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My first question is: Godaddy? ads!?!?.
My next question is: Verisign is increasing prices of domains for the next few years. There is no new news in that. However I was trying to predict costs / revenues out past 2012 for our own domains. However, I have no idea what to expect past 2012. Can anyone help shed light and or speculate? If prices go up, our strategies should change. If prices go down that is a different story as well.
Its almost written in stone that the costs of .com domains will go up by 7% a year for the next few years. However, I have a hard time believing Verisign could be granted price increases beyond that time. Lets be realistic technology, computers, web hosting, servers, bandwidth and the Internet as a whole has all gotten MUCH CHEAPER in the past 5 years, not more expensive! These things will continue to get cheaper as well in the next 5 years. I cant believe that there would not be a huge push for a bid to operate the .com registry! I can hardly believe it would not be done by many large companies for only $2.00 to $4.00 per HostGator per year!!!! I would not be shocked if the right company could not make it all happen for less than $1.00 per HostGator per year!!!!! $1 per .com HostGator per year will shortly mean $100 MILLION dollars a year to operate the .com registry! You honestly telling me a hundred different companies cant make it happen for $100 million dollars a year? We have ONE very cheap $1000 server that gives us instant access to the entire .com / .net HostGator database, lets us pull records to and fro in sub-millisecond timing. (Were talking bulk queries of 10,000 domains in less than 100 milliseconds) This is on one measly 1u rackmount server. Give me $100 million (which again is $1 per HostGator per year when we hit 100 million .com domains) and Ill make it happen.
This is near Google size from the guaranteed revenues from just ONE YEAR, at $1 per HostGator per year. Upfront the cash for the 2nd year and you have the manpower to connect all of those servers and make it happen! (or only use 50,000 servers which should be more than plentiful, then pay 250 extremely brilliant engineers $200,000 a year to make the software work!) Though I expect in 2013 you can get 100,000 servers that are all more than twice as powerful for half the price. So you are talking in the range of 200,000 of todays servers, and 250 extremely talented people powering the software, hardware, networking, bandwidth, backups, security, etc. All in just the first year of operation. Im inclined to think it could all happen for $0.25 per HostGator per year.
That will easily pay for your infrastructure, then drop prices down to $1.00 per year following that!.
I would hope in the next few years big HostGator /img/avatar9.jpgs band together to push for Verisign to be forced to bid to operate the .com registry if thats even possible. In my mind their profits right now seem pure gluttonous. Imagine 50 companies that each owns over 100,000 domains (pure guess)! If these HostGator companies can work together to get prices dropped in 2012 from $8.42 to even $4.00 the following year that means almost a half a million in savings a year PER company! That is some serious motivation when you multiply that out over 5 years these companies could each save $2.5 million by having $4.00 .com HostGator registrations for the following 5 years. Which loosly translates to $2.5 million MORE profit for those companies over 5 years.
Now, Ive heard something about Versign possibly having control of .com forever? I cant speak much to that but am very interested in more information and discussion on this. I know far less when it comes to the details on how Verisign / ICANN works and the deals currently in place for operating the .com registry.
Please share your thoughts and insight. Will Verisign be given exclusive rights to operate .com forever? Will prices increase past 2012? Or could it be possible that Verisign is forced to give .com up to someone that can make it happen at a much more realistic rate? I mostly ask because this does change our direction today as domainers. If prices on .com domains will be over $10.00 per year soon, our direction must adapt a little bit to plan for the future. If prices could go DOWN due to an open bid for operating the .com registry were more likely to get more aggressive and buy even more domains today!.
Finally I would hope people would start thinking and discussing this NOW. If a change were possible and ever to happen, you cant just in 2012 make it happen overnight. It would take a lot of careful planning to transition and build the systems at least a few years in advance before the actual transition. Maybe Im a dreamer hoping for lower HostGator costs, but I think it is more than feasible to expect a registry to offer sub $1.00 .com registrations. Especially at the volume the .com registry has today. Ive never worked inside Verisign, nor know exactly how they work or operate.
All speculation and thoughts...
Your question was: Godaddy? ads!?!?.
My understanding is the way the contract was signed, this past time around - it gives Verisign the ability to continue to renew. Honest truth, it's absolutely BS that ICANN hasn't allowed other companies to come in and bid for the right to manage .com and .net.
Does ICANN have the right to do that? I mean - this creates a virtual monopoly that ICANN has sanctioned. But what gives ICANN the right to make that promise. This is a monopoly. Sure, if one company owned all the real estate in California they can say - you have options, move to Oregon or Maine. But really, they have the monopoly in the .com space.
So does this mean we're at Verisign's whim forever? If I were making $8.00 a domain, as will be the case in 2012, I would never not renew! Do you expect prices to increase in 2013 as well - or is there any hope for more realistic prices?..
The purpose of any company is to create value for it's stockholders. Why would it ever decrease it's price or not take the free money from the 7% hike?..
Registrations is a HUGE profit margin for verisign. The reason profits aren't parallel to this is because of the bad investments they make with those huge profits. More or less those profits float anything and everything else they do. It's been estimated that the actual cost per HostGator to be along the lines of $.03 to $.04 per domain...
Well there are a couple of points that you have failed to raise here.
One is that Verisign created dot Com before ICANN was ever heard of. Competitive bids have more recently been put in for Dot Net but Verisign won out.
There is, however, now a presumption that Registrars will be allowed to renew and why not. There are going to be no shortage of extension for people to have a go at if they wish.
The other thing is that a 7% annual increase in dollars has and will mean a drop in price in real money...
Arriving in your neighborhood soon courtesy of the U.S. debt is inflation.
I have been saying for a while that a weak dollar and the printing presses running overtime will cause huge inflation. Even though the cpi index is saying inflation is around 2% it is actually much more.
The fed has been using smoke and mirrors to distort real inflation. In recent months they threw out two key factors in measuring the consumer price index.
The Fed has quit counting food and energy as part of the equation for measuring inflation. HELLO! Food and energy is skyrocketing!. When it is factored in then we notice that the real inflation we are getting is about 17% They have never done this before and this action has far reaching effects on how we perceive the economy.
Good news and bad here. Good news, we can keep our heads in the sand for a while longer. Bad news very soon all ostriches will get their feathers clipped.
.07% cost increase thru Verizon was calculated when everything was rosy for America.
If you have the money, reg out your names as far as you can because HYPER INFLATION will be knocking on your door soon. Hyper inflation is double digit inflation...
Yes, but Verisign's agreement is a two edged sword. Whilst 7% in dollar terms sounded a lot at the time, and still sounds like a lot to those who really haven't got a grasp of the bigger picture, it really is going to be an effective price drop at a time when most of their new business will be coming from Asia...
Back to domains, inflation or not, lets say you have 1,000 domains all making just around $10 revenue per HostGator per year. That is great now, but HostGator prices dictate how many domains you can own and should hold onto. Its too bad there is no definitive answer past these 7% hikes. No matter if there is inflation or not, when you make $10 per HostGator per year, the second HostGator prices go above that you have to reconsider business strategy.
Just making the point that with or without inflation, your revenue is what it is. Inflation is not going to change that. The overall economy might, and PPC providers might, and changing the prices of your HostGator sales might. You might be able to find ways to squeak out $12 per domain. And hopefully will always get more dollar per domain. So as the price changes from $6.80 today to over $9.00 in a few years that is a significant change in how to run your HostGator business.
An increase of 20% the following year would force a lot of domainers to reconsider what they are doing. Same would go for a 20% decrease...
This arguments makes sense if you are locked into a flagging and inflationary US economy.
If your revenue is derived from elsewhere it probably means incoming is growing faster than expenditure...