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Will Larry Flynt sue over .xxx domains?

The porn publisher Hustler is “prepared to take whatever legal action may be necessary” to stop ICM Registry letting people register its trademarks in .xxx, according to a report.

I’ve been hearing rumors for several weeks that some companies are so unhappy about having to pay to block their brands in .xxx that they may consider legal action.

Now Xbiz reports that Hustler has said it refuses to be “shaken down” by the registry, but that ICM has not responded to its written demands for protection.

But will the company sue ICM (and ICANN?) over what may amount to just a few thousand dollars in defensive registration fees? And on what grounds?

In the US, the Anticybersquatting Consumer Protection Act, which has been on the books since 1999, is rather friendly to registries unless they behave really, really badly.

ICM will have some of the strongest trademark protection mechanisms of any gTLD, suggesting that it could have quite a strong defense to a cybersquatting claim.

Hustler could of course decide to sue based on a different law.

Threats of lawsuits are something that new gTLD applicants will need to bear in mind if they plan to apply for a TLD that encompasses an industry or community, as .xxx does.

Even if applicants manage to win the support of a portion of the affected industry, community members that think they’re likely to be cybersquatted or lose valuable real estate may well resort to the courts.

This is why about 30% of every new gTLD application fee goes into an ICANN war chest reserved in part for legal fees. ICANN knows what could be coming down the pike.

Xbiz quoted Hustler attorney Jonathan Brown saying: “We are constantly policing the registration and use of domain names that attempt to capitalize on Hustler’s trademarks.”

But the record shows that the company does not appear to be an especially aggressive enforcer of its marks in other top-level domains.

The magazine’s parent, LFP, has filed 29 UDRP complaints since 2002, all relating to Hustler and Barely Legal and, apart from hustler.tv, all for .com domains. The most recent filing was in 2009.

The company does not own the string “hustler” in .net, .org, .info, .biz or in a number of high-visibility ccTLDs that I checked. It does, however, own hustler.mobi.

Wiki to shake up the new gTLD market

Tens of thousands of dollars worth of registry secret sauce is set to be released under a Creative Commons license on a new wiki, courtesy of the International Telecommunications Union.

Applying for a new generic top-level domain could be about to get a whole lot cheaper.

Before October, the ITU plans to publish template answers to all 22 of the questions about registry technical operations demanded by ICANN’s Applicant Guidebook.

Because they will be published under a Creative Commons license, new gTLD applicants will be able to copy and paste the whole lot into their applications for free.

And because they will be on a wiki, approved contributors will be able to fine-tune the templates to increase their chances of passing ICANN’s technical evaluation.

Currently, gTLD applicants are generally paying registry back-end providers to take care of this part of their applications, paying $10,000 and up for the privilege.

I think the word that applies here is “disruptive”.

Consultant and former ICANN board member Michael Palage, who has worked on a number of previous TLD launches, is coordinating the creation of the templates with input from registries and engineers.

The resulting “best in class” material will also be used by the ITU and the League of Arab States in their bid for .arab and its Arabic equivalent, .عرب.

According to the Guidebook, applicants do not need hands-on experience running a registry in order to have their application approved. ICANN is trying to enable competition, after all.

But there is a period of pre-delegation testing that each successful applicant must endure before their new gTLD is added to the root, so a simple copy-paste of the ITU’s templates will not suffice.

I doubt this project will take a great deal of money out of the pockets of the incumbent registries – well-funded applicants will presumably be happy to pay the extra money for certainty – but it will provide a bit of flexibility for applicants not already in bed with a back-end.

It could also help open up the new gTLD market to companies that may not have otherwise considered it, such as those in the developing world.

Indeed, part of the rationale for the Creative Commons publication is to aid with “capacity building” in these nations, according to an ITU presentation delivered in Cairo this week.

We’ve already seen pricing competition hit the registry services market in the wake of the approval of the new gTLD program, now it appears we’re seeing the dawn of “free”.

Thousands of short .co domains available

The .co registry may have sold over a million domains since it launched a year ago, but there may be quite a bit of potentially valuable real estate still available.

.CO Internet said in its registrar newsletter this week that, as of May 31, 51.2% of three-letter domains and 71.1% of three-character combinations were still available.

On the back of the envelope I’m looking at, that works out to about 9,000 three-letter names and about 33,000 three-letter/number domains.

No three-letter domains are available for the basic registration fee in .com.

Three-letter domains are often considered fairly safe investments by domainers, from a cybersquatting risk perspective, but UDRP panelists don’t always agree.

UPDATE: In response to a few skeptical reader comments, I pinged .CO for clarification. It turns out that the quoted percentages include the seven Spanish IDN characters that .CO allows — á, é, í, ó, ú, ñ, ü.

Domains including these strings would presumably be far less appealing to registrants, and not all .co registrars offer IDN characters.

The number of pure ASCII three-letter domains available in .co is presumably much, much lower than my envelope math suggested.

ICANN has $750k to advertise new gTLDs

Don’t all rush at once.

ICANN is looking for an advertising agency to help it get the word out about the new generic top-level domains program, but it only has $750,000 to spend.

The organization published a request for proposals last night.

The budget is not much in the advertising world, especially considering that ICANN’s awareness program will have to be global and multilingual to be truly effective.

With such a limited budget, the RFP and accompanying FAQ acknowledges that it will need “creative solutions” from its ad agency.

This is likely to mean a big PR push for advertising equivalent editorial – lots and lots of news stories about new gTLDs.

To an extent, the word is already out by this measure. My standing Google News and Twitter searches for “ICANN” have been going crazy since the gTLD program was approved two weeks ago.

I think it’s fair to say that the vast majority deal of the coverage so far has been either neutral or negative, with much of the focus on potential legal, branding and security problems.

That’s pretty much par for the course in the domain name business, of course.

And ICANN does not necessarily need positive spin – it’s trying to raise awareness of the program’s existence, and negative coverage does that job just as well.

There is, as they say, no such thing as bad publicity.

ICANN’s job of promoting the program is already being done to a large extent by the registries, many of which were investing heavily in media outreach before new gTLDs were approved.

Neustar prices .brands at $10k

Neustar has unveiled extremely aggressive entry-level pricing for “.brand” applicants looking for a registry services provider – just $10,000 a year.

For the size of company expected to apply for .brands, that’s a rounding error. It may as well be free.

It’s called the Brand Assurance Package.

Applicants should not expect much for the money though – the package seems to be targeted at those that want to grab a .brand TLD in the first round, but may not do much at the second level initially.

It basically looks like a defensive registration package.

It covers application support and the registry infrastructure, but Neustar plans to ask clients to upgrade to more expensive services should they expand their .brand strategy in future.

Prices for those services have not been announced, but it would be a good idea to find out what they are before signing up – migrating a TLD between registries may not be trivial.

The fee does not cover ICANN’s application fees, which start at $185,000, of course.

There’s a market for this kind of thing. You need only read some of the marketing trade press to discover that there are a heck of a lot of brand managers scratching their heads about new gTLDs right now.

Many are taking a “wait and see” approach.

The problem with that strategy is that after April 12 next year we have no idea when – or, frankly, if – companies will next get their chance to apply for a new gTLD.

If Coca-Cola gets .coke in round one and .brands turn out to be a success, that could put Pepsi at a competitive disadvantage if it is left stranded in .com space, for example.

In addition, if you share your brand with a company in another vertical, applying in the first round is a must-have, unless you fancy your chances with ICANN’s untested objections procedures.

.xxx domains to get free virus scans from McAfee

ICM Registry has signed up with security software outfit McAfee to provide automatic virus scanning for all web sites hosted at .xxx domain names.

Under the $8 million deal, “every .XXX domain will be scanned for vulnerabilities such as SQL injection, browser exploits and phishing sites, reputational analysis and malware”, ICM said in a press release.

The subscription, which is based on the McAfee Secure offering, will be included in the price of the domain, which is expected to start at around $75 at the cheapest registrars.

McAfee normally charges a lot more than that; ICM has basically negotiated a bulk discount for its customers.

There are two ways to take advantage of the deal.

First, webmasters can choose to put some code on their sites that displays the McAfee Secure logo, potentially increasing customer confidence and ergo sales.

McAfee reckons sales can go up by as much as 12% when sites use this “trust mark”, based on some split-testing it did a couple years ago (results may vary, it adds).

Second, because McAfee is going to automatically scan every .xxx domain every day, whether the registrant wants it or not, porn surfers will be able to use McAfee SiteAdvisor, a free browser plug-in, to verify that a .xxx site is, for want of a better word, clean.

Whether you like .xxx or not, you’ve got to admit that this probably counts as a rare example of “innovation” from a domain registry.

On the flipside, registrars that already offer such services as add-ons, such as Go Daddy, won’t get the up-sell if ICM is giving it to every registrant from the registry side.

But that doesn’t seem to have stopped any registrars from signing up to sell .xxx domains.

Oddly, the press release does not name McAfee as the service provider, but its brand is all over the ICM web site so embarrassment is probably not a factor.

McAfee currently has about 80,000 sites using the service, which could easily grow to 500,000 or more if ICM gets as many registrations as it expects to.

Beware the new gTLD cuckoos

Let’s say that for some reason you’re a big fan of horses.

Ever since ICANN announced it was going to do new top-level domains, in 2008, you’ve been desperate to apply for .horse.

This TLD could not fail, you think to yourself. Everyone likes horses, right? You could have 500,000 registrations in year one, make yourself rich. Maybe buy yourself a new horse.

For the last three years you’ve attended every ICANN meeting, you’ve lobbied for the changes you want to see in the Applicant Guidebook, you’ve spent tens of thousands on hotels and airfare.

You’ve painstakingly built your “.horse” brand, raising money and throwing it into marketing and community building, creating demand among your fellow horse lovers.

The horse community knows about .horse, and they can’t wait for it.

Fast-forward to April 12, 2012.

ICANN has just published the list of first-round gTLD applicants. Your lovingly created .horse bid is in the system, ready for processing.

But wait, what’s that?

Somebody else – some douchebag businessman who doesn’t even like horses – has also applied for .horse, and his bank account is bigger than yours by a long way.

How’s that .horse idea looking now? Did you just spend three years building up somebody else’s brand? Do you think your community will care? Or notice? The other guy is called .horse too, remember.

Oops.

This scenario is very likely to become a reality.

Probably not for .horse, but for many of the new gTLD applicants that we’ve become aware of over the last few years.

If you look at any high-profile application, .gay or .music for examples, we already see multiple applicants, one of which has usually done more to promote the TLD than the others.

Look at Sophia Bekele’s .africa application, which appears to be running into this problem already, despite all of her painstaking outreach.

There will probably be other applicants for these strings that we will know nothing about until April.

You don’t score any points in the Applicant Guidebook for having a loyal fan base, spending oodles of cash on marketing or simply being first to put out a press release.

If you find yourself in a contested string situation, the only way out under ICANN rules is an auction. The applicant with the deepest pockets wins.

Because I’m desperate to one day coin a term and have it stick, I’m going to call these usurpers “cuckoos”. Because, you know… that thing that cuckoos do with their young.

There’s a cuckoo business model, too.

While ICANN has only endorsed auctions as the method of settling contests over non-community strings, that’s there more as a deterrent than as a solution.

ICANN wants competing applicants to come to some kind of agreement between themselves before it reaches that stage and auctions are expected to be rather rare.

What we’re likely to see is a bunch of applicants withdrawing their applications after being paid off, in cash, equity, or some other consideration, by more serious rivals for the same string.

Nobody wants to risk spending millions in an auction if they can make the problem go away earlier with thousands.

Fortunately for the cuckoos, ICANN offers a substantial refund, $130,000, for applicants that drop out before their Initial Evaluation is completed.

This puts the ICANN fee for getting into pay-off talks with a “proper” applicant at a quite reasonable $55,000. If you can score a couple of points of equity in a new registry, it could be a bargain.

Of course, you’d have to hope that your rival does not call your bluff and try to force you to auction. If that happens, it would probably be wisest to admit defeat and cut your losses.

It’s high-risk, sure, but it’s potentially high reward too, and I’m certain it will happen, even if it doesn’t look like it’s happening.

It’s going to be a poker game, and no mistake.

M+M intros flat-rate new TLD services

Minds + Machines is to offer its back-end registry services to new top-level domain applicants for a flat $100,000 annual fee, the company has announced.

The deal represents a bit of a switch for the registry market, which typically charges on a per-domain, per-year basis and doesn’t talk about pricing.

The $100,000 offer will not be extended to potentially high-volume gTLDs, such as .music, or geographic strings such as .nyc, M+M said.

Customers deemed “disadvantaged or needy” will get a 50% discount.

It’s a pretty aggressive move by the company, which has been waiting for years for ICANN to approve the new gTLD program and needs to grab market and mindshare quickly.

M+M was recently compelled to partner with a larger rival, Neustar, to run the back ends for geo-TLDs supported by governmental entities nervous about using a relatively inexperienced player.

“Until now, pricing for registry services has been shrouded in secrecy, and potential applicants have had to try to decipher convoluted pricing tiers,” M+M CEO Antony Van Couvering said in a press release.

He’s not wrong.

The large incumbent registry players have not publicly disclosed pricing, but I gather it’s usually around a couple of dollars per domain per year, with some additional flat fees.

From up-and-coming registry operators, I’ve heard figures as low as $0.75 per domain per year. Competition for applicant customers is, I’m told, getting pretty fierce.

While the new M+M pricing structure is obviously simpler, it will appeal largely to applicants expecting to take a relatively low registration volume, but still high enough that $100,000 does not work out to a ludicrous per-domain fee.

A 25,000-name community registry, for example, would pay the equivalent of $4 per domain per year, which might not make a heck of a lot of sense if they can get an equivalent service for a buck a name elsewhere.

On the other hand, a company targeting a stable base of 250,000 names may lose money in the years it ramps up to that goal, but it will see its margins swell as its registration volume grows.

Still, the new gTLD program is all about innovation (right?) and this seems to be one of the first tangible examples, so it will be very interesting to see how well it plays in the market.

VeriSign’s .net contract renewed

VeriSign has been given the nod to continue to run the .net domain registry after a vote by ICANN’s board of directors today.

The vote was 14-0, with director Bertrand De La Chappelle abstaining without explanation.

The renewal is hardly surprising – nobody thought for a second that VeriSign would fail to retain the contract – but the deal was controversial anyway, due to a Boing-Boing misunderstanding.

The contract still allows VeriSign to carry on raising prices, by up to 10% in any given year, and it still calls for ICANN to receive $0.75 per domain, which currently adds up to over $10 million a year.

The money is still ostensibly earmarked for special projects including extending ICANN’s outreach into developing nations and DNS security, and the resolution passed by the board today says:

ICANN commits to provide annual reporting on the use of these funds from .NET transaction fees.

This is presumably designed to address criticisms that it basically ignored its commitment under the 2006 .net agreement to set up two “special restricted funds” to manage .net cash, as I reported on here.

OpenRegistry wins .gent registry deal

Add another city top-level domain to your lists, the Belgian city of Ghent is set to apply for .gent, using OpenRegistry as its back-end registry software provider

The application for .gent will be made to ICANN by ComBell, a smallish local registrar, which already has the required local government support.

Ghent is Belgium’s third-largest city, with 250,000 residents, so we’re probably looking at a relatively low-volume TLD.

The “Gent” spelling is Dutch.

It sounds like ComBell will be running the infrastructure, assuming the bid is approved, using OpenRegistry’s software, which has also been selected to run a couple of small new ccTLDs.