Trends in prices and services in the TLD market
In September 1995, the United States National Science Foundation (NSF) authorised Network
Solutions to begin charging USD 100 for registrations of second level domain names under
The fee included a two year registration period making the annual fee equivalent to USD 50.
The same sum, USD 50, was also fixed as the annual maintenance fee for renewal of registrations. NSF
further stipulated that 30% of the total revenue collected through domain name registrations should be put
into an interest bearing account for the preservation and enhancement of the `intellectual infrastructure' of
the Internet. In other words the equivalent of a USD 15 annual `tax' per domain name applied with a
further USD 35 being retained by Network Solutions.
In April 1998, NSF and Network Solutions ended the Internet Intellectual Infrastructure Fund portion
of domain name registration charges. This reduced the cost of registering a domain name under
by 30% with the price being reduced from USD 50 to USD 35.
The next major change to gTLD
pricing occurred following ICANN's reform of the gTLD market. The separation of the registry and
registrar functions led to the creation of a registry price (
wholesale) and registrar price (
retail or in
some cases a bundled value added service price). From 15 January 2000 onwards, registrars paid the gTLD
registry non refundable amounts of USD 6 for each annual increment of an initial domain name
registration and USD 6 for each annual increment of a domain name re registration.
From then on,
registrars were free to set their own retail price.
In the four years following the introduction of competition there have been significant retail price
reductions in the gTLD market. ICANN says its reforms have lowered domain name prices by up to 80%.
A domain name that would have cost USD 35 at the beginning of 2000 could be registered for less than
USD 6 by 2004 (
). In March 2004, among the lowest prices was 1&1 Internet's registration
service, priced at USD 5.95 per annum, for all gTLDs. This price, below the USD 6 maximum which may
be charged by the registry (
VeriSign in the case of
), might be viewed as a `loss leader'. 1&1
Internet's pricing strategy would appear to involve registering domain names at below, or near to, the cost
charged by the registry with a view to making a profit on other services (
Web hosting or e mail
services associated with that domain).
In 2004 the price of gTLDs could vary depending on a number of factors. Some registrars, for
example, offered discounts from their annual fee if customers were prepared to commit to longer term
registrations. Network Solutions charged USD 34.99 per annum for a one year gTLD registration.
Registrants could get discounted rates, however, if they registered domain names for a longer term with
Network Solutions. For example, a 10 year registration was priced at USD 14.99 per annum, which was
about 60% lower than annual registration fee with a one year term. Tucows, a registrar located in Canada,
offered discounts of 10% to 30% for longer term registration. Register.com also had an incremental
reduction according to the length of the registration period and it provided around a 15% discount per
annum for a 10 year registration compared to a one year registration. Tucows had three different
registration plans with different charges, as discussed in a following section.
Among the larger gTLDs registrars, Go Daddy Software had one of the lowest rates for gTLDs
registrations. In March 2004, Go Daddy Software charged USD 8.95 per annum for gTLDs registrations,
which was about 75% lower than the standard gTLDs registration fee of Network Solutions. At the time of
writing, registrations under
were on promotion sales and the
USD 7.95 per annum. A further discount was available if a
domain name were registered for ten