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Two new gTLD registries open offices in China

Kevin Murphy, January 27, 2016, Domain Registries

Portfolio gTLD registries Famous Four Media and Minds + Machines have both announced that they’re formally entering the Chinese market.

Both companies are establishing “wholly foreign-owned enterprises” (WFOEs), a form of company that does not require local investment, on the mainland.

The moves are aimed at getting the registries’ respective gTLDs accredited by the Chinese government, something that is required before local registrants are allowed to use them.

In a press release, FFM senior legal counsel Oliver Smith said:

It was clear to us soon after launching our first domain registry that domain registrations from China comprised a strong proportion of the total. It was a natural progression of our strategy to build a physical presence in China. The accreditation process is complicated but well-structured and, thanks to the help of advice from the Chinese government, should be completed relatively quickly.

In some of Famous Four’s gTLDs, Chinese registrars are the overwhelming majority of the sales channel.

In .win, the registry’s biggest-seller, China was responsible for about 85% of registrations at the last count, for example.

Meanwhile, M+M is taking a slightly different route into the country.

It said today that while it also shortly plans to open a WFOE, it has also partnered with ZDNS, a local provider of proxy services for registries.

ZDNS was the company XYZ.com partnered with for its controversial launch into China. According to M+M, it’s also working with .CLUB Domains and some Chinese gTLD registries.

M+M is also using the specialist consultancy Allegravita for its marketing there.

Its local entity will be called Beijing Ming Zhi Mo Si Technology Company Limited (which may or may not translate to something like “Wise Mediation”).

M+M’s first Chinese launches will be .beer, .fashion, .fit, .law, .wedding, .work and .yoga, with .vip and .购物 (“.shopping”) coming later in the year.

Chehade to join World Economic Forum

Kevin Murphy, January 22, 2016, Domain Policy

Outgoing ICANN CEO Fadi Chehade is to join the World Economic Forum as a senior advisor, WEF announced today.

The person he will advise is Klaus Schwab, WEF’s founder and executive chairman, according to a press release.

WEF is the Switzerland-based non-profit think tank famous for its annual summits in Davos, where world leaders and super-rich businesspeople congregate in order to shed their skin-suits and plot world domination whilst in their true reptilian form.

Chehade, it seems, will be primarily involved in the “Global Challenge Initiative on the Future of the Internet”, a WEF project (pdf) focusing on internet governance, access, cybercrime and so on.

This year’s Davos meeting has been taking place this week. Much of the attention has been focused on pressing humanitarian and economic issues such as the Syrian refugee crisis and European Union immigration policy.

Chehade announced he was leaving ICANN in May last year.

He’s suspected of suffering from ICANN burnout after just a few short, albeit transformational, years on the job.

He said in August he’s taking on a role with Boston-based private equity firm ABRY Partners.

Last month, he became a joint founder of the “Wuzhen Initiative”, a China-led internet governance talking shop along the same lines as the NetMundial Initiative.

His successor has yet to be named, but given Chehade is leaving in March the announcement cannot be too many weeks away.

He starts at WEF April 1.

Instagram paid Chinese cyberquatter $100,000 for instagram.com, Facebook lawsuit reveals

Kevin Murphy, January 20, 2016, Domain Sales

Facebook has sued a Chinese cybersquatter for trying to renege on a five-year-old deal that saw it buy the domain instagram.com for $100,000.

The lawsuit, filed in California last week, claims that a family of known cybersquatters, based in Guangdong, is trying to have the purchase invalidated by a Chinese court.

The company, which acquired Instagram for $1 billion in 2012, wants the court to rule that the domain deal was legal, preventing the cybersquatters retaking control of the domain.

Photo-sharing app Instagram launched in October 2010 using the domain instagr.am.

At that time, instagram.com was owned by a US-based domain investor, but it was bought by Zhou Weiming about a month later.

Zhou, Facebook says, was the now-dead father of three of the people it is suing, and the husband of the fourth.

When Zhou purchased the domain, Instagram had become wildly popular, well on the way to hitting the million-user mark in December 2010.

Instagram had applied for the US trademark on its name in September 2010, less than a month before its launch.

The company made the decision to pay $100,000 for the domain in January 2011.

The Whois information for instagram.com changed from Zhou Weiming to Zhou Murong, apparently his daughter, around about the same time, though the registrant email address did not change.

The purchase was processed by Sedo, according to a copy of the deal filed as evidence (pdf).

Now, Murong’s mother and sisters are suing her and Instagram in China, claiming she did not have the authority to sell the domain, according to Facebook’s complaint.

Facebook claims the Chinese suit is a “sham” and that the whole Zhou family is acting in concert.

The company wants the California court to declare that the sale was valid, and that registrar MarkMonitor should not be forced to transfer the domain back to the Zhous.

Facebook in 2014 won a 22-domain UDRP case against Murong Zhou, related to typos of its Instagram trademark.

Read the full California complaint as a PDF here.

.top gTLD tops a million as China goes domain nuts

Kevin Murphy, January 17, 2016, Domain Registries

China-based new gTLD .top has become only the second new gTLD to pass the one-million-domain milestone.

The gTLD, managed by Jiangsu Bangning Science & Technology Co, had 1,000,469 domains in its zone file on Saturday, an increase of 5,808 on the day.

The zone has grown by 453,833 domains in the last 90 days, according to DI PRO stats.

It’s growing just slightly faster, in percentage terms, than new gTLD volume leader XYZ.com’s .xyz.

The rapid growth can no doubt be attributed largely to price, feeding the current Chinese appetite for domain investment.

Its most successful registrar, West.cn (Chengdu West Dimension Digital Technology Co), is currently selling .top names prominently for CNY 4 for the first year. That’s just $0.60.

The registry says that registrants come from 231 countries and regions. On its web site, it highlights France’s Gandi.net and Gibraltar’s budget registrar AlpNames as key international partners.

However, the latest registry reports show that over 90% of its sales are coming from China-based registrars.

Despite .top being a Latin-script TLD, European and North America registrars seem to account for a very small number of registrations.

It’s not even carried by the likes of GoDaddy and eNom.

The third-place 2012-round new gTLD is currently .wang, another Chinese registry, which yesterday had 628,125 names in its zone file.

Number four is .win, which despite being run by Gilbraltar-based Famous Four Media is utterly dominated by sales via Chinese registrars.

At number five is .club, with 552,065 names and a much more international distribution of registrars.

Kinderis calls on industry to cut the bullshit

Kevin Murphy, January 14, 2016, Domain Policy

Domain Name Association chair Adrian Kinderis has called for the industry to “grow up”.

The former ARI CEO, now Neustar veep, said Monday it’s time for the industry to kick out the handful of bad actors that ruin its reputation, and to quit the “bullshit bickering” about which TLDs are best.

“For far too long this industry has turned a blind eye to the less than scrupulous activities,” he said, “and these activities have plagued this industry. Bad actors have tarnished the perception of this industry.”

“This may have been acceptable when it was a few insiders first grasping at a fledgling product in the early nineties but… we are now front and center of the internet,” he said.

“These practices of a few bad actors have led to the frustration of consumers. We have not served the best interests of our consumers at all times,” he said. “This has to change.”

He was speaking to an audience of registries, registrars and investors at the opening session of the NamesCon conference in Las Vegas on Monday.

It was a fairly standard DNA sales pitch, the kind Kinderis has given before, but few could deny the truth of his remarks.

He called upon the industry to more effectively self-regulate, working with ICANN, to keep the boogeymen of government legislators and law enforcement agencies at bay.

“It’s time to grow up and show that we can regulates ourselves and build a strong sustainable industry with integrity,” he said.

He also called for unity among industry participants, pointing out that the threats to their businesses are external to the domain industry.

“The domain name war must be over,” he said. “The infighting and bullshit bickering has to stop. The .coms, the not-.coms, the IDNs, the g’s versus the cc’s… this must stop.”

“As an industry we have been very lucky. We’ve stumbled through 20 years without a collective strategy nor cohesion,” he said. “Outside forces have not had a massive impact on us, yet. QR codes have tried. Apps are trying.”

He pointed to the recent positive “bump” that many domain companies have experienced as a result of investment from China, but attributed to “dumb luck” rather than the result of any smart marketing or outreach.

The 10-minute speech can be viewed below or on the NamePros YouTube channel.

Priced to sell: $46m of two-letter .xxx names

Kevin Murphy, January 7, 2016, Domain Registries

ICM Registry has added over 1,200 two-character .xxx names to its catalog of priced premiums.

With prices ranging from $100,000 to $37,500, the newly offered domains carry a total ticket price of over $46 million.

The only six-figure name on the list is vr.xxx. ICM said in a press release today it has already sold vr.porn and vr.sex for $100,000 apiece.

There are seven names with adult connotations (such as 69.xxx and bj.xxx) priced at $75,000, eight more at $50,000 and two at $40,000.

The rest of the list of 1,227 names are being offered at $37,500, which is roughly 10 times the prices on the equivalent .porn, .sex and .adult domains.

While ICM noted the interest in domain investing from China recently, it does not appear to have valued its numeric-only domains (such as 88.xxx) any more highly than less attractive-looking combinations (such as 0o.xxx).

Judging by the list published on ICM’s web site, it has already sold well over 300 two-character domains in its newest three gTLDs.

Had those sold at the buy-now prices it would have raised over $1.1 million in revenue.

But ICM since September has been offering an option to register premium names for premium annual fees that are lower than the one-off price. A $37,500 domain costs $3,000 a year to register, under this model.

The total value of ICM’s premium list, including all the longer domains, is roughly $115 million.

Baidu, China’s Google, gets its dot-brand gTLD

Kevin Murphy, January 5, 2016, Domain Registries

Chinese web giant Baidu had its dot-brand gTLD, .baidu, go live in the DNS root zone today.

With the extraordinary amount of focus on China in the domain industry currently, this could be one of the dot-brands to watch in 2016.

There are no active domain names in .baidu just yet, but we will likely see nic.baidu put to some use or another over the coming days.

Unusually for a dot-brand gTLD, Baidu’s contract with ICANN does not contain specifications 9 or 13, which allow dot-brands to operate differently to regular gTLDs.

This suggests an open registration policy under which any registrar can sell .baidu domains to any registrant.

However, Baidu’s original gTLD application spells out quite a different plan, focused primarily on trademark protection. It says:

All available second-level strings of .BAIDU (e.g. example .BAIDU) will be initially allocated only to limited number of eligible registrants and for internal corporate business purposes. BAIDU plans to adopt this approach and expects to maintain it for 3 years from the launch of the “.BAIDU” registry service. Such approach will be regularly evaluated and adjusted if appropriate and necessary. Depending a various internal and external factors, including market demand and user expectation, BAIDU may consider a phased roll-out approach for a broader commercial marketplace but will do so after the conclusion of the initial 3-year period.

I wouldn’t expect .baidu to launch properly any time soon.

Not only is the company probably going to want to get its dot-brand contractual protections in place, it’s also showed no huge enthusiasm for making its way through the new gTLD delegation process so far.

It signed its ICANN contract January 8 last year, meaning this week was pretty much the latest date it could permissibly go into the root.

Like most dot-brands, it’s been dragging its feet, in other words.

Baidu is the leading web property in China, dwarfing even Google in terms of search market share locally.

Verisign warns about Chinese .com boom

Kevin Murphy, November 24, 2015, Domain Registries

Verisign has warned investors that the current boom in .com sales is largely coming from Chinese domainers and may not be sustainable.

The company has added an unprecedented 4.1 million domain in .com and .net so far during the fourth quarter.

“While there continues to be demand for domain names globally, the recent increased volume for Verisign’s top level domains, as well as top level domains of other registries, during the fourth quarter is coming largely through registrars in China,” the company said in a Securities and Exchange Commission filing.

It listed several factors that are likely responsible for the sudden uptick, but warned that renewal rates are typically not great.

In the past, Verisign has discussed many factors that affect the demand for domain names, including, but not limited to economic, social, and regulatory conditions, Internet adoption, Internet penetration, and increasing e-commerce. In addition to these factors affecting demand, Verisign is also evaluating additional potential factors unique to China that may also be responsible for the recent increased volume of new registrations in China.

In no particular order, these potential factors, or combination of factors, could include, but may not be limited to, government initiatives in China to develop their online economy such as ‘Internet Plus;’ registry and registrar regulatory requirements; cultural influences such as the popularity of numeric domain names; increasing competition amongst Chinese registrars; potential increases in domain name investment activity; and recent capital markets volatility and access to capital in China.

Verisign cannot predict if or how long this increased pace of gross additions will continue and we cannot at this time predict what the renewal rate for these domain names will be. Verisign has noted in the past that renewal rates for domain names registered in emerging markets, such as China, have historically been lower than those registered in more developed markets.

It’s difficult to imagine that Chinese investors have managed to find four million unregistered domains worth keeping.

There are currently 123,497,852 domains in the .com zone file, according to Verisign’s web site.

Verisign is not the only registry that appears to be benefiting from a deluge of registrations from China.

XYZ.com has seen over 440,000 domains added to its .xyz zone file in the last three weeks, bringing its total to over 1.5 million, which appear to be largely coming through Chinese registrars.

XYZ says it won’t block censored Chinese domains

Kevin Murphy, November 6, 2015, Domain Registries

New gTLD registry XYZ.com has said it will not preemptively censor domain names based on the wishes of the Chinese government.

Over the last couple of days, CEO Daniel Negari has sought to “clarify” its plans to block and suspend domain names based on Chinese government requests.

It follows XYZ’s Registry Services Evaluation Request for a gateway service in the country, first reported by DI and subsequently picked up by the Electronic Frontier Foundation, a Wall Street Journal columnist, Fortune magazine and others.

The clarifications offered up by XYZ probably did more to confuse matters.

A blog post on Wednesday said that XYZ will not reserve any .xyz domain names from being registered, except those ICANN makes all new gTLD registries reserve.

Subsequent comments from Negari stated that XYZ will, as the RSEP stated, prevent names that have been banned in China from being registered.

However, there’s one significant difference.

Now, the registry is saying that it will only put those bans in place for domain names that have been specifically banned by the Chinese government when the name had already been registered by a Chinese registrant.

So, if I understand correctly, it would not preemptively ban anyone anywhere from registering [banned term].xyz.

However, if [banned term].xyz was registered to a Chinese resident and the Chinese government told the registry to suspend it, it would be suspended and nobody would be able to re-register it anywhere in the world.

Negari said in a blog comment yesterday:

if we receive a Chinese legal order tomorrow (before the gateway has launched) which requires disabling a domain name registered in China and properly under Chinese jurisdiction, then it will be disabled at the registry level, and not by the gateway. When the gateway launches the name will continue to be unavailable, and the gateway will not implement the action on a localized basis only in China. The normal registry system would continue to be the only system used to resolve the name globally. Again — the specific stability concern ICANN had was that we would use the Chinese gateway to make .xyz names resolve differently, depending on what country you are in. I completely agree that our [RSEP] re-draft to address that concern came out in a way that can be read in a way that we sincerely did not intend.

So there is a list of preemptively banned .xyz, .college, .rent, .security and .protection domains, compiled by XYZ from individual Chinese government requests targeting names registered to Chinese registrants.

Negari said in an email to DI yesterday:

To clarify the statement “XYZ will reserve domains,” we meant that XYZ will takedown domains in order to comply with “applicable law.” Unfortunately, the inaccuracies in your post caused people to believe that we were allowing the Chinese government to control what names could be registered or how they could be used by people outside of China. The idea that XYZ is going to impose Chinese law and prevent people outside of China from registering certain domain names is simply incorrect and not true. To be 100% clear, there is no “banned list.”

That was the first time anyone connected with XYZ had complained about the October 12 post, other than since-deleted tweets that corrected the size of the list from 40,000 domains to 12,000.

The RSEP (pdf) that causes all this kerfuffle has not been amended. It still says:

XYZ will reserve names prohibited for registration by the Chinese government at the registry level internationally, so the Gateway itself will not need to be used to block the registration of of any names. Therefore, a registrant in China will be able to register the same domain names as anyone else in the world.

This fairly unambiguous statement is what XYZ says was “misinterpreted” by DI (and everyone else who read it).

However, it’s not just a couple of sentences taken out of context. The context also suggests preemptive banning of domains.

The very next sentence states:

When the Gateway is initially implemented we will not run into a problem whereby a Chinese registrant has already registered a name prohibited for registration by the Chinese government because Chinese registrars are already enforcing a prohibition on the registration of names that are in violation of Chinese law.

This states that Chinese residents are already being preemptively banned, by Chinese registrars, from registering domains deemed illegal in China.

The next few paragraphs of the RSEP deal with post-registration scenarios of domains being banned, clearly delineated from the paragraph dealing with pre-registration scenarios.

In his blog post, Negari said the RSEP “addressed the proactive abuse mitigation we will take to shut down phishing, pharming, malware, and other abuse in China”.

I can’t believe this is true. The consequence would be that if China sent XYZ a take-down notice about a malware or phishing site registered to a non-Chinese registrant, XYZ would simply ignore it.

Regardless, the takeaway today is that XYZ is now saying that it will not ban a domain before it has been registered, unless that domain has previously been registered by a Chinese resident and subsequently specifically banned by the Chinese government.

The registry says this is no different to how it would treat take-down notices issued by, for example, a US court. It’s part of its contractual obligation to abide by “applicable law”, it says.

Whether this is a policy U-turn or a case of an erroneous RSEP being submitted… frankly I don’t want to get into that debate.

Disclosure: during the course of researching this story, I registered .xyz domains matching (as far as this monoglot can tell) the Chinese words for “democracy”, “human rights”, “porn” and possibly “Tiananmen Square”. I have no idea if they have value and have no plans to develop them into web sites.

XYZ to put global block on domains banned in China

Kevin Murphy, October 12, 2015, Domain Registries

XYZ.com plans to slap a global ban on domain names censored by the Chinese government.

Chinese words meaning things such as “human rights” and “democracy” are believed to be on the block list, which an industry source says could contain as many as 40,000 words, names and phrases.

(UPDATE: Gavin Brown, CTO of XYZ back-end CentralNic, tweeted that the list is nowhere near 40,000 names long.)

The registry seems to be planning to allow the Chinese government to censor its new gTLDs, which include .xyz, .college, .rent, .protection and .security, in every country of the world.

And it might not be the last non-Chinese registry to implement such a ban.

The surprising revelation came in a fresh Registry Services Evaluation Process request (pdf), filed with ICANN on Friday.

The RSEP asks ICANN to approve the use of a gateway service on the Chinese mainland, which the company says it needs in order to comply with Chinese law.

As previously reported, Chinese citizens are allowed to register domains in non-Chinese registries, but they may not activate them unless the registry complies with the law.

That law requires the registry to be located on the Chinese mainland. XYZ plans to comply by hiring local player ZDNS to proxy its EPP systems and mirror its Whois.

But the Chinese government also bans certain strings — which I gather are mostly but not exclusively in Chinese script — from being registered in domain names.

Rather than block them at the ZDNS proxy, where only Chinese users would be affected, XYZ has decided to ban them internationally.

Registrants in North America or Europe, for example, will not be able to register domains that are banned in China. XYZ said in its RSEP:

XYZ will reserve names prohibited for registration by the Chinese government at the registry level internationally, so the Gateway itself will not need to be used to block the registration of of any names. Therefore, a registrant in China will be able to register the same domain names as anyone else in the world.

It seems that XYZ plans to keep its banned domain list updated as China adds more strings to its own list, which I gather it does regularly.

Customers outside of China who have already registered banned domains will not be affected, XYZ says.

If China subsequently bans more strings, international customers who already own matching domains will also not be affected, it says.

CEO Daniel Negari told DI: “To be clear, we will not be taking action against names registered outside of China based on Chinese government requests.”

But Chinese registrants do face the prospect losing their domains, if China subsequently bans the words and XYZ receives a complaint from Chinese authorities.

“We treat requests from the Chinese government just like we treat requests from the US government or any other government,” Negari said.

“When we receive a valid government or court order to take action against a name and the government has jurisdiction over the registration, we will take action the registration,” he said.

Up to a third of the .xyz zone — about three hundred thousand names — is believed to be owned by Chinese registrants who are currently unable to actually use their names.

The company clearly has compelling business reasons to comply with Chinese law.

But is giving the Chinese government the ongoing right to ban tens of thousands of domain names internationally a step too far?

ICANN allows anyone to file public comments on RSEP requests. I expect we’ll see a few this time.