Nominet Corporate Governance Changes

Existing structure

Nominet is a member governed company and charges its members an annual £100 fee, with a one time enrollement fee of £400 (all prices exclude VAT, where applicable).

Membership is quite easy to attain because members do not need to demonstrate that they have any particular technical abilities, do not need to have an existing member propose them and do not have to satisfy any other significant criteria in order to be accepted. Membership applications do occasionally get rejected but it is accepted that a legitimate application will unlikely be denied membership.

Membership termination is, aside from as a result of a member resigning,  unheard of. No member has been ejected from the membership and the process to eject a member requires a vote in order to do so by the other members with at least 90% voting in favour to do so.

Voting power of members is directly related to domain names under management ("DUM") but to actually manage domain names one also needs to become a Nominet Registrar Provider, previously known as a tag holder. Becoming a Nominet Registrar Provider (I call them "Registrar Providers" here because it is a less stringent process of accreditation than becoming an ICANN accredited registrar). Nominet do not charge a fee for this.

Nominet Registrar Providers who are also Nominet members receive an allocation of votes at any election, approximately related to the number of domain names they manage on behalf of their customers. A cap exists, is predetermined by the Nominet Board of Directors currently set at 3% for Non Executive Director elections (10% for article changes and 3% for all other resolutions), preventing any member representing more than the respective percentage of the total votes cast in an election even if their DUM greatly exceeds this.

Nominet Registrar Providers who are also Nominet members receive a wholesale discount on the cost of domain names, hence most registrar providers are members and most members are registrar providers. There is very little incentive to become only a Registrar Provider without being a Nominet member unless one wishes to manage just a handful of domain names because domain name renewal costs are much greater to non members. There is also very little incentive to become a Nominet member only because governance power is directly associated to DUM.

Nominet's membership has increased to approximately 2500 members although the vast majority of DUM is managed by under 30 members who are also registrar providers.

Considering a change to the model

The case for considering changes to the Nominet governance model has been raised numerous times but changing the model is not easy or straightforward. In his 2015 report, Sir Michael Lyons indicated

"Nominet should reconsider the link between membership and discounted domain registration fees" (Recommendation 5).

At the time the Board decided to leave this alone given other priorties, however the issue continues to bubble under the surface.

In my opinion a number of resonable arguements exist for suggesting it may be time for Nominet governance and Registrar Service Providers, including the wholesale price discount, were finally inextricably separated. It seems clear to me that the issues surrounding Nominet governance are of secondary interest to a great many Nominet members. Typical membership turnout to vote at the non-excutive director ("NED") elections is between 9 and 11%.

A great many Nominet members very likely choose to become Nominet members to access both the wholesale domain name price discount and the Domain Name Availability Checker ("DAC") tool, used by many to assist with acquiring domain names about to be deleted by the registry (also known as drop catching). Both of these are Registrar Provider related and not governance related, yet come as membership benefits which seems illogical.

Should access to registrar services for those who want them automatically bring governance powers with it?

Giving governance responsibilities to those that seem largely uninterested in participating seems non-sensical. The fact that every Nominet member gets this by paying a one time enrollment fee roughly equal to the cost of a mid range mobile phone and an annual membership fee roughly equivalent to a cheap mobile telephone monthly price plan (i.e. approximately £10 per month) seems of questionable logic today in 2021.

Now is the time where it may be more prudent to work towards the seperation of Nominet governance and access to Nominet Registrar Provider services, permitting those that want one, want the other, or want both to take them as fully functional and clearly distinct applications.

Implimenting this would very lightly require a 90%, of turnout of the membership voting in favour by resolution, therefore members would need to see a benefit in voting for this. What that benefit might be is debatable but it could be one of a package of measures that awards better benefits to existing Nominet members either one time or recurringly.

I hope we get to find out in the very near future.