Impact of the new ICANN Budget on Registrars
In very simple terms the new ICANN budget will have one singular impact on Registrars -
"the SMALLER ones will DIE and newer ones will stop entering the field"

Lets investigate each of the effects on Registrars -

Effect 1: Larger Registrars will not have to change their Selling price while smaller & mid-sized Registrars will have to increase their selling price

The $19000 per annum additional fee increases the per domain name cost of large Registrars such as Netsol, Tucows, Godaddy etc by a meagre 0.5 cents or lesser. Infact the $19000 per annum additional fee increases the cost price of the top 20 Registrars by a meagre 10 cents per domain name

The $19000 per annum fee however increases the cost per domain of smaller and mid-sized Registrars by a large component. Check the below table which shows how much the Registrar per domain cost would increase if a Registrar is in any of the brackets below

There are over 120 Registrars who fit in the above set. This means that over 120 Registrars will find themselves in a situation where they have to significantly change their selling price. This is no easy task. Customers and Resellers will never accept a pricing modification of this magnitude.

Click here to download an excel sheet showing the ENTIRE LIST of Registrars (the list is 3 months old) and the direct increase they will perceive in their DOMAIN PURCHASE cost as well as the percentage increase they will see in their budget contribution. It is clearly visible from this list that the smaller and mid-sized Registrars (well over 120 in number) will be significantly impacted by the current budget as proposed.

Effect 2: Larger Registrars will Save a HUGE amount of money while smaller Registrars will be footing that bill

Until now the variable component of ICANN's budget was divided amongst all Registrars in the ratio of the number of Domains that they managed. This resulted in a per domain fee of 12 cents. In the new budget if the same model had been adopted then the per domain fee would be around 37.5 cents. Instead by passing on a $19000 per Registrar fee this has been reduced from 37.5 cents to 25 cents. This results in significant savings of money for the larger Registrars at the cost of the smaller Registrars. For instance lets compute the savings of the top ten Registrars (Note the market share figures are over 3 months old and therefore give only an approximate idea. The actual savings are higher than the below figures)

As you can see from the above table in the earlier variable model fee Netsol would have to pay $900,000 (or 1 million dollars) extra, which it is saving now by that cost being passed on in the form of a fixed $19000 fee to the other smaller Registrars. While netsol makes money on every one of those domains it sells, the variable component of that is being borne by the smaller Registrars.

Effect 3: Smaller Registrars and startup Registrars will be unable to sustain operations

Smaller Registrars and Startup Registrars will not be able to sustain operations. As such they already have to compete in a market where the larger Registrars have had a head start. Now think about the fact that they have to additionally start at a disadvantage as compared to the larger Registrars - namely a higher per domain Cost. This means a new Registrar who does not currently have the capability to offer the features that an existing old large Registrar does, now also buys the commodity at a higher cost. This will completely stifle competition and put many a Registrars out of business.

Effect 4: Several international Registrars in other countries will DIE, and potential applicants will be discouraged

A large chunk of the internet as everyone knows is still concentrated in the United States. A large number of the world's domain names are concentrated in the United States. Other countries have a relatively small share in the Domain Name market. There were still however many Registrars in various countries who had started operations and managed to sustain them since the ICANN fee so far was primarily variable and based on the size of the Registrar. This allowed a startup Registrar to begin operations without a significant working capital overhead, and bring it to a sustainance level.

Now with the new budget process, Registrars in other countries and emerging markets will not have the ability to gain as many domain names as to be able to make operational profits. This will reduce international participation in the ICANN process.