New gTLDs could cost more than $300,000, with even more shocking prices

According to an ICANN analysis released this morning at a meeting in Kigali, Rwanda, the cost of a basic application for a new gTLD could be in excess of US$300,000.

According to the latest estimates, each gTLD could cost between $208,000 and $293,000, but this does not include mandatory fees that have yet to be calculated, which could total “tens of millions of dollars”.

ICANN blamed inflation for much of the increase in application fees in 2012, when they were $185,000 at the time. The staff said that the 2026 application fee could actually be lower if you take into account a 44 percent increase due to 14 years of inflation.

Such a broad range is provided because ICANN still cannot accurately predict how many applications it will receive. The program operates on a cost-recovery basis, and ICANN has budgeted $70 million in expenses before the application window opens.

It could lose tens of millions of dollars if it receives only 500 applications, even if the application fee is high. With an application fee of $242,000, ICANN would need 1,000 applications to recoup its costs, staff said at today's ICANN 80 meeting.

The number of applications in 2012 was 1,930, but the need in 2026 will depend in large part on how many desirable strings are not yet licensed, especially in non-English languages and non-Latin characters, and how enthusiastic brand owners are about the dot-branding concept (or defensively registering their dot-brands).

The major unknown not included in the latest estimate is the cost of implementing the recommendations of the Second Name Conflict Analysis Project, which in May required all gTLDs to be tested in real time in the DNS before being granted to applicant registrars.

Staff indicated that the cost of each NCAP2 recommendation could total between “thousands” and “tens of millions of dollars” and that these costs would be spread across all applicants. Scribbled on the back of the envelope, it seems to me that this could easily push the maximum fee up to $300,000 or more.

The good news is that ICANN already expects to return some of the application fees if it receives a large number of applications and recovers its costs. For example, if the fee is $220,000 and the number of applications is 2,000, then $35,000 per applicant could be returned.

But the rays of sunshine weren't enough to quell the concerns of community members in a Kigali conference room today, some of whom argued with Chief Financial Officer Xavier Calvez and new gTLD program leader Marika Konings about their calculations.

Registered service providers are already outraged by the dramatic increase in RSP program assessment fees announced last month.

One thing that seems uncontroversial is that the high fees will scare off some applicants, which means the cost burden will be borne by fewer people, which means the fees need to be high indeed; a self-fulfilling prophecy.

Source: domainincite