November 30, 2012, 3:17 PM

No inflation ahead in dot-com web addresses

VeriSign’s renewed contract with the Commerce Department bars price hikes to 2018.

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The U.S. Department of Commerce has renewed VeriSign Inc.’s contract to be a registrar for some of the most important top-level web domain names, including those for web addresses that end in .com, .net, .gov., .tv, .name, .cc and .jobs. The contract extension is for six years, VeriSign announced today. A top-level domain is the term that follows the final period in a web address, such as .com, .org and .gov.

However, VeriSign will not be allowed to change the price of a .com web address from $7.85 per year through 2018, the Commerce Department stipulated, unless a petition and review determines that VeriSign no longer has “market power,” VeriSign says. Antitrust laws allow the government to limit price increases by companies that dominate a market. Prior to the agreement, VeriSign had planned for four price increases of up to 7% over the six-year term.

“Today, .com is the heart of e-commerce here in the United States, so predictable costs are great news for those businesses,” says Elisa Cooper, director of product marketing at online brand protection agency MarkMonitor. “That said, as the Internet landscape begins to change with the launch of new generic top-level domains in 2013, e-commerce professionals will have top-level domains other than .com to consider.  Over time, the effect of this decision may have less impact.”

There are now 21 top-level domains, and 250 country code domains such as .uk, .fr and .au. Nonprofit organization the Internet Corporation for Assigned Names and Numbers, or ICANN, is overseeing a process that will allow businesses and organizations to apply to purchase new top-level domains, for example .store, .product or .johndoe. Retailers including Amazon.com Inc. and Google Inc. have already applied for dozens of new domains apiece.

“This is an important event that provides certainty and sets a clear direction for the company,” says Jim Bidzos, executive chairman, president and CEO of VeriSign. Although some analysts on a conference call with the company this morning expressed concern about the .com domain’s price cap, which limits VeriSign’s potential revenue growth, Bidzos says the contract still positions VeriSign as a leader in Internet domain registration and infrastructure services.

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