Ask YC: Why is domain registration so cheap? | Hacker News Reader

Ask YC: Why is domain registration so cheap?

3 pointstx8 comments

How does domain registration work? I mean who governs the process, issues 1-st level domains (like ".com"), besides ICANN? I mean who controls it?

I wonder why don't they jack up prices for domain registration significantly, like to $50/year, immediate pre-pay required without any "parking" bullshit - this will surely eliminate most squatters and free millions of decent domain names to the public. The names they are sitting on are ridiculous - nearly every combination of two English words is taken... The term "domain industry" is absurd: there shouldn't be industries built on top of something inherently non-for-profit...

So.. what stops them from doing that? From raising prices.

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Behind the scenes, each TLD (like .com or .net) has an authoritative top level DNS controller. In the case of .com and .net, that is Verisign.

Any registrar you use (network solutions, godaddy, namecheap) are effectively reselling domain registrations on behalf of Verisign.

.com names are currently $6.86, wholesale. So if you can get one from someone for 6.99, they are only marking it up by 13c ...

As you will see here, prices do go up regularly: http://wtop.com/index.php?nid=108&sid=1378741

Verisign have a monopoly over .com and .net, however the retail registrars work in a massively competitive environment.

You think about all the software and customer support a registrar gives you for 13c per year (or whatever), and how much effort Verisign put in for 6.86 per year?

Of course, some of that goes to ICANN, the governing body... wanna guess how much?

20c per name. Is Verisign onto a good scam?

Look - raising it from $9 a year to $50 wouldn't deter people from squatting/parking. Think of it from a parker's perspective: you have a portfolio of 1000 domains and, on average, each domain makes you $200 a year. You currently pay $9/yr per domain leaving a net profit of $191,000 ($200,000 - $9000 in fees). Changing it to $50 per registration definitely means you make less profit but you still clear $150,000 a year so you shrug your shoulders and do it.

However, changing from $9 to $50 for someone who owns one domain as family website, for example, means a lot. You'll lose a lot of people since $50 is real money and $9 can be thrown away (in a lot of people's minds). Of course, when these people don't renew their domains because it's too expensive, the squatters buy them and now you have even more squatted domains.

So there's no easy answer to the problem...

The TLD registries are treated like public utilities and regulated by ICANN so that they can only make "reasonable" profit. I think allowing VeriSign to increase prices faster than inflation when their costs are constantly falling is a little more than reasonable, but at $8 it's hard to complain. These prices, even as low as they are, do preclude certain business models like giving a free domain to every user and making it back on ads.

1) ICANN & ICANN accredited registrars. 2) Market forces are stopping them from doing that (fortunately), though Network Solutions is still selling them at $35.

Domain tasting was the really annoying thing - that's fortunately been eliminated (Details on the problem: http://tinyurl.com/2ogtxb (bobparsons.com))

Well, some of them do raise prices:

http://www.thestandard.com/news/2008/05/12/why-yahoo-boostin...

... but prices can't rise too much, as long as costs remain low and there is a lot of competition.

If they jack the price up, then the value of having a good domain goes up. It wouldn't stop squatters IMOHO

Competition.

Competition keeps the registrars' margins low, but VeriSign presumably controls the base registration price.

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