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ICANN terminates three registrars

Kevin Murphy, February 12, 2013, Domain Registrars

ICANN has pulled the plug on three accredited domain name registrars, saying they all failed to comply with an audit.

Lime Labs, R Lee Chambers Company (DomainsToBeSeen.com) and Central Registrar (Domainmonger.com) have been given 30 days notice that their accreditations are being yanked and that their domains will be transferred to other registrars.

About 12,000 domains will be affected, the vast majority of which are managed by Lime Labs.

The three registrars were among 10 that ICANN pounced on last month when they failed to respond to its Contractual Compliance Audit Program.

This program is a three-year initiative to make sure registrars and registries are complying with their contractual requirements. A third of registrars were randomly selected to take part late last year.

According to ICANN’s termination notices, all three registrars ignored last month’s warnings and did not submit the data required for the audit.

DomainsToBeSeen and Domainmonger both have just a few hundred gTLD domain names under management each. Lime Labs is much larger, with over 11,000.

The terminations will come into affect March 13.

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How .pw signed up more launch registrars than .xxx

Kevin Murphy, February 12, 2013, Domain Registries

Directi has signed up more registrars for its launch of the .pw top-level domain than .xxx managed a year ago, crediting pricing and “operating in new gTLD mode” for its progress.

Sandeep Ramchandani, business head of .pw at the company, said that over 90 registrars are currently accredited. That’s compared to the about 80 that ICM Registry launched .xxx with in December 2011.

The ccTLD for the tiny nation of Palau (pop. 20,956), .pw isn’t what you’d call an intrinsically exciting string, despite Directi’s attempt to rebrand it as “Professional Web”, making its relatively strong launch channel a bit of a head-scratcher.

The fact that Directi also runs registrar-in-a-box provider LogicBoxes has helped it add some registrars, no doubt.

But Ramchandani reckons a combination of low pricing, open registration policies, a focus on developing markets, and attractive registrar incentives, are helping the TLD gain channel traction.

“There’s going to be a massive shift in power from registries to registrars,” he said. “We’re basically operating .pw in the new gTLD mode.”

I had assumed that many registrars might have wanted to plug in to .pw in order to ease the need for integration work with Directi’s registry if/when the company launches the 30-odd gTLD it has applied for, but Ramchandani pointed out that this is not the case.

The company is using CentralNic as the back-end for .pw, but it’s signed up to use ARI Registry Services for its gTLDs.

“This is not something related to our gTLD business, because we’re working off a completely different platform,” Ramchandani said.

But with the imminent launch of new gTLDs, there’s recently been an increased industry focus on how registrars should be paying their registry fees. Typically, they prepay each TLD registry before they sell domains to registrants, tying up capital that they could be using for other purposes.

That model may work in a world of 1,700 registrars and 18 gTLDs, but it will become increasingly cumbersome and uneconomical for registrars as the number of TLDs approaches 1,000.

Some say it will make more sense for registries to scrap the prepay model, if they want to attract more registrars.

While Directi has stopped short of offering blanket post-pay to its registrars, Ramchandani said it will offer the model in some cases (unlike ICANN-contracted gTLDs, .pw has leeway to treat registrars differently).

“We will be asking for prepayment, but if a registrar is doing significant volume… If they feel they’re blocking a lot of capital and require a more convenient and flexible model we could offer post-payment,” he said. “But it’s not something we can offer every registrar.”

It’s also offering what it says is a more attractive way of handling promotional pricing.

Typically, if a gTLD registry runs a pricing promotion today it will rebate its registrars the difference between the promo price and the regular fee monthly or quarterly based on their sales volumes.

Ramchandani said the .pw model is more attractive to registrars: “With our programs, we will charge the discounted amount up-front, as opposed to charging the full amount and rebating later.”

“We will be coming up with some very, very aggressive promotions that will bring down the first-year registration cost a lot,” he added.

In contrast to SX Registry’s .sx (for the new nation of Sint Maarten), which is launching with prices of around $50 a year, Directi is selling .pw domains with a registry fee “sub-.com” before discounts.

Exact registry pricing for .pw domains has not been publicly disclosed, and Ramchandani declined to give out that information, but given current .com prices we can estimate a ceiling of about $7.85.

Directi reckons the low prices will drive volumes in developing markets, such as its native India.

The .pw launch is currently in the last few days of sunrise — which like so many other recent sunrise periods has been extended to cope with last-minute filings — during which trademark holders can defensively register their brands as domain names for a higher fee.

Not ever registrar is participating in sunrise; eNom, for example, which is .pw’s biggest registrar signing to date, does not plan to get involved until landrush.

Directi has something interesting planned for landrush, which begins next Monday, too.

According to Ramchandani, the registry will release and promote a list of unreserved “premium” domains that are available for registration during the landrush period.

This is slightly different to the standard registry practice of holding back premiums for auction. The names .pw will promote will not be “reserved”, they’ll just be examples of decent strings picked out of the available pool.

Each could technically be sold for the basic landrush fee if only one registrant attempts to register them. In practice, due to the promotion, there’s a higher likelihood of the domains going to auction, however.

“We’re making available a much larger set of premium names during landrush,” Ramchandani said. “We think it will help raise awareness to say: ‘Hey, these are the top picks.'”

“Since those names are generally reserved by the registry, we think it’s important to say: these are available,” he added.

The full list of registrars participating in .pw’s launch is available here.

Directi is promoting those registrars that have committed some marketing resources to the TLD, such as by creating dedicated landing pages.

It has not yet signed up Go Daddy, which is typically responsible for a quarter or more of all sales in gTLDs it sells, but Ramchandani said he expects more “top five” registrars to follow eNom in supporting .pw soon.

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Google, L’Oreal execs tapped for new gTLD summit

Kevin Murphy, February 11, 2013, Domain Services

Executives from Google, L’Oreal and The Boston Globe have been lined up to speak at the new gTLD marketing conference taking placing New York next month.

Hal Bailey, director of Google’s domains business, will speak on the panel “Domains in 2015, 2020, 2025: A View of the dot Future” at the Digital Marketing & gTLD Strategy Congress, according to organizers.

L’Oreal’s chief digital officer has dropped out of the conference, but he has been replaced by Brigitte King, senior vice president of the company’s digital business.

L’Oreal and Google are two of the new gTLD applicants currently under fire for applying for so-called “closed generic” gTLDs, which could make for some interesting discussions.

King will chair the conference and deliver a keynote entitled “The L’Oreal Story: Building Beauty Brands with Digital, Data and Direct Relationships”. L’Oreal has applied for 13 new gTLDs.

The Boston Globe, which has applied for .boston, is sending Jeff Moriarty, it vice president for digital products, and industry IP lawyer Bart Lieben to talk about the newspaper’s plans for the gTLD.

Momentum Consulting, which is organization the dot-brand focused event, says it has 80 confirmed attendees and is on target to have more than its expected 120 by the time ticket sales close.

DI will also be in attendance. I’m hosting a fireside chat with ICANN’s Sally Costerton, head of stakeholder relations.

The conference runs March 11-12 in New York City.

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Closed gTLD debate threatens Google and Amazon

Kevin Murphy, February 8, 2013, Domain Policy

Howls of criticism about Google, Amazon and others’ plans to grab huge swathes of new gTLD real estate and keep it to themselves seem to have spurred ICANN into action.

A public comment period opened this week seeks community feedback (indirectly) on applications such as Amazon’s .music, L’Oreal’s .beauty and Google’s .blog, among many others.

These gTLDs have all been proposed with “single-registrant” business models, in which the registry controls all second-level domains and regular registrars cannot sell them to anyone else.

It’s the “dot-brand” model, but applied to generic dictionary words for which the applicants have no trademark rights.

Scores of such applications have been made, notably by Google and Amazon, but they have drawn criticism from many in the ICANN community, such as a small group of registrars and others led by Blacknight Solutions.

Members of the Governmental Advisory Committee, most vocally Australia, have also expressed serious concerns about the model, saying it could be anti-competitive.

ICANN’s board of directors is currently mulling over these complaints, and has thrown the issue open to public comment to aid in its deliberations.

What it wants from you is:

proposed objective criteria for:

  • classifying certain applications as “closed generic” TLDs, i.e., how to determine whether a string is generic, and
  • determining the circumstances under which a particular TLD operator should be permitted to adopt “open” or “closed” registration policies.

The way the public comment request is phrased should be quite worrying to applicants for closed generic gTLDs.

It seem to assume that ICANN should be classifying gTLDs, something it has steadfastly refused to do for all of the years these kinds of debates have been raging.

What is a “closed generic” anyway?

The DI PRO New gTLD Application Tracker classifies gTLD applications into three buckets: Open, Restricted and Single-Registrant.

We made no attempt to segregate dot-brands from other Single Registrant bids, precisely because there’s currently no such thing as a dot-brand under ICANN’s rules.

There doesn’t seem to be much community concern about the apps we have classified as “Restricted” — applications for .lawyer that propose to vet registrants for their lawyerly credentials, for example.

The concern is all directed at Single Registrant bids. We have 912 of these in our database.

Many of these are dot-brands, where the applied-for string is an exact match with a famous trademark, but many are for dictionary words for which the applicant has no preexisting rights.

In order to sanely operate a dot-brand, applicants must request an exemption to the ICANN rules that oblige them to offer their gTLDs via accredited registrars on a non-discriminatory basis.

This Code of Conduct is a part of the base Registry Agreement for new gTLDs, but it contains a carve-out for single-registrant applicants:

Registry Operator may request an exemption to this Code of Conduct, and such exemption may be granted by ICANN in ICANN’s reasonable discretion, if Registry Operator demonstrates to ICANN’s reasonable satisfaction that (i) all domain name registrations in the TLD are registered to, and maintained by, Registry Operator for its own exclusive use, (ii) Registry Operator does not sell, distribute or transfer control or use of any registrations in the TLD to any third party that is not an Affiliate of Registry Operator, and (iii) application of this Code of Conduct to the TLD is not necessary to protect the public interest.

This provision was added specifically in order to enable “dot-brands” to exist.

It would be pretty weird if, for example, L’Oreal was forced to make .loreal domains available via hundreds of registrars. By requesting an exception, L’Oreal has the chance to keep .loreal in-house.

However, because ICANN deliberately has made no distinction between commonly used words and brands (.amazon could be both), L’Oreal was also able to apply for .beauty as a single-registrant gTLD.

It’s not really a loophole — the possibility of companies applying for closed generics was envisaged by ICANN and the policy-making community long before the application window even opened.

Make no mistake, this is well-trodden ground. ICANN had plenty of opportunities to address the issue before the new gTLD application window opened a year ago and it quite consciously decided not to.

The feeling over the last couple of years has been that objection mechanisms such as the Community Objection, as well as GAC Advice, would be sufficient to close down these problematic gTLDs bids.

During the year-long community discussion about registry-registrar vertical integration, the possibility of closed generics was acknowledged and heavily debated.

The GNSO’s Vertical Integration Working Group failed to reach consensus on almost everything, but most of the recommendations emerging from it included some Code of Conduct exemptions for dot-brands.

Some in the WG suggested that the exemptions should only apply to true dot-brands (ie, those back up by a trademark) but ICANN decided against referring to trademarks when it wrote the Code of Conduct due to the very real possibility that it would encourage gaming by speculators.

That problem has not disappeared. While there’s no such gaming in the current batch of applications, there will be second and third and fourth application rounds that the rules being hastily debated at the last minute right now will also (presumably) apply to.

What do closed generic applicants want?

Some ICANN community members assumed that it would be the big domainer-backed companies (later emerging as Donuts, Uniregistry et al) that would attempt these kinds of land-grabs.

But that (so far) hasn’t turned out to be the case. The domainers have generally proposed registration policies that are super, super liberal in comparison to Google, Amazon and other closed-generic applicants.

I believe it’s partly because it’s these massively powerful e-commerce companies that are the ones making the land-grabs, and the scale of the grabs, that the issue of closed generics has reemerged now.

There are two broad use cases of concern here.

First, the .beauty scenario: L’Oreal keeps all the second-level .beauty domains to itself, essentially converting the word “beauty” into a brand name as far as the DNS is concerned.

Second, the .blog scenario: Google implements a policy that all .blog domains must use its Blogger service, potentially to the detriment of competitors such as WordPress or Tumblr.

In both scenarios, the bids could be rejected in their entirety as a result of formal objections, ICANN board action or Governmental Advisory Committee advice.

If the applications were approved, ICANN could also subjectively apply the ill-defined “public interest” test outlined above to force compliance with the Code of Conduct.

But that would merely lead to the bizarre scenario where 1,700 accredited registrars all qualify to sell .music domain names, but the only potential customer is Amazon.com’s intellectual property management department (which wants to run .music as a single-registrant gTLD).

As ICANN points out in its public comments request, the Code of Conduct regulates who can sell domain names in new gTLDs, not who they can sell them to.

The .blog scenario is a little different.

This is what Google, which has applied via its Charleston Road Registry subsidiary, has proposed (with my emphasis):

Should ICANN grant Charleston Road Registry’s exemption to the Code of Conduct, and the proposed gTLD operate with Google as the sole registrar and registrant, members of the public will not be able to directly register domain names in this new gTLD. Users will, however, be given the opportunity to make use of a vanity second-level domain as a memorable identifier linked to content in Blogger.

In other words, Google will “own” all the second-level .blog domains, but will allow Blogger customers to “use” them.

It looks like what it is: a transparently bogus attempted workaround of the Code of Conduct, designed to let Google exclude rival blogging services and independent, self-managed bloggers from .blog.

(Disclosure: DI is an independent, self-managed blog.)

However, I can’t see how what Google has proposed could possibly qualify for an exemption, which is only supposed to be granted provided the registry does not “transfer control or use of any registrations in the TLD to any third party”.

If sanity prevails, Google probably won’t qualify for an exemption.

But that won’t stop it tying .blog to Blogger.

The Code of Conduct, remember, is only concerned with equal, non-discriminatory access for accredited registrars. It does not speak to registry services or registry policies.

Google could possibly still have a registry policy stating that all .blog domains must point to Blogger.

In addition, Google could make the registration fee $0, making it unattractive for most registrars to carry (though I guess registrars could use it as a loss-leader, they wouldn’t be able to up-sell hosting and other services if all .blog domains have to use Blogger).

In conclusion

Applicants for closed generics paid millions of dollars to apply, using the rules set down in the Applicant Guidebook at the time, and I can’t see them being too happy about this eleventh hour surprise.

However, there can be little doubt that ICANN, if its role is to protect the public interest and consumer trust, has to seriously tackle the issue of closed generics.

But it has to address it in 2011.

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.web lawsuit thrown out of court, “too generic” to be a trademark

Kevin Murphy, February 8, 2013, Domain Registries

A California lawsuit that threatened to scupper all seven applications for the .web new gTLD has been thrown out.

The judge in Image Online Design v ICANN yesterday granted ICANN’s motion to dismiss the case, saying that IOD had no claim for breach of contract and, significantly, that “.web” is too generic to be a trademark.

Here’s the money quote:

This court agrees with ICANN that the mark .WEB used in relation to Internet registry services is generic and cannot enjoy trademark protection.

IOD applied for .web during ICANN’s proof-of-concept new gTLD round in 2000, but was not approved.

It sued ICANN last October, claiming breach of contract and trademark infringement and interference with its business.

The company has been running .web in an alternate DNS root, where hardly anyone uses it, since the 1990s.

Unfortunately for IOD, when it applied in 2000 it signed a document releasing ICANN from all legal liability in relation to the application, so the judge yesterday ruled that it could not sue for breach of contract.

The court also upheld the longstanding position of the US courts that top-level domains cannot be trademarks.

The US Patent & Trademark Office is of the view that TLDs do not indicate the source of goods or services; only the second-level domain does.

IOD had argued in court that, with the imminent introduction of dot-brands, the USPTO expects to modify its position. The judge in this case, Dean Pregerson, agreed in part, stating:

For instance, if ICANN were to introduce the TLD .APPLE, the user would arguably expect that that TLD is administered by Apple Inc. In such a case, the TLD might be considered a source indicator. If Sony tried to administer the TLD .APPLE, Apple Inc. would likely argue and possibly prevail on a trademark infringement claim.

This said, it appears to the court that today only the most famous of marks could have a source indicating function as a TLD. Some marks, such as .WEB, might remain generic even if they were famous, since .WEB in connection with registry services for the World Wide Web appears to refer to the service offered, rather than to only a particular producer’s registry service.

the mark .WEB is not protectable under traditional trademark analysis because it “seems to represent a genus of a type of website” and thus answers the question “What are you?” rather than “Who vouches for you?”

IOD’s other claims were also thrown out. Read the court’s order here.

The ruling means that a similar lawsuit filed by fellow 2000-round new gTLD applicant Name.Space, which is looking for an injunction against 189 gTLD applications, may be on shaky ground too.

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