A other answers have said, large portion of your money goes to Verisign. Verisign is essentially government sponsored monopoly over .com and .net domains. You may ask how did that happened when US supposed to so despise monopolies?

Here's how:

Early on registries were free, funded by government and run by InterNIC. Then government decided to privatize it. The contract to manage .com registry was granted to a company called Network Solutions, Inc (NSI). At that time govt actually paid [$5.9M][1] NSI to do this but then NSI managed to convince that registrations should be charged to cover the cost. Eventually Verisign bought Network Solutions and become the entity who manages .com registry.

Everyone was starting to realize that NSI/Verisign was becoming monoloy for some very important function of modern economy. ICANN was formed in 1998 which was charted to introduce competition in this area. But instead they ended up doing almost exactly the opposite thing in next series of events.

Early in 2003 Verisign introduced a service called [Site Finder][2] which redirected users to search engine if domain didn't exist. ICANN said this was "overstepping the contract terms". Verisign shutdown the service but also sued ICANN for preventing it to bring any improvements. Eventually ICANN had to settle with Verisign and the prize of [settlement][3] was that Verisign would be awarded renewal of contract without any bidding plus right to raise prices without showing cost justifications. There were even terms that indicated Verisign can even continue its monopoly for longer term. If you ask me this is blunder and incompetence by ICANN at mega scale.

[Industry was furious][4]. Lot of people [commented][5] on ICANN's proposal of settlement by saying that .com registry is not the property that ICANN owns to leverage in settlements. Others said no other government agency knowingly consented to unchecked price increase without cost justification. But it all went to vein and ICANN directors voted 5-9 in favor of settlement. Due to industry outrage US Dept of Commerce had to intervene and eliminate the clause for Verisign's right to increase prices by 7%. You can say that Verisign showed benevolence for not increasing prices to what was already considered ridiculous.

In cases like this typically competitors brings in anti-trust suits. It did happened against Verisign in 2010 but they [escaped][6] without a bruise because the organization CFIT which had filed this case wasn't considered as competitor or the one who had financial injuries. It also surprises me that real competitors haven't come forward against Verisign to bring in large scale anti-trust suit.

So when you pay that $10, it's ICANN's massive blunders of last decade to allow Verisign continue absolute monopoly. Verisign has benefitted dearly with this. They have $2 billion in cash and $1 billion of yearly revenues from all the payments you hand out to them. Verisign's financial indicates that this is their highest margin business.

One light at the end of the tunnel is that US government has [announced][7] plan to relinquish the control of Internet which means ICANN might not have authority to hand out monopolies any longer. Their stock too big hit when US government announced this.

[1]: http://en.wikipedia.org/wiki/Network_Solutions#History
[2]: http://en.wikipedia.org/wiki/Verisign#2003_Site_Finder_legal_case
[3]: http://www.cio.com/article/18286/ICANN_OKs_VeriSign_Settlement
[4]: http://www.prnewswire.com/news-releases/godaddycomr-outraged-over-icannr-giving-verisignr-monopoly-55213652.html
[5]: http://forum.icann.org/lists/com-renewal/
[6]: http://domainincite.com/4676-breaking-verisign-settles-cfit-lawsuit-for-free
[7]: http://www.washingtonpost.com/business/technology/us-to-relinquish-remaining-control-over-the-internet/2014/03/14/0c7472d0-abb5-11e3-adbc-888c8010c799_story.html