New nominet pricing

[Edwin]

For anyone who doubts, even for a fraction of a second, where a lot of the money is going, here's a close look at the evolution of Nominet salaries and directors' emoluments since 2002 (which was the first year I could get data from)

All the underlying figures are from the respective Annual Reports Nominet puts out i.e. they are public knowledge.

A few interesting take-aways (you may spot others):
- per-head salaries have more than doubled since 2002
- Director remuneration has quadrupled since 2002
- Pay of highest director has gone up nearly 250% since 2002
- Registration figures have been stagnant for about 2-3 years now, yet magically staff costs have gone up nearly 50% over that period. Begs the question: what are all these highly paid new staff doing?

 

[gimpydog]

Apparently, Nominet is one of the few business on earth that does not benefit from economies of scale.

In Nomland, selling more of something is less profitable!

https://www.youtube.com/watch?v=cqzot8wDjes&feature=youtu.be&t=2551

 

[RobM]

The funny thing is Edwin you can point out the patently obvious but two things always happen:
1) Nominet do what they want regardless in order to increase their profits and to benefit the big registrars of which they have nothing to do with obviously and no connections. The people who moan are irrelevant to nominet so are just ignored.
2) Certain people attempt to 'explain' their actions as if we're too stupid to see why.
Really why bother? It would be just easier for them to send out an email saying 'yep it's that time of year again folks.... bend over. If you don't like it sod off!' Less intelligence insulting.

 

[martin-s]

I wouldn't rule out a price rise altogether. As Nominet state, .uk domains have cost the same since 1999.

But a 50% increase is just insane. 5% would have raised an extra £1.25m pa.

 

[Edwin]

What's baffling is they seem to be going out of their way to extra-penalise 2-year renewals since there will no longer (unless I missed it somewhere) be any price differential between a 2-year renewal and 2 1-year renewals.

Come March 2016 I will be strictly renewing what I decide to keep on a year-by-year basis, if that turns out to be the case.

 

[Edwin]

I wouldn't rule out a price rise altogether. As Nominet state, .uk domains have cost the same since 1999.

But a 50% increase is just insane. 5% would have raised an extra £1.25m pa.

Or even something like 25p/year/domain. That would have yielded bonus revenue of over £2,500,000 per year, every year i.e. a nice chunk of change.

But their increase is just nuts.

 

[bb99]

I wouldn't rule out a price rise altogether. As Nominet state, .uk domains have cost the same since 1999.

At the same time, whilst the price has remained the same, the number of domains in the register has increased in enormous proportions, which has negated the need for a price rise.

 

[bluerock]

At the same time, whilst the price has remained the same, the number of domains in the register has increased in enormous proportions, which has negated the need for a price rise.

The offset is that now paper transfers are dead and are fully automated at £12! negating the need for staff completion. I really do struggle to comprehend how such a big % increase in necessary.

 

[Rob_F]

The offset is that now paper transfers are dead and are fully automated at £12! negating the need for staff completion. I really do struggle to comprehend how such a big % increase in necessary.

It isn't necessary. Nominet have have so much cash left over each and every year that they have to give millions away. With that in mind, there can be no possible financial justification for it.

Greedy (fill blank)

- Rob

 

[Rob_F]

The company wants to generate more revenue to continue to do all it does and to be able to continue to invest. The cost to administer a domain name is higher now than it was in 1999. Back then Nominet didn't engage in many of the domain name related activities it now engages in and didn't provide the systems it does today.

All of that would be understandable if they didn't give millions away via the Nominet Trust. I am sure most members would love them to use that cash to reinvest in the namespace, rather than give it away via the Nominet Trust. This isn't an organisation in need of cash.


- Rob

 

[Rob_F]

An increase in wholesale pricing could also provide further scope for price related discounting which many other registries seem to engage in, Versign included, for example. Verisign regularly increase their pricing although it had its .com wholesale price frozen in 2012 until 2016. The trend with quality registries is to increase prices and not to decrease them. When a product is too cheap it can be perceived as inferior to other more expensive competitors.

I know the trend is for registries to increase prices, but Nominet isn't a listed company e.g. Verisign, where the priority is shareholder returns.

- Rob

 

[Edwin]

Methinks you parrot the party line too closely, David. Anyone would think you were actually in favour of this exercise in gouging registrants to the bone going by your posts on the subject today!

There is no commercial justification for such an extravagent price rise when there are no hungry shareholders baying to be fed ever-juicier returns. The only credible "competitor" to the UK namespace is .com - always has been, always will. And there's nothing now or in the pipeline that will increase the competitiveness of .com (already the #1 extension) further. So effectively Nominet has no competition in the UK market.

Which perhaps explains their predatory, monopolistic price rise.

 

[Edwin]

I was obviously conflicted and unable to vote on the matter. I'm in favour of a full explanation and discussion of the issue to the fullest. As a director of a portfolio holder naturally I wouldn't favour a significant increase in costs but I am not overly concerned about it because the portfolio is strong and earns. The extension still represents very good value for money compared to alternatives we have invested in. Note that the price rise is to registrars, not to registrants. Some registrars may choose not to pass it on. Registrars have always been free to set their own prices.

It is impossible for self-managed tags to avoid the significant price rise.

There is no valid explanation to be had. I was on the phone long enough to Nominet yesterday to realise that. The "costs" line doesn't hold water, and there is no alternative explanation that matches the facts.

As a director, you should be putting the brakes on a 50%+ increase in the core product sold by the company you provide oversight for. That should be true in any business or industry.

The red flag is much much redder this time, because it's a 50% increase in a situation where historically the price has been frozen for nearly the entire existence of that industry (the web in 1999 was not the must-use household thing it is now, even if the first .com boom was under way)

It's true that Nominet's costs have risen since 1999. How could they not? They had so few names under management back then they could have done everything on a couple of servers. I exaggerate, but not that much.

But their revenues have risen many-many-many-many-fold since 1999 too. Not only do their 2015 revenues cover their 2015 costs significantly more than adequately, but they also provide for a fat, juicy surplus to be syphoned off to the Nominet Trust and another chunk of cash to get stashed in the ever-growing float in Nominet's bank accounts.

So the "logic" provided for the price rise, that of rising costs, falls to pieces. In an automated industry like Nominet is in, the cost that matters is not the total cost (so long as it is more-than-covered by revenues) but the marginal cost i.e. how much of that cost is imposed on every new domain registration. The latter is a matter of pennies since all the fixed costs are long since taken care of by the revenue from the existing registrations, so the marginal profit margin on each registration is likely to be of the order of 90%-95%.

That is the reality of the situation. It's all there in black and white in the Annual Reports, for everyone to see.

The facts do not describe a business in "distress", they describe a business floating in gravy.

Given that and Nominet's current requirement to operate on a cost-recovery basis, I cannot understand either their actions or your relatively laid-back, laissez-faire attitude to this.

 

[Edwin]

.com is obviously the main competitor and its wholesale is still substantially more than .uk's. Respectfully we can not ever know that .com will always remain the only credible competitor in the UK to .uk, try as you might to suggest it will be.

Respectfully (a word I dislike because we know what it really means) you're smart enough to know that you're putting up a straw man argument by invoking the fact that none of us can predict the future.

What we can however do is look at the lessons we have access to. None of the 1,000+ new GTLD has gone as far as to wobble the pedestal that .com is on, despite the fact that some are extremely well funded. Renewal rates in general have not been at "replacement" level i.e. most new GTLD namespaces are shrinking.

Meanwhile, the new and exciting and jazzy and innovative .uk has been met with a "so what" response - and even if it dethrones .co.uk in time it's an internal competitor because Nominet offers both.

The .london domain is toast (from a competitive point of view - I'm not suggesting the registry is going to go out of business). It launched in a blaze of publicity and a flurry of partnerships, but deletions for non-renewals are outstripping new registrations now that we've passed the first anniversary of launch (and besides, it's a regional domain and therefore not even on the radar screen of 85% of the country)
https://ntldstats.com/tld/london

So unless you're describing the death of domains as a concept then there's quite literally no chance of this so-called "competitor" emerging.

And if you really want to make the case that Nominet is protecting itself against the day when people don't need domains at all, I will direct your attention back to that ever-growing pile of cash in their account which is more than adequate for any business to pivot and reinvent itself.

 

[Edwin]

There's been a public purpose benefit enshrined in the company memorandum and articles for some time. The Trust comes under that although it does not constitute the companies entire public purpose element by all means.

Nominet's PRIMARY purpose is and has always been the management of the .uk namespace.

It may also have a post-facto, self-imposed public purpose obligation with respect to what it does with the small surplus it may generate from doing so, but the entire organisation was tasked to do one thing back in 1996 and that thing hasn't changed. We shouldn't be pretending it has!

If Nominet really want to go off and do something else - and fund-raise to do so off the back of registrants - then .uk management should be put out to tender with a very narrow remit enshrined as part of the tender process.

It's high time Nominet's wings are clipped, in any case. They seem to do egregious things that are counter to the best interests of the .uk namespace every few months on average these days.

 

[RobM]

Very well put Edwin. However none of your points will be addressed I suspect. In every post invincible has simply stated 'costs are rising' with no further explanation. The facts are we know nominet don't need to raise the prices this much, nominet knows nominet don't need to raise the prices this much. Nominet *want* to raise the prices and they will. The same as they *wanted* UK which nobody except the main large registrars wanted. They have *wanted* to do lots of things in the past and, on the odd occasion where people have been given a say, they have totally ignored that say and performed exactly as they *want*. Do they, and you Invincible, really believe people are too stupid to see the obvious?
However if I was nominet I would just say it exactly like it is. 'From march we are putting the prices up. We will no doubt increase our salaries way beyond these rises. We will no doubt raise directors renumerations way beyond these rises. We will have our board meeting in a 6 star hotel in Dubai and fly first class. If you don't like it TOUGH. Go and buy another extension because we barely give a toss about the co.uk as it is. We're riding the gravy train baby and nobody is going to stop us.' You can't claim to be non-profit, tell people how many extra millions you have, 'give it away', then tell people you need to raise prices because of increasing costs. The whole thing has been a farce since day one.

 

[Skinner]

I'm still waiting for the government to take notice of the many many many millions which they could take.

 

[bb99]

The facts do not describe a business in "distress", they describe a business floating in gravy.

I think it's more of a gravy train than a gravy boat

All aboard!

 

[Edwin]

Something else to think about...

The 2 year registration cost of a domain name for a responsible and sensible business will, over the 2014-2019 period, have risen 300%.

2014 picture: £6/2 years (VAT included)
2019 picture: £18/2 years (£9 for the .co.uk, £9 for the .uk)

Now if that's not naked profiteering, I don't know what is!

Nominet can do what they like, but I wouldn't expect any unrelated party to agree with what they have chosen to.

 

[Stephen]

Hoping common sense will prevail!

Some very useful observations so far (especially from Edwin).

The landscape of the UK namespace will change forever if Nominet get this through.

Many UK portfolio holders have sold on or let expire their portfolios (well done, those that could see what was coming).

As a portfolio holder, due to the 50% price increase, I will reduce my .co.uk portfolio even further than I have done to date, reducing NET revenue to Nominet.

This reduction of my portfolio also takes into account, shortly having to double the costs with acquiring the .uk.

Due to the dropping of .co.uk domains, there will be more UK domains to register, which I can see as the only benefit of the current policy.

The Director's personal windfall will be short lived as I can see action being taken against the direction of Nominet.

Nominet got it so very wrong with .uk in there first auction announcement, with a weak premise to push it through, they have got it very wrong this time.

If Nominet want to enter some game of providing higher prices, so they can slash them like giving .uk away free for a year or big promotional budgets to registrars, these are all cheap con's and should be avoided.

Nominet's arguments of justification for a price increase,
simply do not stand up to any scrutiny.

Unless Nominet can show they need to spend £10 million+ in the next few years and then every few years after that, on extra capital expenditure, it makes no sense at all.

Hoping that common sense will prevail!

Stephen