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Ask HN: ICANN charges only 18¢ per domain name, why am I paying $10?

31 points by allpratik ↗ HN
Purchasing a new domain name is second nature of a techie. But in this ear of disruption it's little odd that we didn't saw any major procedural changes in this field. Especially .com registry, which is owned and monopolized by Verisign.

Which things/laws are preventing us from solving this problem? In btw, kudos to Let's Encrypt for offering free SSL.

25 comments

[ 3.3 ms ] story [ 67.6 ms ] thread
allpratik
Apparently there are 3 guys in picture over here.

1) ICANN - $0.18 2) Registrars - ~$1 to $2 3) Verisign - $7.85

Verisign is making huge margins here, thanks to zero competition.

lfx
Interesting, EU domain fee for Eurid is 4 Euros (~4.33 USD) [1]. And it is non profit organisation. So Verisign margin should be ~3.5 USD? It is good to have monopoly...

P.S. I pay 5 Euros per domain in total, my domain provider takes 1 Euro, would say fair price.

[1] https://www.eurid.eu/en/registrars/become-eu-registrar/prepa...

arcdigital
Non profit doesn't mean they don't make any money... Non profit means that the extra money they make is used to further the goal of the nonprofit (instead of being paid out to the investors/owners). I doubt Eurid is only charging what it costs them to run the registry.
throwaway000002
Perhaps Verisign collects funds for the operation of the root nameservers. According to [1], they operate at 107 out of 514 sites. The rest of which are operated by others including 144 by ICANN itself.

Bizarre, this setup is.

[1] http://www.root-servers.org/

iancarroll
Each TLD has its own operator. You pay that operator an amount they usually define to have them serve your nameserver records. It's used to pay for the immense volume of DNS requests resolving your domain to your NS and to build a (profitable) company.

Root servers only point to TLDs; they do not collect money or register domains.

throwaway000002
Yes, and in turn the TLD operator requires the rootserver operators, am I missing something? It is only appropriate that part the funds they collect be distributed to those that operate the rootservers.

By calling it bizarre, I was only reflecting on how arbitrary the parties involved in rootserver operation seemed to be.

We could imagine internet company X paying ISP y just to have X.tld resolve to the appropriate server, and other stranger scenarios.

feld
at vBSDCon 2013 they explained the immense redundancy and diversity of their NS hosting of .com, .net, and .org. At their POPs they have:

  * Diverse switches
  * Diverse load balancers
  * Diverse servers (from different mfgrs AND hardware generations)
  * Diverse OSes (Linux & FreeBSD)
  * Diverse DNS software: BIND, NSD, and ATLAS
I don't know how they decide the exact configurations here, but the idea is that a single vulnerability or bug is unlikely to cause a full outage at the POP.

The complexity here is immense and they must have a really great system for managing the configurations and replicating DNS changes. It certainly would not be cheap to build.

gist
Exactly. It is a complex system built from scratch from the days when it was Network Solutions which evolved into Verisign and had a contract with the US Government. Which by the way no other company was interested in at the time.
[deleted]
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gesman
Government needs to drive this change. Someone is in VRSN pocket.

The action is to find someone important who is not and start driving change from there.

gist
I am curious is this a big problem for you personally, the charge for domains? How many domains do you own?
PhantomGremlin
is this a big problem for you personally

Perhaps he's just abhorred by typical rent-seeking[1] behavior for such an important part of the global Internet?

[1] https://en.wikipedia.org/wiki/Rent_seeking

gist
From that I see this:

"The classic example of rent-seeking, according to Robert Shiller, is that of a feudal lord who installs a chain across a river that flows through his land and then hires a collector to charge passing boats a fee (or rent of the section of the river for a few minutes) to lower the chain. There is nothing productive about the chain or the collector. The lord has made no improvements to the river and is helping nobody in any way, directly or indirectly, except himself. All he is doing is finding a way to make money from something that used to be free."

I am not seeing in any way the comparison between a company that maintains infrastructure and employs people and machinery to accomplish issuing and enabling domains and keeping them functioning on the Internet and "a feudal lord who installs a chain across a river....there is nothing productive about the chain or the collector".

PhantomGremlin
From that I see this:

Wow. It's like we are reading two different articles. If Verisign isn't doing typical rent-seeking, then we might as well delete the Wiki entry, because the concept doesn't exist.

Just from paragraph 1:

   seeking to increase one's share of existing
   wealth without creating new wealth.
Exactly what Verisign is doing. They are supplying infrastructure to the Internet. They're not creating anything, they're simply charging everyone an excessive fee for using the existing Internet. They're inserting themselves into every single .com and .net domain purchase or renewal.

From paragraph 2:

   capture of regulatory agencies to gain a coercive
   monopoly can result in advantages for the rent
   seeker in the market
Regulatory capture. This is exactly what happened when ICANN awarded no-bid contracts to Verisign, under the pretense that no other firm would have the capacity to do it.[1]

[1] http://timothyblee.com/2010/01/22/verisign-angling-for-no-bi...

jklein11
Verisign isn't hitching the proverbial chain across the river, because they are a necessary part of the domain registration of domain names. They are providing a necessary service and raising the barrier to entry with their patents. If their role were unnecessary, then it would be rent seeking behavior.
PhantomGremlin
Someone is in VRSN pocket

This has been under-discussed in this thread. But looking to "government" (nee ICANN, nee Dept of Commerce) for help is not the answer, rather it's more the problem.

A while ago we had this headline about a no-bid contract awarded to Verisign. I don't know about recent developments, but a while ago this was an ongoing thing.[1]

   Appeals Court Reverses & Allows Suit
   Against Verisign To Go To Trial:
   This Is A BIG Deal
You can bet there are people getting rich off of this. E.g.:[2]

   Under the current contract, which expires Friday,
   VeriSign was guaranteed four price increases
   of up to 7 percent each on domain name registrations
There's chutzpah for you. Verisign was demanding more price increases to run infrastructure that has historically had crazy price deflation associated with it.

[1] http://www.thedomains.com/2009/06/05/appeals-court-reverses-... [2] http://www.nwherald.com/mobile/article.xml/articles/2012/11/...

allpratik
Verisign's some recent financial report's highlights:

1) Verisign ended the third quarter with cash, cash equivalents and marketable securities of $1.9 billion, an increase of $466 million as compared with year-end 2014.

2) Verisign Registry Services added 1.68 million net new names during the third quarter, ending with 135.2 million .com and .net domain names in the domain name base, which represents a 3.4 percent increase over the base at the end of the third quarter in 2014, as calculated including domain names on hold for both periods.

3) In the third quarter, Verisign processed 9.2 million new domain name registrations for .com and .net, as compared to 8.7 million for the same quarter in 2014.

Full Report available at: https://investor.verisign.com/releasedetail.cfm?ReleaseID=93...

Uffizi
It's interesting that Verisign, a private company, controls the authoritative directory of all .com, .net, .tv, .cc, .name top-level domains and that their patents allow them to hold absolute control over the process.

https://www.verisign.com/en_US/patent/index.xhtml

arcdigital
Domains do not cost $0.18 to a registrar. ICANN charges registrars a $0.18 ICANN fee and then the company that owns the TLD (the registry) charges whatever they want per domain. Then your registrar adds their markup to the ICANN + Registry fees. Currently, a .com costs $7.85 + $0.18 + Registrar Markup. (I run a domain registrar)
allpratik
You're right. But here I'm more concerned about the job of the registry (TLD owner). Is there any way to justify $7.85 registry fee? I wanted to know that where they need this money?
gist
It actually takes a bit to keep this running with rock solid reliability. For example when a registrar calls Verisign they get replies almost in an instant as there are people sitting by 24x7 to handle and clear up any issues that come up. And the uptime, with the exception of planned maintenance (which can run from 45 minutes to several hours) is near 100%. This isn't like calling godaddy or fighting with Google or Facebook if you have a problem.

Does Verisign make money? Yes. Do they have a right to make a profit? Yes. How much? Not up to the public to decide this it's up to their customers. Their customers are registrars, not the public. Their contract, fairly negotiated is with ICANN (and their registrars).

What's interesting is that you don't hear much about the price from large portfolio owners but from people who seem to think that nobody has a right to make a profit and all costs need to be driven out of any existing system which most certainly needs to be disrupted.

superuser2
The .COM namespace is the property of the United States Department of Commerce, which has a responsibility to the American public to provide the best service at the lowest cost. Contracting to Verisign and allowing it to extract rents may well be the best way of doing so. But a right to make a profit off a public resource? Why? Why Verisign and not, say, me?
arcdigital
I'm not sure if the exact amount of $7.85 is necessary (there's definitely a decent profit margin there), but charging a registry fee is definitely necessary. There are a lot of costs that go into running a registry. This is my understanding of what running a gTLD registry looks like today (I run a registrar, so I'm on the other side of the picture, so I may be missing a few things).

$185,000 application fee (+50k if a technical review is required)

$6,250 fee per quarter

$0.25 per transaction (registration, renewal, or transfer)

More fees I'm forgetting

You also must run/maintain a bunch of other programs/services like: (this is the bulk of the cost of running a registry) shared registration system (SRS) that implements EPP (used by registrars to register/update domains), whois service, abuse prevention/mitigation, rights protection, dns services, zone file distribution, data escrow, DNSSEC, etc...

propogandist
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