How much money will ICM make from .xxx blocks?

There’s a pretty ludicrous report in the Australian media today, claiming that Aussie businesses are being forced to pay AUD $400 million to ICM Registry to protect their brands in .xxx.
The laughable number ($411 million) appears to have been fabricated from whole cloth. The report in the Murdoch-owned Herald Sun does not even bother trying to source or justify it.
But it’s becoming increasingly clear that ICM is going to make some money out of its .xxx sunrise, including from Sunrise B – the one-time defensive “blocks” that do not result in a domain registration.
The company priced Sunrise B at $162 per domain based on an assumption that it would see 10,000 of them. Any fewer and it would lose money, any more and it would profit.
According to official registry reports, no TLD launched in the last five years – .asia, .co, .jobs, .mobi – saw more than about 10,000 domains defensively registered during its sunrise period.
But my hunch is that .xxx will blow those out of the water. I would not be at all surprised if the final number tops 20,000 names.
It’s just a hunch at this point, based on a comparison to the .co launch – which had a reported 11,000 sunrise applications last year – and four main assumptions:
First, that 10,000 was a conservative estimate. I don’t think ICM would have risked making a big loss.
Second, based on a very small number of conversations, I think that some companies are not taking any chances. They’re applying for blocks in more second-tier brands that maybe they strictly need to.
Third, ICM has a much larger registrar channel than .co enjoyed, and much more aggressively FUDdy registrar marketing tactics.
ICM has approved about 70 registrars, compared to the 10 that .CO Internet had at launch, and a lot of registrar promotion has focused on the “Protect Your Brand!” angle, which was discouraged by .co.
Fourth, the vast amount of mainstream media attention the .xxx sunrise has been receiving, most which has doggedly followed the same line as the registrar FUD.
While the value of defending against typosquatting during the .co sunrise last year was probably more important to trademark holders from a security and traffic loss perspective, the brand protection angle did not receive nearly the same amount of press as .xxx has.
ICM president Stuart Lawley has done dozens of media interviews since the sunrise kicked off last week. I even heard him on a UK radio news show aimed at teenagers.
And this press has been going on for over six years, remember. ICANN first approved .xxx in 2005, and the story has been in and out of the media ever since.
It’s worth noting that a Sunrise B block, with its one-time fee, basically denies ICM Registry a bunch of recurring revenue events forever.
Nike is going to be paying $20 to .CO Internet for its defensively registered nike.co domain name every year until the end of time, in addition to the up-front sunrise fee.
If it blocks nike.xxx, it will pay $162 to ICM now but it will also deny the registry its $60 fee for every year it could have been a renewing domain. In three years, ICM’s losing revenue.
But Sunrise B is very probably going to be profitable for ICM. At 20,000 applications, its top line would be $3.24 million, with profit probably pushing seven figures.
Nowhere near $411 million, obviously, but not a bad payday for selling domain names that will never resolve.

VeriSign CFO quits after buyout rumors

VeriSign has just announced that its chief financial officer, Brian Robins, will leave the company at the end of the month.
The announcement follows a couple of trading days in which VeriSign’s shares have rallied on rumors that the company was on the verge of being acquired.
Ironically, it was Robins’ decision to cancel an appearance at a financial conference that sparked the rumors.
Robins’ resignation follows that of his old boss, CEO Mark McLaughlin, who quit to join a pre-IPO tech startup in late July.
Robins’ destination is not yet known, and VeriSign has yet to name a replacement.

If you pre-register a domain, you are the product

“If you’re not paying for it, you are the product.”
That’s a maxim that has been doing the rounds on the internet for the last few years to describe services such as Facebook, which gets users in for free and then monetizes them to third parties.
It struck me today that this saying also applies to services that allow you to pre-register domain names in non-existent top-level domains.
If you’ve recently registered your interest in a domain in a new gTLD – example.web, say – you’ve gained nothing and potentially lost a lot.
Pre-registering creates two main benefits as I see it, and neither accrues to the registrant.
First, you’re now on the company’s mailing list. When your selected new gTLD(s) go live, the company you pre-registered with is going to try to convert you into a paying customer.
Second, you’ve just freely contributed information to an extremely valuable database, possibly to your own detriment.
When new gTLDs launch, many registries are going to reserve thousands of premium domains to either sell or auction at a later date, to periodically drum up interest in their extensions.
How will these companies decide which domains to add to their premium lists? A database of hundreds of thousands of pre-registrations would be a great place to start looking.
If you pre-register, what you may be doing is voting for your desired domain to be reserved by the registry, for possibly years, and then sold at a large premium.
Something to think about.

What The X Factor taught me about new gTLDs

Elitist, pseudo-intellectual snob that I am, I rarely watch commercial television. But I make an exception when the The X Factor is on.
I’m not sure I’d even describe the show as a guilty pleasure. It’s just consistently great television.
I’m not alone. According to BARB, which tracks viewing figures in the UK, The X Factor is Britain’s top-rated show, with about 11 million viewers each Saturday night.
It is estimated that a 30-second spot in the latest series costs advertisers £154,000 ($250,000), which will likely increase dramatically as buzz builds toward the December finals.
If a company is willing to spend $250,000 on a single ad spot, I got to wondering how these advertisers use domain names. The price of a new “.brand” gTLD is in the same ball park, after all.
So rather than zoning out during The X Factor‘s commercial breaks last night, I took notes.
Of the 15 brands advertised during the show, five did not promote their online presence at all. Ads for products such as breakfast cereal showed no URLs, search terms or Facebook profiles.
Another three displayed their domains on-screen as footnotes, but with no explicit call to action.
Two advertisers, amazon.co.uk and weightwatchers.co.uk, explicitly encouraged the viewer, on-screen and in the voice-over, to visit their sites.
Barclays was the only advertiser that asked viewers to find it using a search engine. Its call to action was “search Barclays offset mortgage”, with no accompanying URL.
There were also a couple of ads that used call-to-action .co.uk domains.
Mars used bagamillionmovies.co.uk to direct viewers to an M&Ms movie competition, while Microsoft (windows.co.uk/newpc) was the only advertiser to use a directory in addition to its domain.
But the two commercials that interested me the most were those that used alternative or “new” TLDs – the ones that are usually afterthoughts when you’ve already put a .com into your cart.
Mars used getsomenuts.tv to advertise Snickers, and the healthcare giant Johnson & Johnson asked viewers to visit sleepchallenge.info.
That’s right. J&J seems to be spending six-figure sums advertising a .info domain during Britain’s most-watched TV show every Saturday night.
This is noteworthy for, among other reasons, the fact that J&J has a seat on the board of directors of the Association of National Advertisers.
The ANA is of course currently leading the campaign against ICANN’s new gTLD program.
ANA general counsel Doug Wood rubbished .info, albeit only by association, in a video interview with WebProNews on Friday, stating:

The idea of [ICANN’s new gTLD program] being successful and delivering the competition or the innovation that they’re speculating on is clearly questionable to a great degree, based purely on the success or lack of success of the last group they introduced – .biz, .travel, .jobs, etc – none of which has as done anything significant vis-a-vis competition or innovation

I would suggest that the existence of sleepchallenge.info shows how dubious these claims are.
First, sleepchallenge.info redirects to a rather longer URL at johnsonsbaby.co.uk. This indicates that it was registered purely to act as a memorable and measurable call-to-action domain.
The fact that J&J used the .info, rather than sleepchallenge.co.uk, which it also owns, suggests that the company appreciates the additional meaning in the word “info”.
(Mere added semantic value would make a poor definition of innovation, but until now it’s been one of the few things that new gTLD registries have been able to offer.)
The domain sleepchallenge.info was a hand registration in May 2010, according to Whois records, costing J&J just $35 from Network Solutions.
The .com equivalent has been registered since 2007 and would have cost substantially more to acquire from its current registrant, if indeed it was for sale, which it may not be.
Because ICANN introduced competition into the gTLD market 11 years ago, J&J was able to obtain a meaningful domain for a massive ad campaign at a low price.
Watching The X Factor has taught me that Johnson & Johnson is an ANA board member that has already directly benefited from new gTLDs.
I guess commercial TV can be educational after all.

Olympic-backed .sport bidder looking for partners

SportAccord, a worldwide coalition of sports federations with Olympic support, is looking for partners to help it with a possible .sport top-level domain bid.
In a request for proposals published today, the organization said it is looking not only for expertise and potential technical partners, but also financial backing:

The objective of SportAccord is to develop the best possible promotion of Sports Themed gTLDs by leveraging its unique relationship with its members, and to establish a usage policy that ensure respect of Sports key values.
SportAccord is therefore seeking to developing partnership with entities that could bring technical expertise and financial support to the common development of Sport themed gTLDs.

The 17-question RFP reveals that the organization has evidently done its homework.
Questions cover pertinent topics such as registrar integration, trademark protection, premium name monetization, and how to beat the ICANN threshold score for community-based applications.
The deadline for replying is September 30.
SportAccord, based in Lausanne, Switzerland, is an umbrella group comprising the international federations for over 100 sports, covering everything from football to tug of war.
The RFP states that the International Olympic Committee supports its gTLD initiative.
That’s an endorsement that may prove the deal-breaker for any .sport application. The IOC has been a vigorous defender of its rights in the new gTLD program.
Its lobbying efforts most recently compelled ICANN to build special protection for Olympic trademarks into the Applicant Guidebook itself (as well as lumbering the GNSO and ICANN staff with a bunch of unnecessary policy-development work).
Two other organizations have previously announced .sport applications
The loudest, Ron Andruff’s DotSport LLC, had appointed some of SportAccord’s member federations to its policy advisory council.
But SportAccord says in its RFP that “neither SportAccord nor any of its Members have made any commitment to support or participate in any sport themed gTLD.”
It looks like we may be looking at yet another push of the reset button on a well-lobbied gTLD.
The SportAccord RFP can be downloaded here.

Domainer Jan Barta invests in dotFree

The Czech company hoping to apply to ICANN for the .free top-level domain next year has secured an undisclosed investment from local domainer Jan Barta.
Jeremie Godreche from dotFree described the deal as “an active and long term relationship”.
Barta is the founder of Elephant Orchestra, a domain investment and lead generation company based in Prague. You can read a recent interview with him in the Prague Post here.
DotFree appears to have recently overhauled its web site also.
It now has a planned launch schedule that would see a .free founders program open in January 2012 and its sunrise period begin a year later.
Now there’s confidence.
I expect .free to be a contested gTLD, and we won’t find out until April at the earliest how many other applicants are also chasing it.
The company plans to monetize .free by charging for 200,000 premium names and imposing an annual upgrade fee on registrants with more than one non-premium domain.
It has had 97,000 pre-registrations since last November.

Most new gTLDs will fail

We’re going to see hundreds of new gTLDs over the coming years, but we’re also going to see potentially hundreds of failures.
That’s the view being espoused by some of the biggest cheerleaders of ICANN’s new generic top-level domains program, including its former chairman, at the .nxt conference this week.
During the opening session on Wednesday, a panel of experts was asked to imagine what the domain name industry might look like in 2017, five years after the first new gTLDs go live.
“My assumption is that many TLDs will have completely failed to live up to their promoters’ hype,” said Minds + Machines executive chairman Peter Dengate Thrush, whose last action as ICANN chair was pushing through approval of the program. “But on the other hand many of them, and I hope a majority of them, will be thriving.”
Anyone expecting to build a business on defensive registrations better think again, panelists said.
“Many ill-conceived generic-term TLDs will have failed by that point, especially those generic term TLDs that are taking comfort in the .xxx Sunrise Part B revenue model,” said Paul McGrady of the law firm Greenberg Traurig.
“There’s definitely going to be burnout in the brand-owner community, so don’t expect the brand owners to show up to to fuel that,” he said.
Others, such as Tucows CEO Elliot Noss, went further.
“I think there’ll be more failures than successes and I’m not fussed by that,” said Noss. “For the users in the namespace, it’s not like they’re left high and dry.”
He compared failing gTLDs to the old Angelfire and Geocities homepage services that were quite popular in the late 1990s, but which fizzled when the cost of domains and hosting came down.
But while the disappearance of an entire gTLD would take all of its customers with it, a la Geocities, that’s unlikely to happen, panelists acknowledged.
ICANN’s program requires applicants to post a bond covering three years of operations, and it will also select a registry provider to act as an emergency manager if a gTLD manager fails.
When gTLD businesses fail, and they will, they’re designed to fail gracefully.
In addition, taking on an extra gTLD after its previous owner goes out of business would be little burden to an established registry provider — once the transition work was done, a new string would be a extra renewal revenue stream with possibly little additional overhead.

M+M surprised by .mumbai snub

One of Minds + Machines’ key top-level domain applications has been thrown into confusion after government support for its .mumbai bid was apparently revoked.
In a letter that surfaced on the ICANN web site this week, Y.S. Mahangade, deputy director of IT at the Municipal Corporation of Greater Mumbai, wrote (pdf):

Honorable Deputy Mayor of MCGM inadvertently issued a letter to one organization which has been revoked later by Honorable Deputy Major of MCGM. It may please be noted that the official position of the City of Mumbai is communicated by Municipal Commissioner.

Under ICANN’s rules, all applications for geographical gTLDs must be backed officially by the local government, otherwise they get rejected.
According to Wikipedia, the Mayor of Mumbai (and presumably the deputy) has a “largely ceremonial” function, “as the real powers are vested in the Municipal Commissioner”.
Wikipedia does not say what kind of power the deputy director of IT wields. I’m guessing it’s not much.
M+M CEO Antony Van Couvering said in a statement:

This is the first we have heard about this and we are looking into the matter with our client, India TL Domain Pvt Ltd, to whom the original letter of appointment was issued by the Deputy Mayor of Mumbai. Once we understand what the situation is viz-a-viz India TL Domain Pvt Ltd and the City of Mumbai, we will provide an update.

You can view the letter of support from the deputy mayor here.
M+M announced its deal with the .mumbai applicant, India TL Domain, in June. As I noted at the time, not much is known about the company.
But according to official records, the company’s managing director is Ashok Hiremath, who’s also chairman of Mumbai-based fungicide manufacturer Astec Lifesciences.
His brother Suresh, now apparently a British citizen living in London, appears to be the only one of the company’s three directors to have engaged, albeit lightly, in ICANN policy development.
The third director is also Astec’s corporate secretary. The company shares its address with Astec.
In June, M+M’s parent company, Top Level Domain Holdings, issued two million new shares to an unnamed consultant as a result of the .mumbai deal, raising £160,000 ($260,000).
This is not the first time a geographic gTLD applicant that apparently raised support from the necessary governmental entity has had its plans thrown into doubt.
The same happened to DotConnectAfrica, a potential .africa bidder, in May, after the African Union apparently did an about-face.
Mumbai is India’s largest city, with over 20 million citizens. It’s also the richest (although the poverty there is enough to make you weep) making .mumbai a potentially lucrative gTLD.

Want Beyonce.xxx? JustinBieber.xxx? Forget it

ICM Registry has banned a whole bunch of celebrity names from the new .xxx top-level domain, in order to scupper cybersquatters and opportunistic porn webmasters.
Want to register Beyonce.xxx, AngelinaJolie.xxx, OlsenTwins.xxx, Madonna.xxx, BritneySpears.xxx, KimKardashian.xxx, HalleBerry.xxx or WinonaRyder.xxx?
How about JustinBieber.xxx, BradPitt.xxx, CharlieSheen.xxx, SimonCowell.xxx, GeorgeMichael.xxx, EltonJohn.xxx, VerneTroyer.xxx, DonaldTrump.xxx or OsamaBinLaden.xxx?
Forget it. According to Whois records, you’re out of luck on all counts. They’ve all been reserved by the registry.
These are all among what I’m guessing is at least hundreds – maybe more – of celebrity names that ICM has blocked from ever being registered.
The company won’t say how many celebrities have been afforded this privilege, or how it came up with the list, but it has said in the past that a total of about 15,000 domains have been registry-reserved.
That also includes the names of the world’s capital cities, culturally sensitive strings put forward by a handful of governments, and the “premium” names that ICM plans to auction.
I’m wondering what the cut-off point is for celebrities. How famous do you have to be to get your .xxx blocked by default by the registry? B-List minimum? D-List? What database is ICM using?
American Pie actor Tara Reid just entered Celebrity Big Brother here in the UK, which pretty much means her career is over, and she’s managed to make it to ICM’s reserved list.
While ICM has always said it would help protect personal names from abuse, it’s never been entirely clear about how it would go about it.
Its registry agreement with ICANN has for some time said that “unauthorized registration of personal names” would be forbidden, but there were no real details to speak of.
As I reported last week, its souped-up cybersquatting policy, Rapid Evaluation Service, has a special provision for personal names.
But presumptively blocking a subset of the world’s famous people from .xxx is bound to raise questions in the wider context of the ICANN new gTLD program, however.
As far as I can tell, no corporate trademarks have been given the same rights in .xxx as, say, David Cameron or Barack Obama.
If ICM can protect Piers Morgan’s “brand”, why can it not also protect CNN? Or Microsoft or Coke or Google? None of these brands are registry-reserved, according to Whois.
The trademark lobby will raise this question, no doubt. ICM has its own celebrity Globally Protected Marks List for .xxx, which only applies to individuals, they could argue.
There are some differences, of course.
Celebrities sometimes find they have a harder time winning cybersquatting complaints using UDRP if they have not registered their names as trademarks, which can be quite hard to come by, for example.
(UPDATE: And, of course, they may not qualify for ICM’s sunrise period if they don’t have trademarks, as EnCirca’s Tom Barrett points out in the comments below).
In addition, celebrity skin is a popular search topic on the web, which may give cybersquatters a greater impetus to register their names as domains, despite the high price of .xxx.
Also, if a registry were to reserve the brand names of, say, the Fortune 1000, it would wind up blocking many dictionary or otherwise multi-purpose strings, which is obviously not usually the case with personal names.

Libyan registry hacked by anti-Gaddafi crackers

The official registry web site for the Libyan top-level domain has been defaced by anti-Gadaffi crackers.
Nic.ly currently looks like this (click to enlarge):

The attack appears to be limited to the web server – as bit.ly domains are still resolving I assume the culprits have not managed to take control of the registry’s more important systems.
Libya famously cut itself off from the internet in March, shortly after the ongoing rebel uprising – which today arrived on the streets of Tripoli – kicked off.
The .ly domain also went completely dark in 2004 after a communication breakdown between the registry manager and IANA.
(via Sophos)