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A Proposed Service To Compete With VeriSign’s WLS

Alex Tajirian
March 23, 2004

 

VeriSign’s proposed Wait-listing Service (WLS) would allow those seeking ownership of a particular domain name – with .com or .net extension -- to pay a fixed fee for the right to claim it, should the current owner/registrant not renew it. The benefits of WLS to consumers, however, are very controversial.

Below is an outline of a possible service that can drive VeriSign out of the business it is trying to create. Our proposed service can be provided only by domain-name registrars.

If WLS creates value to shareholders, the major registrars can easily create a competitive service. Here is how it would differ from WLS:

  1. A customized auction marketplace, instead of a fixed fee, would determine the cost of the right to claim an un-renewed domain name.

  2. A series of actions would be taken by service providers immediately before allowing a domain name registered through them to go into REDEMPTION PERIOD (a period at the end of which the domain would become available for anyone to register):

If an owner does not renew the domain name after it expires and before it enters the REDEMPTION PERIOD, the right to the expired name is temporarily transferred to the highest bidder. Then,

    1. if the owner does not renew the name before the last day of the REDEMPTION PERIOD, ownership is permanently transferred to the highest bidder.

    2. if the owner attempts to renew it before the end of the period, he/she will have to pay a fee, which can be divided between the service provider and the highest bidder.

Registrars have at least two advantages over VeriSign:

  1. They can potentially drive VeriSign out of the business it is proposing, since they are involved with a process that precedes the REDEMPTION PERIOD. Thus, if registrars create a service similar to the one proposed above,  there will be no demand for the downstream services of WLS.

  2.  They can provide a market for other major extensions, especially in the country domain names (ccTLDs), which are becoming an integral part of a company’s digital-brand-protection arsenal. Moreover, maintaining and monitoring ccTLDs is cumbersome, making the role of such registrars even more valuable.

One disadvantage of these service providers is their inability to generate any revenue from fees on domain names that have a very small chance of ever expiring. There may be some people who would pay $24 for a chance at owning the name IBM.com under the WLS fee structure, but success in gaining the name is unlikely. Under the auction system, payment would be conditional on delivery of the product.