Registries and Registrars
Each top-level domain (the part to the right of the dot, such as .com or .net) is managed by a registry. You can think of a registry as a wholesaler that manages the inventory of domain names under that top-level domain.
You don't go directly to a registry to register a domain name. Instead, you go to a domain registrar (such as DnShe.com). When you search for a domain name, the registrar verifies its availability with the registry. If you decide to register the domain name, DnShe notifies the registry to reserve it for you.
The registrar handles your domain search, customer support, credit card processing, renewal notifications, and account management. Think of the registrar as a retailer.
.Com Registry
The registry for .com is Verisign, a publicly traded company based in Virginia. The company manages all 139 million .com domain names, serves as a database of domain availability, and helps internet users reach the correct website when they visit a domain name.
In addition to operating .com, Verisign also manages .net and several other top-level domains.
Take .com domain names, for example. When you register with DNshe, DNshe acts as a retailer, reserving domain names from wholesalers. You pay the registrar, who in turn pays a portion of the fee to the registry.
While retailers can charge whatever they want for .com domain names, competition actually limits their fees. Low-cost registrars like DNshe pay Verisign more than half of each .com domain registration fee.
Price Controls
Because Verisign is the sole wholesaler of .com domain names, there are price controls to prevent it from charging arbitrary fees when someone registers a domain name. Currently, two organizations are responsible for controlling prices: the Internet Corporation for Assigned Names and Numbers (ICANN) and the US government.
The Internet Corporation for Assigned Names and Numbers (ICANN) is a nonprofit organization responsible for overseeing domain name management. One of its primary responsibilities is managing contracts with registries and registrars.
ICANN contracts with Verisign to operate the .com registry. The contract capped the amount Verisign could charge for each .com domain.
Unlike other top-level domains, .com is unique in that the US government also plays a role in setting .com pricing. The National Telecommunications and Information Administration (NTIA), part of the US Department of Commerce, entered into a separate agreement with Verisign called the Cooperative Agreement.
The Cooperative Agreement recognized the unique role of .com in the internet and Verisign's role in operating .com.
In effect, the agreement superseded the terms negotiated by ICANN and Verisign in their .com contract.
In 2006, Verisign signed a .com domain contract with ICANN that allowed Verisign to increase the wholesale price of .com domains by 7% over four of the next six years. Unsurprisingly, Verisign seized the opportunity and raised prices.
When the contract was renewed in 2012, ICANN and Verisign agreed to the same price increases: four 7% increases over the six-year period.
But this time, the National Telecommunications and Information Administration (NTIA) stepped in. It questioned the necessity of the price increase. Verisign was (and still is) a highly profitable company. Therefore, the US government, through the Cooperative Agreement, effectively vetoed the price increase. Verisign now charges the same price for .com domain registrations as it did in 2012.
Future Price Increases
Unfortunately for consumers, .com registration prices may soon increase. Late last year, the National Telecommunications and Information Administration (NTIA) amended its cooperative agreement with Verisign. This revision allows Verisign to increase prices by 7% annually for four of the six years, similar to the 2006 agreement.
While a 7% increase may not seem significant, it means the wholesale price of a .com domain could increase by 31% over the next six years. Therefore, domain registrars are likely to increase the price of each .com domain, especially low-cost registrars like DnShe.
But Verisign's price increase is not set in stone. Remember, Verisign's actual contract to operate .com domains is with ICANN. ICANN must agree to amend its agreement with Verisign before Verisign can raise prices.
Industry observers believe ICANN will acquiesce to this decision. After all, ICANN had already allowed price increases when the 2012 agreement was drafted. It wasn't until the National Telecommunications and Information Administration (NTIA) intervened that ICANN froze prices.
What This Means for You
If you only own one or two domains, a .com price increase might not affect you much. But with nearly 140 million .com domain registrations currently, if registrars pass on all price increases to customers, every $1 increase in .com domain prices would mean an additional $140 million in costs for consumers.
There is one way to protect yourself from short-term price increases. Renew your policy multiple years in advance. For .com domains, you can renew your policy up to 10 years in advance at the current price. If you renew now, you'll pay the current price, not the future price.
