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Draconian Chinese crackdown puts domain industry at risk

Kevin Murphy, May 27, 2015, Domain Policy

The vast majority of top-level domain registries could soon be banned from selling domains into China due to a reported crackdown under a decade-old law.

That’s according to Allegravita, a company that helps registries with their go-to-market strategies in the country.

Allegravita released a report last week claiming that Chinese registrars will be forbidden to sell domains in TLDs that are not on a government-approved list.

The crackdown could come as early as July, the report says:

Foreign registries which have not applied for Chinese market approval are advised to do so in the near term, as unapproved Top-Level Domains are likely to be taken off the market from July this year.

As of April 30, there were only only 14 TLDs on the approved list. All of them are run by Chinese registries and only five do not use Chinese script.

Not on the list: every legacy gTLD, including .com, as well as every ccTLD apart from .cn.

The Draconian move is actually the implementation of regulations introduced by China’s Ministry of Industry and Information Technology over a decade ago but not really enforced since.

As I reported in December, Donuts was facing problems launching its Chinese-script gTLDs due to this red tape.

MIIT announced in 2012 that new gTLD applicants would need licenses to sell into China.

According to Allegrevita, which until recently was working heavily with TLD Registry (“.chinesewebsite”) on its entry into the country, it’s “no longer ambiguous” that MIIT has asserted full oversight of the domain industry in China.

MIIT’s crackdown appears to be focused on the 93 Chinese registrars it has approved to do business.

Allegravita says these companies will not be allowed to sell unapproved TLD domains to Chinese registrants, but that existing registrations will be grandfathered:

by sometime in July 2015, the MIIT will not permit unapproved registries to operate or offer their domains for sale in China. The MIIT will not interfere with existing domain registrations for unapproved registries; however, new registrations will not be permitted to be sold by Chinese registrars to Chinese registrants.

Presumably, non-Chinese registrars will reap the benefits of this as Chinese would-be registrants look elsewhere to buy their domains.

China is an important market for many registries, particularly the low-cost ones.

Judging by MIIT’s web site, getting approval to sell your TLD in China involves a fairly stringent set of requirements, including having a local presence.

MIIT said in a press release last month that the “special action” is designed “to promote the healthy development of the Internet, to protect China’s Internet domain name system safe and reliable operation

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Krueger removed as chair as M+M finally starts seeing some revenue

Minds + Machines co-founder Fred Krueger has been kicked out of his job as executive chairman of the company.

The news came as the new gTLD registry reported its first full year of results as a proper, revenue-generating company.

The company reported revenue of $1.9 million for 2014, compared to $56,000 in 2013.

Its report includes a “cash revenue” line of $5 million, to show off revenues that it has deferred to future periods due to standard domain industry accounting.

For accounting purposes, M+M was profitable to the tune of $22 million for the year, but almost none of that is from actually selling domains — $33.7 million of profit came from losing new gTLD auctions.

That’s not a sustainable or predictable part of the business — nobody knows exactly when or if ICANN will launch the next round of new gTLDs — but it did help M+M grow its cash pile to $45.7 million.

That pile may grow or shrink depending on how aggressive the company is in its 11 remaining new gTLD contention set auctions.

CEO Antony Van Couvering said that M+M is also eyeing acquisition opportunities as the new gTLD industry enters an early consolidation phase.

He said that M+M’s early priorities include a focus on selling premium domains that have higher than usual annual renewal fees.

At the same time as announcing its results, the company said Krueger, who founded M+M with Van Couvering in 2009 in anticipation of the new gTLD program, has quit.

While he’s technically resigned, he left no doubt in his unusually frank resignation letter that he’s actually been forced out by the M+M board of directors.

He wrote that the decision was “initiated by the board” and that his “decision” to leave “was unexpected – for me at least”.

He added that he was “OK with it, indeed supportive of it” and that he has no intention to sell off his substantial stake in the company.

Krueger will now focus on Mozart, a web site building software maker that he’s been leading for the last couple of years. M+M has a deal to offer Mozart to its registrants.

He’s been replaced, albeit in a non-executive capacity, by Keith Teare, an existing director.

Teare is a tech veteran perhaps best known in the domain industry for launching and running RealNames, which attempted to replicate AOL Keywords for the Internet Explorer browser at the turn of the century.

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NameVault terminated by ICANN

NameVault, a registrar that once had over 75,000 domains under management, has been terminated by ICANN over multiple alleged contract breaches.

ICANN told (pdf) the Canadian company this week that its right to sell gTLD domain names will come to an end June 17.

The breaches primarily relate to its failure to provide records relating to the domain stronglikebull.com and its failure to provide ICANN with a working phone number.

NameVault belonged to domain investor Adam Matuzich, but I hear he may have sold it off to an Indian outfit several months ago (that may have been a surprise to ICANN too).

Back in 2011, it had over 75,000 names on its books. Today, it has fewer than 1,000.

The decline seems to be largely due to the departure of fellow domain investor Mike Berkens, who started taking his portfolio to Hexonet a few years ago.

ICANN will now ask other registrars if they want to take over NameVault’s domains.

It’s the fourth registrar to lose its accreditation this year.

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ICANN says “no impact” from TMCH downtime

The 10-hour outage in the Trademark Clearinghouse’s key database had no impact on domain registrations, ICANN says.

We reported earlier this week that the TMCH’s Trademark Database had been offline for much of last Friday, for reasons unknown.

We’d heard concerns from some users that the downtime may have allowed registrants to register domain names matching trademarks without triggering Trademark Claims notices.

But that worry may have been unfounded. ICANN told DI:

The issue occurred when two nodes spontaneously restarted. The cause of this restart is still under investigation. Although both nodes came back up, several services such as the network interface, TSA Service IP and the SSH daemon did not. All TMDB Services except the CNIS service were unavailable during the outage. From a domain registration point of view there should have been no impact.

CNIS is the Claim Notice Information Service, which provides registrars with Trademark Claims notice data.

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Chehade quits as ICANN CEO

Kevin Murphy, May 21, 2015, Domain Policy

ICANN president and CEO Fadi Chehade will step down from the post March 2016, he said in the last hour.

The shock news means he will have served just three and a half years in the top job by the time he leaves. He started September 14, 2012.

It sounds like he might already has a new job lined up. (UPDATE: He’s told AFP that he does, and the identity of his employer will be disclosed later this year.)

He’s told ICANN he intends “to move into a new career in the private sector (outside the Domain Name Industry)”, according to a press release.

Chehade will probably leave just about the same time as the transition of the IANA functions from US government oversight is finalized, assuming ICANN misses the target date of September 2015 and gets a six-month extension.

Here’s the full text of the press release:

The Internet Corporation for Assigned Names and Numbers (ICANN) today announced that President and CEO Fadi Chehadé has informed the Board he will be concluding his tenure in March 2016 to move into a new career in the private sector (outside the Domain Name Industry).

At the request of the Board, Chehadé will be available to work closely with ICANN after March 2016 to support the transition to a new leader, as well as to advise the Board on any issue they require including the implementation of the IANA Stewardship Transition from the US Government to ICANN and the technical operating community.

“I want to thank Fadi for his strong commitment,” said Dr. Stephen Crocker, Chair of the Board of Directors. I am very confident that with Fadi’s continued leadership and ICANN’s very experienced management team who have the breadth to ensure that ICANN continues to manage its key responsibilities effectively, that the organization’s work will proceed smoothly.”

“I am deeply committed to working with the Board, our staff, and our community to continue ICANN’s mission as we still have much to accomplish,” said Chehadé. “During the remaining 10 months of my tenure, it’s business-as-usual. My priority remains to continue strengthening ICANN’s operations and services to the global community.”

Personally, I think this is going to be horrible for continuity at ICANN. Chehade is a vision guy who had set out long-term goals for the organization that I don’t think he’ll be able to wrap up in his remaining 10 months.

What do you think?

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