[ this is a somewhat lenghty response ]

On Mon, May 17, 2004 at 02:33:06PM +0800, Kim Davies wrote:
> Quoting Anand Kumria on Monday May 17, 2004:
> | 
> | So, fundamentally, why is it that .au domains are so expensive? I mean
> | AusRegistry applies a 260% average mark-up before on-selling them. I'm
> | not sure what other kinds of businesses you've been involved with but
> | most people are lucky to get away with 30%.
> 
> I can't agree with this line of logic. It is not a 260% markup. You
> can't compare it to a "resale", where a wholesaler gives someone a
> product, they add their bit, and resell it.

I'm not privy to the agreement between auDA and AusRegistry but you seem
to be saying that the AusRegsitry prices are what it (the agreement)
stipulates.

> AusRegistry operates the domain systems it does under contract from
> auDA, and as part of that it must pay auDA a sum. auDA is not creating a
> saleable product in itself, but runs policy.
> 
> It is more akin to television stations buying broadcast licences from
> the government. You can't argue that the television stations are just
> adding "their markup" to the government's product. I know it is a far
> from ideal comparison but it is more true than what you are saying.

I'm not so sure, you make the point later on that many people envisage a
multi-registry .au system. Do you mean many parties competing at the
AusRegsitry level? If so, then I think the markup I put forward is
meaningful.

> | In competitive environments generally 15-20% is common. Anyway back to
> | the question I posed earlier (why is .au so expensive). I believe this
> | is the result of auDA believing that domain names are price inelastic
> | (i.e. they are necessary for every Australian entity, so they'll pay
> | whatever price).
> 
> I don't think auDA believes such a thing.
> 
> A tender was held to operate 5 TLDs for 4 years. AusRegistry won with
> its bid to run all five. Price was a factor but so was technical
> competence and many other factors.

As an aside, I always wondered how technical competence was evaluated
considernig this was the first time for .au

> I would hope now that the market has matured somewhat, we will have
> more competitive bids for the next four years when it is retendered. I
> would hope the market dynamics will result in whomever wins providing
> the service for a lower price. Bear in mind that part of the cost of
> introducing the new regime in 2002 was laying down the new industry
> framework. That is a once-off cost which has now been borne.
> 
> | However a lot of organisations are realising just how expensive .au is
> | and are making use of other gTLDs (e.g. cityrail.info,
> | sydneyhomeshow.com, etc.) instead. With those kinds of URLs getting
> | widespread coverage and being heavily promoted I believe you'll find
> | fewer and fewer people who need to be told '.com but not au'.
> 
> I would really like to know if those organisations really think that.
> It's easy to say the reason is purely price, simply because there are
> for .com's than .au's, and .com's cost less than .au. But that is
> not a scientific connection, and my gut feeling is it is not true.
> Do you really think CityRail is moaning over an approximately $20/yr
> differential in cost?

Cityrail probably isn't. Those were just two examples which I thought
would be widely known. I'm sure the situation with smaller business is
that they do take the cost into more consideration than people here
imagine.

> There is basically one anomoly with Germany (~8 million domains), but
> that has less to do with price, than the fact the ISP industry that
> basically gives a domains as part of their products to almost everyone

Huh? That has everything to do with price. If domains were cheap enough
to give out to customers, don't you think ISPs in Australia would? Not
only would it "add value" it also raise the profiles of .au domains.

> because I have some services with an ISP and they came with it). Even
> then, outside the US, Germany has the highest takeup of gTLDs anyway -
> which blows your theory out of the water.

I'm not sure where you got this data from but that is an interesting
tidbit.

> There is also a certain media-generated mindset with .com that is
> nothing to do with price, just history. Key global companies that are
> in the public's eye use .com domains - not because they shun .au, but
> just a result of their global nature. This is added to the fact that
> companies like Telstra and ANZ were using .com's in the last 90's
> as their public addresses. Again, I would say it had little do with
> price (In fact, both companies had the .com.au equivelents), yet the
> neon signs they were putting on the sides of buildings were the .com
> addresses. This, I think, helps shape a certain subconcious public
> perception regarding .com's.
> 
> | Anyway, I'm down to three domains stuck in .au and since I've got them
> | for another 2 years, I'll be able to transition them away fairly slowly.
> | However if I was involved with the .au domain industry I'd seriously be
> | asking why auDA/AusRegistry/whoever are trading short-term profit for
> | long-term viability.
> 
> I would argue that auDA has clearly taken long-term viability over
> short-term profit. 

I, obviously, disagree. Long-term viability is about raising the profile
of .au domains. I'd rather the various parties had sacrificied
short-term profit for long-term gain.

> A short-term profit motive would see policy thown
> away and a free-for-all situation for domains, plus devolution of the
> tiered structure allowing registrations in the second level. 

Well perhaps in your short-term oriented place. For me a short-term
profit motive is extracting as much as possible from your customers.
That, to me, gives them an incentive to look at other alternatives.

> Then you'd end up with an exhausted domain supply, with auDA and 
> AusRegistry and the registrars running all the way to the bank. 

I'm sure some would argue that is/has occured. Which is why I see the
current situation arising from short-term concerns.

> Whilst I am as keen as anyone to see prices drop, I don't agree that .au
> is a failure due to pricing.

I believe it has been a significant factor.

Regards,
Anand

-- 
 `` All actions take place in time by the interweaving of the 
 forces of Nature; but the man lost in selfish delusion thinks 
 that he himself is the actor.'' 
        Lord Krishna to Arjuna in _The Bhagavad Gita_