Afilias set to get .hotel despite hacking claims

Afilias is back on the path to becoming the registry for .hotel, after ICANN decided claims of hacking by a former employee of the applicant did not warrant a rejection.
The ICANN board of directors decided last week that HOTEL Top-Level Domain Sarl, which was recently taken over by Afilias, did not gain any benefit when employee Dirk Krischenowski accessed competing applicants’ confidential documents via an ICANN web site.
Because HTLD had won a Community Priority Evaluation, it should now proceed to contracting, barring any further action from the other six applicants.
ICANN’s board said in its August 9 decision:

ICANN has not uncovered any evidence that: (i) the information Mr. Krischenowski may have obtained as a result of the portal issue was used to support HTLD’s application for .HOTEL; or (ii) any information obtained by Mr. Krischenowski enabled HTLD’s application to prevail in CPE.

It authorized ICANN staff to carry on processing the HTLD application.
The other applicants — Travel Reservations, Famous Four Media, Radix, Minds + Machines, Donuts and Fegistry — had called on ICANN in April to throw out the application, saying that to decline to do so would amount to “acquiescence in criminal acts”.
That’s because an ICANN investigation had discovered that Dirk Krischenowski, who ran a company with an almost 50% stake in HTLD, had downloaded hundreds of confidential documents belonging to competitors.
He did so via ICANN’s new gTLD applicants’ portal, which had been misconfigured to enable anyone to view any attachment from any application.
Krischenowski has consistently denied any wrongdoing, telling DI a few months ago that he simply used the tool that ICANN made available with the understanding that it was working as intended.
ICANN has now decided that because the unauthorized access incidents took place after HTLD had already submitted its CPE application, it could not have gained any benefit from whatever data Krischenowski managed to pull.
The board reasoned:

his searches relating to the .HOTEL Claimants did not occur until 27 March, 29 March and 11 April 2014. Therefore, even assuming that Mr. Krischenowski did obtain confidential information belonging to the .HOTEL Claimants, this would not have had any impact on the CPE process for HTLD’s .HOTEL application. Specifically, whether HTLD’s application met the CPE criteria was based upon the application as submitted in May 2012, or when the last documents amending the application were uploaded by HTLD on 30 August 2013 – all of which occurred before Mr. Krischenowski or his associates accessed any confidential information, which occurred from March 2014 through October 2014. In addition, there is no evidence, or claim by the .HOTEL Claimants, that the CPE Panel had any interaction at all with Mr. Krischenowski or HTLD during the CPE process, which began on 19 February 2014.

The HTLD/Afilias .hotel application is currently still listed on ICANN’s web site as “On Hold” while its rivals are still classified as “Will Not Proceed”.
It might be worth noting here — to people who say ICANN always tries to force contention sets to auction so it possibly makes a bit of cash — that this is an instance of it not doing so.

“Dave” becomes first .blog blogger

Blogging pioneer Dave Winer has become the first person to start blogging at a .blog domain name.
His new site, dave.blog, went live yesterday as a beneficiary of registry Knock Knock Whois There’s pioneer program.
The site is one of two pioneer .blog domains — the other being design.blog — highlighted by KKWT yesterday in publicity connected to the opening of its sunrise period.
Winer is the author of Scripting News, which has been around since 1997, one of the first must-read tech blogs.
He also made major contributions to the format and popularity of RSS syndication technology.
He was an outspoken critic of Google, which had planned to use blog in a “closed generic” fashion, linked closely to its Blogger service, writing in 2012:

I played a role in establishing blogs. How does Google get the right to capture all the goodwill generated in the word blog?

Yesterday he expressed relief that the .blog auction was actually won by KKWT, a subsidiary of WordPress owner Automattic, writing:

I’m glad to say that my friend Matt Mullenweg and Automattic are consistent champions of user and developer freedom. That’s why they host .blog for all to use. They could have said “blog” == “wordpress” — many companies would have — but they didn’t. That’s very good! I wish more big tech companies had that philosophy.

Winer said he will use his self-developed 1999.io blogging software on his new domain.
His allocation of dave.blog is arguably bad news for blokey British cable TV station Dave and disgraced former prime minister David “Call Me Dave” Cameron.

Industry lays into Verisign over .com deal renewal

Some of Verisign’s chickens have evidently come home to roost.
A number of companies that the registry giant has pissed off over the last couple of years have slammed the proposed renewal of its .com contract with ICANN.
Rivals including XYZ.com (sued over its .xyz advertising) and Donuts (out-maneuvered on .web) are among those to have filed comments opposing the proposed new Registry Agreement.
They’re joined by business and intellectual property interests, concerned that Verisign is being allowed to carry on without implementing any of the IP-related obligations of other gTLDs, and a dozens of domainers, spurred into action by a newsletter.
Even a child protection advocacy group has weighed in, accusing Verisign of not doing enough to prevent child abuse material being distributed.
ICANN announced last month that it plans to renew the .com contract, which is not due to expire for another two years, until 2024, to bring its term in line with Verisign’s contracts related to root zone management.
There are barely any changes in the proposed new RA — no new rights protection mechanisms, no changes to how pricing is governed, and no new anti-abuse provisions.
The ensuing public comment period, which closed on Friday, has attracted slightly more comments than your typical ICANN comment period.
That’s largely due to outrage from readers of the Domaining.com newsletter, who were urged to send comments in an article headlined “BREAKING: Verisign doubles .COM price overnight!”
That headline, for avoidance of doubt, is not accurate. I think the author was trying to confer the idea that the headline could, in his opinion, be accurate in future.
Still, it prompted a few dozen domainers to submit brief comments demanding “No .com price increases!!!”
The existing RA, which would be renewed, says this about price:

The Maximum Price for Registry Services subject to this Section 7.3 shall be as follows:
(i) from the Effective Date through 30 November 2018, US $7.85;
(ii) Registry Operator shall be entitled to increase the Maximum Price during the term of the Agreement due to the imposition of any new Consensus Policy or documented extraordinary expense resulting from an attack or threat of attack on the Security or Stability of the DNS, not to exceed the smaller of the preceding year’s Maximum Price or the highest price charged during the preceding year, multiplied by 1.07.

The proposed amendment (pdf) that would extend the contract through 2024 does not directly address price.
It does, however, contain this paragraph:

Future Amendments. The parties shall cooperate and negotiate in good faith to amend the terms of the Agreement (a) by the second anniversary of the Effective Date, to preserve and enhance the security and stability of the Internet or the TLD, and (b) as may be necessary for consistency with changes to, or the termination or expiration of, the Cooperative Agreement between Registry Operator and the Department of Commerce.

The Cooperative Agreement is the second contract in the three-way relationship between Verisign, ICANN and the US Department of Commerce that allows Verisign to run not only .com but also the DNS root zone.
It’s important because Commerce exercised its powers under the agreement in 2012 to freeze .com prices at $7.85 a year until November 2018, unless Verisign can show it no longer has “market power”, a legal term that plays into monopoly laws.
So what the proposed .com amendments mean is that, if the Cooperative Agreement changes in 2018, ICANN and Verisign are obligated to discuss amending the .com contract at that time to take account of the new terms.
If, for example, Commerce extends the price freeze, Verisign and ICANN are pretty much duty bound to write that extension into the RA too.
There’s no credible danger of prices going up before 2018, in other words, and whether they go up after that will be primarily a matter for the US administration.
The US could decide that Verisign no longer has market power then and drop the price freeze, but would be an indication of a policy change rather than a reflection of reality.
The Internet Commerce Association, which represents high-volume domainers, does not appear particularly concerned about prices going up any time soon.
It said in its comments to ICANN that it believes the new RA “will have no effect whatsoever upon the current .Com wholesale price freeze of $7.85 imposed on Verisign”.
XYZ.com, in its comments, attacked not potential future price increases, but the current price of $7.85, which it characterized as extortionate.
If .com were put out to competitive tender, XYZ would be prepared to reduce the price to $1 per name per year, CEO Daniel Negari wrote, saving .com owners over $850 million a year — more than the GDP of Rwanda.

ICANN should not passively go along with Verisign’s selfish goal of extending its unfair monopoly over the internet’s most popular top-level domain name.

Others in the industry chose to express that the proposed contract does not even attempt to normalize the rules governing .com with the rules almost all other gTLDs must abide by.
Donuts, in its comment, said that the more laissez-faire .com regime actually harms competition, writing:

It is well known that new gTLDs and now many other legacy gTLDs are heavily vested with abuse protections that .COM is not. Thus, smaller, less resource-rich competitors must manage gTLDs laden (appropriately) with additional responsibilities, while Verisign is able to operate its domains unburdened from these safeguards. This incongruence is a precise demonstration of disparate treatment, and one that actually hinders effective competition and ultimately harms consumers.

It points to numerous statistics showing that .com is by far the most-abused TLD in terms of spam, phishing, malware and cybersquatting.
The Business Constituency and Intellectual Property Constituency had similar views about standardizing rules on abuse and such. The IPC comment says:

The continued prevalence of abusive registrations in the world’s largest TLD registry is an ongoing challenge. The terms of the .com registry agreement should reflect that reality, by incorporating the most up-to-date features that will aid in the detection, prevention and remediation of abuses.

The European NGO Alliance for Child Safety Online submitted a comment with a more narrow focus — child abuse material and pornography in general.
Enasco said that 41% of sites containing child abuse material use .com domains and that Verisign should at least have the same regulatory regime as 2012-round gTLDs. It added:

Verisign’s egregious disinterest in or indolence towards tackling these problems hitherto hardly warrants them being rewarded by being allowed to continue the same lamentable
regime.

I couldn’t find any comments that were in unqualified support of the .com contract renewal, but the lack of any comments from large sections of the ICANN community may indicate widespread indifference.
The full collection of comments can be found here.

Afilias buys three gTLDs from Starting Dot

Registry upstart StartingDot has sold its small portfolio of new gTLDs to Afilias.
.archi, .bio and .ski are the three components of the package.
While the size of the deal was not disclosed, retail prices and zone file volumes suggest the portfolio probably brings in about $2 million a year in revenue.
The biggest seller of the three is .bio, which was originally intended for farmers but its basically unrestricted and has a variety of use cases.
Given the high ticket price — around $90 a year retail — .bio has a surprisingly impressive 14,000 names under management.
.archi and .ski have fared less well, with 3,500 and 6,200 names in their respective zones. Both have premium fees — retailing at about $100 and $60 a year respectively.
Due to the high prices, Afilias gets to call these TLDs “premium”.
.archi is the only one of the three to have registration restrictions — you need to be an architect to get one.
Both .archi and .bio have been available to buy for a couple of years, while .ski’s first renewal cycle is about a month away.
All three sell predominantly through European registrars. Starting Dot is itself based in Paris and Dublin.
The deal seem to have been struck due to Afilias’ we-buy-any-TLD offer, which executives discussed with us a year ago.
Afilias said that StartingDot execs Godefroy Jordan and Stephane Van Gelder will continue to be employed for a transition period.

Donuts rolls the dice with $22.5 million .web lawsuit

Donuts is demanding ICANN pay up the $22.5 million it reckons it is owed from the auction of the .web gTLD, which sold late last month for $135 million.
The company yesterday amended its existing California lawsuit against ICANN to allege that Verisign tried to avoid regulatory scrutiny by secretly bankrolling successful bidder Nu Dot Co.
The updated complaint (pdf) reads:

VeriSign’s apparent acquisition of NDC’s application rights was an attempt to avoid allegations of anti-competitive conduct and antitrust violations in applying to operate the .WEB gTLD, which is widely viewed by industry analysts as the strongest competitor to the .COM and .NET gTLDs.

Donuts wants a minimum of $22.5 million, which is roughly what each of the six losing .web applicants would have received if the contention set had been resolved via private auction.
(I previously reported that number as $18.5 million, because I accidentally counted .webs applicant Vistaprint as losing .webs applicant, when in fact it won .webs, paying $1.)
The company’s claims are still based around the allegation that ICANN breached its duties by failing to root out Verisign as the puppet-master.
The complaint alleges breach of contract, negligence, unfair competition and other claims. It says:

ICANN allowed a third party to make an eleventh-hour end run around the application process to the detriment of Plaintiff, the other legitimate applicants for the .WEB gTLD and the Internet community at large.
…
ICANN intentionally failed to abide by its obligations to conduct a full and open investigation into NDC’s admission because it was in ICANN’s interest that the .WEB contention set be resolved by way of an ICANN auction.

The irony here is that Ruby Glen LLC, the Donuts company that applied for .web, is subject to an arrangement not dissimilar to NDC’s with Verisign.
Ruby Glen is owned by Covered TLD LLC, in turn a wholly-owned Donuts subsidiary.
It’s well-known that fellow portfolio registry Rightside has rights to acquire Covered TLD’s over 100 applied-for strings, but this is not disclosed in its .web application.
ICANN will no doubt make use of this fact when it files its answer to the complaint.
Verisign itself has not been added as a defendant, but much of the new text in the complaint focuses on its now-confirmed involvement with NDC. The suit reads:

Had VeriSign’s apparent acquisition of NDC’s application rights been fully disclosed to ICANN by NDC… the relationship would have also triggered heightened scrutiny of VeriSign’s Registry Agreements with ICANN for .COM and .NET, as well as its Cooperative Agreement with the Department of Commerce.

The fact that Verisign is allowed to collect over half a billion dollars cash every year as a result of its state-endorsed monopoly is a longstanding cause of embarrassment for the Department of Commerce.
It has taken an interest in regulating Verisign’s .com contract in the past — it’s the only reason Verisign has not been able to raise .com prices in the last few years.
But the US government is not a party to the .web contract (unlike .com, where it has a special relationship with Verisign) and is not involved in the new gTLD program’s management or policies.
The complaint also makes reference to a completely unrelated Independent Review Process declaration from last week, which slammed ICANN for its lack of accountability and transparency.
Donuts faces the additional problem that, like all new gTLD applicants, it signed a covenant not to sue ICANN when it applied for its new gTLDs.
A judge in the DotConnectAfrica v ICANN can has allowed that lawsuit to proceed, regardless, but it may prove a stumbling block for Donuts.
It all looks a bit flimsy to me, but I’ve learned not to second-guess American judges so we’ll just have to see how it plays out.

L’Oreal shows cards on former “closed generic” gTLDs

Want to register a .beauty or .makeup domain name? L’Oreal will get to decide unilaterally whether “you’re worth it”.
The cosmetics maker has released the registration policies for its first former “closed generic” gTLD, .makeup, and they’re among the most restrictive in the industry.
Free speech appears to be the first victim of the policy — “gripe sites” are explicitly banned in the same breath as cybersquatting, 419 scams and the sale of counterfeit goods.
Domain investors and those who would hide their identity behind Whois privacy services appear to be unwelcome, too.
But perhaps most significantly, L’Oreal has also given itself the right to decide, in its sole discretion, whether a would-be registrant is eligible to own a .makeup domain.
Its launch policy reads:

Registrant Eligibility Requirements
To support the mission and purpose of the TLD, in order to register or renew a domain name in the TLD, Applicants must (as determined by the Registry in its sole and exclusive right):

• Own, be connected to, employed by, associated with, or affiliated with a company that provides makeup and/or cosmetics related products, services, news, and/or content; or (ii) be an individual, association, or entity that has a meaningful nexus (as determined by the Registry in its sole discretion) with the cosmetics industry; and
• Possess a bona fide intention to use the domain name in supporting the mission and purpose of the TLD.

Would-be registrants have to submit an “application” for the domain they want, and L’Oreal gets to decide whether to approve it or not.
Whether L’Oreal chooses to apply liberal or conservative standards here remains to be seen.
Like most new gTLD registries, the company plans to reserve many domains for the use of itself, partners, or future release.
The policies also give L’Oreal broad discretion to suspend or terminate names it decides violate the terms of the registration policy, which it says it can amend and retroactively apply at any time.
Using the domain counter to the mission statement of the gTLD is a violation. The mission statement reads:

The mission and purpose of the TLD is first and foremost to promote the beauty, makeup and cosmetics segments, through meaningful engagement with manufacturers, beauty enthusiasts, consumers, and retailers, using a domain space intended for use by individuals and/or companies within or associated with the various industries that provide, utilize, or bear a recognizable connection to makeup and cosmetic products and/or services.

L’Oreal has defined gripe sites — sites established primarily to criticize — as a security and stability concern that “may put the security of any Registrant or user at risk”, banning

other abusive behaviors that appear to threaten the stability, integrity or security of the TLD or any of its registrar partners and/or that may put the security of any Registrant or user at risk, including but not limited to: cybersquatting, sale and advertising of illegal or counterfeit goods, front-running, gripe sites, deceptive and⁄or offensive domain names, fake renewal notices, cross gTLD registration scams, traffic diversion, false affiliation, domain kiting⁄tasting, fast-flux, 419 scams.

If you want to set up a .makeup web site to criticize, say, L’Oreal for “body shaming” or for its animal testing policy, lots of luck to you.
The gTLD is owned by L’Oreal but seems to be being managed primarily by its application consultant, Fairwinds Partners.
It was originally designated as a single-registrant space, a so-called “closed generic” or “exclusive access” gTLD, in which only L’Oreal could register names.
But the company was forced to change its plans, under pain of losing its application, after the Governmental Advisory Committee persuaded ICANN to perform a U-turn on the permissibility of closed generics.
.makeup is due to start accepting pre-launch requests for Founders Program domains next Monday. General availability will start October 19.
Sunrise will kick off September 8, though L’Oreal warns that it has withheld generic terms such as “shop” from this period.
The company also owns .beauty, and I expect its terms there to be similar.

Verisign confirms it did fund $135 million .web bid

Verisign has just confirmed that it was behind the winning bid in last week’s .web gTLD auction.
Nu Dot Co won the auction after 23 rounds over two days of bidding, but Verisign was thought to be the real beneficiary.
The company has now released the following statement confirming the relationship:

The Company entered into an agreement with Nu Dot Co LLC wherein the Company provided funds for Nu Dot Co’s bid for the .web TLD. We are pleased that the Nu Dot Co bid was successful.
We anticipate that Nu Dot Co will execute the .web Registry Agreement with the Internet Corporation for Assigned Names and Numbers (ICANN) and will then seek to assign the Registry Agreement to Verisign upon consent from ICANN.
As the most experienced and reliable registry operator, Verisign is well-positioned to widely distribute .web. Our expertise, infrastructure, and partner relationships will enable us to quickly grow .web and establish it as an additional option for registrants worldwide in the growing TLD marketplace. Our track record of over 19 years of uninterrupted availability means that businesses and individuals using .web as their online identity can be confident of being reliably found online. And these users, along with our global distribution partners, will benefit from the many new domain name choices that .web will offer.

No big surprises there. Verisign had already told investors it had a $130 million payment coming up soon.
See DI’s analysis on the auction results here.

Verisign likely $135 million winner of .web gTLD

Verisign has emerged as the likely winner of the .web gTLD auction, which closed on Thursday with a staggering $135 million winning bid.
The shell company Nu Dot Co LLC was the prevailing applicant in the auction, which ran for 23 rounds over two days.
Just hours after the auction closed, Domain Name Wire scooped that Verisign had quietly informed investors that it has committed to pay $130 million for undisclosed “contractual rights”.
In its Securities and Exchange Commission quarterly report, filed after the markets closed on Thursday, Verisign said:

Subsequent to June 30, 2016, the Company incurred a commitment to pay approximately $130.0 million for the future assignment of contractual rights, which are subject to third-party consent. The payment is expected to occur during the third quarter of 2016.

There seems to be little doubt that the payment is to be made to NDC (or one of its shell company parents) in exchange for control of the .web Registry Agreement.
The “third-party consent” is likely a reference to ICANN, which must approve RA reassignments.
We speculated on July 14 that Verisign would turn out to be NDC’s secret sugar daddy, which seems to have been correct.
Rival .web applicant Donuts had sued ICANN for an emergency temporary restraining order, claiming it had not done enough to uncover the identity of NDC’s true backers, but was rebuffed on multiple grounds by a California judge.
Donuts, and other applicants, had wanted the contention set settled privately, but NDC was the only hold-out.
Had it been settled with a private auction, and the $135 million price tag had been reached, each of the seven losing applicants would have walked away with somewhere in the region of $18.5 million in their pockets.
This draws the battle lines for some potentially interesting legal fallout.
It remains to be seen if Donuts will drop its suit against ICANN or instead add Verisign in as a defendant with new allegations.
There’s also the possibility of action from Neustar, which is currently NDC’s named back-end provider.
Assuming Verisign plans to switch .web to its own back-end, Neustar may be able to make similar claims to those leveled by Verisign against XYZ.com.
Overall, Verisign controlling .web is sad news for the new gTLD industry, in my view.
.web has been seen, over the years, as the string that is both most sufficiently generic, sufficiently catchy, sufficiently short and of sufficient semantic value to provide a real challenge to .com.
I’ve cooled on .web since I launched DI six years ago. Knowing what we now know about how many new gTLD domains actually sell, and how they have to be priced to achieve volume, I was unable to see how even a valuation of $50 million was anything other than a long-term (five years or more) ROI play.
Evidently, most of the applicants agreed. According to ICANN’s log of the auction (pdf) only two applicants — NDC and another (Google?) — submitted bids in excess of $57.5 million.
But for Verisign, .web would have been a risk in somebody else’s hands.
I don’t think the company cares about making .web a profitable TLD, it instead is chiefly concerned with being able to control the impact it has on .com’s mind-share monopoly.
Verisign makes about a billion dollars a year in revenue, with analyst-baffling operating margins around 60%, and that’s largely because it runs .com.
In 2015, its cash flow was $651 million.
So Verisign has dropped a couple of months’ cash to secure .web — chickenfeed if the real goal is .com’s continued hegemony.
In the hands of a rival new gTLD company’s marketing machine, in six months we might have been seeing (naive) headlines along the lines of “Forget .com, .web is here!”.
That won’t happen now.
I’m not privy to Verisign’s plans for .web, but its track record supporting the other TLDs it owns is not fantastic.
Did you know, or do you remember, that Verisign runs .name? I sometimes forget that too. It bought it from Global Name Registry in late 2008, at the high point of its domains under management in this chart.

I don’t think I expect Verisign to completely bury .web, but I don’t think we’re going to see it aggressively promoted either.
It will never be positioned as a competitor to .com.
If .web never makes $135 million, that would be fine. Just as long as it doesn’t challenge the perception that you need a .com to be successful, Verisign’s purchase was worth the money.

Verisign announces .net price increase

Verisign has just announced that prices for .net domains are going up again this coming February.
Announcing its second-quarter earnings, the company revealed plans to raise its registry fee from $7.46 to $8.20, effective February 1, 2017.
That’s the maximum 10% price hike it’s allowed to claim under its .net Registry Agreement with ICANN.
Raising .net prices has become a bit of an annual tradition with Verisign, one of the few gTLD registries to still have its prices regulated by ICANN.
The company had about 16.2 million .net domains under management at the last formal, published count in March. Its daily “domain base” has .net at 15.7 million names today.

M+M billings quadruple on China .vip surge

Minds + Machines this morning said that its billings increased to $8.05 million in the first half of 2016.
That’s a 300% increase on the comparable year-ago period, the company said in a preliminary statement to the markets.
It added that its domains under management grew from 217,200 at the end of June 2015 to 728,940 a year later.
While the statement did not elaborate on the reasons behind the growth, the recently launched .vip gTLD seems to be the main factor.
It went to general availability a little over two months ago and quickly topped 400,000 registrations.
Just a few weeks before the end of the reporting period, M+M said its billings and orders for .vip alone had already hit $5.5 million.
That’s due to interest from Chinese domain investors, who were courted by M+M during a conference in Beijing.
M+M will report its full interims on September 20.