If you own .NET domain names will you be looking at higher renewal costs?

ICANN (Internet Corporation for Assigned Names and Numbers) the non-profit organisation in charge of Internet addresses, has lifted pricing restrictions on .net registry fees. This was agreed last month when it renewed its contract with VeriSign.

Better known to domain owners as NetworkSolutions.com, VeriSign has been running the master database for .NET domain names ever since the Internet was born.

ICANN used to fix the .NET domain wholesale price at $6. Under the new, six-year contract signed last month, the price is now down to $4.25 effective to the end of 2006. And from January 2007 price restrictions are due to expire completely.

The wholesale price is what the Verisign registry annually charges to all ICANN accredited domain name registrars for every .NET domain name.

The registrars then add their own costs to get to the retail prices you and I have to pay each year for our .NET domains.

So who gets all the money you pay for your domain name?

Let’s take an example using popular registrar GoDaddy.com, where a one year .NET domain name registration today costs just $7.20.

Here is where your $7.20 domain registration fee goes:

$4.25 to Verisign registry.
$2.34 approximate amount to Godaddy.
$0.36 estimated fee to the credit card company.
$0.25 ICANN fee.

A large portion of GoDaddy’s income will be spent for customer and website support.

But the 25 cents ICANN fee seems to be an ongoing mystery. Nobody but ICANN seems to know what they do with this cash which amounts to over one and a half million dollars annually just for .NET domains. And don’t forget they rake in a further $10 million for .COM and other TLDs!

The Verisign registry is meant to use the $4.25 for maintaining the .NET registry database but probably only a portion is used for that purpose – the rest goes into their bank account. Remember there are currently 6,278,354 active .NET domains registered so this means an annual nest-egg for Verisign, aka NetworkSolutions.com, of $26,683,004!

Verisign say the wholesale price changes are unlikely to result in price increases to consumers. My own belief is that .NET domain prices will remain stable and could fall because the domain name market is very competitive.

.NET domains have always played second fiddle to the more popular .COM gTLD. Domain names are often given away free as part of Web hosting packages or as free domain renewals. And there are also more TLDs on the horizon like .MOBI and .EU giving consumers extra choice for registering their domains.