GOODIES TO GO! ™
August 2, 1999 — Newsletter #39

Greetings, Weekend Silicon Warriors…

I actually had a pleasant experience installing new hardware
on my new computer today. I gave my old computer to my
father, along with my video capture and scanning cards, each
of which had taken me forever and a day to install,
configure, configure again (after a call to the manufacturer),
and finally get to work. This morning I received my USB
scanner and video capture cord (no card — all the hardware
was in the cord). Both were installed and working in under a
half hour. My wife, who usually leaves the house when I
install new hardware, was impressed. Me, too.

Did you hear…

>Hewlett-Packard won a lawsuit against Nu-kote International
Inc. They make ink refills for printers. A jury in San Jose,
CA, agreed with HP that the Nu-kote refills infringed on
copyright and patents. HP gets $2 million for their troubles.
In an interesting side note, the same jury decided that HP
has a monopoly on ink refills for their printers. But, in
line with the Sherman Act, did not get that monopoly through
predatory business practices… so it’s okay.

>Microsoft is going ahead with its plans to offer on-line
e-postage. For about $50, you get a device that hooks to
your computer and allows you to use a scale and print
postage downloaded from the USPS and Microsoft. The postage
equipment is said to be created specifically to work in
Microsoft software. Anyone else see this as being a real
debacle?

>On the “the-Web-is-worth-billions-but-no-one-is-making-any-
money” front, Microsoft is revamping their presence on the
Web. President Steve Ballmer said the company will use their
HotMail and MSN messenger services to get people to search
and shop on Microsoft services. Analysts are suggesting
Microsoft hire an Internet manager instead of trying to do
things in-house.

Now, on to day’s topic…

Have you purchased a domain name in the past five years or
so? Yes? Then you got it from Network Solutions, Inc. (NSI).
The Virginia-based Company has been doling out the .com,
.net, and .org domains since 1992.

Well, now there’s a concern and it all comes down to, what
else, money. Here’s the basic premise:

NSI appears to have a monopoly on domain names. They are
responsible for over five million names with the three most
popular suffixes. NSI is also the holder of the “registry”
(the master list of all of the domain names in the world).
In order for your domain to be recognized by the world, you
have to get it on this list. Thus you go to the person with
the registry. That’s NSI.

Now it appears that the U.S. Commerce Department is upset.
The Clinton administration has said it will end its deal
with NSI unless the company comes to an agreement with a
non-profit organization to take over tasks, and compete, in
the Internet domain market.

The non-profit organization in question is ICANN (Internet
Corporation for Assigned Names and Numbers). Guess who is
its main backer? The U.S. Government. The Department of
Commerce, to be exact.

As I understand it, ICANN itself would not be registering
names per se, but would rather allow and police other
companies to do the task. In a story dated April 23, 1999,
ICANN announced they had chosen five companies to compete
in a test of a new, shared system for registering the domain
names. In a story dated July 8, ICANN said 15 registration
companies had been approved.

That’s good, right? Not so far. ICANN is in big financial
trouble. The company started with a little less than a half
million dollars and is currently in the hole for a million.

ICANN furthered its troubles by attempting to enforce a $1
per domain fee. People balked, of course, asking why a
non-profit organization would charge a fee, be it one dollar
or fifty. In addition, ICANN thought about asking for money
from the companies that would provide the services of
registering domain names. NSI flatly refused and that was
dropped.

It’s that buck-a-name thing that keeps jumping up.

So, now it gets hazy. PSINet was one of the original
supporters of ICANN, donating $10,000 in an effort to start
“a new era of competition” with “reduced involvement from
government.” That makes sense.

But then the government made the statement that ICANN would
need to drop their $1 fee in order to receive government
funding.

Huh? Government funding?

I’m confused. NSI might be dropped from a government contract
in favor of ICANN, a non-profit company that wants to charge
a fee, that must be dropped in order to get government funding
in an effort to lessen government involvement?

Yes, I know a lot of non-profit groups receive government
funding, but I was under the impression that ICANN would be
supported by the Internet community rather than by an entity
that seems to have a real stake in its success.

The ICANN saga just seems to be getting worse. Now
congressional hearings are being called for (and carried out)
to look into ICANN’s company documents, e-mails, and phone
records. An e-mail has surfaced claiming that ICANN’s lawyer,
Joe Simms, urged a Justice Department lawyer to “increase the
level of pressure” on government officials who are in charge
of getting NSI to work with ICANN.

Still, the biggest concern, in my mind, is the registry. I
believe that He Who Owns The Lists Runs The Show. Even the
most ardent domain name competition advocate has to agree
that there can only be one registry list. If there are
multiple lists, then it is only a matter of time before two
people buy the same domain name due to multiple lists. Not
good. That’s a lawsuit and a half right there.

In a congressional sub-committee hearing, the head of NSI,
Jim Rutt, said the registry is not the government’s property
to do with as it may. He claimed that the registry belonged
to NSI and it was their decision what would be done with it.

Isn’t this fun?

What this all comes down to is money. Depending on your view
of the argument, (1) NSI is greedy and wants to keep their
$35 dollar-a-year fee without having to lower it because of
competition, (2) the Web should be completely free, (3) or
it’s another version of money good… money bad.

Here’s where I usually get into a lot of trouble with some
readers. I’m for profit. The Web is a wonderful thing, but
the reality of it is that it costs money to run. No, I’m not
for one or two people taking in jillions, but I am for people
making money. Be honest. Would you work for free? Would you
take a pay raise if you had the opportunity? I love to teach,
but I can’t do it for free. I have a mortgage and a light
bill.

The concept of ICANN is a noble one. A central place where
multiple domain companies can concentrate their technology
in order to create a domain market where supply and demand
would set prices.

Would prices drop? Of course. One of the many competing
companies would undercut the other, and then another would
undercut them until a lower price was reached. Still, there
is a basement to the price, a point at which it cannot go
any lower. The companies who will compete for the domain
name market must make a profit. There’s that word again:
Profit. It’s what they use to pay their employees.

Who is going to pay the ICANN employees? Maybe it’s time to
stop the non-profit mode of thinking. It’s been a year and
the company is almost belly-up. It ain’t working.

Here’s a thought: Why not set up ICANN as a profit-making
center? I say install the $5000 fee. Install the $1 fee.
Let ICANN make money apart from any reliance on funding from
donors. Let their employees get paid. Let the profit go to
upgrading systems.

If companies want to jump into the domain name offering
business, then they pay the fee. This is common in business.
No one opens a McDonalds on his or her own. There’s a
franchise fee that has to be paid to display the Golden
Arches. You want to be in the domain name game, prove you
can handle the job, and then pay the fee to get into
business.

The result to you and me is the same. We see prices for
domains drop, but we see it in an environment where the hub
of all the buying activity is financially stable. If ICANN
is given the go-ahead as a non-profit, what happens when
this month’s donors don’t come through? A Net-athon? Will
we see PBS-style programming where you get a tote bag for
a donation?

Domain competition will probably settle the price of a name
down around $19.95. That seems to be the benchmark for
Internet access these days. So you, the consumer, get the
domain name for a lower price. ICANN gets a buck and the
company that provided you with the name gets a profit.

It seems like a win-win to me. Why must we get caught up in
the hub being non-profit? That spells trouble. The signs are
already there.

But after all of this, when all is said and done, the power
still belongs to whomever owns the registry. The hub must
have access or ownership of the registry. Without it, the
hub will probably be forced to pay a fee for access. Non-
profit or not, donors or not, that fee will need to be paid.

Does the U.S. government feel they own the registry and can
take it away from NSI? It appears so. NSI says otherwise.

Yes, Virginia, there is an Internet Inc. We just don’t know
who it is quite yet.

>>>>>>>>>>>>>>>>>

And that’s that…

Thanks again for reading. It’s always great to write something
you know people will read (and hopefully enjoy).

Joe Burns, Ph.D.

And Remember: What number-one selling song has the oldest
lyrics? The Byrds’, “Turn Turn, Turn.” Most of the text
comes from the Bible’s book of Ecclesiastes.