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DI Leaders Roundtable #1 — How many new gTLDs will be applied for next time around?

Kevin Murphy, October 21, 2019, 20:40:34 (UTC), Leaders Roundtable

How many new gTLDs will be applied for in the next application round?

This is the first question I put to the DI Leaders Roundtable, which you may recall I announced a couple weeks back.

As a reminder, the panel is comprised of leading thinkers in the domain name industry or ICANN community, covering as broad a cross-section of expertise as I could muster.

The question I posed each panelist this time was:

There were 1,930 applications for new gTLDs in 2012. Given everything we’ve learned over the last seven years, how many applications do you think there will be in the next round?

There seemed to be a rough consensus that it’s a little early to put any concrete predictions out there, and that perhaps I should have eased the panel in with something a little less challenging, but some very interesting — and divergent — opinions were nevertheless expressed.

Some of the participants asked me to note that they were speaking in a personal capacity rather than with them wearing a specific one of their various professional/volunteer hats. To save time, readers should just assume that every opinion being expressed below is personal to the expert concerned.

In no particular order…

Jeff Neuman, Senior VP, Com Laude

MugshotWithout wanting to sound like I’m trying to avoid answering the question or hedge my bets, we have to consider this question in the context of the current landscape. The number of applications in the next round will be dependent on the outcomes of the current Subsequent Procedures PDP Working Group, alongside macroeconomic business factors. So therefore I’ll put a range on the possible answer — at the low end (if the application fee remains as is and world economies are facing significant troubles) around 1,000; at the top end (with application fee reduced to a level that operates as far less of a barrier, a fair economic wind behind us and some targeted promotion of the opportunities) there could be up to 10,000.

One thing that is clear is that many of the applications will come from brands that would like to actively use their domains. Those who were forward-thinking and have taken bold steps in the first round are the ones who are benefiting most from the new gTLD program. That’s not to say that there have not also been issues with brands. In 2012 many brands were pressured to apply for TLDs by third parties who advised them to apply for purely defensive reasons. Others gave up after the many fits and starts of the program as well as the overly lengthy period it took ICANN to evaluate the TLDs, approve Specification 13, respond to name collision, and the change of rules to temporarily disallow “closed generic” TLDs. Not surprisingly, we have seen a number of these brands drop out of the program.

However, many of the ones that have stuck it out are doing well. Some have even made transitions from their “.com” or their ccTLDs to their brand TLDs. Others have used their TLDs for marketing campaigns, corporate social responsibility programs, internal corporate intranets, job sites, geolocation tools, social media programs, events and customer service. And this is just the beginning.

What we need to ensure for the future is that application fees represent the true costs of the program and that the process is predictable, reliable and flexible enough to allow brands and others to innovate. Over-regulation due to the fear of unlikely edge cases or paranoia due to how potential applicants for purely generic open TLDs cannot be allowed to happen. All TLDs should not be painted with the same regulatory brush and the community needs to understand that we should be encouraging different business models for TLDs that do not necessarily include the unfettered ability for the public to register domain names in all TLDs. Ultimately, we need to do what is best for end users on the Internet.

Incentives should be provided for TLDs like .bank and .pharmacy to validate their registrants and ensure the safety of their end users by curbing abusive behavior. This could come in the form of reduced fees to ICANN or even ensuring that other similarly sensitive strings have similar verification requirements before allowing them to be delegated.

Finally, in order for the program to succeed, we need to stimulate growth of registries and registrars in the developing world. Support for these organizations should not only be in the form of monetary contributions, but also training programs, consulting services, legal support, and even operational support (eg., the free or low-cost use of third party DNS servers globally, security monitoring and other critical services).

Rick Schwartz, domain investor

MugshotWho cares?? Nobody in the real world. Totally meaningless except to the 1,930 applicants and a totally corrupt and out of control ICANN that needs oversight! SHAMEFUL!

Christa Taylor, CMO, MMX

Mugshot“Will you walk into my parlour and tell me how many applications there will be for the next round, said a Spider to a Fly”

Oh, poor fly, good luck getting out of this one. There have been some exceptionally large volumes thrown around — 10k, 20k, but this fly would prefer to utilize data gathered from statistical surveys. Unfortunately, my workload didn’t allow me to conduct a survey this week so instead, I’ll utilize a less scientific approach and seek the same leniency ICANN received in their volume prediction used in the 2012 round.

A multitude of variables may impact the volume of applications including: notice period, application fees, auctions and delegation rates with each factor being additive to the prior factor.

  • Base volume: 2,000 applications is utilized as the initial value. While the type of applications may change, the overall volume is a logical starting point especially when considering the last round was in 2012.
  • Notice period: A longer notice period on when the application period will begin will allow for more applicants to apply. Assuming a notice period of four months with a 10% increase in application volume for each additional four-month period. i.e. if there is a six month notice until application window opens, volume will increase by 100 (2,000 x 10% x (6-4/4)). Our total volume of applications is now 2,100.
  • Application fee: The new gTLD program is expected to operate on a ‘revenue neutral’ basis. As such, the application fee should decrease from the 2012 fee of $185k. Since the volume of applications is inversely related to the fee, increasing the volume by say, 15% for every $10k less than $150k. For example, if the actual application fee is $125k, the volume of applications will increase by approximately ~800 (15% x 2,100 x ($150k – $125k/$10k) for a total of 2,900 applications.
  • Auctions: One of the most significant items that could drive the volume of applications if auctions and other related resolution mechanisms. The windfalls from ‘losing’ in auctions are well-known and while other options have been discussed – Vickrey auctions, draws, etc. some applications will be submitted for financial gains. Additionally, the potential to gain from ‘losing’ in contention sets combined with reduced application fees and delegation rates (detailed below) will again impact the volume of applications. As such, the number of applications will increase similar to application fees but would suggest that for every $5k less than $150k application fee, the volume of applications will increase by 10%. If the application fee is $125k, the volume will increase by 1,250 (10% x 2,888 x ($150k-$125k/$5k) for a combined volume of 4,150 applications.
  • Delegation rate: The final factor in this unscientific, simplistic volume projection is the delegation rate. In 2010, a rate of 1,000 per year was provided to minimize security and stability risks. If the delegation rate remains relatively the same, the processing of applications could take years and thereby, encourage potential applicants to apply knowing it will take years before their application is delegated. Additionally, a reduced application fee minimizes an applicant’s risk if they decide to withdraw at a later date. Applying another broad brushstroke of 5% per year for the length of time it will take for all applications to be delegated, excluding objections. If it is expected to take three years to process the subsequent round of applications, add in another ~750 applications (5% x 3 years X 4,150) for a total volume of 4,900, rounding to 5,000 applications.

“And take a lesson from this tale of the Spider and the Fly” — gather real data to project application volumes and escape these impossible questions.

Ref: Howitt, Mary. The Spider and the Fly. (1829)

Michele Neylon, CEO, Blacknight

MugshotIt’s not one that’s easy to answer — I think we all got it terribly wrong the last time round.

I suspect, though I could be completely wrong, that there will be at least 1,000 applications if there is a new round. Of course, that number is not based on anything other than just a gut instinct. I don’t think there will be as many distributed retail TLDs in a next round. Apart from a couple of outliers the bulk of new TLDs haven’t been as big of a success as their backers expected.

I can imagine that some cities would pitch for a TLD in the next round but it’d be more of a play in terms of tourism rather than commercial gain.

Some would have us believe that a “lot” of brands want to apply for a TLD in a next round, but I do wonder how much of that demand is “real” and comes from brands and how much of it is being pushed by those who stand to gain from applications. Of course, there could be a lot of brands out there that feel a desire to get their own TLD, but it’s also very clear that many of the brands that got one the last time round haven’t done a lot with them (with a few notable exceptions)

It’s a very good question to ask, but until there’s more clarity about the rules and the costs we’re all going to be guessing.

Jon Nevett, CEO, Public Interest Registry

MugshotCheck back with me in 2022 when we may know the application fee; how contention resolution would work (i.e. will there be speculative applications); and the role of the GAC in reviewing applications.

Dave Piscitello, Partner, Interisle Consulting Group

MugshotWhile I can’t speculate how many, I truly hope that we have fewer “generics” that only serve to create a larger set of TLDs that will be offered in bulk at fees as low as 1 yen to organized spam gangs or botnet operators. ICANN hasn’t provided a scientifically valid economic study that demonstrates a need for more of these; in fact, ICANN’s own DAAR data shows that nearly half of the abused or criminally-used domain names have migrated to the piddling 10-12% share of the total gTLD delegated (and resolving) domain names that the new TLDs represent.

Having said this, I do believe that there are some success stories that point would-be applicants to modestly profitable ventures. City TLDs for the most part have remained free of abuse or criminal misuse. A portfolio of these might be interesting. I think that brands still don’t really know how to use their TLD or migrate to these in a way that alters the threat landscape.

Ben Crawford, CEO, CentralNic

MugshotOur focus today at CentralNic is supporting the growth of existing ccTLD and gTLD registries. However there is no company more prepared for the next round than us, and based on our discussions with potential applicants, we expect more applications in this nTLD round that the last.

Generic TLD applicants obviously gravitate towards CentralNic Registry Solutions as the natural home of TLDs seeking meaningful growth. We are not only the market leaders with more registrars actively selling our nTLD domains than any other backend, but we have as many domains under management as the number 2, 3 and 4 players combined.

Brand owners are also very keen to sign up with BrandShelter as a low cost and flexible one-stop shop that can handle application, backend, registrar and domain management services under a single contract with a money back guarantee. They particularly like that we have the best value support for dot-brands that do want to actively use their TLDs (like .DVAG, .ALLFINANZ and .MINI) while we don’t employ pushy sales people to hassle our clients happy with a defensive strategy to “activate” their TLDs.

Milton Mueller, Professor, Georgia Tech

MugshotIs a negative number an acceptable answer? Will some of the past 1,930 be allowed to bring their TLDs back to the store for a refund? What exactly is ICANN’s return policy, is it as good as TJ Maxx’s? More seriously, I would expect quite a few less applications this time around. I’d be surprised if it exceeded 500. We don’t see any smashing successes from the first round.

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Comments (24)

  1. John Berard says:

    I’ve got one.

  2. Jay says:

    With the likes of frank shilling owning the majority of the best early ones, of course it’s been slow going. His new uniregistry.com blog? Pumps .com blatantly while trashing NTLD.

    While in all of his glory, in the mist of starting uniregistry he jacked the prices up on MANY of his ‘newest toys’ up 1000%, some over $1,000 each.

    You gave the best nTLDs to someone whom TRASHED them. Not an ambassordor, a greedy guy whom probably speaks out of both sides of his mouth, just like Rick Schwartz, Mr. nTLD are TRASH (but I own some .apps)!

    Get real.

    • Snoopy says:

      No point blaming other people for the failure of NTLD’s. It is a terrible product that would have failed no matter what was done.

    • Jay says:

      I would like to see frank shilling held to his price increases. Unable to play underhanded games with registries (namesilo), offering select discounts (900%) on the very nTLDs he STRIPPED from investors hands by jacking the price up 1000%.

      • Jay says:

        How would you like it, own a $12 christmas, that you just built a nice site and now it’s $120 within a year, which you can’t afford. WHAT ON EARTH GOES UP 1000% in ONE YEAR? Ohh…NTLD! Haven’t you heard, at $1k/year pop, you can own one too!

      • Jay says:

        Alas, in a round about way, those domains that got dropped, i’m sure some around him were watching. Anyone else lose domains to frank shilling that got picked up? I say we track them, and see WHOM EXACTLY ended up registering our ‘best ones’ so conveniently.

      • Jay says:

        On a more humorous note, I consider anything he writes someplace other than uniregistry.com as spam.

  3. Rubens Kuhl says:

    The point is not whether there is demand; ICANN has a need to allow new TLDs in the root, or be classified as a cartel.

    Most demand projections were based in defensive registration volumes of previous TLD launches, but fortunately for the program, brand owners stopped trying to register in every TLD. Real demand in this sector comes with time, when people choose names for their new endeavours.

    • The truth is that, if ICANN, and the ngtld registries make three adjustments, the scheme could go from very bad to OK.

      Here are are three of the adjustments necessary, (now it would help to also adopt my 13 postulates circa: 2012):

      1. The Registries MUST be FORCED to submit to severe regulations; that’s right, a capitalist calling for regulations; these regulations would include price, price increases, price decreases, and everything that makes it impossible for a Registrant to be surprised by capricious moves by the Registries;

      2. There should be a limit of one ngtld string to one entity, either an individual, a partnership, or a corporation.

      3. All new gtld second level strings shall cost the same across the board; dot Car must be the same sub $5/year level as dot Horse, dot XYZ and so on…

      The greed must not only be tamed, but caged!

      • Rubens Kuhl says:

        So you are ok with also capping the price on domains sold in the secondary market, right ? There is a lot of criticism on domainers that the prices are extorsive, so capping those prices would also serve a public interest.

        • MoGreen says:

          I have never read such a good self-own as the post by Domenclature.

          Greed is bad for everyone, we must control it via regulations. What about what you are doing, selling a domain for thousands of dollars , many people call it greedy.

          uhhh, that is just market pricing, based on supply and demand, that is fine , no need to regulate this

          hahahahahahaha

        • No, Kuhl, I’d not be ok with it because, that would be anti-capitalism; there’s no fiduciary responsibility involved in the aftermarket, where’s the hawkers of the new gtld (Registries), specifically pitched the powers that be that they were on a mission to rescue the public from the .COM shortage, and such.

          I mean some new gtlds are over $49,000 to register, and $49,000 per month! My GOD!!!!

    • Rubens,
      Did the people doing the demand projections have a clue about the domain name business. The ICANN first year projections were quite laughable. Without that initial float of brand protection registrations, most new gTLDs struggled. Throw in the self-dealing by registries holding back premium domain names and there goes the Land Rush.

      I really don’t think that the ICANN, at the time, understood the importance of the link between demand and sales. If a registry cannot market a gTLD well enough to gain registrations, then all that real demand, when and if it appears, will do so when the gTLD is in EBERO or has been bought out by a portfolio operator.

      • Rubens Kuhl says:

        My guess is that they tried to be conservative on the technical side; more demand, more load on IT systems. But this backfired in the financial side, where being conservative would be forecasting much less registrations.

  4. Snoopy says:

    These names are going nowhere and the only way they will get decent volumes of applications is by slashing the application fees, that is the only handle Icann has left to pull.

    .Brand has done particularly badly so who knows what the Mr Neuman is talking about, presumably what he said is a sales pitch.

  5. That fine Kiwi phrase “bugger all” is my prediction

  6. MoGreen says:

    Round 1 of Roundtable – Meh

    A few guesses , an advertisement for CentralNic and yes , everyone’ response in their “Personal Capacity “ .

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