[ga] RE: [icann-delete] WLS Input - Greatest Good vs. Benefits of the Few

[Ron Wiener <Ron@Snapnames.com>]

Donny,

I applaud you and thank you for saying the positive things that you did say
about the WLS/SnapNames, and for looking out for your own company's bottom
line.  Let me briefly respond to some of your comments.

If the WLS does not get through this process please do not worry about the
health of SnapNames.  We're in excellent financial shape, and in fact just
closed a Series B funding round last week.  We've taken no investments from
any company in this industry, and we're not for sale.  Got plenty of cash,
and a host of new infrastructure products in development which we'll be
introducing over the next few quarters - all of them being items that
registrars and registries can grow their revenues with.  So, if the WLS does
not proceed, we will be OK.  If it does proceed, we will still be offering
SnapBack for .org names as we do today, and we plan to shortly be offering
it for other TLDs as well.

Everyone seems to underestimate the complexity of building a system like
this, and let me tell you as someone who started out writing code over 20
years ago - you can't begin to assess the requirements of this system in a
10-minute napkin exercise.  Every new registry that has recently launched
learned the hard way that it always looks simple before you start, and the
devil is in the details.  This is my fourth stint as CEO of a high-tech
company - previously having brought to market everything from jet aircraft
flight simulators to artificial intelligence based decision support systems
- and this WLS system was as complicated to build as anything I've seen in
the past.  More complicated, perhaps, in its reliability and redundancy
requirements.

Regarding charge-backs by customers when the original registrants
renew, perhaps you're not aware that in such cases the customer's
first several options are to transfer his subscription to a new name.  With
fewer than 50% of domain names renewing, and customers being very savvy in
not putting back-orders on active websites, the odds are very good that
he'll get the one he wants.  I'm also happy to share our experience with you
as we have been in this business for over a year now.  Charge-backs are a
reality for all registrars and businesses that take credit cards, but in our
experience it has been an extremely small problem.  And that's with a 70%
efficacy product, no less.  Subscribers are able to exchange the target name
at any time during the subscription term, and most people have a short list
of back-up names in case they don't get their first choice.  With 100%
efficacy I don't see any reason why charge-backs shouldn't be even more
deminimus than they are today.  We're talking way, way under 1%.  

There are as many economic theories as there are economists, and perhaps
registrars, too.  While your customer may be right, he may be exactly wrong
as well.  It's possible that the lower the cost of a WLS position the more
names will be bought by speculators and that the elasticity curve of the
product is such that everyone makes a lot more money at a lower price.  Like
the Sony Walkman, ten years after it was introduced.  The point, once again,
is that without launching a test program, we can speculate all day long on
high versus low and never KNOW the correct answer.   
 
No person in this debate, not you, nor I, nor VGRS or even ICANN can "know"
what the best price point will be up-front... the only way to resolve it is
to offer it the market and see how customers respond.   From an economic
perspective alone, I'm not overly concerned about where the price ends up in
this negotiation between VGRS, ICANN and the affected constituents because
there is a volume relationship to price - the lower the price, the more
sales, and voila! more money for everyone - but, of more concern to us,
along with that lower price comes a shift toward speculator usage and away
from mainstream usage.   That is not our business model, and it is not,
despite the higher cash, the sort of proposal we had any desire to see given
to ICANN.  I think the data is pretty clear on that.  Alas, it's not up to
SnapNames - we're just offering our historical data as support for the
RC/VGRS/ICANN to make the best decision with.  

Cheers,
Ron


-----Original Message-----
From: Donny Simonton [mailto:donny@intercosmos.com] 
Sent: Tuesday, January 15, 2002 3:21 PM
To: 'Ron Wiener'; ga@dnso.org; icann-delete@total.confusion.net
Subject: RE: [icann-delete] WLS Input - Greatest Good vs. Benefits of the
Few

Ron,
I was the one registrar who said "when Verisign goes live with the WLS, we
would offer it."  But before I made that statement I also said, "in my
opinion in doesn't matter what decision we come up with today, I think
Verisign will go through with the WLS no matter what the registrars opinions
are!"  I went on to say that I thought the price was WAY too high, but it
was an interesting concept.  But don't get too excited yet.
 
The WLS will be the end of Snapnames!  If the WLS goes live either using the
Snapnames technology or not, the snapnames service that is offered today on
their site will no longer exist as it does today.  So Snapnames has the
largest amount to lose in this entire proposal.  If the WLS never goes live,
Snapnames will continue as usual.  If the WLS goes live as proposed, they
will all be rich and happy.  If the WLS goes live, without using the
Snapnames technology, all of their employees will be looking for new jobs! 
So this must go through for Snapnames to stay in business.
 
WLS without the Snapnames technology?  Sit down and think about what would
be involved in creating this technology.  I mapped out the entire WLS
backend technology on a napkin in 10 minutes.  It's very easy!  And I would
give my technology away for free, not charge $40 a domain for it.  Sure, it
might not be in some pretty 90 page pdf file with all of the EPP commands,
but mine comes with some doodles on the top of the napkin and is a lot
cheaper.
 
 
Let's talk about chargebacks with the WLS system.  Let's pretend I'm Enom
(the have said they will charge $1.00 over their cost).  A customer comes to
the site and does a "WLSback" or whatever it's going to be called.  They
want donny.com, because they really don't like Donny Osmond.  So they pay
their $47.00.  The initial $40.00 goes to the new registry
Verisign/Snapnames and the $7.00 goes to the registrar.  If the domain is
really registered, then $6.00 would go to Verisign and the registrar would
get their $1.00 profit.  And now they can go on that vacation to the
bankruptcy court you always wanted.
 
But guess what?  The customer didn't get donny.com, because the current
registrant renewed the domain.  So the customer charges back on you.  So
let's see you are now out $40.00, because you already paid
Verisign/Snapnames and you can't get a refund, and you are out the
chargeback fee, which we will say is $20.00.  So you are out $60.00, because
the customer charged back on you, because they were confused about the
service.  Now you have to sell 60 more "WLSbacks" to break even again!
 
How does the WLS system handle chargebacks?   It's never been mentioned.
 
 
The WLS will NOT lower the number of check domain queries send to the
registry, in fact I bet it will more than double the current number of
queries.  It's simple, every registrar that would offer it would do the
"check if domain is available for WLSback" command, whenever anyone does a
search on their site.  Since right now on our site if somebody does a search
for a word, we show them if the .com, .net and .org are available or not. 
With the WLS, we would also check to see if the "WLSback" is available for
the .com and .net.  So at least from our site you will get a 66% increase in
lookups of some type.  
 
I was talking to one of our customers yesterday about the WLS system,
because I respect his opinion since he owns a few domains.  I told him that
I didn't like what we would have to charge him if the current pricing scheme
stays the same.  When I told him the price he was overjoyed that it was so
expensive.  His quote was "It will keep all of the normal people out of the
business!"  He went on to say that Verisign should charge $5000.00, so that
only 3 or 4 people would be able to buy domains.  I know that I don't have
the money to "blow" on a domain that I might not even get and I am sure 99%
of our customers are the same way.
 
 
Trust me nobody on the conference call had anything good to say about the
WLS system except for myself.  Even the Verisign representative decided not
to comment on any of the proposals.  I like the concept of the WLS, but not
the current implementation!  IMHO, there is no reason for Snapnames to be
involved with this system.  There is no need for their "technology"; it's a
very simple process.  Without their technology, Verisign would still have to
create another registry/company, since ICANN won't allow Verisign to sell
domains to registrars for more than $6.00.  So they could funnel the deleted
domains through the other company and do it that way.  This is why we have a
"technology partner" with this proposal.
 
I say Verisign should just buy Snapnames and get this all over with!
 
Donny
 
 
 
 
-----Original Message-----
From: owner-icann-delete@total.confusion.net
[mailto:owner-icann-delete@total.confusion.net] On Behalf Of Ron Wiener
Sent: Tuesday, January 15, 2002 10:24 AM
To: 'ga@dnso.org'; 'icann-delete@total.confusion.net'
Subject: [icann-delete] WLS Input - Greatest Good vs. Benefits of the Few
 
Rather than respond to individual response documents and e-mail posts,
please find attached aconcise document, in PDF format.
 
Cheers,
Ron
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