Mr Weiner "Educates" us......

[Harold Whiting]

>----- Original Message -----
>From: "Ron Wiener" <[EMAIL PROTECTED]>
>To: "'Peter Girard'" <[EMAIL PROTECTED]>;
>> 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?

Are you implying that it is more advantageous to create a "new" registrant rather than retain the current one?  Is this a mindset you REALLY want Registrars to have?  Encourage "Domain Abandonment" over Renewals?

>>
<snip>
>> 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?

Why should the REGISTRY be allowed to "speculate" on names either? It does seem that with the WLS proposal that is essentially what is happening.  They may not be "warehousing" it for speculation, but diverting it off through another channel for profit, which seems effectively the same to me.

>>
>> 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.

Please give us the facts.  What percentage of SnapNames' income is derived from speculators?  Why would the WLS be any less of a percentage?  Does SnapNames enjoy 90% of revenues from Speculators? 95%?  97%?  How much?

>> 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.

I know for a fact that speculators are already "whipping up robotic algorithms" to immediately pounce on WLS slots on names the second they go on hold.  This seems like a red herring to me.

>> 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.
>>
The WLS proposal is still a "Game of Chance", in my opinion, due to the fact that it encourages the sale of WLS "positions" on names NOT known to be deleting.  If total market saturation were to occur on 32 million names, how many consumers would recieve absolutely nothing?  The idea of being able to "switch names" 3 times also indicates to me that this is still something that would require the consumer's attention during the subscription period, if only to avoid recieving nothing in return for whatever fees they paid. Why can a consumer buy a WLS on a name that isn't even going to expire during the term of the WLS? If a name were "accidentally" deleted during this term, would it not have to be returned to the original registrant anyway?

>> 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.
>>
What this has to do with anything, I don't know.  The FTC doesn't much care for monopolies either, as far as I can tell.

>> 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.

While the WLS may indeed provide these nice "Wall Street" benefits for SnapNames and Verisign, it has been stated already by some registrars that the margin on WLS sales by registrars will most likely only be a dollar or two.  All it takes is for ONE registrar to do it and ALL the others will have to follow suit in order to be competitive.  Again, this also seems to be "encouraging domain abandonment" rather than "registration retention", although I agree that a certain percentage will not renew anyway.  And is it really every Registrar's dream... "to be aquired someday"?  What happened to being profitable enough not to HAVE to be aquired?

-HJW-
Harold Whiting