I work for a domain reseller. Now, GoDaddy and Network Solutions may very well not have to pay anything for registration, so this tactic might be more useable for them. But for the company I work for, this tactic would be a financial loser.
These "Domain management companies" you speak of are what I call "scammers". I've gotten similar notices in the mail, after registering my first domain. "Hey, your domain is expiring next year. Give the ownership to us and renew it for only $80 a year!" Of course, this letter fails to note the other option, which is leaving my domain where it's at and continuing to renew for $12 annually.
I can't fathom why anyone would want someone to "manage" their domain registrations, unless they have no clue what a domain registration actually is. This is how you manage it: You pick name. You type in your contact info, and optionally the name servers you want to use. You renew it annually. That's it. The most complicated thing you could ever do is trying to transfer it - which just means clicking the "Unlock" button on the registrar's site, getting the transfer key, and providing that to the new registrar. Way easier than doing taxes.
The only thing hard thing about it is that people don't understand domain registration is separate from DNS management and service hosting (web sites, for example). People commonly get the idea that all of these things are the same. If you have that conception, you're already on bad footing since you're trying to be webmaster and IT with zero skills.
The right thing for those guys to do isn't to succumb to the smooth talker who promises to make all the technical problems go away. (Then steal the domain.) If they don't or can't learn webmaster skills, they need to either (a) employ someone trustworthy who does, or (b) start *from the beginning* with an integrated registration/design/hosting service that takes care of everything end to end. It might seem cheaper to do it DIY in the beginning, but to successfully DIY you have to know how to DI first.
Do you really think it's fair to call a 50 year old woman who wants a nice website for her cat-blog a moron?
Yes, if she expects to take on the role of webmaster and developer, with zero technical experience. I absolutely call that a moron. It's the equivalent of that same lady trying to build a kit car, which then loses a wheel and explodes rolling out of the driveway.
The right thing for her to do is find a qualified individual or company to create the site for her, if she wants that level of customization and control. Otherwise, she belongs on Blogger or Facebook, where she can post her cat pictures, but doesn't need technical skills beyond manipulating a GUI.
All the WordPress installations I've dealt with (quite a few, it's part of my job) had users' password hashes stored in a MySQL database. I wonder why the W3 plugin is writing them to the file system in the first place?
Now, the *average* potency has probably increased in the last 50 years, due to advances in growing technique and pressure from the drug war. Higher potencies mean a lesser amount of material to smuggle for a given profit.
I don't want to blame it all on Apple, but they are afflicted with the same "chase the shiny, fuck the technological repercussions" syndrome which many people have. There's *loads* of software that wastes bandwidth, but it's also the users. The day that MySpace users could paste HTML into their pages is when this began. True, we had GeoCities back in the day - but those were blink tags and GIFs. It's just gotten worse now with every grandmother and high school dropout trying to go "Web 2.0".
You should see some of the WordPress sites I have to deal with. Streaming 5 videos on a page that's already bogged down with 30 conflicting live-chat plugins? Why not!