Analysis of how Organic Names would affect competition in the provision of registration services at both the registry and registrar level.

Organic Names stance in the marketplace will be of a new, simple, unaffiliated registry strong enough to compete with the existing registries and with a wealth of experience of commercial and not-for-profit operations and the domain market.

Organic Names believes that a registry is effectively a wholesaler and registrars are effectively retailers. As is traditional with such a relationship Organic Names will not seek to compete with its channel of registrars, either in the retail sale of domain names or in the provision of other services which might compete with registrars.

Subject to ICANN's consent, Organic Names will provide a "retail sale of last resort" facility at a high price (agreed with ICANN) for those who might wish not to register through a registrar for commercial competition reasons and Organic Names may sell other services through its registrar channel where such services benefit from or are dependant upon a centralised system and thus cannot be effectively provided by a single registrar.

Organic Names has made no prohibitions on suppliers or potential suppliers to Organic Names in working with any other bidders for .org.

Organic Names a for-profit company, encouraging competition

It is often suggested that registries, especially gTLD registries, should be not-for-profit. This can be based on the misplaced perception of such registries as monopolies.

The wide range of gTLDs and ccTLDs gives the lie to this perception. Both registrants, and thus registrars, have substantial choice.

Those of us who have run large registries over the last few years have seen the boom time when despite our best efforts the not-for-profit organisations have made huge surpluses. Organic Names has also seen how quickly the market can change.

The share price of VeriSign has plummeted from over $200 to about $10. Not-for-profit Registries such as Nominet UK have had to change their business models as activity has swung from registrations to renewals and the winners of the new gTLDs have not lived up to the promise of their business plans.

Organic Names has consulted and had advice from many quarters. The business plans proposed for .org have fallen into five categories:

1. A true not-for-profit registry
2. A profitable registry
3. A sham not-for-profit registry
4. A not-for-profit registry which owns directly or indirectly, or is otherwise affiliated with, the main registrar base.
5. A for-profit registry owned by a registrar, or several registrars.

Organic Names believes that type 3, where, for instance, an apparently not-for-profit entity entering into a lucrative long term subcontract with a for-profit entity, is a cynical exercise and both insults the intelligence of the selectors, and is not a proper use for the $5 million VeriSign endowment, whose appropriation it suspects may be a substantial motivation for some applicants.

Type 4 is a model where undesirable interactions between the registry and its customers will cause the registry to always act to favour its subsidiaries.

Type 5 registries suffer from a similar problem to type 4 in that there will always be a pressure to favour ones own shareholders and/or directors companies.

Organic Names does not believe that a plain vanilla not-for-profit registry (type 1), will prosper and remain stable, nor that there is any incentive for its operators to develop it, nor that there are sufficient economic drivers to encourage such registries to minimise costs and maximise efficiency, and drive down costs to their registrars, and hence, ultimately, registrants. The .org registry will have to survive in a world where there will be commercial competition and a not-for-profit specialist registry will lose staff, morale and direction.

Organic Names has chosen a for-profit company therefore because it provides the most stable, commercially solid, straightforward and honest model. Organic Names does not think it precludes it from using its revenues to benefit the Internet, and hopefully such investments will also bring benefit to the registry.

Competition at the registry level A new gTLD registry

The gTLD registry market is currently dominated by a single operator, VeriSign. Whilst new gTLDs have been awarded to other registries, none of these has met their own growth forecasts, and each has had their own unique problems, on which it is hardly necessary to dwell in this document.

However, this not only serves to underline the importance of promoting further competition at the registry level, but also the importance of ensuring that such competition is independent. ICANN would produce far more effective competition by introducing independent market players, as opposed to awarding the contract to existing registries or their consortia and thus attempting to prop up competitors whose business models have proved less than entirely successful, a strategy which in any case may risk subsequent embarrassment to ICANN.

Organic Names currently operates no gTLD registries. By adding an independent gTLD operator, ICANN will truly enhance competition between gTLD registries.

Organic Names is independent of all existing gTLD registries. Neither Organic Names, nor its bid partner CentralNic, nor any of their shareholders or directors, holds any material interest in an existing gTLD registry.

In awarding the contract to Organic Names, ICANN would thus be making a clear and transparent improvement in competition in the provision of registration services at the registry level, when compared to the current incumbent (a near monopolist registry), and other bidders, many of whom may be owned, part owned, or joint ventures with one or more existing gTLD registries.

Competition at the Registrar level Independence of Registrars

Organic Names has found that there is a great deal of interlocking ownership of registries and registrars. The power and reach of an organisation like VeriSign is such that it is very difficult for it to completely divest itself of .org. There is a danger that some bids will merely move ownership of the name to another entity in which VeriSign has a significant interest.

Organic Names is independent of registrars. Neither Organic Names, nor its bid partner CentralNic, nor any of their shareholders or directors, holds any material interest in any ICANN accredited registrar.

It is also noted that most of the profits from domain name registration are generated at registrar level and here ownership of both registry and registrars offers opportunities for distorting the market.

It is these considerations which have lead to the creation of Organic Names, a well-funded company with a wealth of expertise in registry operations but with no baggage of subsidiaries, shareholdings or other relationships with associated registrar players. Organic Names is positioned to be a safe pair of hands which clearly and honestly can run .org as a stand-alone entity.

In awarding the contract to Organic Names, ICANN would thus be making a clear and transparent improvement in competition in the provision of registration services at the registrar level, when compared to the current incumbent (a large registrar), and other bidders.

Removing Barriers to Entry in the Registrar Market

Organic Names aims to use a two-pronged approach to remove barriers to entry in the registrar market:

1. Whilst the ICANN accredited registrar system has been, in general terms, a success, there is a perception that it may have acted to exclude small community registrars in developing countries. Organic Names will, subject to ICANN's agreement, investigate opening up a mechanism for such registrars to use Organic Names registry services.
2. Organic Names believes that the new registry will start operations in a world where other languages and character sets will become more common on the Internet. This will be one of the most significant areas of change over the next decade. Organic Names aim is to widen the registrar base and enable smaller registrars across the world to register .org domains which will act as a conduit to a much greater support of foreign languages. To serve this multi-lingual registrar base, Organic Names will put in place a call centre operation to cover the worlds major languages.

Organic Names sees both these policies as likely to improve competition at the registrar level, and thus highly beneficial for all users of .org.

Organic Names is a newly formed company to run .org and does not at present run a DNS registry with over 500,000 registered names. However, its bid partner CentralNic, which will provide technical and registry services to Organic Names, currently runs a registry with over 1.5 million names.

The directors and advisors and staff of Organic Names include the senior management of Nominet UK which runs a register in excess of 3.5 million domain names.

No affiliations of any kind exist between Organic Names or CentralNic, or their respective directors or shareholders, and any operator of a DNS registry having more than 500,000 registered names, other than as follows:

1. Steve Dyer is a director and Shareholder of Organic Names, and a director and shareholder of CentralNic, and CentralNic is a subcontractor to Organic Names. CentralNic operates a DNS registry in excess of 1,500,000 names, and more background on CentralNic is given elsewhere in this document.
2. Alex Bligh, and Steve Dyer, directors and shareholders of Organic Names, are each directors of Nominet UK (a company limited by guarantee), members of that company, and members of its Policy Advisory Board. Nominet UK operates a registry in excess of 3,500,000 names, and more background on Nominet UK is given elsewhere in this document.