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Earnings reports: GoDaddy, Tucows and NameSilo report growth

Three of the industry’s largest registrars announced revenue growth in their latest reporting periods in recent days.

GoDaddy

Market-leading GoDaddy reported a whopping 18.8% year-over-year revenue growth from domains in its first quarter, with $422.7 million.

CEO Aman Bhutani told analysts that much of this growth is being driven by the company’s emerging strategy of acting as a secondary-market intermediary, making it easier for domainers to sell their domains quickly to end-users (what it calls “independent customers”) and vice-versa.

“Independent customers added over 200,000 domain names that had otherwise been passive into the aftermarket, spurring activity for domain investors,” Bhutani said.

It currently has over 20 million domains listed on its aftermarket platform, contributing 10% of total revenue, the first time it’s broken into double-digits, analysts were told.

Domains was the best-performing segment in growth terms by some margin.

Including its other segments, GoDaddy’s overall Q1 revenue was up 13.8% year over year, at $901.1 million. It had a net income of $10.8 million, compared to $43.2 million a year earlier.

Tucows

Tucows reported domain services revenue up 4%, from $59.5 million in Q1 2020 to $61.2 million, with adjusted EBIDTA of $13.8 million versus $11.5 million a year ago.

CEO Elliot Noss said in a statement that new domain registration growth was slowing following the “pandemic surge” it experienced in 2020, when lockdown-hit businesses flew online to keep afloat.

Including its non-domain segments, Tucows reported Q1 revenue of $70.9 million. That was down from $84 million a year earlier largely as a result of the sale of its Ting Mobile business to Dish Network.

Net income for the quarter was $2.1 million, down 24% compared to the year-ago period.

NameSilo

Fast-growing registrar NameSilo reported revenue for its full-year 2020 of $31 million, up 14.3% on 2019. That was primarily driven by domains growth and its newish add-on services, it said, but it does not break down its revenue by segment.

It had net income of $6.5 million in fiscal 2020, compared to a net loss of $4 million in 2019.

It added 235,347 net domains in gTLDs in 2020, according to reports filed with ICANN, ending 2020 with 3,663,090 names under management. NameSilo said that number is now around 3.9 million.

Net4 nightmare almost over as court rules ICANN can shut down chaotic registrar

Kevin Murphy, April 29, 2021, Domain Registrars

ICANN is finally moving to shut down Net 4 India’s gTLD domains business, after months of upheaval and thousands of customer complaints.

An Indian insolvency court this week lifted its ban on ICANN terminating Net4’s registrar contract, after ICANN appealed to it with a wealth of evidence showing how critical services such as hospitals and train services were being harmed by registrants being unable to transfer their domains away.

ICANN has now invoked its De-Accredited Registrar Transition Procedure, which will see Net4’s tens of thousands of gTLD domains transferred to a different, more stable registrar, according to head of compliance Jamie Hedlund.

The Org had terminated Net4’s contract in February after hearing from thousands of customers whose names had ceased to work, expired, or were locked-in to Net4 due to its broken transfers function.

But the Delhi court handling the registrar’s insolvency asked ICANN in March to delay the termination at the behest of the resolution professional attempting to extract as much value as possible from Net4 in service of its creditors.

That order was lifted orally after a hearing on Tuesday, according to ICANN.

Under the DARTP, either the dying registrar picks a successor or ICANN picks one, either from a rotation of pre-approved registrars or by rolling out a full registrar application process.

Given the timing crisis, and Net4’s irresponsible behavior to date, it appears most likely that ICANN will hand-pick a gaining registrar from the pre-qualified pool.

Hedlund blogged that ICANN expects to name Net4’s successor within two weeks, after which the gaining registrar will reach out to registrants to inform them how to proceed.

Registrants will not be charged for the bulk transfer.

Net4 had over 70,000 gTLD domains under management at the end of 2020, but this number has likely decreased in the intervening time.

ccTLDs such as India’s .in will not be covered by the bulk transfer. It will be up to local registry NIXI to minimize disruption for Net4’s .in registrants.

ICANN asks registries to freeze Net 4 India’s expired domains

Kevin Murphy, April 26, 2021, Domain Registrars

ICANN has asked all domain registries to exempt from deletion expired names registered via collapsed Indian registrar Net 4 India.

The company has been in receipt of an ICANN termination notice since the end of February, but it’s in insolvency proceedings and ICANN says the insolvency court is preventing it from carrying out the execution.

Net4’s customers have been plagued with problems such as the inability to renew or transfer their domains for well over half a year, and ICANN has issued three public breach notices since December.

ICANN says it has received more than 8,000 complaints related to the registrar — which does not even seem to have a functioning web site any more — since things got real bad last September.

Today, ICANN’s head of compliance Jamie Hedlund blogged:

While we await a final order from the insolvency court, ICANN has requested that all registries not delete expired domain names registered through Net 4 India that registrants have not been able to renew or transfer.

While this may not solve every technical issue experienced by Net4 customers, it should at least prevent them permanently losing their domains, assuming a high level of registry compliance with ICANN’s request.

Registrants won’t be fully safe until ICANN is able to carry out the termination and move Net4’s domains to a stable third-party registrar.

While ICANN disputes whether the Indian insolvency court has jurisdiction over it, it is nevertheless currently complying with its instruction to delay termination until further notice.

Hedlund wrote:

ICANN org is taking actions permitted by its agreements, policies, and law to protect registrants and to facilitate the bulk transfer of the Net 4 India registrations to a functioning registrar that can service its customers. ICANN also is being respectful of the [National Company Law Tribunal’s] processes with this case, which have not yet concluded.

He wrote that the next scheduled hearing of the NCLT is tomorrow, April 27. It appears to have been called due to Hedlund recently impressing upon the court the importance of the crisis.

Formerly massive drop-catcher faces ICANN probe

Kevin Murphy, April 26, 2021, Domain Registrars

Pheenix, which used to operate a network of hundreds of accredited registrars, now faces potentially losing its last remaining accreditation, due to an ICANN probe.

ICANN told the US-based company in a breach notice last week that it faces additional action unless it fixes a bunch of problems related to domain transfers and Whois before May 14.

According to ICANN, for over a year Pheenix has been declining to provide data showing it is in compliance with the Expired Registration Recovery Policy and the Transfer Policy, related to dozens of domains.

Pheenix was told about at least one such disputed domain as far back as February last year, but ICANN says it’s been unresponsive to its outreach.

It’s also failed to implement an RDAP server, which ICANN has been nagging it about since October 2019. RDAP, the Registration Data Access Protocol, is the successor protocol to Whois.

A quick spot-check reveals that the disputed names are traffic domains once belonging to legitimate organizations, usually with inbound Wikipedia links, that were captured after the organization in question folded and its domains expired. Most were repurposed with low-quality content and advertising.

That fits in with Pheenix’s registrar business model. It was until a few years ago a huge drop-catching player, with over 500 shell accreditations it used to gain speedy access to dropping domains.

But it dumped almost 450 of these in November 2017, and another 50 the following April.

Since then, Pheenix’s primary IANA number (the coveted “888”) has been associated with fewer and fewer domains.

It had 6,930 domains under management at the end of 2020, down from a November 2017 peak of 71,592.

It hasn’t recorded any new domain adds in any gTLDs since April 2020.

According ICANN’s chronology of events, it’s sent dozens of emails, faxes and voicemails over the last year, related to multiple domain names, and it’s only received a single email in response. And that was in May 2020.

Net4’s “complete breakdown” is bringing India to a screeching halt, and ICANN could have prevented it

Kevin Murphy, April 20, 2021, Domain Registrars

Domains belonging to hospitals, power grids, public transit services, banks, and other critical services have gone offline due to the collapse of a major local registrar whose troubles ICANN has been aware of for years.

Net 4 India, which has been slowly imploding over the last year, saw a number of its name servers stop functioning last week, leading to customers’ web sites and email services ceasing to work.

Affected customers are not only domainers, web developers, mom-n-pop stores, and small businesses. We’re talking about major players in India’s physical infrastructure, some with billions of dollars of annual revenue.

Power Grid Corporation of India, for example, has complained to ICANN that its primary web site, at powergridindia.com, has gone down, and that its email at that domain is no longer working.

That’s a government-owned company that according to Wikipedia takes in $5.4 billion per year and is responsible for transmitting 50% of the electricity generated in India, a nation of almost 1.4 billion people.

“We are facing problems with DNS of Net4India and due to non availability of email service our operations would affect badly,” a Power Grid employee told ICANN, according to papers filed with Net4’s insolvency court at the weekend.

Others to inform ICANN of outages include:

  • The Delhi Metro Rail Corporation, which with over four million passengers per day is India’s largest mass transit rail network.
  • Multi-billion-dollar conglomerate Bharti Group, which has its fingers in pies such as telecoms, insurance and food, said its “email and other essential business services have been rendered defunct”.
  • The Punjab National Bank, which had revenue of over $9 billion last year, named eight domains, seven of which were in gTLDs, that were with Net4 but no longer work.
  • Global Hospitals India, a private healthcare provider that sees to 18,000 transplant surgeries per year, has seen its .com domain stop working and has been unable to secure an auth code for a transfer out.

I’ve not seen any reports of these internet-based problems spilling over into actual life-threatening issues such as power outages or failures of critical hospital functions, but one can only assume that not having functional email represents a risk of this kind of thing happening.

The customer testimonies cited above were part of a second batch (pdf) sent to the insolvency court handling Net4’s case by ICANN’s head of compliance, Jamie Hedlund, on Sunday.

And those are just a sampling of the over 2,400 complaints about Net4 that ICANN said it received between April 14 and April 16 last week.

Net4’s own web site appears to have been dark for most or all of this month.

And this is all happening as India’s struggle with the coronavirus pandemic hits a low point. Not only have many heavily-populated areas of the country been forced into lockdown in recent days, but the country seems to have spawned its own virus variant, which is raising concerns among scientists worldwide.

A major internet infrastructure crisis couldn’t come at a worse time, but ICANN not only could fix it now but could have prevented it years ago.

ICANN on February 26 told Net4 it would terminate the company’s Registrar Accreditation Agreement, after the company did not get its act together to fix three previous breach notices detailing its customers’ woes, the first of which was issued December 10.

That meant — or should have meant — that after March 13 ICANN would kick off its process of transferring Net4’s domains and customers to a third-party registrar, where none of this downtime nonsense would have occurred.

But the “resolution professional” trying to keep Net4 alive long enough to service its corporate creditors asked the insolvency court to ask ICANN to halt the termination, and the court complied.

Even though neither ICANN nor the court seems to be claiming that the court has any jurisdiction over a California non-profit and an RAA governed by California law, ICANN has nevertheless spent the last five weeks noticeably NOT terminating Net4 and saving its customers as promised.

Hedlund told the court (pdf) at the weekend:

Unfortunately, ICANN currently is not in a position to assist these individuals, businesses and organizations in transferring their domain names from Net 4 to another registrar because ICANN has no access to AuthInfo codes or the technical ability to generate them the way that registry operators, like the National Internet Exchange of India (NIXI), and registrars, like Net 4, can. Rather, ICANN can only assist these registrants by transitioning all of Net 4’s registrations to a functioning registrar through a bulk transfer in connection with ICANN’s termination of Net 4’s RAA, which ICANN has been prevented from doing as a result of this Hon’ble Tribunal’s Ad Interim Order of 16 March 2021

It’s not at all clear from the record why ICANN’s lawyers are allowing Net4’s customers to suffer — and its own compliance department to turn into a de facto replacement for Net4’s absentee customer service department — to abide by the suggestion of a court they claim has no power over it.

In fact, it’s not even clear why ICANN has been playing softball with Net4 since it first issued a breach notice against the firm in June 2019.

At that time, ICANN threatened to suspend Net4 for going into insolvency proceedings — the RAA gives it the right to do so unilaterally when “proceedings are instituted by or against Registrar under any bankruptcy, insolvency, reorganization or other laws relating to the relief of debtors”.

If it had wanted to, ICANN could have terminated Net4 and transferred its domains to a safe registrar in 2019, a year before its troubles (arguably exacerbated by the pandemic) started to cause serious problems for the registrar’s customers.

But ICANN did not act at that time. Instead, court filings and other documents suggest, it chose to cooperate with Net4 and the resolution professional, allowing Net4 to continue to market itself to new customers as an accredited registrar.

Hindsight is a wonderful thing, and it’s something ICANN didn’t have in June 2019.

But now that we do have that luxury, surely we can say that the Net4 debacle is going to have to go down as one of ICANN’s all-time most humiliating and potentially dangerous failures.

Squarespace files to go public in New York

Kevin Murphy, April 19, 2021, Domain Registrars

Web site tools maker and registrar Squarespace has filed its papers for an initial public offering on the New York Stock Exchange.

The company is focused on serving small businesses by simplifying the process of building web sites. It sells domains as a value-added service, but it’s not its core competency.

In filing for its IPO, the company said its revenue last year was $621 million, up 28% on 2019. It had a net profit of $30.6 million, down from $58.2 million the previous year.

Squarespace said it has 3.7 million unique subscriptions, but it did not break down how many of those are domain registrations.

Squarespace has been an ICANN-accredited registrar since 2018, but it has historically acted as a Tucows/OpenSRS reseller. That dynamic changed a little last year.

It sold about 10,000 .com domains per month on its own accreditation in the fourth quarter. It’s accredited in many other gTLDs, but has yet to sell any domains there on its own IANA tag.

Facebook gunning for Web.com in latest $27 million-plus cybersquatting lawsuit

Kevin Murphy, April 16, 2021, Domain Registrars

Facebook has sued what it believes is a Web.com subsidiary, claiming the company has been engaged in wholesale cybersquatting for well over a decade.

The complaint, filed in a Pennsylvania District Court, alleges that New Venture Services Corp current owns 74 domains, and has previously owned 204 more, that infringe its Facebook, Instagram and WhatsApp trademarks.

While no other named defendants are listed, the complaint makes it abundantly clear that it believes NVSC is a subsidiary of Web.com and a sister of Network Solutions, Register.com, SnapNames and Perfect Privacy.

Facebook is suing partly under the Anti-Cybersquatting Consumer Protection Act, allowing it to claim $100,000 damages per infringing domain, so we’re looking at a floor of $27.8 million of potential damages should the lawsuit be successful.

But it’s also looking for NVSC to hand over any profits it’s made from the domains in question, which are generally parked with ads and listed for sale via the SnapNames network for premium fees.

While NVSC is registered in the British Virgin Islands and uses a Pennsylvania post office box as its mailing address, there’s a wealth of evidence going back to 2007 that it’s been affiliated first with NetSol and then Web.com.

Web.com’s last regulatory filing before it went private in 2017 lists NVSC as a subsidiary, which is probably the most compelling piece of evidence establishing ownership.

It appears that NVSC is a shell company that Web.com uses to hold potentially valuable or traffic-rich domains that its customers have allowed to expire. The names are then parked and put up for resale.

Example domains listed in the complaint include httpinstagram.com, faceebbok.com, facebooc.net, instagram-login.com, and installwhatsapps.com.

One would have to assume these names were captured using a fully automated process; even a cursory human review would clock that they’re useful only to bad actors.

The lawsuit is the latest in Facebook’s crusade against mainstream registrars it believes are profiting by infringing its trademarks, which has already ensnared Namecheap a year ago and OnlineNIC in October 2019.

Namecheap recently filed a counterclaim in which it tries to get some of Facebook’s trademarks cancelled.

Facebook has all but admitted that putting legal pressure on registrars is part of its strategy when it comes to getting the policies it wants out of ICANN on privacy and Whois access, where there’s currently an impasse.

Here’s the complaint (pdf).

As Net4 goes dark, NIXI says customers won’t lose their expired domains

Kevin Murphy, March 29, 2021, Domain Registrars

Indian ccTLD registry NIXI has thrown a life vest to the owners of some 73,000 .in domain names, giving them a way to transfer out of slowly sinking registrar Net 4 India.

NIXI also said that it will not cancel expired domains that registrants have been unable to renew due to Net4’s ongoing problems.

“NIXI has decided not to discontinue the .IN Services for those .IN domain end users whose renewal is due,” the company said in a statement (pdf).

It sounds rather like registrants will be able to renew directly with the registry. They’ll also be able to transfer to a new registrar by emailing NIXI from the address in the Whois or mailing proof of company identity.

Why NIXI has chosen to act now, when Net4’s troubles have been known for almost year, is not clear.

“In the recent days, NIXI was informed that Net 4 India, who is one of the registrars of NIXI for Country code domain “.IN” has some issues in maintaining domains,” its statement says.

Net4’s web site isn’t resolving right now, at least for me, which probably has something to do with it.

The company has been in insolvency proceedings since 2017, a fact ICANN discovered when it started missing payments two years ago, but it was not until mid-2020 that Net4’s customers started complaining en masse about problems renewing and transferring their domains.

ICANN has processed thousands of complaints since then.

The registrar was told last month that ICANN was terminating its accreditation to sell gTLDs. Registrants of names in .com for example should be pretty safe, with their names automatically transferred to a new registrar, should ICANN follow through on its threat.

The termination was challenged in the insolvency court shortly before it would have become effective two weeks ago.

While ICANN does not believe it is subject to the court’s jurisdiction, it has decided to wait for an official ruling on the matter.

Pirate Bay founder says ICANN won’t let him be a registrar

Peter Sunde, co-founder of the controversial Pirate Bay file-sharing web service, says ICANN is unfairly refusing him a registrar accreditation and he’s not happy about it.

Sunde told DI at the weekend that his application for his new registrar, Sarek.fi, to obtain accreditation was recently denied after over 18 months on the grounds that he lied about his criminal convictions on his application form.

He denies this, saying that his crimes were not of the type ICANN vets for, and in any event they happened over a decade ago.

He thinks ICANN is scared about doing business with a disruptive and “annoying” “pain in the ass” with a history of criticizing the intellectual property industry.

Would-be registrars have to select “Yes” or “No” to the question of whether any officer or major shareholder of the company has:

within the past ten (10) years, has been convicted of a felony or of a misdemeanor related to financial activities, or has been judged by a court to have committed fraud or breach of fiduciary duty, or has been the subject of a judicial determination that is similar or related to any of these;

Sunde was convicted by a Swedish court of enabling copyright infringement via the Pirate Bay in 2009, and was sentenced to a year in prison — later reduced to eight months on appeal — and hundreds of thousands of dollars of fines.

The Pirate Bay was a web site that collected links to BitTorrent files, largely copyrighted movies and music.

Because he was not based in Sweden, Sunde avoided jail for several years despite an Interpol arrest warrant.

He eventually served five months of his sentence after being arrested in 2014.

He checked “No” on his registrar accreditation application form, on the basis that he had not been convicted of fraud or any of the other listed financial crimes, and certainly not within the last 10 years.

But ICANN took a broader interpretation, and refused him accreditation due to the Pirate Bay conviction and his Interpol status in 2014, he says.

Since then, the Org, including CEO Göran Marby (with whom he had a brief email exchange) have been ignoring his emails, he says.

Sarek.fi has already been accredited to sell ccTLD domains by the likes of Nominet, Verisign and Donuts, but ICANN’s rejection means the company won’t be able to sell gTLD names.

Sunde says he’s now faced with the likelihood of having to leave his own company in order to secure accrediation, though he’s not ruled out pursuing ICANN through its own appeals process.

He says he suspects ICANN just doesn’t want to do business with him due to his reputation as a disrupter. He’s attended ICANN meetings in the past but wants to get more involved in the policy process.

“it’s really a way for ICANN to make sure that an annoying person with media influence and with a dislike for centralised organisations and monopolies to be there to raise concerns — that they just proved valid,” he told DI in an email.

I take quite an offence to their denial. Not just on the basis of their interpretation of the law (copyright infringement is not fraud, i would have been convicted of fraud then…) Not just because it seems that it’s ok to be a murderer the past 10 years. Or a wife beater. Or a neonazi. These things that are a bit worse than being an internet activist, caring about the free and open internet. The biggest offence I take is to their obligation to the general public to have a broader membership than what they allow today.

Sarek.fi’s business model is to charge a flat fee above wholesale cost for every domain registered.

It’s Sunde’s second domain business. He launched Njalla, a Tucows reseller with a focus on protecting the privacy of registrants, in 2017.

ICANN finally cans Net 4 India

iCANN has terminated Net 4 India’s registrar accreditation, after many months of criticism and foot-dragging and a recent sharp uptick in customer complaints.

The move comes after an unprecedented four concurrent public breach notices over 20 months, almost four years after the company entered insolvency proceedings — grounds for termination which ICANN became aware of almost two years ago.

ICANN has received over 2,600 customer complaints over the last year, and almost 1,000 of these were submitted in February alone, according to the organization.

“The termination of the RAA is due to Net 4 India’s repeated and consistent breaches of the RAA and failure to cure such breaches despite multiple notices from ICANN and opportunity to cure,” ICANN said in its ginormous 59-page execution warrant (pdf).

Among the charges ICANN levels at Net4 is its failure to operate a functioning Whois service, something it’s warned the company about 30 times since November.

This hindered ICANN’s ability to investigate the more serious charges — that Net4 transferred some of its customers’ domains to a different registrar, OpenProvider, without their knowledge or consent, in violation of ICANN transfer policies.

The registrar also failed to enable its customers to renew their expired domains or transfer them to other registrars, also in violation of binding policy, ICANN said.

ICANN said:

Currently, more than 400 cases remain unresolved; and hundreds of complaints are still under review, which, once vetted, will become more new cases. In addition, ICANN Contractual Compliance continues to receive more than 20 new complaints each day. And it is not known how many more complaints are pending with Net 4 India that have not yet been brought to ICANN’s attention.

The termination notice contains 10 pages of complaints from Net4 customers, saying their domains could not be renewed or transferred. Some came from non-profits and hospitals. One registrant said he was contemplating suicide.

Net4’s customer service was non-responsive in each of these cases, the complainants said.

While some of Net4’s problems could be chalked down to coronavirus-related restrictions, the company has been in trouble for much longer.

It entered insolvency proceedings in 2017 after a debt recovery company called Edelweiss bought roughly $28 million of unpaid debt from the State Bank of India and took Net4 to court.

ICANN did not find out about this until April 2019 — it’s probably not a coincidence that this was the same month Net4 was late paying its first ICANN invoice — and it issued its first public breach notice in June that year.

Insolvency is grounds for termination in itself under the Registrar Accreditation Agreement.

It’s never been clearly stated why ICANN did not escalate at that time. Had it done so, it could have saved Net4’s customers from a world of hurt.

The Indian insolvency court admitted last month that it had no jurisdiction over ICANN or the Registrar Accreditation Agreement, both of which are governed primarily by California law.

Nevertheless, the court asked ICANN to not terminate Net4’s contract until after April 25, to give the company time to get its house in order.

But the termination notice, issued on Friday, will see the RAA cut off March 13. ICANN notes that it hasn’t heard from the court-appointed resolution professional, to whom previous breach notices were addressed, since mid-January.

Affected domains — there are still thousands under Net4’s accreditation — will be moved to another registrar under ICANN’s De-Accredited Registrar Transition Procedure.

Net4 could have a say in where its domains wind up. It’s already an OpenProvider reseller so that’s a possibility. Otherwise, ICANN will pick a beneficiary from a queue of qualified candidates.