Nominet price review process?

[Whois-Search]

Rather than have an open day this week to discuss a “price review process”...

When will Nominet have an open and transparent consultation on pricing and show the justification for yet another .uk price rise?

The executive have made it very clear they would like a price rise but at the moment have offered no justification for it.

Let’s look at the figures...

Nominet is currently making more profit than ever before and no longer donates to the Nominet Trust:

OPERATING PROFIT

Operating profit before Public Benefit Initiatives increased to £16.3m, representing 28.9% of revenue (2016: £8.7m, 29% of revenue). The increase in profitability was driven by the extended accounting period delivering increased revenue and ongoing tight control over operating expenditure. The donation to the Nominet Trust of £5.4m made at the end of the prior period related to 17 months of activity during the current accounting period to 31 March 2018. In anticipation of a new governance structure for Nominet Trust, no further donations were made in this accounting period. As a result, combined with the extended accounting period, the overall operating profit reported was £15.7m (2016: £2.6m).

Nominet staff costs have increased but operating charges are still around 70% of revenue:

EXPENDITURE
Operating charges of £40.1m represented 71.1% of revenue (2016: £21.3m, 70.8%
of revenue).

Staff and other personnel costs of £20.5m have increased pro rata by 14.3% reflecting growth in average headcount of 9.2% to deliver the Project 2020 strategy together with underlying wage inflation for the 18 month period and a tight market for technology and sales team skills. This investment has been to ensure the strength of the .UK registry and the implementation of diversification plans.

Average staff numbers increased to 166 (2016: 152) and permanent staff payroll cost increased pro rata by 11.0% reflecting the above staff cost factors.

Nominet has a huge cash surplus:

INVESTMENTS

In line with the plan to reduce the Group’s surplus cash balances held on low yielding deposits a further £22.5m (2016: £7.2m) of contributions were made into the portfolio and returns during the period reinvested. With the prior year adoption of IFRS, investments are included in the consolidated statement of financial position at their fair value. With additional contributions, realisations made, income
and market movements, the fair value of the investment portfolio increased during the year and closed at £95.8m (2016: £64.8m).

BALANCE SHEET AND CASH FLOW

Retained earnings for the Group increased by £19.1m during the period to £64.4m (2016: £45.3m).

Revenue is already increasing from .uk and the last price rise:

REVENUE
With the benefit of the Right
of Registration and other promotions, the .UK register at 31 March 2018 closed at 12.0 million domain names under management (30 September 2016 – 10.6 million). The Right of Registration promotion was launched during the period to promote the awareness and take up of rights for .UK holders but has not yet led to an uplift in revenues. With the maturing domain market, underlying
.UK registrations were slightly down for the period whilst renewal rates for domains have slightly improved.
Our registry services portfolio of TLDs has expanded in number and domains under management have seen significant growth over the period to nearly 1.6m domains (30 September 2016 – 0.1m).

The Group’s revenue increase largely reflects the 18 month accounting period, increasing by £26.3m to £56.4m (2016: £30.1m). With income recognised by spreading
the sale value of domains over the new registration or renewal period, the revenue has benefitted from the flow through of the .UK domain price rise implemented on
1 March 2016. This has also been combined with revenues from associated DNS and cyber security services, notably from our PSN contract with the UK Government.

Source: Nominet accounts 2018

https://registrars.nominet.uk/sites/default/files/06.21.18_nominet_ra_2018.pdf

So what possible justification is there for another price rise? Can we have a decrease please?

 

[Skinner]

How else are they going to install moats around the summer houses ?

 

[Nigel]

If they can get away with further increases they will. Remember how they tried to introduce .uk with a £20 reg fee. The only thing that might keep them in check will be lapse ratios.

 

[Skinner]

What's pushing them is that they have increased the holding by 20% via free and discounts but haven't seen the extra 20million.

Sadly against our better judgement and fomo fever in about 9 months we'll line their pockets in ways they have only dreamed of, but in 2 yrs it will start to crumble and they will push a price increase through, not realising it will start a cascade, or reduced numbers and price hikes.

 

[RobM]

Of course they'll get away with further increases. They have been given free range to do whatever they want by people who thought uk was a good idea and barely making a whimper over the last price hike. I think the only thing that will stop them is government intervention.

 

[Nigel]

The problem is domain renewal costs are relatively small outlay for most businesses and that's why nominet have already got away with a 50% price hike.

 

[Admin]

@[email protected]