What do I have to negotiate with registrar registry operators?
April 12, 2011 7:45 PM Subscribe
To become a domain registrar, ICANN here says: "Once you return the signed RAA and pay your accreditation fee, ICANN will notify the applicable registries of your accreditation and add you to the list of registrars at http://www.icann.org/registrars/accredited-list.html and http://www.internic.net/regist.html. You should work out the contract, financial, and technical details with the registry operators."
Who are these "registry operators" if not ICANN, what do they want and what will I have to pay them?
Good grief I need some sleep. That was full of way too many typos.
posted by ecco at 8:22 PM on April 12, 2011
posted by ecco at 8:22 PM on April 12, 2011
Best answer: A registry operates the authoritative registry database for one or more top level domain names (TLDs). The registries all generally have both financial and technical requirements that you have to comply with before they will let a registrar register domains in a TLD operated by the registry. As a quick example, VeriSign operates the registry for the .com, .net, .name, .tv, .cc, and .jobs TLDs and Public Interest Registry operates the registry for the .org TLD. VeriSign has a page on how to become a registrar for one of the TLDs in their registry. If you don't qualify to be a registrar for the TLDs you're interesting in registering, you can instead become a reseller (i.e. resell the services of one of the existing registrars for the registry that operates the TLD).
posted by RichardP at 8:23 PM on April 12, 2011
posted by RichardP at 8:23 PM on April 12, 2011
Response by poster: Thanks, RichardP and ecco. Do either of you have an inkling as to cost? I imagine VeriSign alone would be quite expensive.
posted by michaelh at 8:25 PM on April 12, 2011
posted by michaelh at 8:25 PM on April 12, 2011
Best answer: Do either of you have an inkling as to cost?
Can you tell us what you're trying to do? Which costs you are asking about? The cost of starting a registrar is going to depend a lot on your existing resources, talents, and contacts.
ICANN and each registry you choose to work with is going to place both technical and financial requirements on your registrar business. Lets assume you are an experienced software engineer, have an existing internet-based business with regular income, a contract lawyer already on retainer, and a bank willing to issue your business a letter of credit. You are already leasing server space and feel you can write or purchase your own registrar operations software. Given this, lets look at just the ICANN financial requirements. ICANN requires that you demonstrate that have $70,000.00 in working capital, pay a one-time $2,500.00 application fee (non-refundable if they turn you down), pay an annual $4,000.00 accreditation fee, pay a quarterly variable fee (will be approximately an additional $4000 for 2011), and obtain commercial liability insurance coverage of at least $500,000 (about $500.00 a year). So, just looking at the annual ICANN overhead, you'll be spending at least $8,500.00 for the privilege of being an ICANN accredited registrar — you'll still need to meet the requirements of the registries for the TLDs you intend to sell.
So now lets look at what it would take to sell .com TLDs. As I mentioned above, I am going to assume you already have all of the hardware, software, and technical expertise needed to operate your side of a registrar's operations so you won't have to spend any additional money to meet their technical requirments. So you only need to meet their financial requirements (basically your business needs to pass their credit check and post a security deposit or present a letter of credit from a bank), i.e. probably no additional cost given the original assumptions. From the ICANN .com Registry Agreement and the VeriSign .com Registry-Registrar Agreement we can determine that the cost to your registrar for a .com TLD for one year will be $7.34 to VeriSign and $0.18 to ICANN (for a total of $7.52 per domain-year).
So, above and beyond the costs of an internet-based business, your annual costs will be about $8,500. For this expenditure, you'll have the privilege of purchasing .com TLDs for $7.52. For comparison, the annual costs to be a domain name reseller are about $100, and for this price you'll be able to purchase bulk .com domains for $8 (I'm using GoDaddy's reseller pricing). This means that your extra margin for being a registrar is only 8.00 - 7.52 or $0.48 per domain. Thus, in order for it to be profitable to be registrar instead of reseller you'll need at least (8500 / (0.48)) or 17,708 .com transactions a year.
In practice, given all of the overhead costs we assumed as free you'll probably need at least 100,000 or more domain name transactions a year for this to make sense. Also, I glossed over the fact that as a registrar you'll be required to respond to DMCA complaints and UDRP actions, so having a lawyer on retainer definitely won't be optional (particuarlly given the number of domains you'll need to be selling for this to be profitable). Even worse you'll be directly competing with registrars like GoDaddy who can afford to purchase multi-million dollar Superbowl ad campaigns. In reality, registrars essentially operate the domain name registration side of their businesses as a loss leader in order to get the opportunity to up-sell other profitable services to the domain name holders (i.e. hosting, e-mail forwarding, etc.).
posted by RichardP at 11:53 PM on April 12, 2011 [3 favorites]
Can you tell us what you're trying to do? Which costs you are asking about? The cost of starting a registrar is going to depend a lot on your existing resources, talents, and contacts.
ICANN and each registry you choose to work with is going to place both technical and financial requirements on your registrar business. Lets assume you are an experienced software engineer, have an existing internet-based business with regular income, a contract lawyer already on retainer, and a bank willing to issue your business a letter of credit. You are already leasing server space and feel you can write or purchase your own registrar operations software. Given this, lets look at just the ICANN financial requirements. ICANN requires that you demonstrate that have $70,000.00 in working capital, pay a one-time $2,500.00 application fee (non-refundable if they turn you down), pay an annual $4,000.00 accreditation fee, pay a quarterly variable fee (will be approximately an additional $4000 for 2011), and obtain commercial liability insurance coverage of at least $500,000 (about $500.00 a year). So, just looking at the annual ICANN overhead, you'll be spending at least $8,500.00 for the privilege of being an ICANN accredited registrar — you'll still need to meet the requirements of the registries for the TLDs you intend to sell.
So now lets look at what it would take to sell .com TLDs. As I mentioned above, I am going to assume you already have all of the hardware, software, and technical expertise needed to operate your side of a registrar's operations so you won't have to spend any additional money to meet their technical requirments. So you only need to meet their financial requirements (basically your business needs to pass their credit check and post a security deposit or present a letter of credit from a bank), i.e. probably no additional cost given the original assumptions. From the ICANN .com Registry Agreement and the VeriSign .com Registry-Registrar Agreement we can determine that the cost to your registrar for a .com TLD for one year will be $7.34 to VeriSign and $0.18 to ICANN (for a total of $7.52 per domain-year).
So, above and beyond the costs of an internet-based business, your annual costs will be about $8,500. For this expenditure, you'll have the privilege of purchasing .com TLDs for $7.52. For comparison, the annual costs to be a domain name reseller are about $100, and for this price you'll be able to purchase bulk .com domains for $8 (I'm using GoDaddy's reseller pricing). This means that your extra margin for being a registrar is only 8.00 - 7.52 or $0.48 per domain. Thus, in order for it to be profitable to be registrar instead of reseller you'll need at least (8500 / (0.48)) or 17,708 .com transactions a year.
In practice, given all of the overhead costs we assumed as free you'll probably need at least 100,000 or more domain name transactions a year for this to make sense. Also, I glossed over the fact that as a registrar you'll be required to respond to DMCA complaints and UDRP actions, so having a lawyer on retainer definitely won't be optional (particuarlly given the number of domains you'll need to be selling for this to be profitable). Even worse you'll be directly competing with registrars like GoDaddy who can afford to purchase multi-million dollar Superbowl ad campaigns. In reality, registrars essentially operate the domain name registration side of their businesses as a loss leader in order to get the opportunity to up-sell other profitable services to the domain name holders (i.e. hosting, e-mail forwarding, etc.).
posted by RichardP at 11:53 PM on April 12, 2011 [3 favorites]
Response by poster: Yes, after reading these answers I can see that becoming a registrar is out of the question.
The context here is that I want to provide a premium domain name ownership service. Hopefully I can find a registrar with an API that lets me wrap a complicated service around their system. (Or just become a patent troll.) Thanks so much.
posted by michaelh at 6:30 AM on April 13, 2011
The context here is that I want to provide a premium domain name ownership service. Hopefully I can find a registrar with an API that lets me wrap a complicated service around their system. (Or just become a patent troll.) Thanks so much.
posted by michaelh at 6:30 AM on April 13, 2011
The context here is that I want to provide a premium domain name ownership service. Hopefully I can find a registrar with an API that lets me wrap a complicated service around their system.
OpenSRS is generally considered the registrar of choice for building this kind of service since they offer a completely "white-label" solution to resellers. As a reseller of their service, you can use their API with a custom front end of entirely of your own design (they, of course, also provide an online control panel if you don't want to build your own stuff). Furthermore, unlike some registrars (i.e. GoDaddy), they won't try to up sell services to your customers (since they'll be completely invisible to your customers if you use their API). However, they charge resellers more than other registrars — OpenSRS resellers pay about $3.00 over registry cost (i.e. $7.52 + $3 for .com).
posted by RichardP at 2:00 PM on April 13, 2011 [1 favorite]
OpenSRS is generally considered the registrar of choice for building this kind of service since they offer a completely "white-label" solution to resellers. As a reseller of their service, you can use their API with a custom front end of entirely of your own design (they, of course, also provide an online control panel if you don't want to build your own stuff). Furthermore, unlike some registrars (i.e. GoDaddy), they won't try to up sell services to your customers (since they'll be completely invisible to your customers if you use their API). However, they charge resellers more than other registrars — OpenSRS resellers pay about $3.00 over registry cost (i.e. $7.52 + $3 for .com).
posted by RichardP at 2:00 PM on April 13, 2011 [1 favorite]
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So ICANN sets the global rules, but registries run one or more TLDs.
E.g. .com is run by Verisign. Verisign is the one place in the world where everyone eventually gets their .com domains from, similarily PIR (Public Interest Registry) provides everyone in the world with .org domains. CIRA with .ca etc. (full list)
These registries maintain the systems which tracks who owns the domains in their TLD. Generally that means they provide an API and web portal which are used to purchase renew transfer and update of domains, name servers and contacts.
posted by ecco at 8:18 PM on April 12, 2011 [1 favorite]