Ex-ICANN Board Member: VeriSign’s cost per domain is $0.14

6 Apr
2007

The title says it all. This post by Domain Tools goes into more details on how Karl Auerbach, a former ICANN board member, told Name Intelligence (who operate Domain Tools) that the cost to VeriSign is far lower than they claim. This goes right along with my point that due to scaling, the cost per domain goes down, not up.

The other great point they raise is domain tasting – the ability to register a domain for five days and get a full refund. If the DNS was taking such a beating (as VeriSign claims), why even allow it? That would make a noticeable dent on all the registrations going on.

($6.00-$0.14)/$0.14 = 4200% markup = 97.6% profit (old).
($6.42-$0.14)/$0.14 = 4500% markup = 97.8% profit (new).

Poor VeriSign, they aren’t happy with their ‘little’ margins.

Updated: Steve correctly pointed out a flaw in my wording. Furthermore, for people with the typical “Don’t use them” defense – if you buy a .com or .net, you have to use them. Read my previous post.

11 Responses to Ex-ICANN Board Member: VeriSign’s cost per domain is $0.14

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Adam

April 7th, 2007 at 12:49 am

Like Jay talks about . They are just being a responsible corporation. It’s their job to make the most money for their shareholders. Too bad ICANN doesn’t do their job and protect the interests of the consumers they serve. Oh well

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Steve

April 7th, 2007 at 7:59 am

Your math is wrong. You calculated a markup, not margin. Margin is Profit / Revenue, so their margin is actually 98%. It is impossible to have a margin > 100%.

Not that this makes the news any more palatable.

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m3mn0n

April 7th, 2007 at 8:09 am

monopoly? WTF you smokin’

This isn’t 1999… ever heard of GoDaddy?

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DJ

April 7th, 2007 at 8:23 am

m3mm0n,

You need to dig into the subject matter a bit more.

Verisign is the sole .com registry, GoDaddy is nothing but a registrar…

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Amhed Herrera

April 7th, 2007 at 9:37 am

Guys, this is only the exploitation margin (I talk spanish, not sure that’s the actual name).

This doesn’t take into consideration operating costs, electricity, sales reps, services reps, etc.

If GoDaddy raises the new domain names 20 cents, who the hell is going to care? it’s just 20 cents which you pay once a year. Give me a break.

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Ahmed

April 7th, 2007 at 10:18 am

@Steve – doh you are right – fixed.

@m3mn0n – its best not to talk about stuff you don’t know about. GoDaddy pays VeriSign $6 for every domain they have – and will pay $6.42 in the future

@Amhed – sales? What kind of sales personnel does VeriSign need for the registry? The $0.14 is the overall operating cost per domain. With 65 million domains, they scale up quite fast.

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technology news

April 7th, 2007 at 3:12 pm

i think 0.14 not a suitable for domainers …

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Ahmed

April 7th, 2007 at 3:28 pm

And I’ve already explained this multiple times:

1. This isn’t about domainers. Complain about the domainers all you want, but this is a monopoly abusing its position to make more money (to the tune of $25 million pure profit).

2. $0.14 or $6.00 or $6.42 – 99% of domains owned by domainers won’t be affected by this price increase.

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Jason

April 7th, 2007 at 6:44 pm

Get over it, we live in a capitalist society, the company has the right to raise the price if they want to.

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Ahmed

April 7th, 2007 at 6:46 pm

Hrmm – considering I own a variety of businesses, I’m hardly one to decry capitalism.

VeriSign isn’t capitalism. Its a monopoly – its been given to them, without any competing bids. They’ve now arbitrarily decided to increase prices, making them a nice $25 million extra in profit.

A monopoly != capitalism – in fact it is the very antithesis of capitalism.

Alas, hiding behind anonymity is rather easy :)

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Nikolay Kolev

April 7th, 2007 at 8:28 pm

I agree that capitalism and monopoly are mutually exclusive. VeriSign is not a responsible corporation, it’s an evil corporation and we should all boycott it! It’s unbelievable that registrars like GoDaddy and others are making peanuts compared to VeriSign, which is doing almost nothing.

Unfortunately, ICANN is almost as bad. It’s a mafia and is not serving the public interest.

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