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.

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.

| 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.

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?

I work primarily with European ccTLDs and it is the same story
everywhere, even in countries where the retail cost is <$5 per year.
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
whether they want it or not. (I have 2 .de domains I never use just
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.

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. 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. Then you'd
end up with an exhausted domain supply, with auDA and AusRegistry and
the registrars running all the way to the bank. You'll then have the
.com situation where all practical domain names are long gone.

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

kim