Starting September 1, 2024, Verisign will raise the price of .com domains, impacting website owners and businesses globally. Verisign, the leading provider of domain name registry services, has announced that the .com domain price will increase from $9.59 to $10.26. This 7% rise is part of an ongoing series of annual hikes permitted by Verisign’s agreement with the US government.
This blog explores the significance of this trend and its potential effects on millions of domain registrants and the broader internet environment. Understanding these changes is important for all stakeholders in the digital domain economy.
Key Takeaways
- Price Increase Announcement: Effective September 1, 2024, Verisign will raise the price of .com domains from $9.59 to $10.26, marking a 7% increase as allowed by its agreement with the US government. This adjustment continues the trend of annual price hikes, which are capped at 7% during specific contract periods.
- Impact on Domain Registrants: The price increase is expected to affect millions of website owners and businesses globally, potentially leading to higher retail prices from domain registrars. This could impact both new registrations and the renewal of existing domains.
- Ongoing Regulatory Discussions: The US National Telecommunications and Information Administration (NTIA) has initiated discussions with Verisign regarding the implications of these price hikes on the .com ecosystem. Advocacy groups have criticized Verisign’s monopolistic control over the .com domain, raising concerns about fairness and accessibility for small businesses.
- Financial Context: Verisign reported revenue of $1.49 billion for 2023, which included the effects of previous price increases. Despite a decline in managed domains, the company experienced a revenue growth of 4.8%, underscoring the significant impact of its pricing strategies on overall financial performance.
Verisign Increases .com Domain Prices by 7% Starting September 2024: What It Means for Website Owners and Businesses?
Effective September 1, 2024, Verisign implemented a 7% increase in the wholesale price of “.com” domain registrations, raising the cost from $9.59 to $10.26 annually. This adjustment marks the fourth consecutive annual increase at the maximum rate permissible under Verisign’s current agreement with the US government. The terms of this contract restrict yearly increases to no more than 7% during the final four years of each six-year cycle.
Verisign’s history of price adjustments shows a consistent upward trajectory over the recent years under its agreement with ICANN. Notably, the price of .com domains climbed from $8.97 to $9.59 in September 2023, and then to $10.26 in September 2024. These price changes reflect Verisign’s controlled authority to modulate .com domain costs.
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Recently, the US National Telecommunications and Information Administration (NTIA) announced the renewal of its Cooperative Agreement with Verisign, which maintains the .com domain registry. In a communication from NTIA’s head, Alan Davidson, dated August 2, 2024, he praised Verisign for its contributions to maintaining internet stability and security. This renewed agreement stipulates a price freeze, preventing any further increases for the following two years, after which Verisign can resume its price modification cycle.
Controversy surrounds Verisign’s management of the .com registry. Advocacy groups like the Economic Freedom Project and the Demand Progress Education Foundation have expressed disapproval of Verisign’s monopolistic control, asserting that it negatively affects small businesses and individual website owners who rely on .com domains. They criticize the lack of competitive bidding in granting control to Verisign and suggest that this exclusivity leads to unfairly high prices.
In response to rising concerns, NTIA has initiated dialogues with Verisign to assess the impact of these pricing strategies on the broader .com ecosystem, including the retail and secondary markets. Despite Verisign’s openness to discussions, no concrete amendments have been agreed upon. Verisign argues that existing price controls have indirectly supported the growth of an unregulated secondary market, contrary to the interests of end-users.
Verisign’s CEO, D. James Bidzos, in his letter to NTIA, remarked that the regulated price increases have not uniformly benefited consumers, a sentiment echoed by Assistant Secretary Davidson. They highlighted the necessity to address concerns in both retail and secondary markets.
According to a study by Economic Liberties, the power of retail domain registrars to influence final consumer prices is minimal due to the vast distribution of the market among numerous registrars. Indeed, 77% of the .com domain retail market is divided among various companies. This highlights a significant gap between Verisign’s wholesale price hikes—almost 25 times the typical retail markup—and the burden on consumers, particularly small businesses. These users encounter increased costs for maintaining domain name registrations, an essential service for online presence.
Plus, Verisign disclosed to its investors that the price caps have stimulated the proliferation of a sizable, unregulated secondary market, valued in billions. The company seems to favor the removal of these caps, although it is widely acknowledged that very few .com domains fetch high prices on the secondary market. Removing price controls is unlikely to resolve issues with high-value secondary sales but may lead to broader price increases across the market.
These discussions might potentially reshape the terms of the Cooperative Agreement, though no definitive commitments have been made yet.
Following Verisign’s announcement of the price increase, it is expected that domain resellers and registrars will adjust their pricing upwards, possibly by more than 7%. Such changes could impact both new registrations and the renewal of existing domains, thus increasing the operational costs of maintaining a .com presence for many users.
Verisign shared this pricing update in conjunction with its 2023 financial results, revealing that the company’s revenue reached $1.49 billion. Despite a decline in total managed domains, the revenue saw a 4.8% increase, partly due to the previous year’s 7% price hike. This revenue growth underscores the significant financial implications of Verisign’s pricing strategy on its overall business performance.
Are These Costs Justified?
Several factors are behind the recent price increases; while some of these reasons might be reasonable, some simply do not justify hiking prices by 7% every year!
- Infrastructure and Security Investments: Verisign dedicates considerable resources to maintaining and securing the .com domain infrastructure. This ensures it remains highly available and protected from cyber threats, which is essential given the .com domain’s importance for both global business and personal use.
- Regulatory and Compliance Costs: Managing a top-level domain such as .com involves adhering to various regulations. These regulations are designed to ensure transparency and fairness in domain management, but they also contribute to higher operational costs. These expenses are then passed on to consumers in the form of higher prices for domain registrations and renewals.
- Market Conditions: Economic factors such as inflation and the rising costs of technology impact prices. Verisign adjusts its pricing to sustain profitability and support its continued operations in a competitive market.
About Verisign
Verisign, a global company founded in 1995 by D. James Bidzos, is headquartered in Reston, Virginia. The company manages the infrastructure for various top-level domains, including .com, .tv, .net, .name, .cc, .edu, .jobs, and .gov, and operates two of the world’s 13 Internet root servers, specifically servers A and J. Verisign handles the DNS infrastructure for approximately 121 million domain names. It processes over 77 billion Internet queries each day.
In addition to its core services, Verisign offers infrastructure assurance services such as Managed DNS, DDoS Protection, and iDefense Security Intelligence, which help maintain online businesses’ availability and the web’s overall reliability. The company aims to enable global connectivity with reliability and confidence through its comprehensive services and extensive network infrastructure, which includes a vast array of hardware and software as well as hundreds of points of presence worldwide.
Conclusion
Verisign’s decision to raise .com domain prices to $10.26 highlights a trend of annual increases under its agreement with the US government. While Verisign argues that the hikes are necessary to maintain infrastructure and security and comply with regulations, they have sparked concerns among small businesses and advocacy groups.
These groups argue that the price increases could disproportionately affect smaller entities that rely on .com domains for their online presence. As the NTIA and Verisign engage in discussions, the broader implications on the domain market and potential regulatory adjustments remain to be seen.
