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Verisign facing its own activist investor

Kevin Murphy, April 29, 2016, Domain Registries

While new gTLD registries Rightside and Minds + Machines have faced board-room challenges by activist investors in recent months, it seems industry heavyweight Verisign is contended with a similar problem.

John Chevedden, once described as an “economy class” activist due to his relatively small stakes, is attempting to give smaller Verisign shareholders the ability to propose directors for the company’s board.

Rather than attempting to gut the companies he invests in, he tries to make the odd incision into their corporate governance in order to give smaller investors a greater voice in their companies.

He’s filed a proposal, which will be voted on at Verisign’s June 9 annual general meeting, for a new “proxy access” bylaw.

Essentially, the proposal would allow an unlimited number of shareholders who collectively own over 3% of the company’s stock to propose two people for director elections (or 25% of the board, whichever is greater).

But Verisign’s current board is recommending that shareholders vote against the proposal, saying it’s “unnecessary”.

The company says that it plans to introduce its own proxy access bylaw that would be slightly different.

The Verisign alternative would limit the size of the nominating gang to 20 shareholders. That would mean that each individual investor would have to own much larger stakes, in order to pass the 3% threshold and nominate director candidates.

Verisign says Chevedden’s proposal, which does not limit the number of small shareholders involved, would be expensive and unwieldy to manage.

Chevedden reportedly has quite a decent success rate with these kinds of proposals.

Two more dot-brands self-terminate

Kevin Murphy, April 29, 2016, Domain Registries

The dot-brand dead-pool is now up to three gTLDs.

FLSmidth, which supplies machinery to the cement industry, and Emerson Electric, which also makes industrial machinery, have both decided that they don’t need their new gTLDs.

The affected gTLDs are .flsmidth and .emerson.

Both companies have filed cursory notices of termination with ICANN, indicating that they no longer wish to have a new gTLD Registry Agreement.

Neither company has yet received a preliminary determination from ICANN, a step that will lead to a month-long public comment period before the contracts are terminated.

In Emerson’s case, .emerson has not been delegated so there will be no impact on the number of TLDs in the root.

FLSmidth’s dot-brand has been live since September 2014, but the company never made the transition away from its .com.

While registry reports show that six domains have been registered, its latest zone file shows only the obligatory nic.flsmidth domain is active.

The first new gTLD to cop out was .doosan, the dot-brand for Korean conglomerate Doosan. It took over four months from filing its notice last October to the TLD being retired.

.web has an auction date

Kevin Murphy, April 29, 2016, Domain Registries

The .web gTLD will go to auction July 27, according to ICANN.

The organization released an updated auction schedule (pdf) on Wednesday night that also slates .kids/.kid for an auction on the same day.

Both auctions have confusing “indirect contention” elements, where two strings were ruled confusingly similar.

With .web, it’s lumped in with Vistaprint’s application for .webs, which lost a String Confusion Objection filed by Web.com.

Under ICANN rules, .webs is confusingly similar to to Web.com’s .web, but not to the other six .web applications.

This means that Vistaprint and Web.com basically are fighting a mini contention set auction to see who gets their applied-for gTLD.

If Web.com wins the auction for .web, Vistaprint cannot have .webs. However, if any other .web applicant wins, Vistaprint can go ahead with .webs.

Either way, there will be a .web delegated this year. Google, Donuts, Radix, Afilias, Schlund Technologies, Nu Dot Co are all contenders.

In the case of .kids/.kid, the one applicant for .kid — Google — won SCOs against DotKids Foundation and Amazon by default because both .kids applicants failed to respond to the complaints.

DotKids Foundation recently lost a Community Priority Evaluation, enabling the auction to go ahead.

Because Google is in contention with both .kids applicants, only one of the two strings will ultimately be delegated — .kids and .kid will not coexist.

The only other scheduled auction right now is that of .doctor, which is planned for May 25. Radix, Donuts and The Medical Registry will fight it out in this rather less complex battle.

It’s worth noting that if any of these contention sets unanimously choose to resolve their differences via private auction, none of the ICANN auctions will go ahead.

Verisign has great quarter but sees China growth slowing

Kevin Murphy, April 29, 2016, Domain Registries

Verisign beat its sales expectations in the first quarter of the year, but leadership said rapid growth from Chinese registrants will now “normalize”.

The .com/.net registry last night reported net income up 21% at $107 million, on revenue that was up 9.1% to $282 million.

That’s based primarily on it selling 2.65 million net new .com/.net names during the quarter, at 7.1% increase on the Q1 2014 level baseline. It said it sold 10 million new names in the quarter, up from 8.7 million a year ago.

For comparison, Q1 2015 saw 1.51 million net adds across the two TLDs. Three months ago, the company had predicted net adds to be 1.5 to 2 million names.

It had 142.5 million names at the end of the quarter, 126.6 million of which were .com.

CEO James Bidzos told analysts: “We again saw activity coming from registrars in China that exceeded our expectations.”

However, he added: “At this point, we expect activity from registrars in China to normalize as we continue through the second quarter.”

When pressed, CFO George KIlguss elaborated (according to the SeekingAlpha earnings call transcript):

as we look at the trends, we’ve seen the demand that happened in the second half of the first quarter kind of ebb and flow. So we saw it come. It was pretty strong for a few weeks and then it came back to more than normalized path. So we don’t have a perfect crystal ball, but based on the trends that we’ve seen that we’ve been tracking, it seems to be back on the normalized path for that particular region, at least as what we’ve seen historically.

Verisign is currently negotiating for the renewal of its .com contract with ICANN, which may or may not enable it to raise its government-frozen registry prices in future.

The .web gTLD could go live in 2016

Kevin Murphy, April 27, 2016, Domain Registries

The new gTLD .web could be coming to the internet sooner than expected after two of the remaining barriers to delegation disappeared.

Following the withdrawal last week of an application for the plural .webs, an auction for .web could happen in the next couple of months, enabling a go-live date possibly in 2016.

.web, often considered the most desirable truly generic gTLD, has had a rough time of it in the 2012 ICANN new gTLD program.

There were seven applications for the string. Google, Web.com, Donuts, Radix, Afilias, Schlund Technologies, Nu Dot Co all applied.

The registrar Web.com (owner of Network Solutions, Register.com, et al) appears to be especially keen to get the domain, given that the string more or less matches its brand.

It perhaps should have been a straightforward auction shoot-out.

But, complicating matters, bespoke printing firm Vistaprint had filed two applications — one vanilla, one “community” based — for the plural version of the string, “.webs”.

Vistaprint runs a website development service called Webs.com. It’s the plural of the Web.com brand.

Web.com wasn’t happy about Vistaprint’s .webs applications, so it filed String Confusion Objections against both, arguing that .web and .webs were too confusingly similar to co-exist on the internet.

While there are now many examples of plurals and singulars living together (see .auto/s, .fan/s and .gift/s), the registrar won both of its SCO complaints, meaning Vistaprint’s two applications and the seven .web applicants were lumped together into the same contention set.

If two strings are in the same contention set, only one can survive to be ultimately delegated to the DNS.

Vistaprint appealed the SCO decisions, first with a Request for Reconsideration to the ICANN board (predictably unsuccessful) and then with an Independent Review Process complaint.

While the IRP was being mulled over, .web was in limbo.

The IRP was unsuccessful. The IRP panel ruled in October that ICANN had not violated its bylaws in accepting the SCO panel’s decision.

But it gave ICANN a nudge, suggesting that perhaps it could give Vistaprint leave to appeal the original SCO determinations via another mechanism.

In early March, the ICANN board proper decided that:

the Vistaprint SCO Expert Determination is not sufficiently “inconsistent” or “unreasonable” such that the underlying objection proceedings resulting in the Expert Determination warrants re-evaluation.

The board said that the .web/.webs contention set should be processed as normal; in other words: go to auction.

That removed the first barrier to the .web/.webs auction going ahead.

The second barrier was the fact that Visaprint had file two applications for .webs — one regular, one “community”.

By self-identifying as a “community”, Vistaprint qualified for the Community Priority Evaluation. A winning CPE means all competing applications — including the .web applications in this case — would be eliminated.

While the CPE process is far from perfect, I think the chances of Vistaprint winning would be pretty slim.

Perhaps Vistaprint agreed with me. Whatever the thought process, the company has withdrawn its “community” application. The withdrawal was reflected on the ICANN web site at the weekend, according to the little birds at DI PRO.

What this means is that the seven .web applications and Vistaprint’s remaining, non-community .webs application will be going to auction together.

It could be a private auction, where the proceeds are divvied up between the losers, or an ICANN “last resort” auction, where ICANN gets all the money.

Either way, the winning bidder is likely to pay a LOT of cash for their chosen string.

GMO Registry paid $41 million for .shop back in January. I’d be flabbergasted if .web wasn’t eight figures too.

If Vistaprint offers to pay more money for .webs than Web.com wants to pay for .web, Web.com will be eliminated from the race and Vistaprint will get .webs.

In that scenario, the remaining six .web applicants fight it out for control of the gTLD.

However, if Vistaprint loses against Web.com then all of the seven .web applicants fight it out at auction.

Depending on the identity of the winner and the timing of auctions and pre-delegation testing, it could slip into the root and possibly even become available before the end of the year.

That’s assuming no more surprises, of course.

UPDATE: This post originally incorrectly described the rules of the .web/.webs auction. It was updated with a correct explanation at 2120 UTC.