Perfect Information: The Global And The Local
Chris Ambler: "What am I missing?"
You aren't really *missing* anything inasmuch as you seem to have confused the global and local approaches.
The local approach is defined as simply being what Tucows decides to do with its about-to-be-expired domain name inventory. We're betting that there's a lot of latent opportunity in this inventory that we can steer towards our channel partners and their customers (expiring registrants and auction winners). That's really just the 10% solution that you point out. We make sure that Registrants understand the value of their expiring name, we move expiring names into auction and we make sure that expiring registrants get the lion's share of the auction proceeds.
But this isn't the 100% solution that we described in the Perfect Information proposal.
PIP is a global solution with checks and balances sufficient to sustain a long-term market. As you point out there are significant hurdles to the adoption of this proposal, but they aren't the local ones that you outline in your post. Rather, they are largely contractual.
In no certain order, a) first-come, first served registration b) mandated registrar equivalent access to registry resources and c) flat pricing. Each of hinders innovation of registration services and limits a registrar's capability to take a crack at solving some of the market issues that you outline (market demand, service adoption rates, consumer behaviors, etc...) in addition to a slough of others. Changes in how these restrictions are contractually executed will unlock new ways of looking at this space and capitalizing on the hidden opportunity - for registrars, registries, ESPs and registrants. I'm convinced that we can come to a logical agreement about the best way to bring registrants into the loop.
I think Keith Teare sums it up best in his recent post, "...this market is about to change very quickly into a more organized and rational one... the registries and registrars need to come to agreement on a single solution. I do believe that will most likely occur now."
See this post as it first appeared on Blogware.
10 comments
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(name not saved), September 7, 2004
Yet you don't explain why a registrar, making a decent chunk of that $4,000,000 market, would want to change anything at all. Most of those whom you would have participate are making more money now than they would under your proposal.
How do you overcome this problem?
(name not saved), September 7, 2004
With PIP, you get a larger supply pool and likely, larger valuations on a per name basis. With some intelligent choices around demand creation, the valuation only increase again. There are a number of knobs and dials that can be twiddled to increase the total size of the market opportunity which in turn makes it a more lucrative option for those that are solely playing in the secondary drop market.
(name not saved), September 7, 2004
Hypothetically, why would I, a registrar with, say 10 names a day dropping, want to participate? I can get, nominally, $1 per name on average under your system, yet I now have a statistically non-trivial chance to catch a name in the drop worth in excess of $30,000 if I allow one of the ESPs (nice term) to aggregate my registry access.
I'm all for efficiencies in the market, but you've not made a compelling financial argument yet. Tucows doesn't participate in the current ESP market, so this system is, essentially, better than nothing.
But I'd like you to identify the knobs and dials, especially in terms of making it more financially attractive for one of the four major ESPs that you identify.
Convince me :-)
(name not saved), September 7, 2004
I'm fairly certain that you won't be able to convince those already playing the dropping names game. Convince the registrants!
Bret
(name not saved), September 7, 2004
Convince the registrants how? If a registrar isn't playing, the registrant would have to transfer the name to a registrar that is. The registrant who is willing to do that is, almost by definition, a registrant who isn't going to let a valuable name drop.
Only registrants who don't know what they own would be the target for such a system. An opt-in system like that is not going to gain much adoption for the reasons I've already outlined.
Only if a good market-share-worth of registrars participate would this succeed. In the current environment, I just don't see it. Now, if the drop were to go away (say, WLS happens), that's VERY different. Then I'd be agreeing completely with Ross. As things stand now, however, those currently making money in the game already have a lot of momentum.
(name not saved), September 7, 2004
Ross, you should open up the expiring domains auction to allow users to sell their domains before expiration. This would greatly enhance the product.
(name not saved), September 7, 2004
chris, I think you underestimate both the power and the importance of the registrant.
I understand the argument you are making, but what you seem to describe as steady state will change whether a registrar likes it or not. we are simply talking about the elephant in the room.
the supply chain serves the customer, not the other way around.
(name not saved), September 7, 2004
Pool tried this without much success at all.
I understand Ross's points, but I think we're going to disagree on how effective it would be.
But I've been wrong before :-)
(name not saved), September 9, 2004
We've definitely discussed this. It will definitely be in the product at some point. Focus, timing, etc. are the real important bits that we're trying to optimize for right now...
(name not saved), October 22, 2004
i do understand both of your opinions, christpher and ross.but lets have a look on what would be the different interests of each of the 5 stakeholders in a possible change to PIP:
stakeholder (1) "registrant": i dont think that the registrant, although being the greatest interest in number of interestees, play such a huge role in wheather or not the current system is efficient, fair or value-creating. as christopher said, even if all registrants knew about the value of their domains, most of them would not participate in PIP. i agree to that. but much more important is that 99% of those owning a valuable name do know about it and would sell it privately before letting it expire. so PIP from todays view would only help about 1% of registrants. i doubt that PIP would be a moneyspinner to competing registrars.
stakeholder (2) "registrar": there are 4 different views, depending on what kind of registrar you are:
A.) registrars having a reasonable market share in current registrations, but NOT acting as an ESP. (example: tucows)
B.) registrars having a reasonable market share in current registrations, already acting as an ESP. (example: dotster via namewinner,enom as club drop, NSI via snapnames)
C.) registrars having a small or no market share in current registrations, but NOT acting as an ESP or cred-seller/ESP partner
D.) registrars having a small or no market share in current registrations, acting as an ESP or cred-seller/ESP partner
which of these groups would benefit from PIP? A as a whole, B only in case the average number of *own* daily drops is bigger than the average number of *alien* daily drops its ESP is able to catch. i would guess NSI falls under that theory, enom and dotster do not.
that also explains why exactly tucows (group A) and NSI/snapnames (group B) have come forward to introduce PIP, while enom would not like the idea.
stakeholder (3) "ESP customer": all participants of this stakeholder group are neccessarily part of group 1. they perfectly fit into the 1% i was talking about. they know about the value of their domains and could live without PIP. but many of them dream of reselling their domains in such ESP auctions, because nowhere else on the secondary market, prices are such high. so ESP customers would use PIP as an additional, very effective sales channel for their domains. what they would also like about PIP is that they wouldnt have to backorder their desired name with every single ESP on earth just to make sure he gets the chance to own it, but with PIP they would know, where the name is dropping, which means less work if you are trying to catch only some names, but becomes a pain in the ass when you're catching dozens of names daily. still, i think ESP cutomers would love PIP.
stakeholder (4) "registry": PIP would save them a lot of money, and at the same time wouldn't affect their revenue. so their view is clear.
stakeholder (5) ICANN: they should not have an interest into this topic at all, their job is to find the most appropriate, efficient and fair way to combine the 4 interests above.
actually they should find a complete new expiring name system, someting that combines WLS with PIP:
all names fall back into a registry pool after the RGP (like WLS), where they are auctioned (like PIP). some percentage of the revenue goes to the registry (about 10% should cover their costs), some percentage goes to the previous registrar (i would recommend about 40%), the rest (about 50%) should go to the previous registrant. actually i have no point why the registrars should get a piece of the pie at all, but we definitely need some good argument why group D, C and parts of B would agree to this system.
you are arguing a lot about registrants