We have always been taught that the foundation of economic science is the law of supply and demand. If supply outstrips demand, the price goes down. If there is more demand than supply, then the price goes up. It is consolingly simple, and apparently it is rubbish.
Transferring his own domain name, and managing Father Pitt’s purchase of fatherpitt.com, Dr. Boli had the opportunity to see what domain names are going for these days. The price depends on the suffix. For example, the registrar was selling .com domains for $7.99. (This is the price of initial registration, and it was marked as “on sale”; renewal costs $15.99.) On the other hand, .net costs $10.99.
A very large number of these suffixes are now available, and here are the registration prices quoted for just a few of them:
The price depends on…something. It is a little hard to determine what. But Dr. Boli can state with absolute assurance that it does not depend on supply and demand, because—and this has probably already occurred to the alert reader—the supply is infinite. We do not dig domain names out of rare domain-ore beds found only in war zones. For practical purposes, there is no limit to the number of domains that can be registered with a suffix of .auto, for example—and yet that suffix will cost you $2500.00. If there is any restriction of the supply at all, it would be for .com suffixes, since that suffix has been around since the beginning of the public Internet and has been by far the most popular for a quarter century, so that the very most desirable domain names are already taken. Yet .com is one of the cheap suffixes.
As for demand, it is still true today that the great majority of people looking for a domain name will be looking for a .com domain. Most car dealers, for example, would prefer to have .com even if .auto were the same price. Demand is higher for the cheap suffixes.
Why, then, is there any price difference at all, when the process for registering these domain names must be exactly the same, must take the same amount of electrical power, must cost the same effort (viz. none at all) from the registrar’s staff, must be completely automated in fact? You can ask the Internet this question. And what will the Internet tell you? “The law of supply and demand.”
After explaining that the old-line domain suffixes like .com are regulated, for example, one registrar goes on to explain that the newer suffixes are not. “The wholesalers for these domain names can charge whatever they want for these new web addresses, making them subject to the open market rules of supply-and-demand and resulting in wide price ranges.”
Meaning no disrespect, Dr. Boli believes that this writer is talking through his hat. When the supply is infinite, the law of supply and demand does not apply. Clearly, when our possessions are virtual, supply is taken out of the equation. We are left with only demand—but a demand of a peculiar sort. The only explanation Dr. Boli can come up with is that more expensive domains are more desirable because they are more expensive. To spend money wastefully sends a particular message: “I have money to waste.” If that is the message you wish to send, your competitors will receive it very clearly if you pick one of the absurdly expensive domain suffixes.
If, therefore, you are an ordinary consumer, you may find it useful to examine a list of domain prices. Then if you see a car dealer whose Web address ends in .car, for example, you can be confident that this is a dealer who will overcharge you. You can march right past and stop at the first dealer who keeps her Web presence at a sensible and economical .com address.