By: Lee Hodgson

January 9th, 2002

Reader Rating: 8

Following on from Domain Name Goldrush Part 5 - The Mother Of All Drops [1], Lee updates us on the latest happenings in the dropping domains industry...

Verisign Inc. have announced the details [2] of a new system that will completely change the way deleting domain names are re-registered. Although the proposal has still to be commented on by the "Registrar Constituency", chances are that by March 20th, we'll all use this new system if we want to register expiring domain names.

What's The New System?

Verisign have adopted the domain back-ordering concept popularized by SnapNames Inc., and they've taken it one stage further (back).

SnapNames relied on a small network of ICANN registrars to attempt to register the expiring domain names that had been back-ordered by SnapNames customers. But subscribers always endured a tense wait to see whether they'd been lucky enough to land their back-ordered names.

Verisign, on the other hand, control the .com registry, so they don't have to rely on luck, judgment, or even technical prowess. By making adjustments to the registry protocols, they can guarantee that any deleted domain name is redistributed to a party subscribed to their WLS (Waiting List Service). This turns what was once a very useful service into an absolute killer.

It should be no surprise to learn that Verisign have actually teamed up with SnapNames to produce this waiting list service, and licensed SnapNames' Parallel Registry™ technology in the process. The WLS system will initially run as a year one trial, the last two months of which will be monitored, with the results forwarded to ICANN and others for comment. However, there's every chance that this system will be in place long after its March 2003 expiry date. So now you can forget the old expiring name buzz-phrases like "domain drops", "name grabbing", and "6.30 AM Goldrush". The new phrases you'll need to learn (and I'll be testing you later) are "Waiting List Service (WLS)" and "subscribers".

A Few Common Questions

This Verisign proposal has already generated many questions, so let's look at the most popular ones.

Where will subscriptions be sold?

WLS subscriptions will be available through ICANN-accredited registrars (and their resellers). So, for instance, when you check a domain name and find that it's already registered, you'll be presented with an option to take out a subscription on that name, presuming of course that someone else hasn't subscribed first. Subscriptions should also be available from deleting name services such as Local WHOIS [3].

How much will subscriptions cost?

Verisign propose to charge ICANN registrars US$40 per name per year for WLS subscriptions. So retail prices could be anywhere between US$45 and US$100 per name per year. Though this makes a subscription to an existing name much more expensive than the registration of a new name, the price point reflects the industry realization that unregistered names and expiring names are completely different beasts, and must be treated as such. SnapNames proved through their successful SnapBack™ service that customers are prepared to pay a premium to register expiring domain names.

How long will subscriptions last?

Subscriptions will last for one year, but it will be possible to renew them indefinitely.

Will WLS subscriptions be available for .com, .net, and .org names?

.org names will not be included in the test period.

Will WLS subscriptions be transferable between names?

Verisign say that subscribers will be able to change the name tied to their subscription up to three times during the one year subscription period. So in other words, a single subscription could be used to try to grab four different names.

Will WLS subscriptions be transferable between parties?

Verisign aren't planning to introduce any kind of official transfer mechanism during the one-year test period, though such a system would seem to be a necessity going forward.

Will there be a WHOIS for WLS?

As with registrations themselves, the registrars will be the exclusive holders of customer information on WLS orders. Accordingly, whether there is WHOIS-like information associated with a WLS subscription will depend on the policy of the registrar who holds that particular subscription.

What will happen to names that aren't subscribed to when they're deleted?

Names to which no-one has taken out a subscription will be deleted in the normal manner, and will be available for re-registration by any party. Registrars will be charged the usual wholesale price of $6 on these names.

What will become of SnapNames?

SnapNames will continue to offer SnapBack™ subscriptions on .org domain names. They also have other numerous projects lined up in 2002, including Parallel Registries for other TLDs.

Who Wins? Who Loses?

It would be hard to identify a sector in the domain name industry that generates as much heat and light as does that of expiring domains. This only serves to demonstrate how much of a need there is for a real solution to end the chaos that currently exists.

It's likely that this proposed system will be good for the Verisign registry. Making US$40 on every domain name that's deleted with a subscription in place sounds like great business, especially when you bear in mind that Verisign make only US$6 on each standard registration.

This system is also likely to benefit the average consumer, primarily because it attempts to introduce a degree of certainty and transparency into what is currently a horribly complicated system that's understood by relatively few. Under the current system, the typical consumer hasn't the slightest hope of registering a name that's considered "valuable" by any objective measure. Being put on a waiting list is a concept that customers can understand.

What I'm not sure about is whether this system really benefits registrars. Certainly in the respect that it will eliminate the hammering of the registration system during domain drops, all ICANN registrars will be positively affected. The big question, though, is how much revenue registrars and their resellers can make from this new system.

As a comparison, let's take a look at the current domain registration pricing model. ICANN registrars pay the Verisign registry $6 to register domain names. Several ICANN registrars have said, "Let's be the cheapest service out there," and have priced their registration services accordingly. As a result, they've made much less than a dollar a name in some cases. If they use the same business model to sell WLS subscriptions, we could easily see retail prices at US$45 or less. This is great for the consumer, and it's no problem for Verisign, as they're guaranteed US$40 no matter what the retail price is. But for all the ICANN registrars stuck in the middle, it means no better margin than they currently make on new registrations.

...but that's not all! Check out Lee's next instalment on the evolving expiring domains industry in Part 7: WLS Gets ICANN Approval [4].

[1] http://www.ecommercebase.com/article/540
[2] http://www.buildable.com/RWP.pdf
[3] http://localwhois.domainguru.com
[4] http://www.webmasterbase.com/article/880