ICANN’s Domain Name Tax on .Jobs and .Travel

I missed this before—perhaps I wasn’t the only one. ICANN has repeatedly attempted to impose a “tax” on domain names. This was first proposed back in 1999 and again at the end of 2004. Now, at the end of March, we learned that ICANN is charging a tax of $2 per year on each SLD in the .travel and .jobs TLDs. The expectation is that some fee will be levied against other TLDs under ICANN’s administration as the applicable agreements come up for renewal/renegotiation.

This tax, of course, raises some serious questions:

· Where’s the money going to go? More money in ICANN’s pocket means two things: (1) more flexibility for ICANN to do more ill-advised things (a propensity they’ve amply illustrated while operating on a shoestring budget), and (2) a greater pot of money for those interested in ICANN governance to fight over.

· What procedural limits are there on ICANN’s ability to impose new taxes or raise existing ones? Who’s watching the watchman? “The power to tax involves the power to destroy.” John Marshall, McCulloch v. Maryland (1819).

· As ICANN sets a minimum floor on domain name pricing (at minimum, to cover the flat ICANN tax), what will this do to the market for domain names? In general, domain name pricing has been dropping dramatically; now there may be a countervailing need to raise prices. Price increases in domain names put significant scrutiny on the value of domain names, a value that has arguably been slipping throughout this decade as more action moves to the search engines.