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Verisign wants to auction off O.com for charity

Kevin Murphy, December 1, 2017, 13:56:57 (UTC), Domain Registries

The internet could soon gets just its fourth active single-character .com domain name, after Verisign revealed plans to auction off o.com for charity.

The company has asked ICANN to allow it to release just one of the 23 remaining one-letter .com domains, which are currently reserved under the terms of the .com registry agreement.

It’s basically a proof of concept that would lead to this contractual restriction being lifted entirely.

O.com has been picked as the guinea pig, because of “long-standing interest” in the domain, according to Verisign.

Overstock.com, the $1.8 billion-a-year US retailer, is known to have huge interest in the name.

The company acquired o.co from .CO Internet for $350,000 during the ccTLD’s 2010 relaunch, then embarked upon a disastrous rebranding campaign that ended when the company estimated it was losing 61% of its type-in traffic to o.com.

Overstock has obsessed over its unobtainable prize for over a decade and would almost certainly be involved in any auction for the domain.

In fact, I wouldn’t be surprised to discover that Overstock pressured Verisign into requesting the release of o.com.

Despite the seven or eight figures that a single-letter .com domain could fetch, Verisign’s cut of the auction proceeds would be just $7.85, its base registry fee.

Regardless, it has a payment schedule in mind that would see the winning bidder continue to pay premium renewal fees for 25 years, eventually doubling the sale price.

The winner would pay their winning bid immediately and get a five-year registration, but then would have to pay 5% of that bid to renew the domain for years six through 25.

In other words, if the winning bid was $1 million, the annual renewal fee after the first five years would be $50,000 and the total amount paid would eventually be $2 million.

All of this money, apart from the auction provider’s cut, would go to a trust that would distribute the funds to internet-focused non-profit organizations, such as those promoting security or open protocols.

There’s also a clause that would seem to discourage domain investors from bidding. The only way to transfer the domain would be if the buyer was acquired entirely, though this could be presumably circumvented with the use of a shell company.

It’s an elaborate auction plan, befitting of the fact that one-character .com domains are super rare.

Only x.com, q.com and z.com are currently registered and it’s Verisign policy to reserve them in the unlikely event they should ever expire.

Billionaire entrepreneur Elon Musk this July reacquired x.com, the domain he used to launch PayPal in the 1990s, back from PayPal for an undisclosed sum.

Z.com was acquired by GMO Internet for $6.8 million in 2014.

Single-character domains are typically not reserved in the ICANN contracts of other gTLDs, whether pre- or post-2012, though it’s standard practice for the registry to reserve them for auction anyway.

Verisign’s reservations in .com and .net are a legacy of IANA policy, pre-ICANN and have been generally considered technically unnecessary for some years.

Still, there’s been a reluctance to simply hand Verisign, already a money-printing machine through accident of history, another windfall of potentially hundreds of millions of dollars by allowing it to sell off the names for profit. Hence the elaborate plan with the O.com trust fund.

The proposal to release O.com requires a contractual amendment, so Verisign has filed a Registry Services Evaluation Process request (pdf) with ICANN that is now open for public comment.

As a matter of disclosure: several years ago I briefly provided some consulting/writing services to a third party in support of the Verisign and Overstock positions on the release of single-character domain names, but I have no current financial interest in the matter.

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Comments (7)

  1. Jamie Zoch says:

    Not sure O.com is a good one to start with, mainly because Overstock has many active trademarks for O.com… which really gives them an advantage and puts the winning bidder other than Overstock at risk of losing the domain due to the TM’s.

    • John says:

      It’s important to make sure only those with the deepest pockets get the single letter .coms in case they are ever released, rather than any more fair system by which new deep-pocketed parties could be created out of those who are currently less fortunate, just as those who already became deep-pocketed before them were fortunate enough to benefit from the status quo of their time and availability of .com at normal registration cost.

    • John says:

      That was meant to be a separate reply, not under yours, Jamie.

  2. Don Smith says:

    Re: “auction off o.com for charity”

    Translation: We (VeriSign) are making so much money from the no-bid, presumptive right of renewal .COM contract (more than $700 million in free cash per year), optically, it looks bad if we pocket even more money from auction proceeds on single character domains. Thus, let’s give all of the proceeds to charity.

    What other Registry would entertain the notion of auctioning off single character domains with all of the proceeds going to charity? The only reason VeriSign has proposed this is because of optics and protecting its monopoly over the .com namespace. Quick background – VeriSign used a lawsuit against ICANN to win one of the most lucrative no-bid contracts in the world:

    http://www.domainarts.com/2011/11/22/upcoming-verisign-price-increase-reminder-of-icanns-failure/

    Additionally, the details of this proposed auction are extremely unique (aka the winning bidder will have to pay 5% of that bid to renew the domain for years 6 through 25.) What types of backdoor discussions have taken place between VeriSign and Overstock? Collusion between both parties to ensure this auction is structured in a way to benefit Overstock?

    Assume the auction for O.com fetches $15 million:

    Here is what the Renewal table looks like:
    Year 1 – included
    Year 2 – included
    Year 3 – included
    Year 4 – included
    Year 5 – included
    Year 6 – $750,000 renewal
    Year 7 – $750,000 renewal
    Year 8 – $750,000 renewal
    Year 9 – $750,000 renewal
    Year 10 – $750,000 renewal
    Year 11 – $750,000 renewal
    Year 12 – $750,000 renewal
    Year 13 – $750,000 renewal
    Year 14 – $750,000 renewal
    Year 15 – $750,000 renewal
    Year 16 – $750,000 renewal
    Year 17 – $750,000 renewal
    Year 18 – $750,000 renewal
    Year 19 – $750,000 renewal
    Year 20 – $750,000 renewal
    Year 21 – $750,000 renewal
    Year 22 – $750,000 renewal
    Year 23 – $750,000 renewal
    Year 24 – $750,000 renewal
    Year 25 – $750,000 renewal

    This should set off alarm bells for everyone in the industry. VeriSign introducing premium renewal pricing on the legacy .COM domain extension!!!!!!!!!!!!!

  3. kd says:

    It’s ridiculous that Overstock would be rewarded for ABUSING the USPTO like this. They applied for trademarks for a domain they, nor nobody owns!! Then they somehow convince VeriSign to auction this domain name off for their benefit? What sort of deals have been made in private? What is in it for VeriSign? The government should be looking into this VERY CLOSELY as this smells fishy, it looks fishy, and that is because it IS fishy. As Don said above, VeriSign is not new to making shady deals in private.

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