[registrars] FW: My response to Ron Wiener

[Elana Broitman <ebroitman@register.com>]

FYI - this debate may be of interest to registrars, as the earlier email by
Ron had been posted to the regisrars' list.  Thanks

> -----Original Message-----
> From: Peter Girard [mailto:peter_girard@yahoo.com] 
> Sent: Tuesday, January 08, 2002 3:06 PM
> To: Ron Wiener; icann-delete@total.confusion.net
> Cc: ga@dnso.org
> Subject: RE: [icann-delete] Proposal: Registry Re-circulation System
>  
> Hello Ron, 
> I think you misread the Afternic RRS proposal, confusing some elements
> with Afternic's previously published pre-delete solution. (Mea culpa,
> we've got multiple balls in the air.) 
> To your first point, RRS does not require this permission. I know Chuck
> Gomes has weighed in with a landlord analogy with which I agree,
> concerning the right of the registry to resell deleted names. And that's
> what these are--post-deletes. To sell pre-deletes at any time, the
> registrant must become the de facto seller. Policy experts seem clear on
> this (same for 1b). But as a post-delete proposal, the RRS suggests
> neither contacting former-registrants nor selling names in a limited
> window (ie. 45-day grace period). 
> You bring up a valid point in (1a). Publically available knowledge that
> another person wants your domain name (WLS, RRS, etc.) might influence
> your decision to renew it. It's possible that this will keep a percentage
> of registered names from end users. Can we stop this? Should we? You
> dispute that the RRS eliminates some first mover advantage and high-tech
> gaming, but I'm not sure what you mean. Clever speculators are the
> ultimate first-movers--they saw value in domain names before anyone else.
> They know the value of WLS, and they'll use it and maybe game it, and I
> don't think that's necessarily illegal. But RRS places them in competition
> with their target customers. And we all benefit whenever an end user buys
> a domain name, regardless of how or from whom. 
> I really question your defense of the consumer, though. "Goaded into
> paying unwarranted prices?" What's an unwarranted price? For some names,
> the dearth of consumer demand suggests that $6 is too much. Some have
> warranted thousands. But of all the warrantors of value in the
> marketplace, a "quasi-professional speculator" might be the least
> attactive to the consumer. Unless you disincentivize speculation,
> speculators will identify attractive names, buy low and sell high, and
> their customers will determine what are warranted prices. 
> And if the arbitrary price for an attractive registration rises, whether
> to $40 or $99, those names considered by end users to be worth less than
> that price will not be registered. Demand will soften. And if demand
> softens, registrars will find little comfort in knowing ahead of time that
> their queued re-registrations represent a fraction of last year's
> registration volume. You're right that my parent company, Register.com,
> may be less damaged initially by the loss of volume vs. the increase in
> price than would some registrars, but there is some concern industry-wide
> that the upside might not compensate for the loss. 
> I appreciate your commentary. We must find a satisfactory solution, and
> only through dialogue can we develop consensus. I know Harold Whiting
> commented (with quotes) that I have positioned my idea as "the only one
> worth looking at," but I assure you, that is not my position. 
> Thanks, 
> Peter 
>   Ron Wiener <Ron@Snapnames.com> wrote: 
> Peter,
>  
> I enjoyed reading your proposal, and have admired the way you continue to
> carry the flag for a variable-priced auction mechanism.  If you please, I
> have a couple of questions followed by a few general comments:
>  
> 1.	If you are requiring the permission of the former registrant in
> order for the auction to "close"...
> 
> 
> 
> 		a.	...are you not then in effect alerting him or her to
> the fact that their name may have some value, and encouraging them to
> renew rather than allow the name to expire?  This may be a brilliant
> scheme for goosing up renewal rates, but how does it help registrars and
> registries gain any upside that they would presumably only enjoy if the
> name actually changed hands?
> 		
> 		
> 		
> 		b.	Correct me if I'm mistaken, but the reason you NEED
> the current registrant's permission is that in order to circumvent the
> registry, you want to be able to use the XFER command instead of actually
> deleting the name.  I suspect the IP constituency might have some serious
> heartburn over this as it creates all sorts of liability problems when the
> creation date of a domain name record is not reset upon a new registrant
> receiving the name.  Using the XFER command in this way exposes the new
> registrant to potential litigation from the prior registrant who may claim
> the registrar did a lousy job of tracking him down with a renewal notice
> "because they'd make a lot more money auctioning off my name than letting
> me renew it."  The original transfer date matching his filed invoices
> could imply that the name is still his since apparently it was never
> deleted.
> 		
> 		
> 		
> 		c.	It's also not clear to me that registrars Terms &
> Conditions extend the current registrant's rights to the domain name past
> the actual expiration date and into the grace period.  If this is the case
> that the current registrant's rights have already ended then the registrar
> would essentially be warehousing and speculating with this name during the
> grace period.  Perhaps someone from ICANN or VGRS can clarify this for us.
> Dan or Chuck?
> 		
> 		
> 		
> 2.	It seems to me that there is a distinction between the WLS (as
> proposed) and the RRS (as proposed), in that the WLS allows registrars to
> capture "backup demand" for any name throughout the entire year.  The RRS
> only allows the capture of demand during a portion of the 45-day grace
> period window, which inherently means it would be primarily of interest
> to, and accessible to, speculators, not mainstream consumers.  
> 
> Mainstream customers are unlikely to happen to discover a need for a
> domain name during any particular 45-day period, learn how to search for
> it from about 1.5M names that would presumably be up for auction during
> such period, learn how the bidding mechanism works, dig in their pockets
> for a credit card to pay a $2 fee (smacks a bit too much of $2 .biz
> lottery fees - yikes - bad memories!), and sit around to monitor the whole
> thing.  Odds are 9:1 that the discovered need for a name would happen
> sometime other than that 45-day window.  (I'm simplifying this by assuming
> the average registration is about one year in term anyway.)  The RRS
> proposal states that consumers would have "open, fair access to deleting
> domain names in an environment free from high-tech gaming and first-mover
> advantage" but the method described doesn't seem to meet this definition.
> 
> 
> 
> 
> Consumers are not likely to want to participate in an auction process
> which can easily be gamed, much like eBay auctions often are, with shill
> bids.  Witness the thick file at the FTC and the number of lawsuits that
> were generated.  In fact, a savvy speculator could whip up a robotic
> algorithm to outbid others milliseconds before auction close, or to pump
> fraudulent bids into the system using stolen credit card numbers - a
> problem already plaguing too many registrars and secondary name sites.
>  
> Consumers are also not likely to wait anywhere from 1 to 344 days to then
> have to monitor an auction process, and then be prepared to spend an
> undefined amount of money to get the name.  I can see speculators being
> willing to do this all day long - they're good at it - but mainstream
> consumers?  For them I believe this type of mechanism would be deemed yet
> another "game of chance" with $2 betting fees, and could become a
> lightning rod for litigation against registrars, ICANN, VeriSign, et al.
> Speculators may be just fine with the game of change (some seem to even
> thrive on it) but mainstream customers would be anything but enamored by
> the prospect of it.
>  
> Further, while I fundamentally agree that variable-pricing makes a lot of
> sense in the long run, it's extraordinarily tricky getting it right when
> it comes to domain names, and now doesn't seem the right time to implement
> such an advanced marketplace concept.  Witness the number of different
> models that have been tried and abandoned by some of the ccTLDs - a
> perfect one is yet to be found.   One concern from an FTC standpoint is
> that uninitiated domain name buyers might be goaded into paying
> unwarranted prices for domain names because of the heated action of an
> auction.  This is where sites like NameWinner are actually safer, because
> everyone there is at least a quasi-professional speculator and knows how
> to appraise the value of a name.  If unwitting consumers are successfully
> drawn into an active bidding event for domain names, they could
> potentially be misled into paying exorbitant prices.  One benefit of the
> flat pricing of the WLS structure is that it eliminates the possibility of
> this sort of complex and problematic consumer experience.  Again, you
> might ask the FTC how many such complaints they've received from eBay
> customers over this sort of thing.
>  
> Finally, putting on my Wall Street hat for a moment, the RRS lacks two
> especially nice financial features of the WLS which is that it provides no
> forward visibility on certain revenues (i.e. if 60% of my registrants do
> not renew next year I know that x% of the names in question would
> automatically go to a wait listed customer) and no growth in deferred
> revenue, a key valuation driver.  For public companies (there are
> currently six publicly-held registrars) this is particularly important, as
> it is for the valuation of any registrar that hopes to be acquired
> someday.
>  
> Cheers,
> Ron
>  
>  
> Ron Wiener, Chairman and CEO
> SnapNames.com, Inc.
> 115 NW First Avenue, Third Floor
> Portland, OR 97209
> tel: 503-219-9990 x222
> cell: 503-502-5016
> fax: 503-274-9749
> <mailto:ronw@SnapNames.com>
> http://www.SnapNames.com <http://www.snapnames.com/> 
>  
>  
>  
>  
> -----Original Message-----
> From: Peter Girard [mailto:peter_girard@yahoo.com] 
> Sent: Monday, January 07, 2002 11:27 AM
> To: icann-delete@total.confusion.net
> Subject: [icann-delete] Proposal: Registry Re-circulation System
>  
> With the help of several members of the registrar community, we have
> migrated our dynamically priced delete proposal to a registry-level
> service in which the bulk of the revenue opportunity goes to the
> registrars. This system would be cheaper, fairer, more transparent, and
> better for Internet growth than earlier proposals. Perhaps most important,
> it would reward the sector of this industry (registrars) that faces market
> risks and creates value.
> I have attached a Word document. If this is problematic, I will happily
> provide an alternative format.
> Peter Girard, Afternic.com
>  
> 
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