November 16, 2004

Vodoo Economics a la ICANN

Here are some more thoughts on ICANN's "Strategic Plan".

In that report - on page 22 - ICANN is claiming that ICANN has saved the community of internet users over a billion dollars due to reduced fees.

That is simply untrue.

ICANN has overseen a reduction in domain name fees, that is true.

But ICANN has constructed a price floor that prevents fees from being reduced even further and thus has prevented competition from delivering even more savings to the domain name consumer.

How much has this price floor cost internet users?

My estimate is that this price floor is taxing internet users to the tune of $200,000,000 to $300,000,000 (US) per year.  This estimate is based on ICANN's artificial price floor that is today on the order of $6 per name per year and an estimated non-fiat registry price of about $1 per name per year.

Over ICANN's five years of existance this cumulates to more than the billion dollars that ICANN says it has saved.

In other words, even if we grant to ICANN the billion dollars it claims, there is still more than an addtional billion dollars that ICANN has dragged out of the pockets of internet users and pushed into the pockets of domain name registries.

Posted by karl at November 16, 2004 9:12 PM