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Sep 27, 2004
Comments Off on of auctions and the prius

of auctions and the prius

This is the longer response I promised. I will try and deal with three things. First, why we should be thinking about the way the market should be, not what the rules are. Second, I want to share what I believe to be a useful analogy from the real world. Third, I would like to briefly touch on why discussing form (changes to agreements, EDDP) is not important here and now.

The market for expired names is changing. When Ross posted our paper earlier this month it set off a frenzy of folks trying to figure out where things would evolve to and what their place in that new framework would be. Good. The old one wasn’t working. Not for everyday registrants and that is who we should all be thinking about. Not for Verisign and not for ICANN. Those who say that either of them like the status quo really do not have a clue.

These changes will be significant. Every registrar that I speak to is planning their next steps. The changes will be rapid and far reaching. The market for expired domain names will look unrecognizable one year from now. And registrants will be the primary beneficiary if we can help it.

Some discussion about these potential changes has met with disapproval. The guts of the argument made by Robert (and to some extent George) seem to me to be predicated upon an assumption. Robert states this as “domain names that expire do not belong to the registrant, or to Tucows, or to anyone else; they belong to ‘the public'”. But which “public”?

The comment is true only in a narrow sense. However what we are talking about is providing more and better information to registrants prior to their names expiring. This may require some changes in the processes that exist today. Specifically, there are few alternatives to holding some form of auction to determine something of a “fair market value” for domain names.

Those auctions take place today. They simply take place AFTER Robert’s condition is met, that is after the names expire and rights have passed. This is not the result of some careful planning at a policy level but is simply an unintended outcome of a number of other, unrelated, policy decisions.

I want to use an analog from the real world to frame our views on this market. I will tell you about my recent experience buying a car.

Now there are a couple elements to my car buying process that are a little unique. They stem from two things. First, I don’t care much about cars. For me they are a “get me from A to B” kind of thing. Second, I am completely clueless when it comes to repair and maintenance.

Accordingly, I have been a huge fan of “walk away” leases ever since they first came on the scene. They are perfect for me. The car is always new, always under warranty, my monthly cost is completely bound and at the end I just move on to the next one. Fits my needs just right.

One other unique element for me. I hate car shopping. So for my last three cars (in a two car family) I have used a “service”. Essentially I have a Car Service Provider (“CSP” :-)). We simply go online, pick the car we want, including colour and options and they arrange everything from there. I pay $500 above dealer’s invoice and they even arrange the lease. Works just perfectly for me. [ed. note anyone in Ontario wanting more details about the CSP thing contact me offlist]

So what does this have to do with expiring domain names? Well, this year’s experience has been a little unique. My current car, just coming to the end of its lease, is a 2002 Toyota Prius (or “Pious” as I like to call it). At the time the car was new in Canada and was available in very limited quantities. There was no market history for the car, thus the buyback was set without nearly the amount of information that is typical for most cars. No one expected Carmen Diaz to brag about her Prius to Jay Leno in front of a national audience. No one expected oil prices to reach nearly $50/barrel. In short, no one expected the huge demand that now exists for Priuses (Priae? Prium?).

Now the waiting lists for the Prius (I will henceforth avoid the plural at all costs) are huge. Six weeks to six months depending upon where you live. The supply of used ones is extremely small. They are a great car and everyone who has one loves it. In short, I have real value in my buyback.

My lease was with a Credit Union as this was the most favourable option at the time. There were no 0% deals on the Prius. When they sent me the notice letting me know my lease was up they made no mention of the buyback whatsoever other than to set timing around it. If I had chosen to buy a car from another dealer I may or may not have discovered that value. Lucky for me my CSP has been able to help me work through all of the options and all of the puts and takes of dealing with this.

The interesting thing is this. To me, they would have been responsible for this. If I had simply gotten my new Prius (yes a shiny new 2005 is in my future!) and turned in the old one, happy as a clam, only to find out a month later that there had actually been a couple of thousand dollars of value in my buyback I would have been extremely angry.

I would have taken personal responsibility for this in one sense. I knew the rules. It was my responsibility to do the digging. I had every opportunity to exercise the buyback. I wouldn’t have thought them LEGALLY responsible. BUT (and its a big but) I would have been mad and disappointed in my CSP. The relationship would have changed forever. Instead of me singing their praises and referring customers to them on a regular basis I would have never used them again, never mentioned them positively again and may have even spoken negatively about them to other potential customers.

It is not just that it would have been negative. It would have been negative in THE MOST IMPORTANT ASPECT of any service provider relationship. I need to trust them. I need to believe that they are looking out for my interests. That they understand that I am counting on them to help me navigate the world of automobiles, a world for which I have no affinity and a world that I need as part of my life.

Substitute “Internet” or “domain names” for “automobiles” and the above paragraph describes EXACTLY how I believe most of you are viewed by your customers. Your role is to make your customers NOT FEEL STUPID. Your role is to make them comfortable with something that they need but have no affinity for. That is what is at stake here.

And saying that they will never find out what a name they let expire was worth is simply lame. Relying on customer ignorance is not a scalable or sustainable business model.

I do not propose to discuss the many form issues for reasons that should be apparent. The legality of the NSI agreement, of any changes that may be made to our agreements or compliance with the EDDP are not the point of this discussion, at least for me. Those are formalistic and frankly not interesting. It is also worth noting that the big battles in this regard will not be fought on this list, or by this company.

We should all be thinking about what where this market is likely to go, where we think it should go and how we can all best get there. We need to do this in a way that enhances, not detracts from, registrants’ rights.

Registrants, at least ours, should have as much information as they can in dealing with their online assets. Today we think the best way to accomplish this is to provide them with a way to determine fair market value. If we can do this without detracting from their existing rights then we are serving them.

We all need to remind ourselves that domain name policy is an infant and  it needs to constanly evolve if it is to keep up with the market. Our analysis should always start with how things should be at a market level and to try and shape policy to fit that reality.

Perhaps most importantly, no one has yet come up with a set of facts that demonstrates how taking an approach as we have broadly discussed will in any way detract from the rights of registrants. For me the concept of “the public” having some right to expiring names in no way conflicts with a registrants’ right to better information as to the market value of their domain name.

There are thorny edge cases here no doubt (ie. registrants who can’t be located), but they pale in comparison to the mess that is the current state of affairs. Every week someone lets a domain name expire that has a value in excess of $10,000, in fact is bought for that price. Some may view that as the registrants own fault. I think the registrant’s supplier was derilect in their duties. I wonder who the registrant, the CUSTOMER, would agree with?

Jul 27, 2004
Comments Off on rim job

rim job

Another scary number that I was struck by today. Google came out with the pricing for their IPO. There were a raft of articles that talked, at length, about how overpriced it was.

On a price/sales basis it was about the same as the current stock price for Research in Motion.

I know which one I like better and it’s not RIM although I wouldn’t buy either at these prices. Although that is coming from a guy whose stock trades at 1/12th the multiple of price/sales of RIM so I could just be bitter ;-).

Jul 27, 2004
Comments Off on growth is relative

growth is relative

I was struck by an article yesterday (that I can't link to because of a combination of the national post's poor search engine and silly registration policies) that was another of many talking about the M$ no longer being considered a growth stock.

The fascinating number was the growth in revenue for M$ over the last 12 months. $4.5b. Larger than Yahoo or eBay or twice Google! Just the growth.

And this is all before xbox or MSN make a meaningful contribution.

Jun 29, 2004
Comments Off on so little posting…..

so little posting…..

I have been completely inactive (from a blogging perspective) for over two months now. I thoght I would share a couple whiny reasons why.

I may not post much, but I half-post quite often! More like 3/4-post. I then abandon, primarily for three reasons. SEC, competition and employees. Each of these groups causes me to think twice (three times?) before I hit “save” and I trash the post.

I think the only way around it is to just jump back in and try again so here I go. Wish me luck.


Apr 25, 2004
Comments Off on so why did we get together with boardtown?

so why did we get together with boardtown?

Last week we took a big step down a new road with the acquisition of Boardtown, company based in Starkville, Mississippi, whose primary products deal with billing, provisioning and customer care. You are most likely to have heard of their Platypus billing product.

The acquisition itself wasn’t that big relative to our size, but the direction it suggests certainly is. So I thought I would write a bit about why we have done this and why we think it is important.

Why billing?

It is a large problem for our customers. In the course of dealing with customer integration into the OpenSRS platform, and in having to deal with this problem for two service providers myself years ago, we have found that taking and keeping track of payments, provisioning services and managing customer care are significant challenges for service providers, for you guys.

Given the size of most service providers and the competitive nature of the services offered it is essential that these functions be automated and accurate. Problems with them lead directly to support costs and possible customer loss.

For years it has been common for service providers to have numerous customers receiving services without being billed. A quick personal example. My home DSL service, provided by Bell Canada, the largest telco in the country and owner of a multi-million dollar billing system, did not bill me at all from May-January of this year! Because of this they lost me as a customer.

Service Provider 2.0

All of this was problematic in the past, but we are at an inflection point in the competitive environment. Internet usage has reached a point in North America and Europe where growth in users has essentially peaked.

This means that the game has changed. Growth can no longer be expected to come from new customers. It now must come from selling more to existing customers. This is not news, but it may be the most important structural change for service providers for the next 5-10 years and the implications on operations are not yet digested.

The need to offer more services is most often constrained by current billing and provisioning systems. This has been our experience and is shared by others who provide services to service providers. Believe me, I have asked.

Current Market Environment

Today most service providers use inhouse billing solutions. These range in complexity from near-manual systems to relatively complex full-scale billing solutions. They either require much burping and feeding or constrain the ability of the service provider to offer additional services or both.

While sometimes life-threatening, many smaller service providers (here I would say 250-5000 customers) especially, have been able to avoid and ignore this problem. I do not believe this can continue.

At the high end the story isn’t much better. The offerings jump from Platypus and its competitors right up to Portal and others whose customers are rarely happy and who deliver much shelfware.

Besides they are too expensive by a couple of zeros for the vast majority of you guys and you are the ones who are winning competitively.

Why buy Boardtown/Platypus

Their experience allows us to enter this market better and faster. The company has been providing billing and provisioning software to service providers for nearly seven years. We are big believers in experience and subject matter expertise and believe that these people have demonstrated the highest level of knowledge about billing for service providers.

They have a strong reputation with their customers. It seems their customers like them as much as you guys like us and, maybe more importantly, they care as much about their customers as we do about you guys.

It was amazing that this was reinforced even after announcing the deal. I had a number of old Platypus users come out of the woodwork, current employees referencing previous jobs, bankers who had operated service providers years earlier. All of them had positive things to say. All of them had a story about customer service expectations being exceeded. We of all people know how hard it is to please you guys and have you say anything nice about suppliers.

Plus they are good guys. Oh and Mississippi is a bit warmer than Toronto in the winter!

We aren’t talking about product plans at this point, but you all know that I prefer service models to software models and I prefer subscription or monthly pricing to the classic software model of license and support.

We like to tie price to value wherever possible. It is how we like to buy so it should be how we like to sell.

All in, we are very excited about this. We think it can really enhance our ability to help you be better at what you do and to be more competitive. And if we do that than the rest takes care of itself.



I am elliot noss.

for more on me see the google results.

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some of my old blog posts here.

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