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Trojan TLDs to get more scrutiny

Kevin Murphy, February 22, 2011, Domain Registries

ICANN has proposed a new policy for its new top-level domain program that would make it harder for community-based TLDs to liberalize their registration policies after they launch.

The idea is to prevent a replay of the recent .jobs controversy, in which registry Employ Media substantially altered its business model after failing to sell enough .jobs domains.

Because the Applicant Guidebook gives “community” TLD applications an opportunity to avoid a potentially costly auction if their TLD is contested by multiple applicants, there’s a risk of gaming.

Under the current rules, a company could win a contested TLD without paying big bucks, by promising to restrict it to a narrowly defined community of registrants.

It could later attempt to change its rules via ICANN’s Registry Services Evaluation Process to broaden or limit its potential customer base, potentially harming others in the community.

I call these Trojan TLDs.

Employ Media, for example, restricted .jobs domains to the names of companies, but now has licensed thousands of geographical and vocational generic names to a partner, over the objections of major jobs search engines such as Monster.com.

Under ICANN’s proposed policies (pdf), community TLDs would still have to pass through the RSEP, but they’d also be subject to a review under the Community Priority Evaluation.

The CPE is already in the Guidebook. It will be used to score applications based on the strength of community support. To avoid an auction, you need to score 14 out of 16 points.

ICANN now suggests that the CPE criteria could also be used to evaluate what it calls a “Community gTLD Change proposal” made by a TLD registry post-launch.

The new score would be used to determine whether to accept or reject the change:

If the sum of all identified score changes for the first three CPE criteria is zero or positive, the recommendation would be to accept the proposal, regardless of any relevant opposition identified. If the sum is minus one, the recommendation would be to accept the proposal, unless there is relevant opposition from a group of non-negligible size, in which case the recommendation would be to reject the proposal. If the sum is minus two or lower, the recommendation would be to reject the proposal.

The ICANN board would be able to deviate from the CPE recommendation, as long as it stated its reasons for doing so, and the registry would have the right to appeal that decision under the existing Reconsideration Request process.

These rules would apply to all new TLDs that designate themselves as community-based, apparently regardless of whether they successfully passed the CPE during the application process.

The rules are presented as a “discussion draft”, but I don’t think they’re going to be opened to official public comment.

ICANN names date for Applicant Guidebook

Kevin Murphy, February 22, 2011, Domain Registries

ICANN has put a tentative date on the release of its Applicant Guidebook for new top-level domains.

In publishing its summary and analysis of the proposed final version of the AGB today, ICANN also issued this timetable:

Expected Path Forward
* Board-GAC Consultations: 28 Feb – 1 Mar 2011
* ICANN meeting: 14 – 18 Mar 2011
* Release of Applicant Guidebook: 14 Apr 2011

Note that it says “release”, not “approval”.

The nearest scheduled ICANN board of directors meeting to the release date is April 21.

ICANN prepares for trademark fight with GAC

Kevin Murphy, February 22, 2011, Domain Registries

ICANN thinks the benefits of new top-level domains will outweigh the costs, and it preparing for a scrap when it meets its Governmental Advisory Committee in Brussels next week.

In a number of briefing documents published yesterday, ICANN makes it clear that it does not think the new TLD program will create a huge economic burden on trademark holders.

Brussels is possibly the final major hoop ICANN has to jump through before its board of directors will be able to sign off the Applicant Guidebook and start accepting new TLD applications.

There are a number of areas where the GAC and ICANN disagree. Next week’s meeting is intended to identify those differences, and to try to find ways to resolve them.

The GAC’s biggest problem with the new TLD program, as its members made clear in Cartagena and subsequently, is that it’s not convinced new TLDs won’t cost brand holders a bundle.

What will be the damage caused by cybersquatting? How much money will big business be forced to spend on defensive registrations?

Nobody knows for sure, and none of the independent third-party economic reports commissioned by ICANN ventures anywhere near a comprehensive empirical study.

So the GAC wants another economic study done, to quantify the costs and benefits of new TLDs, and to figure out how voluminous defensive registrations is likely to be.

ICANN disagrees, saying essentially that more studies are pointless, and that demand for defensive registrations in new TLDs are likely to be low.

The Board position is that defensive registrations will increase but not in numbers projected by some trademark holders

Estimates from the Coalition Against Domain Name Abuse, CADNA, last year put the cost to brands of the new TLD program at $746 million. But ICANN isn’t buying that:

The Board also believes that economic studies do not provide evidence that new TLDs will result in demand for defensive registrations. Existing independent studies, that the Board is seeking to validate, indicate that defensive registrations occur only in the very largest, well-established registries only.

the Board is seeking (and will publish) independent corroboration that:

• trademark holders generally do not register their trademarks in all the current generic TLDs.

• Therefore, it is not expected that trademark owners, in general, register their trademarks in new gTLDs, and

• due to the expected costs to run a registry and the expected low number of defensive domain name registrations, there is no economic incentive for an applicant to obtain a TLD for the sole purpose of making money from defensive trademark registrations.

ICANN does not identify these “independent studies”, but the data points cited in the document (pdf) point to a February 2009 article published on CircleID by Paul Stahura, and a comment made on that article by Richard Tindal that cites third-party data.

The Stahura report is arguably the most comprehensive carried out on defensive registrations in existing open gTLDs, concluding that the current cost to trademark holders is very low indeed, and that the bulk of typosquatting and trademark enforcement goes on in .com.

The research suggested that each new TLD would create costs in the tens of thousands of dollars per year, across the whole universe of trademark interests. It used baseline registrar fees in its calculations, unlike the CADNA report, which used sunrise fees about a hundred times greater.

But the Stahura study is “independent” only in the respect that it was not commissioned by ICANN or carried out with its blessing or participation.

At the time it was published, Stahura was president of eNom owner Demand Media, which is expected to be a new TLD applicant. Tindal, apparently also cited in ICANN’s latest report, was senior vice president, registry, for Demand Media.

Independently validating the report’s conclusions will be important, if only to avoid accusations that ICANN is making its decisions based on the views of those who would benefit from new TLDs.

Another of ICANN’s newly published briefing documents (pdf) also address the specific trademark protection mechanisms called for in the Applicant Guidebook.

The GAC has not yet published, or provided ICANN with, its specific recommendations relating to these mechanisms (I understand that will come in the next day or two) but they are expected to call for a tightening of the rules governing the Trademark Clearinghouse and Uniform Rapid Suspension policy.

Unlike several parts of yesterday’s briefing papers, ICANN’s language when discussing these two mechanisms does not suggest to me that it is preparing to substantially compromise.

With trademarks just one of many issues under discussion, Brussels is shaping up to becoming very interesting indeed.

.CO quiet on Super Bowl sales

Kevin Murphy, February 18, 2011, Domain Registries

Judging from its CEO’s latest blog post, .CO Internet doesn’t want to talk about how many new .co domain names were registered following its Super Bowl commercial with Go Daddy.

I take this as a sign that the event did not have an earth-shattering impact on its registration numbers.

Making some basic assumptions, reading between the lines, and using some back-of-the-envelope math, I estimate that the number of new .co domains registered was likely less than 50,000.

That’s not terrible, but I think it could take quite some time for the company to see a return on its investment, given that its margins on the promotional pricing would have been pretty thin and that at least a quarter of those registrations will likely disappear a year from now.

I doubt it made enough cash on the day to pay for Joan Rivers’ boob job.

But in Juan Calle’s post, he makes it clear that .CO is playing the long game. He wrote:

The most common success metric that many registries use is the total number of domain names registered. Although we are certainly enjoying our incredible growth – the number of .CO domains registered is simply not a metric we believe is robust enough to measure the kind of impact we fully plan and expect to have in the world over the long term.

You can be fairly sure that if .CO had doubled the size of its customer base last week, or broke through the million-domain milestone, Calle would not be talking in these terms.

He’s not keen on using secondary market prices to define success either, saying he expects it will be four or five years before the .co aftermarket matures.

Sedo’s .co auction, which ended yesterday, saw the majority of domains fail to meet their lofty reserves. But that’s not necessarily a slight on .co – auction activity in general has been sluggish recently.

Calle has some fetal ideas about how to measure the success of a TLD. He wrote:

To gauge the impact of the .CO extension, I think we will need to consider a combination of factors. Imagine, if you will, a sort of “Gross Domain Product” or “GDP,” measuring not only the total number of .CO registrations, but the number of websites developed, and the broader value of the economic activity happening within the .CO space.

It’s an interesting idea, but there’s a reason why most people judge TLDs based on their number of registrations. It goes something like: registrations = revenue = profit.

Selling domains is generally a registry’s only revenue stream. A registry with few registrations won’t turn a profit, and stands less of a chance of staying in business.

And for the aftermarket, a TLD retaining a large number of registered and renewing domains over the long term means there’s demand, which leads to higher prices.

Fortunately for .co, it is off to a great start, with probably something approaching 700,000 domains under its belt in just seven months, if my envelope-back is reliable.

Calle’s post gives every indication that the company plans to keep up its aggressive marketing spend, so the TLD stands, I think, a pretty good chance of breaking through the one million domains mark this year.

ICANN confirms TLD delays after sponsorship closes

Kevin Murphy, February 17, 2011, Domain Registries

ICANN has officially confirmed that it does not intend to launch the new top-level domains program at its meeting in San Francisco next month.

The news came just one day after the organization stopped accepting sponsorship deals, at the new controversially higher rate, for the meeting.

In a blog post, ICANN’s Jamie Hedlund said that a vote on the new TLD program would not be possible due to the upcoming consultation with the Government Advisory Committee in Brussels.

He wrote:

In addition to the Brussels consultation, the bylaws-defined consultation will take place on 17 March, the day before the Silicon Valley–San Francisco Board Meeting. Because of the timing of the bylaws consultation, the Board will not approve or announce the new gTLD program at that Board Meeting.

Now, the timing of this announcement could just be a coincidence, it could be related to ICANN’s fast-approaching deadline for publishing meeting documents, but the fact that it came the day after the sponsorship deadline for SF passed raised an eyebrow chez DI.

ICANN has known about the timing of the GAC consultation since at least January 25, when its board of directors approved the March 17 schedule.

Chairman Peter Dengate Thrush was quoted as saying new TLDs were likely off the menu for SF as early as February 3, and senior vice president Kurt Pritz echoed that view a week ago.

With March 18 no longer a possibility for the Applicant Guidebook getting approved, what does that mean for the new TLDs timetable?

Some observers believe that we’ll have to wait for the ICANN meeting in Amman, Jordan, in June, which could see the first-round application window open in October.

I’m not convinced we’ll have to wait that long. It seems possible that ICANN will eschew the fanfare of a public meeting and approve the final draft of the Guidebook over the phone whenever it’s ready.

The first new TLDs are expected to go live on the internet approximately 15 months after the Guidebook gets the nod.