Hundreds of Millions of Dollars at Stake as .COM Price Freeze Set to Expire

Hundreds of Millions of Dollars at Stake as .COM Price Freeze Set to Expire

Verisign, the company granted exclusive rights to issue .com domains, is expected to request a price increase for .com domains when its current ‘price cap’ agreement with the U.S. Department of Commerce’s National Telecommunications and Information Administration (NTIA) expires on November 30, 2018. Will NTIA impose a price increase on millions of Internet users to further enrich Verisign, “The Most Profitable Company You’ve Never Heard Of” [1], which is already enjoying huge windfall profits?

.Com domain names are issued exclusively by Verisign on a “wholesale basis” and sold by domain name registrars directly to the public. Domains ending in the .com extension are, by a wide margin, the most popular. A price increase would affect millions of individuals and small-businesses throughout the United States and around the globe.

All of the approximately 134 million .com domain names are administered exclusively by Verisign, a public company with a market capitalization of over $19 billion. Although the cost of running the .com registry may be as low as $3 per domain, Verisign charges $7.85 to their customers. Due to the dominance of .com, Verisign has no real competitive pressure on their pricing. Before the U.S. government stepped in to cap Verisign’s prices in 2012, Verisign’s previous contract permitted it to raise prices 7% annually in most years.

Thanks to Verisign’s exclusive contract to operate the .com registry, granted without a competitive bidding process, Verisign earned $457 million last year, and enjoys inflated operating margins of over 60%. Its windfall profits powered a tripling of its stock price over the past five years — despite the freeze imposed on .com prices. Verisign places fourth behind only Apple, Facebook, and Alphabet (Google’s parent company) in terms of revenue per employee. Verisign uses its excess cash to reward its top four executives with nearly $18 million in compensation in 2017 — equivalent to 7% of Verisign’s operating expenses (excluding cost of revenue). In comparison, the compensation of Oracle’s and Adobe’s top four executives is about 1% of operating expenses.

Not content with their current windfall profits, Verisign will likely seek an unjustified price increase that would over time effectively constitute a billion-dollar “tax” on Internet users.

For further information on how Verisign profits from .com domains, visit StopthePriceIncreaseof.Com. A Change.org petition has been launched to raise public awareness of this issue.

[1] See: “Special Investigation: The Dirty Secret Behind Warren Buffett’s Billions”, David Dayen, The Nation, February 15, 2018

4
Like
Save

Comments

Write a comment

*