Millions of Australian domain name owners ‘ripped off’ – The Sydney Morning Herald

Domain name owners  say the owners of Australia’s more than three million domain names are being ripped off by the organisation governing domain names.

The .au Domain Administration Authority is the body that governs and distributes all .au domain names which includes .com.au and .net.au and domain name users claim as a result of auDA’s actions the wholesale price paid for domain names is about double what it should be.  

Josh Rowe is one of several who've forced change at .auDA. Josh Rowe is one of several who’ve forced change at .auDA. 

The self regulatory body has around 250 members all of whom are businesses or individuals involved in the Australian domain name industry and critics say this has resulted in significant conflicts of interest at auDA. 

Overcharging claims

Sean Fogarty is a website owner, builder and reseller and auDA member who says he and many other small business owners are being overcharged. 

Jim Stewart is the founder of StewArt Media. Jim Stewart is the founder of StewArt Media. Photo: Supplied

The wholesale price of a com.au domain name is $14.95 every two years with domain names then sold by retailers such as Melbourne IT which charges $153 every two years for a com.au domain name.

Fogarty says the price should be at least half this. 

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“Everyone in Australia has been ripped off for too long,” he says. “The contracted party, which is AusRegistry, has been on the auDA board and has done everything possible to keep things the way they are. AusRegistry has not reduced its wholesale price as was the condition of its contract renewal in 2008. They are making massive profits for it for their own interest.”  

When AusRegistry’s contract was renewed in 2008 AusRegistry’s media statement documented “new pricing that sees a drop in AusRegistry’s wholesale price to $14 (for a two-year licence) for .com.au and .net.au domains and further drops as volumes increase.”

Adrian Kinderis says more volume means increased costs for AusRegistry. Adrian Kinderis says more volume means increased costs for AusRegistry. Photo: Supplied

However this price decrease has not eventuated with AusRegistry’s prices staying stable despite large increases in volume. 

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“It is evident that AusRegistry and several parties have continued to profit above and beyond fair market pricing competition and extreme profit levels with little if any real competitor pricing modelling for too long,” Fogarty says. “Domain name consumers have been basically overcharged since 2008.”

Governance concerns

Fogarty says pricing has been driven up by the conflicting interests that result from having members of AusRegistry as members of the auDA board.

When you show two graphs on a page with one going up in terms of volume and the other staying stable in terms of cost I agree it would be natural to say these guys are price gouging and it’s a natural monopoly and they’re walking out with wads of cash in their pockets.

Adrina Kinderis

“[auDA]’s been stacked at the board level by people with conflicts of interest who have made hundreds of millions of dollars out of this,” he says.

auDA has also been dogged by governance concerns, with chair Stuart Benjamin resigning last week ahead of an extraordinary general meeting that was to consider a vote of no confidence in him. 

As reported by Fairfax earlier this week, auDA members, led by former auDA board member Josh Rowe, objected to the removal of board minutes from the organisation’s website, the introduction of a code of conduct that sought to allow the board to judge how members were publicly representing the organisation and a push by auDA to in-house its previously outsourced registry, which some said was the organisation trying to be both a regulator and wholesaler of domain names

“Over the last year it has just been an ongoing mess of policy changes,” Fogarty says.  

Move to introduce the direct .au domain name

auDA is also under fire for pushing to introduce a direct .au domain name to Australia within the next year.

Jim Stewart, owns digital marketing company StewArt Media and says more domain owners need to be worried about the role auDa plays in this.

Stewart is particularly concerned about auDa’s push to the .au domain name, which he sees as a money grab that will devalue existing domain names. 

“The move to direct .au registrations will have a significant impact on a lot of businesses even if it is just lessening the value of their assets,” Stewart says. “Most businesses will just go and register [.au] and shelve it and that will be just another fee they will have to pay so a competitor won’t get it. The .com.au is devalued as there is another domain in the market. There is 20 years in building up the .com.au brand and now it’s about to get trashed. The only winners out of this are the registrars.”

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‘Walking out with wads of cash’

Cameron Boardman, chief executive of auDA, defended the charges levied by the organisation.

“These agreements are four-year agreements and the agreement that was executed in 2010 had a volume-based reduction,” he says. “This agreement expired on 30 June 2014.  A new agreement was put in place in October 2013 for the period July 2014 to July 2018.  The wholesale price paid for domain names is internationally competitive, however, we are currently in the middle of a tender to test the market.” 

Adrian Kinderis, chief executive of AusRegistry, claims an increase in volume in domain names brings with it an increase in costs for service, marketing and security.  

Kinderis says the price for a .au domain name is cheaper than .com, which is “the most popular domain space on the planet” and it is “dangerous” to compare wholesale rates. 

“When you show two graphs on a page with one going up in terms of volume and the other staying stable in terms of cost I agree it would be natural to say these guys are price gouging and it’s a natural monopoly and they’re walking out with wads of cash in their pockets,” he says. “But we are wanting to offer a service that is world class and it has been 15 years without having a DNS outage and keeping .au at the forefront in the global industry.” 

Kinderis says there is value in charging more for domain names. 

“No one wants to see, quite frankly, domain names commoditised when they become $1 or $2, they are a service that we are offering. With the advent of the new domain names you see different business model with charges from $1 to $1000. There is no one set price that a domain name should be. What you see with the cheaper domain names is they get filled  with junk. The people with spam and pirate websites all participate in the cheaper domain names. A healthy price keeps out those that want to do ill in the domain name space.” 

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