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New gTLD revenue projections revealed in leaked Famous Four presentation

Kevin Murphy, August 1, 2013, Domain Registries

Famous Four Media expects to make an average of almost $30 million revenue in year one from each of the new gTLDs it secures.

That’s according to a PowerPoint presentation (pdf), written for potential investors, that was provided by an anonymous source (I suspect not a fan of the company) to DI this week.

According to the presentation, “potential year 1 revenues for an average Registry” could amount to $28.4 million, the vast majority of which would come from sunrise, landrush and premium domain sales.

The presentation, dated June 2013, was prepared by Domain Venture Partners, the immediate parent of the 60 shell companies that Famous Four is using to apply for its 60 gTLDs.

The company was unable to provide an executive to discuss this story until August 14.

But according to the PowerPoint, the Domain Venture Partners II fund is an investment vehicle set up to “bridge the gap” in Famous Four’s funding requirements:

Domain Venture Partners II shall provide a unique structured regulated investment opportunity to participate in the new gTLD programme to provide secured fixed annual returns along with additional venture type returns at a time in the process where most of the major risks have been removed.

DVP is looking to raise up to $400 million, having raised £48.3 million ($73.2 million) in 2011 via the Domain Venture Partners I fund, it says. The current round opened in March and is expected to close in November.

Famous Four has applied for 60 gTLDs — mostly highly sought-after strings such as .poker, .music, .shop, .search and .buy — 10 of which were initially uncontested.

According to the presentation, landrush period auctions would account for about a third of year-one revenue in each gTLD: $9.7 million. That’s based on selling 45,697 domains for an average price of $213.34.

Revenue from trademark owners is the second-largest chunk. An average sunrise period could raise $6.9 million, assuming 39,679 domains at an average of $173.5 each, according to the PowerPoint.

Sales of regular domains during the first first year of general availability could raise $4.1 million, based on 225,759 registrations at $18.47 apiece, the presentation says.

Here’s the full slide, one of 33 in the deck:

Domain Venture Partners II presentation

The presentation says that the projections are “based on historical data points established by the existing operational gTLD Registries”, adding:

The figures are averages and therefore would represent projections for a standard gTLD Registry. Potential year 1 revenues for specific Registries may be below or above this average.

Some of the numbers strike me as optimistic. While the likes of .asia and .mobi may have seen these registration volumes due to the novelty and scarcity of new gTLD namespaces, my feeling is that those days are over.

The new gTLD program is likely to see scores of overlapping sunrise and landrush periods; it’s difficult to see registries benefiting from the same focus and excitement as their predecessors.

There’s a limited amount of domainer capital to spread around landrush sales and trademark owners are likely to be much more selective about where they defensively register their brands in a world of 1,300 gTLDs.

That said, Famous Four has applied for some of the nicest strings in the round so I may be wrong.

An appendix to the presentation discussing the first DVP funding round says that while Famous Four hopes to sign contracts for 30 new gTLDs, it has only secured 32% of the money it is looking for.

Securing investment appears to have been tough due in part to the complexity of the ICANN process and investors’ lack of familiarity with it, which looks like risk. It also says:

The costs associated with applications in the new gTLD have increased, the financial strength of most applicants has been reduced and the knowledge barrier to entry is too high to interest large standard venture investors.

Famous Four’s business model is based around consolidation and keeping costs down, according to the pitch. For the most part, this is due to the economies of scale of running a large number of TLDs.

With Neustar as its back-end provider, Famous Four says it has found the “lowest fees in the industry”.

But the model also involves keeping tax to a minimum. Famous Four is based in Gibraltar, where it says it will pay no tax on domain sales:

FFM is operating in a fiscal environment that has multiple advantages over others in the industry. Domain names sales are treated as royalty income which is currently zero rated in Gibraltar. This would result in an instant bottom line gain.

There’s a strong suggestion in the presentation that DVPII is not limiting its ambitions to the new gTLDs it has applied for.

It also seems to discuss acquiring other applicants and ccTLD rights, then bringing them into the Famous Four fold, but the plan was not completely clear to me and executives were unavailable for clarification.

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DotMusic loses LRO, and four other cases rejected

Kevin Murphy, July 31, 2013, Domain Policy

Constantine Roussos has lost his first Legal Rights Objection over the flagship .music gTLD.

The case, DotMusic v Charleston Road Registry (pdf) was actually thrown out on a technicality — DotMusic didn’t present any evidence to show that it was the owner of the trademarks in question.

But the WIPO panelist handling the case made it pretty clear that DotMusic wouldn’t have won on the merits anyway.

If any applicant can be said to have built a brand around a proposed generic-term gTLD, it’s Roussos. DotMusic has been promoting .music on social media an in the music industry for years.

The company also owns the string “music” in a number of second-tier TLDs such as .co, .biz and .fm.

It’s not a bogus, last-minute attempt to game the system, like the .home cases — filed using Roussos-acquired trademarks — that have been thrown out repeatedly over the last couple of weeks.

The panelist addressed this directly:

On the one hand, the Panel recognizes that there has been a real investment by the Objector and associated parties in the trademark registrations, domain name registrations, sponsorship and branding to create consumer recognition and goodwill entitled to protection. On the other hand, there is a circularity in the Objector’s position in that the rights upon which the Objector relies to defeat the application are to a certain extent conditional on the defeat of the Applicant and the Objector’s success in obtaining the <.music> gTLD string.

In other words, Catch-22.

The panelist decided that .music is generic, that Google’s proposed use of it is generic, and that obtaining a trademark on a gTLD should not be a legit way to exclude rival applicants for that gTLD.

One objective of the Objector has been to obtain precisely the type of competitive advantage (in this case in the application process for the <.music> gTLD string) that the doctrine of generic names is designed to prevent. However, as the Applicant proposes to use the <.music> gTLD string in a generic sense it is immune from this challenge.

On that basis, the LRO would have failed, had DotMusic managed to demonstrate standing to object in the first place.

Unfortunately, DotMusic didn’t present any evidence that it actually owned the trademarks in question, which were applied for by Roussos and assigned to his company CGR E-Commerce.

The objection failed on that basis.

Defender Security, which obtained trademarks on “.home” from Roussos, ran into the same problems proving ownership of the trademarks in its LROs on the .home gTLD.

Four other LROs were decided this week:

.mail (United States Postal Service v. GMO Registry)

The case (pdf) turned on whether USPS owns a trademark that exactly matches the applied-for string (it doesn’t) and whether the word “mail” should be considered generic (it is) rather than a source identifier (it isn’t).

It’s pretty much the same logic applied in the two previous .mail LROs.

.food (Scripps Networks Interactive v. Dot Food, LLC)

This is the first of two competitive LROs filed by Scripps — which runs TV stations including the Food Network — against its .food applicant rivals to be decided.

Scripps has a bunch of trademarks containing the word “food”, including a November 2011 registration in the US for “Food” alone, covering entertainment services.

The WIPO panelist found (pdf) that the trademark was legit, but decided that it was not enough to prevent Dot Food using the matching string as a gTLD.

The fact that rights protection mechanisms exist in the new gTLD program was key:

to the extent that registration and use of a particular second-level domain within the <.food> gTLD actually creates a likelihood of confusion, then Objector will have remedies available to it, including the established Uniform Domain Name Dispute Resolution Policy, the forthcoming Uniform Rapid Suspension System and relevant laws. The fact that such disputes at the second level may arise is inherent in ICANN’s new gTLD program and is not in the circumstances of this case sufficient to uphold the present legal rights objection.

Objector’s rights in the FOOD mark do not confer upon it the exclusive right to use of the word “food” in all circumstances, particularly where, as here, Applicant intends to use the <.food> gTLD in connection with the food industry. Such intended use of the word would appear to be only for its dictionary meaning and not because of Objector’s trademark rights.

.vip (i-Registry v. Charleston Road Registry)

It’s the second objection by .vip applicant to get thrown out. In this case the respondent was Google.

Like the first time, the WIPO panelist found that the i-Registry trademark had been obtained for the purposes of the new gTLD program and that Google’s use of it in its generic sense would not infringe its rights.

.cam (AC Webconnecting Holding v. Dot Agency)

The second and final LRO decision (pdf) in the .cam contention set.

AC Webconnecting, an operator of webcam-based porn sites, lost again on the grounds that it applied for its trademark just a month before ICANN opened up the new gTLD application window in January last year.

The company didn’t have time to, and produced no evidence to suggest that, it had used the trademark and built up goodwill around “.cam” in the normal course of business.

In other words, front-running doesn’t pay.

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Two banks go down after forgetting to renew domains

Kevin Murphy, July 31, 2013, Domain Tech

Two UK banks suffered downtime over the weekend after apparently failing to renew their domain name registrations.

Clydesdale Bank and Yorkshire Bank, which offer online banking services at cbonline.co.uk and ybonline.co.uk respectively, both blamed a “systems update” for the downtime.

But some customers reported seeing a registrar’s renewal page when they attempted to access the sites, and others are reportedly still seeing difficulties consistent with DNS propagation delays.

Both domain names have expiry dates of July 26, according to Whois records.

Thankfully, the banks, both of which are owned by National Australia Bank, managed to retain control of their domains. If they’d fallen into third party hands things could have been a lot worse.

Combined, the banks have revenue of a couple of billion pounds.

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Donuts details second private gTLD auction list

Kevin Murphy, July 31, 2013, Domain Services

Donuts has committed 68 of its new gTLD applications to a set of private auctions due to commence August 13.

It’s the second round of auctions conducted by Innovative Auctions, which last month settled six contention sets for an average of $1.5 million per TLD.

Here’s the full list of Donuts’ strings:

.apartments .hot .art .jewelry .auction .law .audio .lawyer .baseball .legal .beauty .life .blog .living .boats .loans .broadway .memorial .broker .online .cafe .phone .casa .pizza .chat .place .church .plus .city .property .construction .rent .data .run .deals .salon .direct .school .discount .search .dog .show .expert .site .fish .soccer .football .storage .forum .store .furniture .studio .fyi .style .garden .team .global .theater .gratis .trading .group .website .guide .wedding .help .world .hosting .yoga

It’s very similar to the list of 63 strings that Donuts committed to the first round of auctions, which was under-subscribed by its rivals.

The additions since then are: .broker, .casa, .data, .deals, .dog,. expert, .lawyer, .life, .loans, .place, .property, .rent, studio, .website, .world and .yoga.

This list does not include the six gTLDs that were settled in the first round, for obvious reasons, but the following strings have also been removed: .forsale, .juegos, .marketing, .media, .sale.

Some of those appear to have been removed because Donuts has already won the contention set due to withdrawals.

The list still includes many in which Donuts is in a contention set with Uniregistry, which has previously said it would not participate in private auctions due to legal concerns.

Innovative said recently that over 100 applications had been committed to the August 13 auction.

It had previously said that the over 40 strings being applied for by applicants that had participated in the first auction had also been committed.

The deadline for committing to the auction is August 5.

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Afilias wants registrar ownership ban lifted on .mobi and .pro

Afilias has applied to ICANN to have its ban on owning registrars in two of its own gTLDs, .mobi and .pro, lifted.

With requests to ICANN a few days ago (here and here), the company said it wants to be able to own more than 15% of an ICANN-accredited registrar that sells both TLDs, which is currently forbidden by the two Registry Agreements in question.

Afilias’ proposed new .info contract, which was renegotiated this year (because it expired) and closed for public comment last week, would also enable the company to vertically integrate with a .info registrar.

A process for relaxing the cross-ownership rules on a per-TLD basis was approved by ICANN’s board of directors last October.

The only registry so far to have its contractual ban lifted is puntCat, the .cat registry operator.

When an ICANN working group was discussing the vertical integration issue a couple of years ago, Afilias was one of the participants that held fast against any relaxation of the 15% ownership cap, eventually driving the working group into stalemate and forcing the ICANN board’s hand.

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L’Oreal takes the red pill, withdraws .matrix bid

L’Oreal has withdrawn another of its dot-brand new gTLD applications.

This time it’s .matrix, for one of its hair-care product brands.

It’s the eighth of L’Oreal’s 14 original new gTLD applications to be withdrawn, after .欧莱雅, .kiehls, .loreal, .garnier, .maybelline, .kerastase, and .redken.

Only .lancome remains of its dot-brand applications. It has already passed Initial Evaluation, unlike the others which tend to get dropped shortly before results are posted, to secure a bigger refund.

Its “closed generic” bids for .skin, .beauty, .hair, .makeup and .salon are all still active and have all passed IE.

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Is social media the answer to the dot-brand problem?

With many dot-brand gTLD applicants still unsure about how they will use their new namespaces, the maker of the Kred reputation service is proposing social media as the answer.

Speaking to DI today, Kred CEO Andrew Grill said that one dot-brand applicant — a bank — has already committed to use parent company PeopleBrowsr’s new Social OS platform for its gTLD.

Social OS is being marketed as a way for companies to quickly launch their own social media networks along the lines of Facebook or LinkedIn.

Dot-brands would be able to own the customer relationship and get access to much more data about their users than they get with the limited “Like”-oriented Facebook platform, Grill said.

End users would be able to use these vertical networks using their existing social media log-in credentials, he said.

The company plans to use the platform in its own gTLD, .ceo, which it has applied for uncontested.

Grill said he talked to about 100 people at the recent ICANN meeting in Durban and expects to come away with five to 10 additional customers for the Social OS platform.

While the value proposition for new gTLD owners seems fairly reasonable, in general I’m quite skeptical about the internet’s need for more social media sites.

Any such service operated by a dot-brand would have to have a fairly compelling value proposition for end users.

Grill said that a car maker, for example, could use its own gTLD social media network to keep in touch with its customers — giving them a second-level domain when they buy one of its vehicles.

A bank, meanwhile, could offer services such as customer-to-customer transaction apps for users who have second-level domains in its gTLD. If registrations were limited to existing banking customers, a greater level of security would be baked in from the start, he said.

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Google beats USPS in LRO, Defender loses another

The United States Postal Service and Defender Security have both lost Legal Rights Objections over the new gTLDs .mail and .home, respectively.

In both cases it’s not the first LRO the objector has lost. USPS, losing here against Google, lost a similar objection against Amazon, while Defender has previously racked up six losses over .home.

The Defender case (pdf) this time was against .Home Registry Inc. The objection was rejected by the World Intellectual Property Organization panelist on pretty much the same grounds as the others — Defender acquired its trademark rights purely in order to be able to file LROs against its .home rivals.

In the USPS v Amazon case (pdf) the WIPO panelist also decided along the same lines as the previous case.

The decision turned on whether USPS, which owns trademarks on “U.S. Mail” but not “mail”, could be said to have rights in “mail” by virtue of the fact that it is the monopoly postal service in the US.

USPS argued that .mail is like .gov — internet users know a .gov domain is owned by the US government, so they’re likely to think .mail belongs to the official US mail service.

The panelist decided that users are more likely to associate the gTLD with email:

A consumer viewing the string <.mail> in the context of a domain name registration or an email address is presumably even more likely to think of the electronic (“email”) meaning, rather than the postal meaning, of the term “mail,”

WIPO has now decided 20 LRO cases. All have been rejected. Several more were terminated after the objector withdrew its objection.

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URS is live today as .pw voluntarily adopts it

Kevin Murphy, July 29, 2013, Domain Policy

Directi has become the first TLD registry to start complying with the Uniform Rapid Suspension process for cybersquatting complaints.

From today, all .pw domain name registrations will be subject to the policy, which enables trademark owners to have domains suspended more quickly and cheaply than with UDRP.

URS was designed, and is obligatory, for all new gTLDs, but Directi decided to adopt the policy along with UDRP voluntarily, to help mitigate abuse in the ccTLD namespace.

URS requirements for gTLD registries have not yet been finalized, but this is moot as they don’t apply to .pw anyway.

To date, only two UDRP complaints have been filed over .pw domains.

The National Arbitration Forum will be handling URS complaints. Instructions for filing can be found here.

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dotShabaka wants to be the first new gTLD to launch, but big problems remain

Having been the first to sign a contract with ICANN two weeks ago, new gTLD registry dotShabaka is also desperate to be the first to launch, but faces big obstacles.

The company, International Domain Registry, is a spin-off of AusRegistry, with many of the same directors and staff, but executives insist it is an entirely separate entity and will become more so with time.

It was awarded, uncontested and unobjected, the Arabic TLD شبكة., which means “.web” and transliterates to “.shabaka”. It will do business under the trading name dotShabaka Registry.

According to the Registry Agreement published by ICANN last week, it was signed on July 13, one day before the other three registries to so far get contracts.

“It was a lot of work to make sure we were the first to sign, and we intend to be the first to delegation,” general manager Yasmin Omer told DI last week.

“The best-estimate timeline published by ICANN in Durban is our timeline, that’s our target,” she added.

The timeline she’s referring to (pdf) is the one that says the first new gTLD could hit the root as early as September 5, with the first Sunrise period kicking off a month later.

Omer is slightly less optimistic about the timing, however, saying that “mid-September” is looking more likely, due to the requirements of the Pre-Delegation Testing period that dotShabaka is currently in.

The company is doing preliminary PDT work right now and expects to start testing properly in the first week of August.

But PDT is not the only thing standing in dotShabaka’s — and other new gTLD applicants’ — path to delegation.

Right now, the Trademark Clearinghouse and the 2013 Registrar Accreditation Agreement are the big barriers, Omer said.

TMCH requirements not ready

The TMCH is a problem because ICANN has still not finalized the TMCH’s RPM Requirements document, a set of rules that each new gTLD registry must adhere to in their Sunrise and Trademark Claims phases.

“A group within NTAG and the Registries Stakeholder Group has been negotiating this document with ICANN for some time now, going back and forth,” Omer said. “It’s all fine for those who intend on launching later on, but this document has yet to be finalized and that really harms us.”

A draft of the Requirements document (pdf) was published in April, and Omer said she expects ICANN to take a more up-to-date draft to public comment.

A standard 42-day comment period, starting today, would end mid-September.

As we reported in April, the Requirements raises questions about whether registries would, for example, be able to create lists of reserved premium domains or whether trademark owners would always get priority.

dotShabaka faces an additional problem with the TMCH because its gTLD is an Arabic string and there are been very little buy-in so far from companies in the Arabic-speaking world.

A couple of weeks ago, TMCH execs admitted that of the over 5,000 trademarks currently registered in the TMCH, only 13 are in Arabic.

In Durban, they said that the TMCH guidelines were not yet available in Arabic.

Part of the problem appears to be that a rumor was spread that the TMCH does not support non-Latin scripts, which executives said is not remotely true.

With so little participation from the Arabic trademark community, an early شبكة. launch could mean a woefully under-subscribed Sunrise period — 30 days to protect just a handful of companies.

“There’s no knowledge of the TMCH in the region,” Omer said.

“We’re currently putting our heads together to think of mechanisms to overcome this,” she said. “We don’t just want to be first to delegate and have it sit there idly, we want to be first to market as well.”

dotShabaka has been doing its own press in the region and claims to have taken thousands of expressions of interest in the gTLD, indicating that there is a market if awareness can be raised.

Registrars are a problem

Signing the 2013 Registrar Accreditation Agreement is a requirement for any registrar that want to sell new gTLDs, and that includes IDNs. Only seven registrars have publicly signed it to date.

According to Omer, the 2013 RAA’s stricter requirements are “not helping us in the region”.

Its provisions related to insurance can be “prohibitive to those located to those located in North Africa and the Middle East”, she said by way of an example.

In addition, there are only about seven accredited registrars in the region, all on older RAA versions, she said.

dotShabaka has already signed up Go Daddy and others to carry شبكة., so getting the TLD into the channel is not a problem.

But while Go Daddy will have an Arabic landing page for the TLD it will not have a full Arabic-language registration process and shopping cart ready in time for شبكة.’s planned launch window launch.

This makes me wonder whether there’s a risk that domain savvy Westerners are more likely to get a crack at the best شبكة. names before the Arab world is fully aware of the launch.

But Omer said that dotShabaka is doing its own outreach and that it’s committed to improving the “horrible” online experience for Arabic speakers that exists today.

“It’s not just about the TLD, it’s about the cause, it’s about an Arabic internet,” she said. “Yes there are issues and yes there are barriers, but we want to build more robust Arabic domain name market.”

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