In a move that could redefine the landscape of the internet, VeriSign, the global leader in domain name registry services, announced a 7% price increase for .com domains in February 2023. The hike was scheduled effect on September 1, 2023, and comes after a green light from regulators allowing VeriSign to increase prices by 7% per annum over a six-year period.
A Virtual Monopoly
VeriSign essentially holds a virtual monopoly over the registration and management of .com and .net top-level domains (TLDs), the most popular domain extensions globally.
This dominance provides VeriSign with a unique advantage, shielding it from competition and ensuring a steady revenue stream.
Screenshot of VeriSign website.
VeriSign and ICANN: A History of Agreements and Litigations
VeriSign's authority to manage .com and .net TLDs is not without its legal complexities. The company's relationship with the Internet Corporation for Assigned Names and Numbers (ICANN), the nonprofit organization responsible for coordinating the maintenance and procedures of several databases related to domain names, has been fraught with litigation and agreements over the years.
In the early 2000s, ICANN and VeriSign clashed in court over the latter's SiteFinder service, which redirected mistyped domain names to a VeriSign search page. The lawsuit was eventually settled, but it set the stage for a series of legal agreements that would allow VeriSign to retain its control over .com and .net TLDs, albeit under stricter regulations.
Subsequent renewals of the agreement between ICANN and VeriSign have often been met with public scrutiny, given the monopolistic nature of VeriSign's business. However, these renewals have also included clauses that allow for price increases, such as the one announced for September 2023.
Learn About The History of ICANN
The Financial Outlook for Verisign (Why This Matters to Investors)
The announcement was expected to have significant implications for VeriSign's stock performance (VRSN), which closed at $205.15 in the trading session that ended on September 1st, 2023, marking a -1.27% move from the previous day.
Investors are keenly watching the impact of the price hike on VeriSign's next earnings report, where analysts expect increased earnings and year-over-year growth.
The Takeaway (Why This Matters to Website Domain Owners)
The 7% price increase for .com domains is a double-edged sword. While it strengthens VeriSign's revenue outlook, it also puts the spotlight back on the company's quasi-monopolistic control over critical internet infrastructure.
Now that the September 1st, 2023 price increase deadline is upon us, all eyes will be on how this price adjustment affects both the internet ecosystem and VeriSign's financials... and our wallets.