Letters to ICANN #2 Free market vs. regulated prices of new domain names	Visited: 1596 5.0/5.0 (4 votes total) Rate: Select 1 - Terrible 2 - Poor 3 - Average 4 - Good 5 - Outstanding
by Ivan Vachovsky November 18, 2008

Free market prices vs. regulated prices, what is right for the new and upcoming gTLDs?

There is no "one size fits all" solution here. ICANNs willingness to promote free markets for the new gTLDs is appreciated, however ICANN can not escape from it's regulatory role to regulate new and inherited monopolies in the gTLD space. At least two market segments should be considered (a) free market with free pricing model and (b) monopolistic markets with regulated prices.

While it makes sense to regulate monopolies such as .com for example, it is anti-capitalistic to regulate everything. The free competition and free markets are cornerstones of the capitalistic society. Many attempts to replace those principles with heavy regulations have failed worldwide with the fall of the communism being the boldest example.

It is my sense that ICANN is trying to create true competition in the gTLD space and let the market set the pricing. Registries which set unreasonable prices will most likely fail. Do not forget the distribution channel ( Registrars ) as well. Most of the Registrars will flatly deny selling product which is priced unreasonably leading to the demise of such product. In a more Utopian world the Registrars may create ( or activate existing ) their own association to negotiate hard on their behalf with the Registries.

Furthermore not all gTLDs are made equal. There are some with mass appeal ( like .fam for example dedicated to families ) and there are others with limited use ( such as .bar serving the legal professionals in the US for example ). The economy of scale benefits the mass markets and those can afford lower prices, whereas it will cost more to operate gTLDs targeting niche markets. In addition to that the issuance of a domain name may require identity checks and certification in certain gTLD domains which will add to the cost. That's why unified regulated price for the whole gTLD industry might not be appropriate.

Finally, ICANN should recognize that the free market prices work in a competitive environment. If ICANN chooses to be a bottleneck in the process either by slapping exuberant application fees for wannabe Registries or by creating cumbersome approval process, than ICANN should recognize that the gTLD business is not a "free market" business since it is out of reach for many. In this case, ICANN should admit that it is creating monopolies and thus step in its regulatory role.

Of course there is no excuse for charging different prices for the same services such as charging $1 million per year for google.com and $6 per year for joetheplumber.com I do agree completely with previous postings that such practice should be prohibited.

In conclusion a business model is proposed whereby the gTLDs are divided into two groups (a) free market whereby enough competition exists to serve a particular market segment and (b) monopolistic. Prices will be non regulated for the free market and regulated for the monopolistic market. The long term trend and goal for ICANN should be reducing the gTLD monopolies. Even .com which is an inherited monopoly could become unregulated when enough competitive Registries are operational with proven market shares in the business gTLDs.

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