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DI Leaders Roundtable #3 — What did you think of ICANN 66?

Kevin Murphy, November 25, 2019, Leaders Roundtable

It’s time for the third in the series of DI Leaders Roundtables, in which I pose a single question to a selection of the industry’s thought leaders.

With ICANN 66 taking place a couple of weeks ago in Montreal, Canada, a multitude of topics came under public discussion, among them: DNS abuse, the .amazon gTLD application, access to Whois data and geographic names protections.

So, this time around, I asked:

What was your biggest takeaway from ICANN 66?

And this, in no particular order, is what they said:

Frank Schilling, CEO, Uniregistry

Mugshot

What a great industry… So many stable players with fresh ideas. Innovators who cross pollinate and stay with the industry in spite of the fact that there is no new gold and obvious money-making opportunity at the moment. Many stable operators trying new things and growing the industry from the inside out.

Michele Neylon, CEO, Blacknight

MugshotThere weren’t any big surprises at ICANN 66. As I expected there were a couple of topics that many people were focussed on and they ignored pretty much everything else.

The biggest single topic was “abuse”. It’s not a “new” topic, but it’s definitely one that has come to the fore in recent months.

Several of us signed on to a “framework to address abuse” in the run up to the ICANN meeting and that, in many respects, may have helped to shift the focus a little bit. It’s pretty clear that not all actors within the eco system are acting in good faith or taking responsibility for their actions (and inactions). It’s also pretty clear that a lot of us are tired of having to pay the cost for other people’s lack of willingness to deal with the issues.

Calls for adding more obligations to our contracts are not welcome and I don’t think they’ll help deal with the real outliers anyway.

There’s nothing wrong in theory with offering cheap domain names but if you consciously choose to adopt that business model you also need to make sure that you are proactive in dealing with fraud and abuse.

Ben Crawford, CEO, CentralNic

MugshotThat M&A has become the dominant business activity in the domain industry.

Milton Mueller, Professor, Georgia Tech

MugshotMy takeaways are shaped by my participation on the EPDP, which is trying to build a “standardized system of access and disclosure” for redacted Whois data. The acronym is SSAD, but it is known among EPDP aficionados as the “So-SAD.” This is because nearly all stakeholders think they want it to exist, but the process of constructing it through an ICANN PDP is painful and certain to make everyone unhappy with what they ultimately get.

The big issue here concerns the question of where liability under the GDPR will sit when private data is released through a So-SAD. Registrars and registries would like to fob off the responsibility to ICANN; ICANN tells the world that it wants responsibility to be centralized somehow in a So-SAD but ducks, dodges and double-talks if you ask it whether ICANN org is willing to take that responsibility.

ICANN’s CEO, who fancies himself a European politician of sorts, has driven the EPDP team batty with a parallel process in which he ignores the fact that the EPDP team has all stakeholders represented, lawyers from contracted parties and data users, and privacy experts on it, as well as formal legal advice from Bird and Bird. Instead he feels compelled to launch a parallel process in which ICANN org goes about trying to make proposals and then ask European authorities about them. He has asked a bunch of techies unaware of the policy issues to design a So-SAD for us and is now badgering various European agencies for “advice” and “guidance” on whether such a system could centralize legal responsibility for disclosure decisions. The parallel process, known as the Strawberry team, was featured in the public meeting on Whois reform as if it was of equal status as the formally constituted EPDP.

But a great ICANN 66 takeaway moment occurred during that moment. The European Commission’s Pearce O’Donoghue told the assembled multitudes that a SoSAD “WOULD NOT…REMOVE THE LIABILITY OF THE DATA CONTROLLER, WHICH IS THE REGISTRAR OR THE REGISTRY. SO WE WOULD HAVE A QUESTION AS TO WHETHER IT IS ACTUALLY WORTH THAT ADDED COMPLEXITY.” So, bang, the request for European advice blew up right in Goran Marby’s face. Not only did he get a critical piece of advice on the most important issue facing the SoSAD and the EPDP, but he got it without going through the elaborate parallel process. No doubt there is now furious behind the scenes lobbying going on to reverse, change or step back from O’Donoghue’s comment. Marby has been quoted (and directly seen, by this writer) as claiming that with the submission of the Strawberry team’s formal request for “guidance” from the European Data Protection Board being submitted, he is now “done” with this. Let’s hope that’s true. My takeaway: ICANN org and all of its fruity concoctions needs to get out of the way and let the PDP work.

The final EPDP-related takeaway is that the biggest decision facing the EPDP as it makes policy for the So-SAD is who makes the disclosure decision: registrars who hold the data, or ICANN? Everyone agrees with centralizing the process of requesting data and hooking up to a system to receive it. But who makes the decision is still contested, with some stakeholders wanting it to be ICANN and others wanting it to reside with the contracted parties. It seems obvious to me that it has to be the registrar, and we should just accept that and get on with designing the So-SAD based on that premise.

Jothan Frakes, Executive Director, Domain Name Association

Mugshot

A few: WHOIS (or Lookup) remains challenging territory, registries and registrars > are not inactive about addressing abuse while avoiding becoming content police, and poutine is delicious.

Christa Taylor, CMO, MMX

MugshotFrom my perspective, the biggest takeaway is the level of industrious efforts, transformation and passion throughout the industry. Every meeting and dinner consisted of a broad range of organizations and people with diverse perspectives on industry topics resulting in thought-provoking debates or conceptual brainteasers. Compared to a year ago, the conversations have materially changed — impacted from industry consolidations, system updates and developments along with organizational transitions to streamline business in one method or another. While there is still plenty of work ahead of us, both within the industry and ICANN, it’s satisfying to reflect and realize that progress is being achieved, cooperation benefits all and no matter how long the tunnel might be, there is light.

DI Leaders Roundtable #1 — How many new gTLDs will be applied for next time around?

Kevin Murphy, October 21, 2019, Leaders Roundtable

How many new gTLDs will be applied for in the next application round?

This is the first question I put to the DI Leaders Roundtable, which you may recall I announced a couple weeks back.

As a reminder, the panel is comprised of leading thinkers in the domain name industry or ICANN community, covering as broad a cross-section of expertise as I could muster.

The question I posed each panelist this time was:

There were 1,930 applications for new gTLDs in 2012. Given everything we’ve learned over the last seven years, how many applications do you think there will be in the next round?

There seemed to be a rough consensus that it’s a little early to put any concrete predictions out there, and that perhaps I should have eased the panel in with something a little less challenging, but some very interesting — and divergent — opinions were nevertheless expressed.

Some of the participants asked me to note that they were speaking in a personal capacity rather than with them wearing a specific one of their various professional/volunteer hats. To save time, readers should just assume that every opinion being expressed below is personal to the expert concerned.

In no particular order…

Jeff Neuman, Senior VP, Com Laude

MugshotWithout wanting to sound like I’m trying to avoid answering the question or hedge my bets, we have to consider this question in the context of the current landscape. The number of applications in the next round will be dependent on the outcomes of the current Subsequent Procedures PDP Working Group, alongside macroeconomic business factors. So therefore I’ll put a range on the possible answer — at the low end (if the application fee remains as is and world economies are facing significant troubles) around 1,000; at the top end (with application fee reduced to a level that operates as far less of a barrier, a fair economic wind behind us and some targeted promotion of the opportunities) there could be up to 10,000.

One thing that is clear is that many of the applications will come from brands that would like to actively use their domains. Those who were forward-thinking and have taken bold steps in the first round are the ones who are benefiting most from the new gTLD program. That’s not to say that there have not also been issues with brands. In 2012 many brands were pressured to apply for TLDs by third parties who advised them to apply for purely defensive reasons. Others gave up after the many fits and starts of the program as well as the overly lengthy period it took ICANN to evaluate the TLDs, approve Specification 13, respond to name collision, and the change of rules to temporarily disallow “closed generic” TLDs. Not surprisingly, we have seen a number of these brands drop out of the program.

However, many of the ones that have stuck it out are doing well. Some have even made transitions from their “.com” or their ccTLDs to their brand TLDs. Others have used their TLDs for marketing campaigns, corporate social responsibility programs, internal corporate intranets, job sites, geolocation tools, social media programs, events and customer service. And this is just the beginning.

What we need to ensure for the future is that application fees represent the true costs of the program and that the process is predictable, reliable and flexible enough to allow brands and others to innovate. Over-regulation due to the fear of unlikely edge cases or paranoia due to how potential applicants for purely generic open TLDs cannot be allowed to happen. All TLDs should not be painted with the same regulatory brush and the community needs to understand that we should be encouraging different business models for TLDs that do not necessarily include the unfettered ability for the public to register domain names in all TLDs. Ultimately, we need to do what is best for end users on the Internet.

Incentives should be provided for TLDs like .bank and .pharmacy to validate their registrants and ensure the safety of their end users by curbing abusive behavior. This could come in the form of reduced fees to ICANN or even ensuring that other similarly sensitive strings have similar verification requirements before allowing them to be delegated.

Finally, in order for the program to succeed, we need to stimulate growth of registries and registrars in the developing world. Support for these organizations should not only be in the form of monetary contributions, but also training programs, consulting services, legal support, and even operational support (eg., the free or low-cost use of third party DNS servers globally, security monitoring and other critical services).

Rick Schwartz, domain investor

MugshotWho cares?? Nobody in the real world. Totally meaningless except to the 1,930 applicants and a totally corrupt and out of control ICANN that needs oversight! SHAMEFUL!

Christa Taylor, CMO, MMX

Mugshot“Will you walk into my parlour and tell me how many applications there will be for the next round, said a Spider to a Fly”

Oh, poor fly, good luck getting out of this one. There have been some exceptionally large volumes thrown around — 10k, 20k, but this fly would prefer to utilize data gathered from statistical surveys. Unfortunately, my workload didn’t allow me to conduct a survey this week so instead, I’ll utilize a less scientific approach and seek the same leniency ICANN received in their volume prediction used in the 2012 round.

A multitude of variables may impact the volume of applications including: notice period, application fees, auctions and delegation rates with each factor being additive to the prior factor.

  • Base volume: 2,000 applications is utilized as the initial value. While the type of applications may change, the overall volume is a logical starting point especially when considering the last round was in 2012.
  • Notice period: A longer notice period on when the application period will begin will allow for more applicants to apply. Assuming a notice period of four months with a 10% increase in application volume for each additional four-month period. i.e. if there is a six month notice until application window opens, volume will increase by 100 (2,000 x 10% x (6-4/4)). Our total volume of applications is now 2,100.
  • Application fee: The new gTLD program is expected to operate on a ‘revenue neutral’ basis. As such, the application fee should decrease from the 2012 fee of $185k. Since the volume of applications is inversely related to the fee, increasing the volume by say, 15% for every $10k less than $150k. For example, if the actual application fee is $125k, the volume of applications will increase by approximately ~800 (15% x 2,100 x ($150k – $125k/$10k) for a total of 2,900 applications.
  • Auctions: One of the most significant items that could drive the volume of applications if auctions and other related resolution mechanisms. The windfalls from ‘losing’ in auctions are well-known and while other options have been discussed – Vickrey auctions, draws, etc. some applications will be submitted for financial gains. Additionally, the potential to gain from ‘losing’ in contention sets combined with reduced application fees and delegation rates (detailed below) will again impact the volume of applications. As such, the number of applications will increase similar to application fees but would suggest that for every $5k less than $150k application fee, the volume of applications will increase by 10%. If the application fee is $125k, the volume will increase by 1,250 (10% x 2,888 x ($150k-$125k/$5k) for a combined volume of 4,150 applications.
  • Delegation rate: The final factor in this unscientific, simplistic volume projection is the delegation rate. In 2010, a rate of 1,000 per year was provided to minimize security and stability risks. If the delegation rate remains relatively the same, the processing of applications could take years and thereby, encourage potential applicants to apply knowing it will take years before their application is delegated. Additionally, a reduced application fee minimizes an applicant’s risk if they decide to withdraw at a later date. Applying another broad brushstroke of 5% per year for the length of time it will take for all applications to be delegated, excluding objections. If it is expected to take three years to process the subsequent round of applications, add in another ~750 applications (5% x 3 years X 4,150) for a total volume of 4,900, rounding to 5,000 applications.

“And take a lesson from this tale of the Spider and the Fly” — gather real data to project application volumes and escape these impossible questions.

Ref: Howitt, Mary. The Spider and the Fly. (1829)

Michele Neylon, CEO, Blacknight

MugshotIt’s not one that’s easy to answer — I think we all got it terribly wrong the last time round.

I suspect, though I could be completely wrong, that there will be at least 1,000 applications if there is a new round. Of course, that number is not based on anything other than just a gut instinct. I don’t think there will be as many distributed retail TLDs in a next round. Apart from a couple of outliers the bulk of new TLDs haven’t been as big of a success as their backers expected.

I can imagine that some cities would pitch for a TLD in the next round but it’d be more of a play in terms of tourism rather than commercial gain.

Some would have us believe that a “lot” of brands want to apply for a TLD in a next round, but I do wonder how much of that demand is “real” and comes from brands and how much of it is being pushed by those who stand to gain from applications. Of course, there could be a lot of brands out there that feel a desire to get their own TLD, but it’s also very clear that many of the brands that got one the last time round haven’t done a lot with them (with a few notable exceptions)

It’s a very good question to ask, but until there’s more clarity about the rules and the costs we’re all going to be guessing.

Jon Nevett, CEO, Public Interest Registry

MugshotCheck back with me in 2022 when we may know the application fee; how contention resolution would work (i.e. will there be speculative applications); and the role of the GAC in reviewing applications.

Dave Piscitello, Partner, Interisle Consulting Group

MugshotWhile I can’t speculate how many, I truly hope that we have fewer “generics” that only serve to create a larger set of TLDs that will be offered in bulk at fees as low as 1 yen to organized spam gangs or botnet operators. ICANN hasn’t provided a scientifically valid economic study that demonstrates a need for more of these; in fact, ICANN’s own DAAR data shows that nearly half of the abused or criminally-used domain names have migrated to the piddling 10-12% share of the total gTLD delegated (and resolving) domain names that the new TLDs represent.

Having said this, I do believe that there are some success stories that point would-be applicants to modestly profitable ventures. City TLDs for the most part have remained free of abuse or criminal misuse. A portfolio of these might be interesting. I think that brands still don’t really know how to use their TLD or migrate to these in a way that alters the threat landscape.

Ben Crawford, CEO, CentralNic

MugshotOur focus today at CentralNic is supporting the growth of existing ccTLD and gTLD registries. However there is no company more prepared for the next round than us, and based on our discussions with potential applicants, we expect more applications in this nTLD round that the last.

Generic TLD applicants obviously gravitate towards CentralNic Registry Solutions as the natural home of TLDs seeking meaningful growth. We are not only the market leaders with more registrars actively selling our nTLD domains than any other backend, but we have as many domains under management as the number 2, 3 and 4 players combined.

Brand owners are also very keen to sign up with BrandShelter as a low cost and flexible one-stop shop that can handle application, backend, registrar and domain management services under a single contract with a money back guarantee. They particularly like that we have the best value support for dot-brands that do want to actively use their TLDs (like .DVAG, .ALLFINANZ and .MINI) while we don’t employ pushy sales people to hassle our clients happy with a defensive strategy to “activate” their TLDs.

Milton Mueller, Professor, Georgia Tech

MugshotIs a negative number an acceptable answer? Will some of the past 1,930 be allowed to bring their TLDs back to the store for a refund? What exactly is ICANN’s return policy, is it as good as TJ Maxx’s? More seriously, I would expect quite a few less applications this time around. I’d be surprised if it exceeded 500. We don’t see any smashing successes from the first round.

Introducing… the DI Leaders Roundtable

Kevin Murphy, October 7, 2019, Leaders Roundtable

Today, I’m introducing what I hope to be the first of several regular features, the DI Leaders Roundtable.

Every week or two, I’ll be putting a single question to a collection of domain industry and ICANN community leaders and compiling their responses in order to gain some insight into current thoughts on hot topics or broader industry trends from some of the space’s top thinkers.

I’ve tried to reflect a broad cross-section of the industry, with a mix of business, policy and technical expertise from registries, registrars, back-ends, new gTLDs, legacy gTLDs, investors, etc.

The initial line-up for the panel, which will likely evolve as time goes by, is, in alphabetical order.

Ben Crawford, CEO, CentralNic

MugshotCrawford is CEO of CentralNic, a triple-play domain company based in London and listed on the Alternative Investment Market. Initially a vendor of pseudo-gTLDs such as uk.com and gb.com, CentralNic has over the course of the last seven years evolved into a company that sells both its own self-managed TLDs, such as .sk, as well as acting as a back-end for the likes of .xyz, .site and .online. Describing itself as a consolidator, the company nowadays makes most of its money via the registrar side of the house as a result of a series of mergers and acquisitions, particularly the merger with KeyDrive last year.

Jothan Frakes, Executive Director, Domain Name Association

MugshotA long-time industry jack-of-all-trades, Frakes is currently executive director of the Domain Name Association, the prominent industry trade group. Frakes has acted in a number of roles at domain name companies, as well as co-founding the popular NamesCon conference back in 2014. His technical credentials can be exemplified by, among other activities, his participation in Mozilla’s Public Suffix List, while his policy nous could be vouched for by many who have worked with him during his 20 years of ICANN participation.

Richard Kirkendall, CEO, NameCheap

MugshotKirkendall founded leading budget registrar NameCheap in 2000 and has occupied the office of CEO ever since. A long-time Enom reseller, NameCheap’s popularity was for many years shrouded in mystery. It finally transferred the last of its Enom names over to its own accreditation in January 2018, revealing it to have 7.5 million gTLD names under management. It added a further two million over the next 18 months, and says it has over 10 million names in total. NameCheap is known for its low prices and for its occasional support for pro-freedom political causes such as the Electronic Frontier Foundation.

Milton Mueller, Professor, Georgia Tech

MugshotMueller is an academic and among the most prominent voices in ICANN’s Non-Commercial Stakeholder Group. Based at the School of Public Policy at the Georgia Institute of Technology, he founded the Internet Governance Project, an independent policy research outfit, in 2004. He’s the author of several books on the topic, and very active in ICANN policy development, including the current effort to balance privacy rights with commercial interests in the Whois system.

Jeff Neuman, Senior VP, Com Laude

MugshotNeuman is senior vice president of brand-protection registrar Com Laude and sister company Valideus, which provides new gTLD consultancy services to brand owners. From 2000 until 2015, he worked in senior policy and registry business roles at Neustar, helping to apply for and launch .biz in 2001. A noted ICANN policy expert, Neuman has sat on various ICANN working groups and currently co-chairs the New gTLD Subsequent Procedures Policy Development Process, which is developing the rules for the next round of new gTLDs.

Jon Nevett, CEO, Public Interest Registry

MugshotNevett is CEO of Public Interest Registry, which manages the 10-million-domain-strong legacy gTLD .org and a handful of new gTLDs. Prior to PIR, he was executive vice president of Donuts, and one of its four co-founders. He’s been in the domain business since 2004, when he joined Network Solutions as a senior VP on the policy side of the house. Nevett has also been involved in ICANN policy-making, including a stint as chair of the Registrars Constituency.

Michele Neylon, CEO, Blacknight

MugshotNeylon is CEO and co-founder of Blacknight Internet Solutions, a smaller registrar based in Ireland. Known for his “often outspoken” policy views, he’s a member of several ICANN working groups, sits on the GNSO Council representing registrars, and is a member of stakeholder group committees for various ccTLD registries including .eu, .ie and .us. Blacknight has almost 60,000 gTLD registrations to its name but also specializes in serving its local ccTLD market.

Dave Piscitello, Partner, Interisle Consulting Group

MugshotPiscitello is currently a partner at security consultancy Interisle Consulting Group, having retired from his role as vice president of security and ICT coordination at ICANN last year. With over 40 years in the security business, he’s also a board member of the Coalition Against Unsolicited Commercial Email (CAUCE) and the Anti-Phishing Working Group (APWG). Interisle is an occasional ICANN security contractor.

Sandeep Ramchamdani, CEO, Radix Registry

MugshotRamchandani is CEO of Mumbai-based new gTLD registry Radix, which currently has a portfolio of 10 gTLDs and one ccTLD. It’s known primarily for its low-cost, high-volume, pure-generic business model, which has seen its two best performers, .online and .site, rack up almost three million domains between them. Radix is a unit of Directi Group, which is where Ramchandani cut his teeth for almost a decade before taking the reins of Radix in 2012.

Frank Schilling, CEO, Uniregistry

MugshotSchilling started off as a domain investor at the second level, 19 years ago, eventually managing hundreds of thousands of secondary-market domains with his company Name Administration, before founding Uniregistry in order to invest in new gTLDs in 2012. As a registry, Uniregisty has about a quarter of a million names spread across its 22-TLD portfolio; as a registrar it has over 1.2 million domains under management. Schilling is widely considered one of the most successful domain investment pioneers.

Rick Schwartz, aka the “Domain King”

MugshotSchwartz is viewed by domain investors as one of the most successful domainers of all time, and is known for his forthright, blunt criticisms of both new gTLDs and poor domain investment strategies. He’s been buying and selling domain names since 1995, and has sold several category-killer .com domains for seven-figure sums. Schwartz also founded the T.R.A.F.F.I.C. domainer conference in 2004, and it ran for 10 years.