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31 Jul 2016
The latest ICANN domain auction brought the auction proceeds piggy bank to about $240 million. The application fees for the new gTLD round were $361 million of which, at the end of March, they'd spent $227 million, and their very conservative estimate is that at the end of the process they'll have spent $289 million. If you add the numbers from the private auctions to the ones for the ICANN auctions, it's as much or more than the application costs. These suggest a much better way to pay for the next round.
In the current round the application fees had to cover all the expenses, so they set the price high enough that they'll have $72 million or more left over. In a future round, it should be somewhat cheaper to evaluate the applications, using what we learned this time around, For example, nearly everyone uses the same five back end providers, all of whom are technically competent, so there is no need to check things like DNSSEC separately for everyone using the same back end.
My plan is simple: next time the application fee is nominal, say $1000. But if there are several applications for the same name, they all go to auction, and the auction income pays for the rest of the program.
If you apply for a name that nobody else wants, because it's your company name or it's just obscure, you can get it cheap. If you want a name that a lot of other people want, which at that price is quite likely, it goes to auction to find out who wants it the most. While I have my doubts whether any second round auctions would go to the crazy prices that .SHOP and .WEB did, they'll make up in quantity what they lack in craziness.
If several applicants for the same name want to negotiate a winner some other way, that's fine. They can feel free to collude at auction so the winner bids $2 and everyone else bids $1. But if one of the losers cheats and bids $5, that's not our problem.
If an applicant believes that someone else has applied for his proprietary name, they can slug it out in court and let us know who won. Or maybe it'd be cheaper to go the auction and pay the competitors to go away. (Nobody said defending a trademark was supposed to be free.)
There are some obvious details left to work out, like how to figure the ongoing fees once a domain is delegated, but those shouldn't be hard, particularly once it's clear what the actual ongoing revenue from the current round is.
This approach may seem cynical and venal. It is. But in practice is it any more so than the current approach? It may be cynical, but it's a lot simpler and a lot more transparent.
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