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10 Years Ago… new gTLDs, ICANN pay, DNS abuse and ethics

Kevin Murphy, October 11, 2021, Domain Policy

The more things change, the more they stay the same.

I’ve been in a reflective mood recently, and it’s a slow news day, so I thought now might be a good time to launch a new, irregular feature — a trawl back through the DI archives to see what we were all talking about a decade ago this month.

In many respects, the conversations haven’t changed all that much in the last 10 years. Some are being repeated almost verbatim today. Others seem almost laughably naive with hindsight.

New TLDs

We were just a few months away from the opening of the first big new gTLD application window, but in October 2011 many of the rules of the program were, remarkably, still up in the air.

ICANN still hadn’t decided how much an application would cost. It had yet to decide how it would subsidize poorer applicants.

No Trademark Clearinghouse supplier had yet been found, and there was still some confusion about how the application process would work, and how it would be communicated to potential applicants.

The industry was awash with speculation, as it had been for the whole year, about who might apply for a gTLD. In October, there were stories about potential applications from New South Wales, Orange, Corsica, and BITS.

Afilias was offering $5,000 for new gTLD ideas.

But perhaps the strangest idea was a pitch from CentralNic to the super-rich. For $500,000, it would apply for your family name as a new gTLD. This came to nothing in the 2012 round, but CentralNic’s site is still live.

While new gTLDs were still in the future, October 2011 saw the ongoing sunrise period for the previous round’s .xxx, auctions following the recent launch of .co, and the creation of two new ccTLDs.

Abuse

October 2011 was marked by the registrar community reluctantly agreeing to enter talks with ICANN to renegotiate their standard Registrar Accreditation Agreement, which would ultimately lead to the current 2013 RAA.

The move came as the Governmental Advisory Committee was on the warpath on behalf of its law enforcement allies, demanding more action from the industry on DNS abuse and threatening legislation if it didn’t happen.

Imagine that.

Meanwhile, Verisign asked ICANN for more powers to take down abusive domains, which faced immediate pushback from registrars and others, before the request was retracted mere days later.

The Revolving Door

There was a lot of talk during and around ICANN 42 about conflicts of interest, particular with regards the emergence of a so-called “revolving door” between ICANN’s top brass and the domain industry.

It had been just a few months since chair Peter Dengate Thrush had, on the eve of his retirement from the board, pushed through final approval of the new gTLD program and promptly took a top job at portfolio applicant Minds + Machines.

It looked rotten, and ICANN CEO Rod Beckstrom, who had himself announced he was quitting just months earlier, had made its his personal mission to reduce at least the perception of conflicts of interest at the Org.

He ruled out being replaced by a fellow director, threw money at consultants, and said the next CEO should be an industry outsider.

It was probably all pointless.

As it turned out, the guy who replaced Beckstrom, Fadi Chehade, put in a few years in the corner office before prematurely quitting for private equity, where he now runs the company that owns Donuts, itself run by Chehade’s ICANN number two, Akram Atallah.

The amount of revolving door action at less-senior levels has been so frequent since 2011 that I don’t even keep track of it any more.

ICANN Pay

ICANN gave its top execs big pay raises. Along with death and taxes, this is a universal constant.

GoDaddy rides another 21 gTLDs into its stable

Kevin Murphy, July 28, 2021, Domain Services

GoDaddy may have disavowed the domain registry business for much of the last decade, but it’s fast becoming one of the largest registry operators out there.

The company’s GoDaddy Registry unit this week took over the ICANN contracts for 21 more gTLDs, bringing the number of TLDs it either contracts for or technically manages close to the 200 milestone.

As well as taking on new gTLD success story .club, it’s also signed the Registry Agreements for 19 more strings formerly belonging to MMX, aka Minds + Machines, which plans to bow out of the industry after 10 years in business.

The MMX TLDs being moved are: .law, .abogado (“lawyer” in Spanish), .beer, .casa (“home” in Spanish), .cooking, .dds (“dentists” in American), .fashion, .fishing, .fit, .garden, .horse, .luxe, .rodeo, .surf, .vip, .vodka, .wedding, .work, and .yoga.

GoDaddy took over the back-end for .xxx, .porn, .adult and .sex, belonging to former MMX subsidiary .ICM Registry, last week.

The remaining string to enter the portfolio is .design, which GoDaddy acquired from Top Level Design, which is still a going concern with its small portfolio of gTLDs.

There are still a few MMX TLDs that have not moved over, all of which appear to be the geographic strings it operates in partnership with local government backers. These will need additional clearances before transfer.

While GoDaddy has taken over the registry contracts for the 19 MMX TLDs listed above, their back-ends are still Nominet, according to IANA records. Clearly, that will change in future.

The MMX deal was worth $120 million. The values of the .design and .club deals were not disclosed.

GoDaddy welcomes four porn TLDs

GoDaddy may not have the raunchy public image it once promoted, but it’s now the official registry for tens of thousands of porn-related domain names.

The gTLDs .xxx, .porn, .adult and .sex made the move from UNR’s back-end to GoDaddy Registry this week, IANA records show.

These almost certainly the TLDs that MMX was talking about last week when it said it had ICANN approval to reassign four contracts, which it did not name.

IANA records still show the sponsor as ICM Registry for all four, suggesting the deal was structured a little differently to the 20-odd other gTLDs in MMX’s portfolio, which are still with MMX.

MMX said earlier this year that it was selling its entire portfolio to GoDaddy for at least $120 million.

.xxx, which launched the earliest — pre-2012 — is the largest of the TLDs, with around 55,000 names under management. .porn has about 10,000 and the other two have about 8,000 each.

MMX gets nod to sell 22 gTLDs to GoDaddy

New gTLD registry MMX expects to shortly offload most of its portfolio of strings to GoDaddy Registry after receiving ICANN approvals.

The company said today that its transfer requests for four of its gTLD contracts have received full ICANN approval.

Another 18 have received conditional ICANN approval, and MMX believes it has met these unspecified conditions.

Another five of its stable that are not fully owned and operated still require the nod from its partners.

MMX said in April that it planned to sell its entire portfolio to GoDaddy, after which it is expected the company will be wound down.

The company did not break down which transfer have received full approval, conditional approval, or are still waiting for approval.

It gTLDs are: .cooking, .fishing, .horse, .miami, .rodeo, .vodka, .beer, .luxe, .surf, .nrw, .work, .budapest, .casa, .abogado, .wedding, .yoga, .fashion, .garden, .fit, .vip, .dds, .xxx, .porn, .adult, .sex, .boston, .london and .bayern.

Verisign hopeful after decision reached in .web gTLD case

Kevin Murphy, May 25, 2021, Domain Policy

The fate of .web has been decided, over 20 years after it was first applied for, and Verisign thinks it might emerge triumphant.

The company said last night that the ICANN Independent Review Panel handling the case of Afilias v ICANN reached a decision May 20 and delivered it to Verisign the following day.

Verisign says the panel “dismissed Afilias’ claims for relief seeking to invalidate the .web auction and to award the .web TLD to Afilias, concluding that such issues were beyond its jurisdiction.”

Sounds good for Verisign so far. Afilias wanted its $135 million bid for .web, submitted via an intermediary called Nu Dot Co, thrown out due to claims that ICANN violated its own bylaws by not sufficiently vetting the bidder.

But Verisign goes on to say “the panel’s ruling recommends that ICANN’s Board of Directors consider the objections made about the .web auction and then make a decision on the delegation of .web”.

It adds that the panel found that ICANN violated its fairness and transparency commitments:

With respect to ICANN, the ruling finds that certain actions and/or inaction by ICANN in response to Afilias’ objections violated aspects of ICANN’s bylaws related to transparency and fairness. These findings are particular to ICANN’s actions and not conduct by Verisign. Verisign anticipates that ICANN’s Board will review the panel’s ruling and proceed consistent with the panel’s recommendation to consider the objections and make a decision on the delegation of .web.

Based on Verisign’s statements, it seems that ICANN lost, but Afilias didn’t win.

The revelation was buried in a Securities and Exchange Commission filing on an unrelated financial matter last night. Hat tip to @jintlaw for spotting and tweeting about it.

It’s the most eagerly anticipated IRP ruling since 2011’s .xxx case, but in stark contrast to Rod “let’s draft this tweet” Beckstrom-era ICANN, where the decision was posted in a matter of hours, the 2021 org has not yet posted the panel’s findings or made a public statement acknowledging the ruling.

Verisign says it intends to “vigorously pursue” .web, but “can provide no assurance” as to which way the ICANN board of directors will swing.

Now celebrities and politicians can block their porn names

Celebrities and holders of unregistered trademarks are now able to buy porn domain blocks from MMX.

The company’s subsidiary, ICM Registry, has broadened its eligibility criteria in order to shift more units of the product, upon which it is banking much of its growth hopes.

Previously, to get an AdultBlock subscription you either had to have previously blocked your brand using ICM’s Sunrise B scheme, which ran in 2011, or to have a trademark registered in the Trademark Clearinghouse.

Now, you don’t need to be in the TMCH, and your trademark does not even need to be legally registered.

Celebrities and politicians are explicitly covered. They have to provide evidence to prove their fame, such as IMDB profiles or movie posters. Politicians need to provide links or documentation proving their political activities or government roles.

AdultBlock prevents brands being registered in MMX’s .porn, .adult, .xxx and .sex gTLDs, as an alternative to defensive registrations. The AdultBlock+ service also blocks homographs.

When .xxx launched a decade ago, thousands of celebrity names, largely harvested from Wikipedia, were blocked by default and free of charge.

ICM even blocked the names of 2011-era ICANN executives and directors. Then-CEO Rod Beckstrom benefited from a block on rodbeckstrom.xxx that survives to this day. Current CEO Göran Marby does not appear to have afforded the same privilege.

My name is also blocked, because it’s a match with goodness knows how many famous people called Kevin Murphy.

Despite the obviously sensitive nature of the TLDs for many brands, there’s been very little cybersquatting in .xxx in the near-decade since its launch. There have been a few dozen UDRP complaints, and most of those were filed in 2012.

MMX, amid poor renewals for its less porny gTLDs, has placed a lot of focus on AdultBlock renewals for its short-term growth.

The company is in the process of having its assets acquired by GoDaddy for $120 million, with the deal expected to close in August, subject to various approvals.

MMX’s year marked by terrible renewals

MMX saw its revenue dip in 2020, and it reported shocking renewal rates at two of its highest-volume gTLDs, according to the company’s annual financial results, published this morning.

The portfolio registry, which is in the process of selling off essentially its entire operating business to GoDaddy, reported revenue of $16.8 million for the year, down from $17.2 million in 2019.

Profit was up very slighty, to $2.9 million from $2.8 million.

The 2019 results included a few one-off gains, including $588,000 from losing a new gTLD auction, which accounted for most of the 2020 revenue decline.

But the company also reported a 19% decline in domains under management, from 2.46 million to 1.99 million, based on some terrible renewal rates in its .vip and .work gTLDs.

The DUM decline can be attributed mostly to .vip, a popular TLD among Chinese speculators, which started 2020 with around 1.4 million domains but finished the year with just over a million.

.work actually ended the year up on where it started, with around 709,000 names under management.

But MMX today disclosed that the renewal rates for .vip and .work were 36% and 18% respectively. In a business where 70%+ is considered healthy, these are some poor numbers indeed.

However, the company discontinued first-year promotions on these TLDs in 2020, focusing instead on selling domains likely to lead to recurring renewal revenue, which lead to 14% (.vip) and 19% (.work) increases in revenue.

Fewer domains. More money.

MMX said that it is seeing these trends continuing into 2021. Public transaction reports show both these TLDs losing 40-50,0000 names in January. The company expects revenue to fall 4% in the first quarter compared to Q1 2020.

One bright spot appears to be “The Great Relese”, the company’s move last month to mark down hundreds of thousands of premium-priced domains. That’s brought in $170,000 since its April 23 launch.

One basket where the company is placing a lot of its eggs is AdultBlock, the trademark protection service it inherited when it acquired ICM Registry a few years back. It enables customers to block their brands in .xxx, .porn, .adult and .sex without actually having to register the names.

The 10-year period ICM allowed brands to block when it launched in 2011 is coming to an end, so MMX is banking on renewals (which retail at $349 to $799 per year before multi-year discounts) to boost revenue.

“While it is early in the AdultBlock Sunrise B renewal period, we are encouraged by Registrar interest and some early sales of this product,” CEO Tony Farrow said in a statement.

This reliance on AdultBlock for short-term organic growth was one of the reasons MMX is selling up to GoDaddy.

The market-leading registrar and fast-emerging registry consolidator agreed to pay $120 million for MMX’s portfolio, which will leave MMX as a shell company only long enough to distribute the cash to investors before fading away quietly.

That deal has an August deadline to close and is dependent on approvals from business partners, ICANN and the Chinese government.

China could block GoDaddy’s $120 million MMX swoop

GoDaddy’s proposed $120 million acquisition of essentially all the meaningful assets of portfolio gTLD player MMX will be subject to Chinese government approval, it emerged this morning.

Following GoDaddy’s bare-bones press release announcing the deal last night, this morning MMX added a whole bunch of flesh, including a list of closing conditions, in its statement to shareholders.

GoDaddy is proposing to buy essentially MMX’s entire operating business — the 28 gTLD registry agreements with ICANN, including the four porn-related strings belonging to subsidiary ICM Registry.

Not only do MMX shareholders have to approve the deal — and holders of 64% of the shares have already promised they will — but ICANN approval will be required for the registry contracts to be reassigned.

This may prove a hurdle or delay if third parties raise competition concerns, but ICANN’s pretty opaque approval process generally doesn’t frown too much on industry consolidation.

Another known unknown is China.

MMX told shareholders that it needs: “Approval of Chinese authorities for the change of control of MMX China (including change of control in respect of relevant licenses held by MMX China permitting it to distribute TLDs in China).”

The reason for this is quite straightforward: in volume terms, quite a lot of MMX’s business has been in China in recent years. Popular sellers such as .vip, with over 800,000 names today, have been driven primarily by Chinese investors.

A local presence (in this case MMX China) and approval from the Ministry of Industry and Information Technology is required to legally sell a TLD to Chinese registrants via Chinese registrars.

I’ve no particular reason to believe MIIT will withhold its approval for MMX China to move into GoDaddy’s ownership, but a failure to get the nod from China appears to be a deal-breaker.

MMX’s statement to the markets this morning also provided some clarity on what exactly it is that GoDaddy is proposing to buy.

The gTLDs to be acquired are: .vip,.nrw, .casa, .vodka, .xxx, .fit, .miami, .fishing, .porn, .beer, .surf, .boston, .adult, .yoga, .garden, .abogado, .work, .fashion, .horse, .rodeo, .sex, .wedding, .luxe, .dds, .law, .bayern, .cooking, and .country.

It seems that when Tony Farrow took over as MMX CEO last year, after his predecessor left due to an accounting snafu, he had the portfolio audited and came to the conclusion that it could expect only pretty crappy growth over the coming years.

It had banked on selling expensive defensive trademark blocks in its four porn-themed gTLDs to big brands to make up the shortfall, but then GoDaddy approached in December brandishing its rather large checkbook.

MMX reckons the deal values the company at a 92% premium over its closing share price Tuesday, and 87% and 78% premiums over its 20-day and 90-day average selling price.

.bayern, .nrw and the four porn gTLDs belong to subsidiaries that GoDaddy will acquire outright, but GoDaddy is not proposing to buy MMX itself.

Rather, MMX will likely stay alive and publicly traded long enough to redistribute its cash windfall to investors and sell or wind down about a dozen non-operating subsidiaries.

It has a transition services agreement to manage certain business functions of the registry until January next year, which sounds a bit like what fellow GoDaddy acquisition .CLUB Domains explained to me last night.

After that, London’s Alternative Investment Market rules will treat MMX as a “cash shell”, and it will either have to acquire an operating business from somewhere or make itself the subject of a reverse takeover by a company looking for a quick way to the public markets.

GoDaddy buys 30 new gTLDs for over $120 million

GoDaddy Registry has just announced it is acquiring 28 new gTLDs from rival MMX, along with the TLDs .club and .design.

The MMX deal is worth at least $120 million; the value of the other two deals was not disclosed.

GoDaddy is also taking over the back-ends for .rugby and .basketball, which had been contracted to MMX, and said it has won the back-end deal for the dot-brand, .ally.

It’s the most significant pieces of registry consolidation since Donuts and Afilias hooked up in December.

GoDaddy Registry will wind up being the contract holder or back-end for over 240 TLDs, with over 14 million domains under management, the company said.

It’s not entirely clear which gTLDs GoDaddy is acquiring right now, but it appears to be all of those listed on the MMX web site.

It’s currently listed by IANA as the sponsor for 21 gTLDs: .cooking, .fishing, .horse, .miami, .rodeo, .vodka, .beer, .luxe, .surf, .nrw, .work, .budapest, .casa, .abogado, .wedding, .yoga, .fashion, .garden, .fit, .vip and .dds.

MMX subsidiary ICM Registry runs .xxx, .porn, .adult and .sex, not an easy fit with the family-friendly image GoDaddy has attempted to cultivate in recent years.

MMX also manages geographic gTLDs .boston, .london and .bayern on behalf of their respective local governments.

The company hinted in January that it was considering selling off some of its under-performing registries, after a crappy 2020 that saw it forced to restate revenues, lay off staff and can its top executives.

MMX, which is publicly traded in London, has yet to make a statement on the deal but we should no doubt expect something in the morning before the markets open.

The deal appears to be bad news for Nominet, which runs the back-end for most MMX gTLDs. GoDaddy will very likely migrate them over to its own platform eventually.

MMX aside, GoDaddy is also buying .club from .CLUB Domains, according to its press release.

.CLUB is a bit of a rarity — a single-string new gTLD registry that done really rather well for itself without tarnishing its brand by becoming synonymous with cheap domains and spam.

.design, the other GoDaddy acquisition today, is run by Top Level Design, which also runs .ink, .wiki and .gay.

.design has over 120,000 domains in its zone file today, while .club has over 1 million. Both have been on a growth trajectory recently.

GoDaddy also said as part of the same announcement that it has signed Ally Financial’s dot-brand business for .ally, but as Ally was already a client of Neustar (which GoDaddy owns) I’m not entirely sure what it’s getting excited about.

MMX vows to refocus under new boss after crappy 2020

Kevin Murphy, January 25, 2021, Domain Registries

MMX says it plans to refocus its business on higher-margin products after a 2020 marred by plummeting registrations, product delays and financial irregularities that led to senior management being oustered.

The new gTLD registry also revealed that it laid off 20% of its staff in a “right-sizing” exercise last year. Due to its modest size, this means about four or five people lost their jobs.

The company said today that acting CEO Tony Farrow has been confirmed for the job full-time, and that he will join the board of directors after regulatory checks.

Farrow took over last October, when CEO Toby Hall and CFO Michael Salazar were both ejected after admitting to over-stating MMX’s revenue and profit in 2019.

Now, Farrow says MMX will spend 2021 focusing on “quality” regs — those with a higher chance of renewing or with higher-margin reg fees — and on its AdultBlock services, which block trademarks and typos across its four porn-themed gTLDs.

Overall domains under management declined 19% in 2020, which appears to be almost entirely down to .vip, a cheap gTLD that initially performed strongly with Chinese speculators, losing about half a million names.

AdultBlock, which covers the old ICM Registry portfolio, launched at the end of 2019 with a high price tag and a couple bulk sales, but stalled during 2020. MMX blames this for a 3% decline in overall billings last year.

The company also hinted that it may try to offload some of its crappier gTLDs, saying:

The new executive team is also reviewing the contribution received from each of its TLDs and the growth prospects for each from new sales initiatives to ensure the carrying values associated with each TLD is appropriate going forward.

Farrow said in a news release:

Our FY 2021 plan will focus on AdultBlock sales, extensive release of inventory to the market, quality registrations with the view of future renewal revenue and standardized promotions for our channel partners. It is a straightforward business where focus must remain on the quality of our domain registrations and promotions with our channel partners. We lost some of the momentum after the initial launch of AdultBlock in FY 2019. However, FY 2021 was always the target year for the full rollout of this new product, and I am encouraged by the dialogue with our channel partners to really move AdultBlock in FY 2021.

AdultBlock, which sets trademark-match domains aside as non-resolving reserved names, launched with a price tag of between $349 and $799 per trademark per year.

MMX separately announced today that it is paying ICM Registry’s investors, primarily founder Stuart Lawley, over alleged (and denied) breaches of unspecified warranties made at the time of the acquisition in May 2018.

Farrow was COO of ICM from the 2011 launch of .xxx until the MMX acquisition.