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Second emergency registry tested with dead dot-brand

Kevin Murphy, April 27, 2017, Domain Registries

ICANN is running its second test of the Emergency Back-End Registry Operator system, designed as a failover for bankrupt gTLDs.

This time, the EBERO under the microscope is CORE Association, one of the three approved providers.

It this week took over operation of .mtpc, a dot-brand gTLD that Mitsubishi applied for, was delegated, never used, and then decided it didn’t want to run any more.

ICANN said:

ICANN is conducting a test of the Emergency Back-End Registry Operator program. Simulating an emergency registry operator transition will provide valuable insight into the effectiveness of procedures for addressing potential gTLD service interruptions. Lessons learned will be used to support ICANN’s efforts to ensure the security, stability and resiliency of the Internet and the Domain Name System.

The first test was conducted by ICANN and EBERO provider Nominet earlier this year, using the similarly unloved dot-brand .doosan.

I expect we’ll see a third test before long, using CNNIC, the third EBERO provider.

It would have plenty of dead dot-brands to choose from.

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MMX stung for $7.7 million by crappy .london contract?

Kevin Murphy, April 26, 2017, Domain Registries

Did MMX take a $7.7 million accounting hit to renegotiate a crappy .london gTLD contract? It looks a bit like that to me.

Found in the company’s full-year 2016 financial results yesterday is the disclosure that it had to pay off an undisclosed gTLD partner after originally making “overly ambitious” predictions about its likely popularity.

The deal apparently had MMX — then under previous management as Minds + Machines — making guaranteed payments to its partner on the assumption that it would sell a lot more domains than it eventually did.

.london currently has about 56,000 names in its zone file, down from a post-launch peak of about 65,000.

According to its statement to the markets, MMX recorded a 2016 one-time contract restructuring expense of $3.8 million and has added a $3.9 million intangible asset to its balance sheet in relation to the contract.

That’s a total of $7.7 million, but CEO Toby Hall told DI that the cash payment was nowhere near that amount. He said:

in reality we have paid no where near that amount and much of this is the accounting treatment of a new contract that we believe has the potential to deliver future economic value to the business and will be covered from future revenues.

The gTLD in question is not named in the statement, and Hall also declined to name it in response to a DI inquiry, but MMX says of the contract:

In very early 2012, at the time when ICANN was still accepting new generic Top Level Domain applications, the then Executive Team entered into an overly ambitious agreement that it believed would provide value to the overall profile of the Group. The agreement had very significant financial commitments over the life of the contract and did not include any clauses that could allow the Group to renegotiate those commitments should the specific top-level domain not perform to the agreed financial projections. The growth of this top-level domain has not come close to meeting those expectations and the agreement has proven – and would have continued proving – to be a significant drag on the Group’s ability to generate positive cashflow from the given TLD.

In late Q4 of 2016 the current Executive team was able to successfully conclude renegotiations of certain components of the agreement by either restructuring or buying out certain financial commitments thus making it more economically viable going forward. As a result of the renegotiation effort, the Group has revised its modeling and believes that it can derive future economic benefit from the renegotiated contract. Accordingly, based on Management’s review, a portion of the buy out ($3.8million) has been expensed as a one-off restructuring cost while the remaining portion ($3.9million) will be capitalized as an intangible asset with future economic benefit.

All the evidence points to .london being the gTLD in question.

First, MMX says that the deal was entered into in “very early 2012”, which ties up with the timing of the request for proposals by the Mayor’s marketing office, London & Partners.

Second, MMX doesn’t have any other partner-based gTLDs that would plausibly have such ambitious commitments.

Third, MMX has previously stated that it was renegotiating some “burdensome” contracts. Last year, without relating it to a renegotiation, it said in a trading update that it was “encouraging to see an increasingly commercial and flexible approach from London & Partners, our Dot London partners”.

Fourth, word on the street back in 2012 was that L&P (which remember is affiliated with the London Mayor, an elected political office) had gone with tax-haven-based MMX rather than UK-based non-profit Nominet because MMX (then Minds + Machines) had offered the best financial incentives.

The scrapping of the old deal is perhaps another indicator of the hubris that accompanied the opening of the new gTLD program five years ago.

While L&P is the “owner” of .london, for want of a better word, in practice I gather that MMX runs it pretty much as if the gTLD was part of its regular portfolio.

The news of the contract changes were made in MMX’s audited 2016 results, which showed its billings doubling to $15.8 million during the year.

Revenue was $15 million, up from $6.3 million in 2015. Less partner payments, revenue was $13.5 million versus $5.5 million a year earlier.

The statement has half a dozen or more bottom lines, depending on what costs you exclude, but the one MMX wants us to look at is “Billings Operating EBITDA before one off restructuring costs”, which was $4.2 million compared to a loss of $6.6 million in 2015.

That, in other words, means that an unprofitable company has become a profitable one.

A lot of that has to do with the revenue from hundreds of thousands of .vip domain sales in China and a swingeing restructuring that led to headcount being slashed from 43 people to 20 people.

The company also sold off its registrar business to Uniregistry and started outsourcing its back-end functions to Nominet.

For 2017, the company has already disclosed two huge sales that will boost domains under management considerably, but at the risk of concentrating a larger part of MMX’s business outlook in just a few hands.

UPDATE: This article was updated a few hours after publication to clarify what MMX has said in relation to .london in previous trading statements.

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Hey, you! Listen to the ICANN board webcast more private sessions

Kevin Murphy, April 26, 2017, Domain Policy

ICANN’s board of directors is to live stream two sessions during an upcoming retreat, and if you’re at all interested in ICANN you really ought to tune in.

The webcasts are part of an ongoing pilot program designed to increase transparency at the very top of ICANN’s policy-making reverse-hierarchy.

The public, listen-only sessions seem to have been cherry-picked from the broader program of a retreat in Geneva over the May 6-7 weekend, and are:

Marketplace Dynamics Session I: Registries and Registrars
Saturday, 6 May, 11:15 – 12:00 UTC

Internet Governance Engagement Strategy with a Focus on the Internet Governance Forums (IGFs): Proposal to the Board
Sunday, 7 May, 09:00 – 10:00 UTC

Neither session sounds earth-shatteringly exciting, but both will be worth a listen in my view.

If nobody listens, ICANN could fairly say that streaming board meetings is a waste of money and stop doing it rather than expanding the program in future. That reduction of transparency would be in nobody’s interests.

The most recent live sessions occurred during ICANN 58 in Copenhagen last month, but until I ranted on Twitter nobody apart from me was listening.

That’s despite the fact that increased board transparency has been something the community has been crying out for for years.

So if you agree with transparency but find the chosen topics boring, perhaps just open the Adobe Connect room, hit mute, and go for brunch or play with your kids or something.

The Adobe links can be found here.

Disclosure: now that I’ve written this post, I think it’s almost inevitable that I will accidentally miss one or both of these sessions. You’re welcome to mock me should that happen (though you’ll only know whether I was there if you tune in yourself).

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MarkMonitor tells .feedback to take a hike after “breach” claim

Kevin Murphy, April 25, 2017, Domain Registrars

MarkMonitor is to voluntarily terminate its registrar relationship with Top Level Spectrum after the .feedback registry hit it with a breach of contract notice.

Troy Fuhriman, director of domain management at the registrar, told DI today that the company has just sent TLS a letter stating that it no longer wishes to sell .feedback names.

TLS earlier this month accused MarkMonitor of breaking the terms of its Registry-Registrar Agreements by leaking details of that agreement to media outlets including yours truly.

While TLS CEO Jay Westerdal told DI that an apology from MarkMonitor would be enough to make the termination threat go away, MarkMonitor has clearly decided against that route.

“We’re going to terminate all accreditation agreements for .feedback,” he said. “In part it’s a response to ICANN’s finding that Top Level Spectrum violated its Pubic Interest Commitments, and what we believe is a retaliatory breach notification from them.”

MarkMonitor and a small posse of high-profile clients including Facebook recently won a Public Interest Commitment Dispute Resolution Policy complaint against .feedback, related to the transparency of its launch policies and pricing.

It was in that complaint that MarkMonitor released details contained in the RRA that TLS deemed to be confidential.

Terminating the agreement means that MarkMonitor will no longer be able to sell .feedback names as a registrar and will have to transfer its existing registrations to a different registrar.

Not many clients are affected. MarkMonitor had only 45 .feedback domains under management at the last count (which was still enough to make it the fourth-largest independent .feedback registrar).

Most of these domains will be moved to 101domain, which with fewer than 200 domains is still the leading .feedback registrar.

UPDATE: Westerdal says that MarkMonitor was in fact terminated on Monday. Neither party claims that MarkMonitor made any effort to comply with the breach notice by apologizing.

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ICANN attendance shrank in Denmark

Kevin Murphy, April 25, 2017, Domain Policy

Attendance at ICANN’s recent meeting in Copenhagen was down about 8% on the comparable meeting a year earlier in Marrakech, according to ICANN statistics.

There were 2,089 at the Denmark meeting, down from 2,273 reported a year ago in Morocco.

The decline appears to be largely a result of relatively lower local participation. Africa is usually under-represented at ICANN meetings, but there was a surge in Marrakech, with almost 956 attendees hailing from the continent.

About half of Copenhagen participants — 1,012 people, of which 417 were first-timers — were European.

The number of remote participation attendees was much higher in Copenhagen. ICANN counted 4,428 unique users logging into Adobe Connect meeting rooms, compared to 3,458 in Marrakech.

Both Copenhagen and Marrakech, ICANNs 55 and 58, are designated as “community forums”, meaning they follow the traditional ICANN schedule. ICANN 56 was a shorter, policy-focused meeting and ICANN 57 was a longer meeting with a focus on outreach.

The stats for Copenhagen can be downloaded here (pdf).

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