ICANN raises prices for the first time in a decade, increasing costs for both registrars and users

For more than a decade, ICANN's registrar fee structure has remained stable. However, all that changed this week.

On July 22, ICANN announced that registrars voted to approve a price increase proposal, which will bring in an additional $4.6 million in revenue each year from this fee. This is the first registrar fee increase since more than a decade ago, and although it may seem small, it may set off a chain reaction in the entire domain name ecosystem.

Who is paying?

The price increase consists of two parts: one is that the "floating fee" shared equally among registrars will increase from $3.42 million per year to $3.8 million; the other is that the fee for each domain name transaction will increase from $0.18 to $0.20. This $0.02 is often called the "ICANN tax", which is paid by the registrar, but it is likely to be quietly reflected when the end user pays.

Small and medium-sized registrars can still get a two-thirds discount, but for larger service providers, this is a significant cost adjustment. Although the fixed fee of $4,000 per certification remains unchanged, the overall burden is obviously rising.

Why now?

The reasons given by ICANN include: inflationary pressure, slowing domain name growth, and market volatility after the COVID-19 pandemic. In fact, after a brief surge in 2020, domain name registrations have cooled significantly in the past two years, putting pressure on ICANN's budget.

The price increase is also seen as preparing for the next round of gTLD (new top-level domain) applications in advance. ICANN revealed this year that the next round of new top-level domain applications will be opened as early as 2026, which will require more operational resources.

Will investors and users feel it?

Although $0.02 sounds insignificant, for bulk registrants and domain name investors, this "annual payment" fee is not small in total. More importantly, this may be a signal that the domain name industry is entering a period of rising costs.

Under the business logic of "the wool comes from the sheep", end customers, investors and even bulk holders may face increasingly higher registration and renewal costs in the future. And the pricing strategy of registrars may gradually move towards "high quality and high price".