VeriSign price increase makes sense for the company.

There has been a collective whine from the domainer community over the past 12 hours after news broke that VeriSign is increasing .com prices again.

I’m whining, too. But this is an expected and smart move by VeriSign.

VeriSign’s contract with ICANN allows it to raise prices 7% in any four years of its current six year contract. It raised prices in the first two years, bringing VeriSign’s take of a .com registration from $6.00 to $6.86. The assumption was that VeriSign would increase the price each year for the first four years to maximize its revenue. After all, not raising it in one year meant the registry would lose out on that increase every year until it hit its four price increases, and the compounding effect would also be lost.

In the third year (this year), VeriSign didn’t raise rates. Although the economy may have played a factor, the real reason was politics. VeriSign was being trotted in front of congress this year to testify about ICANN and the end of its Memorandum of Understanding with the U.S. government. It was a politically untenable environment to jack up rates again.

In fact, during VeriSign’s first quarter conference call this year President and COO Mark McLaughlin said:

So far we’ve taken two of these increases. And the patentees’ have been thoughtful about the timing of the increases, and I think we should be continuing to do so particularly in life as the impact of an increase could have on sales in this weak economy, as well as some uncertainty in the multiple constituencies that are involved in this industry.

This decision to not raise rates in 2009 will cost VeriSign over $75 million in pure profit over the next two years. If VeriSign raises rates again next year it will have “caught up” to its maximum pricing under the contract, so its loss from not increasing rates in 2009 is two years worth of revenue at the higher prices, not to mention the compounding effect of missing a seven percent increase.

With this year’s legislative focus on domain names behind us, there won’t be as much scrutiny of VeriSign in 2010.

The current wholesale price of .com domains is $7.04 including an 18 cent ICANN fee. The new price will be $7.52 including the ICANN fee, effective July 1, 2010.

The argument that registrations will decrease as a result of this price increase is largely a fallacy. It’s true that people will drop domain names making between $7.04 and $7.51 if they have no potential of future sale. But that’s limited mostly to typos, and the increase in revenue more than makes up for losing these domains.

This increase will affect professional domainers with large portfolios more than other consumers. And no one on Capitol Hill cares about domainers. ICANN’s take, at least when I talked to them about VeriSign price increases a couple years ago, was that we shouldn’t complain. After all, registering a .com domain name cost $35 a year just a decade ago.

But the move will also build political pressure increase over time, and it may backfire as VeriSign attempts to get the business of people wishing to release new TLDs. The true cost of managing the .com registry is perhaps a dollar or two a domain. That’s what some registries will offer as pricing to new TLD operators. How will VeriSign be able to offer lower prices to new TLD operators with a straight face? Won’t people start to question its costs for .com? The answer is probably that VeriSign won’t risk the heat on .com at the expense of picking up some small new TLD contracts.

Then there’s also a lawsuit that could force ICANN to open the .com registry up to competitive bid. But that won’t be settled any time soon.

So we can go ahead and whine about .com prices increasing. I know I’m going to. But I also know that, if I were in VeriSign’s shoes, I’d do the exact same thing.

© DomainNameWire.com 2009.

Review and rate domain name parking companies at Parking Judge.

Related posts:

1. Will VeriSign Hold Domain Name Prices Steady this Year?
2. VeriSign Says Domain Name Price Hikes Coming
3. .com registry prices could hit $9.00

Help shape the 5th Annual Domain Name Wire Survey.

It’s almost time for the 5th Annual Domain Name Wire Survey, where you get to pick the best domain name registrars, parking companies, and services in the industry.

Last year the survey included a free-form question about which third party domain name software or hosted application you find most valuable. We received a lot of different answers. This year the question will be multiple choice. With that in mind, please help by commenting on any software or hosted applications you think should be included for this question:

Which software or hosted application is most valuable to your domain name business for research and management?

We’re not looking for monetization solutions, forums, or blogs here. Here are top answers from last year that will be included:

DomainTools
Wordtracker (keyword tool)
Estibot
Watch My Domains
FreshDrop
Xsite Pro

© DomainNameWire.com 2009.

Review and rate domain name parking companies at Parking Judge.

Related posts:

1. 1 Day Left to Complete Domain Name Wire Survey
2. Survey: Sedo Top Online Domain Sales Site
3. 2009 Domain Name Wire Survey Opens

Going offline to promote your city web site.

A couple months ago I sat at a cafe for lunch in Lakeway, Texas. Alone with nothing but myself and a sandwich, I grabbed a couple newsletters off the newsstand. You may have seen similar newsletters before; they’re front and back, filled with mostly useless content and lots of ads.

But I was a captive audience with nothing else to read. So I read the newsletter. Then it hit me: why not create a local newsletter, branded with my Lakeway.com web site and good quality content, and distribute it to local businesses? It would help promote the brand, allow me to sell print advertising to companies that don’t yet understand the internet, and give me the chance to meet local businesses by asking to place the newsletter in their store.

The idea worked. But fumbling through the process was time consuming. So, rather than you spending time figuring out how to produce a print newsletter, getting good content, and getting it printed, I’m going to give you the step-by-step process right here. (You’re welcome).

1. Get a desktop publishing program. I spent a lot of time looking for a program with a quick learning curve and without feature overload. After trying a couple programs, I came upon Serif’s PagePlus X4. It’s cheap, very easy to learn, and comes with lots of pre-made templates. Seriously, don’t waste your time trying out other programs unless you are a desktop publishing pro. And feel free to use my link

2. Get someone to write content for you. I asked a local library, which already adds its events to Lakeway.com, to write an article about its book clubs and other programming. Additionally, I did some work myself. I wrote an article on the top things to do in Lakeway with kids when it’s cold outside, and created a list of local businesses using Twitter.

3. After creating the newsletter, get it printed. This is really your only cost in this endeavor. If you print tabloid size front and back newsletters on ivory paper, it’s going to set you back about 40-45 cents per copy at Fedex Kinkos. Instead, use BestValueCopy.com, which will print and fold them for less than 15 cents each.

4. Distribute them. This is a time consuming process, but also a great way to get in front of local businesses. Instead of walking in the door with something to sell, you simply say, “I’m with city.com, and was wondering if I could leave our latest newsletter for your customers”. Out of 50+ businesses I’ve visited so far, not a single one has rejected me. Many have made room on their checkout counter for the newsletter. I was sure to point out to them if they were included in the newsletter some way, such as being listed in the Twitter article. My daughter’s Montessori school offered to distribute them in parent folders. I also left a flyer for the business owner about adding themselves to Lakeway.com. I wasn’t pushy, but mentioned that they should at least take me up on the free listing I offer. Of course, I’d like them to upgrade to a paid listing, too. You can also pay someone to distribute the flyers for you, or have a commissioned salesperson do it.

By the way, here’s a copy of the inaugural Lakeway.com Print Edition (pdf).

© DomainNameWire.com 2009.

Review and rate domain name parking companies at Parking Judge.

Related posts:

1. Name.com Launches Domain Name Sales Newsletter
2. 5 Offline Ways to Promote Your City.com Web Site
3. How to Promote Your Web Site with Facebook