agency). Whenever we change the retail price, we change the amount we pay the Government. Whenever our profit changes (which has not been in proportion to domain name volumes over the last few years), our tax to the Government changes. I would have no problem with ICANN charging using either of those two methods - ie a percentage of profit from selling gtld names - or a percentage of the retail sales price per name The ICANN model of a per transaction fee is only equitable under an environment where we are all charging the same retail price and our costs are similar (ie our per domain name profit is similar). This is clearly not the case, otherwise we would clearly be sales agents for the registry. I don't disagree that the increase in ICANN fees will affect a small registrar, but it should be understood that the increase in transaction fee (from 18 cents to 25 cents) significantly affects large registrars that sell a large volume of names at a small or even negative margin. The increase in transaction fee cost could result in some companies with large number of names leaving the industry. The real measure is whether a small or large company is making a profit after the increase in ICANN fees, as to whether they will continue in the industry. This is not directly related to the number of transactions. The bottom line is that there is an large overall increase in fees for registrars as a whole, and nobody (big or small) is happy with the increase they have to pay individually. Regards, Bruce
Bruce Tonkin wrote:
Hello Rick,
There is lots of literature on what happens to markets and the poor with regressive taxes, "flat taxes" have the allure of fairness which is why the rich rarely support them.
On the subject of taxes, there are two main types that I know of:
Income tax on an individual or company - as I understand it, the tax is on the profit (ie revenue minus expenses earning that revenue)
Value-added tax - as I understand it, it is charged on the retail price
Neither tax is related to the number of goods sold.
In Australia, Melbourne IT pays a tax to the Government on our profit, and we also pay 10% of our retail price to Australian customers to the Government as a value-added tax (which is applied to all goods and services) on behalf of our retail customers (ie we act as a collection agency).
Whenever we change the retail price, we change the amount we pay the Government. Whenever our profit changes (which has not been in proportion to domain name volumes over the last few years), our tax to the Government changes.
I would have no problem with ICANN charging using either of those two methods - ie a percentage of profit from selling gtld names - or a percentage of the retail sales price per name
Not sure that this could be done. How could you determine the "selling" price for a name, or the profit, for registrars who give the name away for free and charge for another service? Or who register names for their own account or register names for another purpose. For example, say the University of Pennsylvania decides to become a registrar and provide all of their students with their own domain names?
The ICANN model of a per transaction fee is only equitable under an environment where we are all charging the same retail price and our costs are similar (ie our per domain name profit is similar). This is clearly not the case, otherwise we would clearly be sales agents for the registry.
I don't disagree that the increase in ICANN fees will affect a small registrar, but it should be understood that the increase in transaction fee (from 18 cents to 25 cents) significantly affects large registrars that sell a large volume of names at a small or even negative margin.
That is a business choice that they have made. If their costs go up they need to reevaluate that choice. That is not the same as a small registrar having to pay quad the fees.
The increase in transaction fee cost could result in some companies with large number of names leaving the industry. The real measure is whether a small or large company is making a profit after the increase in ICANN fees, as to whether they will continue in the industry. This is not directly related to the number of transactions.
Setting a per registrar fee of $19,000 (plus) is a barrier to entry and a business killer to small registrars. Setting a per domain fee of even .50c is a "cost of doing business". I see them differently. The only way that the increase in transaction fees will kill a large registrar is if they have contracts with customers that specify their cost will always be, say $6.50 (or whatever). Another example of a registrar that might need to eat the fee might be Godaddy. The site advertises $7.95 and $8.95 for transfers/new registrations. If a per domain fee of .25 is added, they can't maintain those prices and those magic numbers. I think that if a registrar makes a choice to sell domains so close to the cost, then take a risk if fees are increased. That is a risk of the business model they have chosen. It is not the same as, once again, a small registrar being hit with an extra $19,000. I think it would be entirely reasonable for a registrar to think that fees could increase slightly on a per domain basis and that they would need to increase what they charge to customers as a result. I think it is unreasonable to think that registrar fees could go from $6000 to over $20,000 per year. Larry Erlich
The bottom line is that there is an large overall increase in fees for registrars as a whole, and nobody (big or small) is happy with the increase they have to pay individually.
Regards, Bruce
-- ----------------------------------------------------------------- Larry Erlich - DomainRegistry.com, Inc. 215-244-6700 - FAX:215-244-6605 - Reply: erlich@DomainRegistry.com -----------------------------------------------------------------
Larry:
That is a business choice that they have made. If their costs go up they need to reevaluate that choice. That is not the same as a small registrar having to pay quad the fees.
Can you explain this to Me, because I see it exactly the other way arround.
The only way that the increase in transaction fees will kill a large registrar is if they have contracts with customers that specify their cost will always be, say $6.50 (or whatever).
I can not speak for other registrars, but it will badly hurt us.
Another example of a registrar that might need to eat the fee might be Godaddy. The site advertises $7.95 and $8.95 for transfers/new registrations. If a per domain fee of .25 is added, they can't maintain those prices and those magic numbers.
Please, visit our website and check our prices.
I think that if a registrar makes a choice to sell domains so close to the cost, then take a risk if fees are increased. That is a risk of the business model they have chosen. It is not the same as, once again, a small registrar being hit with an extra $19,000.
Again how come it is unfair only one way. There is an increase on the variable fee, and it is substantial, as Kurt said yesterday, MOST of the funds come from the increase in the PER TRANSACTION fee. What you are advocating for is that ALL the funding should come from a per transaction. I not only think it is unfair, I can tell you it will completely cripple our business, and our ability to provide a large number of customers with registrations at an affordable price, customers, that because of the increase might not be able to pay for those registrations... Our "choice" of model has always been to provide more for less, and it proved successful. I do not think your idea of killing our model in favor of smaller, "boutique" , "specialty" or even non registering registrars is fair; As for the registrars that have a VIABLE, REAL, registration business going on, there is relief from the fee. Regards, JP
The bottom line is that there is an large overall increase in fees for registrars as a whole, and nobody (big or small) is happy with the increase they have to pay individually.
Regards, Bruce
-- ----------------------------------------------------------------- Larry Erlich - DomainRegistry.com, Inc. 215-244-6700 - FAX:215-244-6605 - Reply: erlich@DomainRegistry.com -----------------------------------------------------------------
At 10:48 AM 5/26/2004, JP wrote:
I not only think it is unfair, I can tell you it will completely cripple our business, and our ability to provide a large number of customers with registrations at an affordable price,
Dear JP: I just can't let that one go by:-( The cost of the domain name is the least expensive service in the bundle of services required by the registrant -- web hosting, co-location, mail service, search engines, web editors, marketing... need I go on??? It is only significant for those few registrants who have thousands of domains and one (or just a few web sites). I don't think Jon Postel had that in mind and I don't think ICANN should structure its operations to subsidize that kind of registrant. Regards, BobC
JP wrote:
Larry:
That is a business choice that they have made. If their costs go up they need to reevaluate that choice. That is not the same as a small registrar having to pay quad the fees.
Can you explain this to Me, because I see it exactly the other way arround.
I have explained it. We see it differently. There is no reason to ever guarantee customers that a variable cost won't change unless you have a contract with someone else stating that the variable cost won't change. Then I guess it would be reasonable to guarantee the variable cost. This isn't the case with ICANN fees and I thought there were ways for even Verisign to increase the $6 rate. We don't take money in advance from customers so this isn't an issue for us and additionally we don't sell domains for small amounts over cost. I note from your web page that you offer "1000 domain packs" for $6.99. So what I think is going on here is that you have sold packs that obviously have unused domain registrations. You may have sold tens or hundreds of these. Or you may have sold hundreds of domain packs of lesser quantities like 250 for $7.99. Your registration agreement is ambiguous as to whether you can pass the fees along to customers. It says that you can change or add fees at any time but I don't know if that is for new packs or legacy packs. In any case, good news and bad news. The good news is that I think you and others have a good case to have a certain amount packs that you sold grandfathered if there could be a reasonable way to show that you had sold the packs with the expectation that the price wouldn't change. You would have to proove that. I could argue that either way. But in the end ICANN should probably grandfather some past sales. The bad news is that it certainly makes selling future packs less attractive if you have to say something like "by the way we are selling you domain packs at $7.25 but if our cost go up you won't be able to register as many names." But you should be able to find a creative way to bury this somewhere. (Probably more advice than you want to hear on a public list.)
The only way that the increase in transaction fees will kill a large registrar is if they have contracts with customers that specify their cost will always be, say $6.50 (or whatever).
I can not speak for other registrars, but it will badly hurt us.
Another example of a registrar that might need to eat the fee might be Godaddy. The site advertises $7.95 and $8.95 for transfers/new registrations. If a per domain fee of .25 is added, they can't maintain those prices and those magic numbers.
Please, visit our website and check our prices.
I think that if a registrar makes a choice to sell domains so close to the cost, then take a risk if fees are increased. That is a risk of the business model they have chosen. It is not the same as, once again, a small registrar being hit with an extra $19,000.
Again how come it is unfair only one way. There is an increase on the variable fee, and it is substantial, as Kurt said yesterday, MOST of the funds come from the increase in the PER TRANSACTION fee.
What you are advocating for is that ALL the funding should come from a per transaction.
I am not advocating that all of the funding come per a per transaction. I am advocating: 1) See if DOC really needs all these things done on the schedule that is laid out in the MOU that was "just signed" 2) Analyze and reduce expenses possibly by outsourcing. 3) Find some reasonable combination of fixed and variable fees. In the end I don't think it's unreasonable that costs be assigned on both a per registrant and per registration and per registrar basis. Actually that's a new idea. Find some way to attach a cost to a "registrant" since 1 registrant with 100,000 names is certainly less work for everyone than 100,000 registrants with 1 name each.
I not only think it is unfair, I can tell you it will completely cripple our business, and our ability to provide a large number of customers with registrations at an affordable price, customers, that because of the increase might not be able to pay for those registrations...
I still don't see that. If your costs go up on a per transaction basis and your competitors costs go up how will that cripple you? Can you give an exact example of some of these customers that would stop registering names if the variable cost increased?
Our "choice" of model has always been to provide more for less, and it proved successful. I do not think your idea of killing our model in favor of smaller, "boutique" , "specialty" or even non registering registrars is fair; As for the registrars that have a VIABLE, REAL, registration business going on, there is relief from the fee.
As I mentioned I think it would be reasonable, even though it wouldn't benefit us, to have any legacy sales excluded if there is a way to do that. Larry Erlich ----------------------------------------------------------------- Larry Erlich - DomainRegistry.com, Inc. 215-244-6700 - FAX:215-244-6605 - Reply: erlich@DomainRegistry.com -----------------------------------------------------------------
Regards,
JP
The bottom line is that there is an large overall increase in fees for registrars as a whole, and nobody (big or small) is happy with the increase they have to pay individually.
Regards, Bruce
--
Larry Erlich - DomainRegistry.com, Inc. 215-244-6700 - FAX:215-244-6605 - Reply: erlich@DomainRegistry.com -----------------------------------------------------------------
Larry,
I am not advocating that all of the funding come per a per transaction.
I am advocating:
1) See if DOC really needs all these things done on the schedule that is laid out in the MOU that was "just signed" 2) Analyze and reduce expenses possibly by outsourcing. 3) Find some reasonable combination of fixed and variable fees.
Ok, Now that you make this clear, I agree, and can support your position.
I still don't see that. If your costs go up on a per transaction basis and your competitors costs go up how will that cripple you?
I am sorry but I do not think it is a good idea for me to post an answer to this in here, but we can discuss it privately.
Can you give an exact example of some of these customers that would stop registering names if the variable cost increased?
The famous "free domain" with purchase... At least for a while.
JP, The increase in your cost of registration is not the full transaction fee plus per-registrar fee in this budget. You are currently paying something to ICANN so the *difference* is the real increase in your costs. And, based on history, surely you worked increases in ICANN fees somewhere into your business plan and budget when figuring your true costs and setting your prices. It still seems to me that the per-registrar fee is the issue we need to discuss and find a reasonable resolution to that the majority of us can agree on and present to ICANN. Tim -----Original Message----- From: owner-registrars@gnso.icann.org [mailto:owner-registrars@gnso.icann.org] On Behalf Of JP Sent: Wednesday, May 26, 2004 11:49 AM To: Larry Erlich; Bruce Tonkin Cc: Registrars Constituency Subject: Re: [registrars] Regarding taxes Larry:
That is a business choice that they have made. If their costs go up they need to reevaluate that choice. That is not the same as a small registrar having to pay quad the fees.
€€€ Can you explain this to Me, because I see it exactly the other way arround.
The only way that the increase in transaction fees will kill a large registrar is if they have contracts with customers that specify their cost will always be, say $6.50 (or whatever).
€€€ I can not speak for other registrars, but it will badly hurt us.
Another example of a registrar that might need to eat the fee might be Godaddy. The site advertises $7.95 and $8.95 for transfers/new registrations. If a per domain fee of .25 is added, they can't maintain those prices and those magic numbers.
€€€ Please, visit our website and check our prices.
I think that if a registrar makes a choice to sell domains so close to the cost, then take a risk if fees are increased. That is a risk of the business model they have chosen. It is not the same as, once again, a small registrar being hit with an extra $19,000.
€€€ Again how come it is unfair only one way. There is an increase on the variable fee, and it is substantial, as Kurt said yesterday, MOST of the funds come from the increase in the PER TRANSACTION fee. What you are advocating for is that ALL the funding should come from a per transaction. I not only think it is unfair, I can tell you it will completely cripple our business, and our ability to provide a large number of customers with registrations at an affordable price, customers, that because of the increase might not be able to pay for those registrations... Our "choice" of model has always been to provide more for less, and it proved successful. I do not think your idea of killing our model in favor of smaller, "boutique" , "specialty" or even non registering registrars is fair; As for the registrars that have a VIABLE, REAL, registration business going on, there is relief from the fee. Regards, JP
The bottom line is that there is an large overall increase in fees for registrars as a whole, and nobody (big or small) is happy with the increase they have to pay individually.
Regards, Bruce
-- ----------------------------------------------------------------- Larry Erlich - DomainRegistry.com, Inc. 215-244-6700 - FAX:215-244-6605 - Reply: erlich@DomainRegistry.com -----------------------------------------------------------------
I can say for us, that we expect some amount of "reasonable" growth in ICANN. But increasing the per-domain cost by USD$0.10 *and* tacking on a USD$19,000 fixed fee (which for us equates to another USD$0.13 per domain) means that our per domain costs are going up from around USD$0.19 per year to USD$0.42. Yes, the size of the fixed fee is an issue. The smaller the Registrar, the bigger the issue. But the overall issue to us is that our ICANN "taxes" are doubling. As a larger registar, the percentage increase you see may be smaller, but I bet the total increase in your out-of-pocket fees to ICANN are *LARGER*. With millions of domains, an extra 10 cents each is no "chump change". In my personal opinion, any growth in ICANN's budget that increases the amount collectively paid by Registrars more than 25% per year is unacceptable - and I think I'm being generous at 25%. If there are truly fixed costs to ICANN for maintaining each accreditation, I can accept some amount of increase in the fixed fee component of the "tax". I would apply the same growth cap to the fixed fee component as I would to the entire fee structure however. In closing, I think we as a Constituency should not tell ICANN that its growth must be constrained by the growth in taxes paid by us. We need to stress that we are fighting having ourselves be the pocket that is picked. Our pockets are nowhere near as deep as ICANN seems to believe they are. 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 Tim Ruiz Sent: Thursday, May 27, 2004 3:39 PM To: 'JP'; 'Larry Erlich'; 'Bruce Tonkin' Cc: 'Registrars Constituency' Subject: RE: [registrars] Regarding taxes JP, The increase in your cost of registration is not the full transaction fee plus per-registrar fee in this budget. You are currently paying something to ICANN so the *difference* is the real increase in your costs. And, based on history, surely you worked increases in ICANN fees somewhere into your business plan and budget when figuring your true costs and setting your prices. It still seems to me that the per-registrar fee is the issue we need to discuss and find a reasonable resolution to that the majority of us can agree on and present to ICANN. Tim -----Original Message----- From: owner-registrars@gnso.icann.org [mailto:owner-registrars@gnso.icann.org] On Behalf Of JP Sent: Wednesday, May 26, 2004 11:49 AM To: Larry Erlich; Bruce Tonkin Cc: Registrars Constituency Subject: Re: [registrars] Regarding taxes Larry:
That is a business choice that they have made. If their costs go up they need to reevaluate that choice. That is not the same as a small registrar having to pay quad the fees.
€€€ Can you explain this to Me, because I see it exactly the other way arround.
The only way that the increase in transaction fees will kill a large registrar is if they have contracts with customers that specify their cost will always be, say $6.50 (or whatever).
€€€ I can not speak for other registrars, but it will badly hurt us.
Another example of a registrar that might need to eat the fee might be Godaddy. The site advertises $7.95 and $8.95 for transfers/new registrations. If a per domain fee of .25 is added, they can't maintain those prices and those magic numbers.
€€€ Please, visit our website and check our prices.
I think that if a registrar makes a choice to sell domains so close to the cost, then take a risk if fees are increased. That is a risk of the business model they have chosen. It is not the same as, once again, a small registrar being hit with an extra $19,000.
€€€ Again how come it is unfair only one way. There is an increase on the variable fee, and it is substantial, as Kurt said yesterday, MOST of the funds come from the increase in the PER TRANSACTION fee. What you are advocating for is that ALL the funding should come from a per transaction. I not only think it is unfair, I can tell you it will completely cripple our business, and our ability to provide a large number of customers with registrations at an affordable price, customers, that because of the increase might not be able to pay for those registrations... Our "choice" of model has always been to provide more for less, and it proved successful. I do not think your idea of killing our model in favor of smaller, "boutique" , "specialty" or even non registering registrars is fair; As for the registrars that have a VIABLE, REAL, registration business going on, there is relief from the fee. Regards, JP
The bottom line is that there is an large overall increase in fees for registrars as a whole, and nobody (big or small) is happy with the increase they have to pay individually.
Regards, Bruce
-- ----------------------------------------------------------------- Larry Erlich - DomainRegistry.com, Inc. 215-244-6700 - FAX:215-244-6605 - Reply: erlich@DomainRegistry.com -----------------------------------------------------------------
Bruce, If this were a discussion about taxes -- some sovereign authority to levy tax -- but it isn't -- taxation and authority to tax are simply analogs to fees and contracts. Tax structures serve a variety of policy goals -- my wife has become a tax maven over the past year preparing to run for a seat in the Maine legislature -- we've a Jarvis-Gann "property tax cap" on a ballot, a wild disparity of means between the wealthy summer-people and the year-rounders, and and the Maine woods are rife with strutting turkeys of any number of stripe gobbling out "fairness and equity" arguments. Oblig promotional: Please point the browser of your choice, and mozilla is always a good choice, at http://www.williams4me.org and stuff up to $250 into the PayPal box. US law prohibits campaign contributions by evil foreigners (e.g., Canadians, etc.) only in _national_ elections, not state, so evil foreign and good domestic registrars please throw money. This blatant grab at fat checkbooks is not limited to Bruce's. Mainers ("Mainiacs" is the prefered form) need to find out what their shared policy goals are, within the bounds of municipal, state, and federal taxes and services -- one instance of the American political idiom. Presumably a balance can be found that is better than raw police power. Some agreement about the nature of government, etc. Our problem(s) is/are different. Is the original policy, some form of economic diversity (e.g., "competitive registrars") still controlling in ICANNv2.0? Do we have a shared interest? Is it just surviving the dotBOMB market collapse? Is it "good government"? (would the "goo goos" in the RC kindly hold up their hands.) Is it expanding the dns market? Is it expanding the derived market? Is it being ahead of the telcos in franchise-space when e164.arpa goes live? (Sorry about that BT, DT, and AOL.) We know there is insufficient shared interest by the registries to support a single protocol/version/toolkit model. That was tried and it failed. We registrars may be just as incapable of finding a shared interest that can shape our fees and services dialog with ourselves and the rest of the bits that make up the ICANN constituencies and institutional secretariate. Nothing is perfect, including this note. Eric
participants (7)
-
Bruce Tonkin -
Eric Brunner-Williams -
JP -
Larry Erlich -
Mike Lampson -
Robert F. Connelly -
Tim Ruiz