man looking at laptop pondering the .com price cap

When discussing what I do for a living, the question I get asked most often is how does it all work? The general Internet user knows very little about domains. They understand the concept of buying a name for their website but they have little knowledge beyond that. People are unaware of just how many top-level domains (TLDs) exist and they know nothing about the role of domain Registries and Registrars in all of it. A recent development on a US government enforced .com price cap is ruffling some feathers and illuminating the domain industry and its players.

How it all works

Domain Registries are the wholesale operators of TLDs. Registries, for the most part, do not sell directly to customers. This makes Domain Registrars the distributor or the middle-man for domain names. Most Registries are free to set their own prices. Verisign, the Registry which operates .com and other TLDs, is the exception. Verisign is in a contract with the US Government that placed a .com price cap of $7.85 in 2012. Verisign recently won a battle to amend this contract. According to Allemann, the amended agreement states that Verisign will be able to charge $10.29 per .com domain name six years from now.

Who profits from the .com price cap?

The news of the lifted .com price cap is not ideal for domain owners who have portfolios with hundreds and thousands of domains, many of which are .com. Selling domain names is a game of patience. Domain investors sometimes sit on names for years before they sell them for profit. The idea of the .com price cap was put in place to protect consumers however this isn’t always the case. Just because Verisign has a .com price cap does not mean that the Registrars do. Verisign is prohibited from selling directly to end users or anyone other than ICANN-accredited Registrars.

Registrars can charge whatever retail prices for .com domains they see fit. Here at 101domain, we are not the cheapest and we are not the most expensive. We do however believe in full transparency with our pricing which is why you can always see prices for new registrations, renewals, and transfers on all of our product pages. Other Registrars sell the first-year way below wholesale cost and then mark up the prices for renewals in the following years. We aren’t a fan of this tactic and believe in selling our domains to consumers and businesses at a reasonable price they can expect.

We should support small businesses

Why is it that when celebrities and big brands launch a new product, podcast, program, etc. we are so willing to buy into it? I always find it crazy that Kim Kardashian can sell so many perfumes without people ever having smelled them! But when it comes to our friends starting a new business or a local startup in our community, we have endless doubts.

I’m gonna wait to see how other people respond before I decide.”

“Doesn’t he know resturaunts are the worst business to get in.”

“She’s never going to make it.”

Kim Kardashian KKW Beauty Perfume Bottle

Source: Instagram @kimkardashian

The people who we should be supporting are the local businesses, our neighbors, our friends, and our communities. I think this relates to the question of who really profits from .com price cap and the point Verisign was trying to make in their blog post. On one side we have domain investors petitioning against the lifted .com price cap. On the other side, Verisign is calling out domain investors for exploiting consumers. I’m just over here trying to make a point somewhere in between.

The takeaway

I believe that domain investors should be more empathetic to the fact that many of the people buying domain names from them are small fries. They aren’t the huge mega-corporations, they are the start-ups, the small businesses and the people who are starting their very first website. We all want to succeed and thrive. We should all be in the business of doing what we can to help the people around us succeed. If that means amending the .com price cap or reconsidering the price you are charging for domains in the secondary market, we should all do our part. We shouldn’t be cutting each other down. We are are all on the same team and want to see success and growth in the domain industry. Together we need to find a solution and steer the industry in that direction.

If you’re not first…

But at the end of the day, it’s the name of the game. Domain names have always been and will always be a first-come-first-served product. The perfect name for your website and online branding is invaluable. No matter the .com price cap whoever registers the domain first whether it is another business or a domain investor has the right to hold on to it or let it go for whatever price is worth it to them.

Question for our readers:

Where do you stand on the .com price cap?