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Digging for dirt in the Demand Media IPO – roundup

Kevin Murphy, August 9, 2010, Domain Registrars

Demand Media, parent of second-largest domain name registrar eNom, has filed to go public, and the publication of its S-1 registration document has given an unprecedented glimpse inside the company.

Unsurprisingly, the “content mill” part of Demand’s operation, which accounts for more than half of its revenue, has garnered the most media coverage over the weekend.

Demand says that the fact that is “transforming traditional content creation models” and is “frequently the subject of unflattering reports in the media about our business and our model.”

Reports of its IPO are no exception.

This report in DailyFinance.com observes that the key difference between Demand and traditional media is that Demand does it “at scale”, with some 10,000 writers producing 5,700 articles per day.

DaniWeb notes that Demand’s freelancers are “working for wages often well below industry standard to churn out content” and said the company is subject to “redundancies, inefficiencies and the reliance on trying to game Google”.

Others are more direct: “wtf: this is why the Internet is full of unreadable junk”

CNNMoney.com reports that Demand is “notorious” for paying as little as $15 per article, and that it can make a 58% return on a month’s articles over seven quarters.

As a freelancer reporter, I don’t like Demand’s model either. I think it devalues the profession. The S-1 reveals that the company is well aware that it’s also quite exploitative:

We believe that over the past two years our ability to attract and retain freelance content creators has benefited from the weak overall labor market and from the difficulties and resulting layoffs occurring in traditional media, particularly newspapers. We believe that this combination of circumstances is unlikely to continue and any change to the economy or the media jobs market may make it more difficult for us to attract and retain freelance content creators.

On the domain name side of the business, DomainNameWire was quickest off the mark, digging out the fact that eNom uses look-ups by prospective registrants to decide what articles might be profitable and what web sites it could develop.

The S-1 says:

These queries and look-ups provide insight into what consumers may be seeking online and represent a proprietary and valuable source of relevant information for our platform’s title generation algorithms and the algorithms we use to acquire undeveloped websites for our portfolio.

eNom has already said that this should NOT be interpreted as “front-running”. (apologies, the first version of this article accidentally omitted the word “not”)

Also found in the S-1, and already known from eNom’s registration agreement Ts & Cs, the company keeps some customers’ expired domain names for itself, if they have value.

I can remember a time not too many years ago when this kind of behavior was frowned upon.

DNW also points to the list of Demand’s subsidiaries. There are 146 of them, at least 100 of which are shells for ICANN registrar accreditations.

Others, such as Acquire This Name, which KnuJon had beef with (pdf) a year ago, act as eNom resellers.

Looking at the financials, All Things Digital gently mocks the company’s reliance on non-standard “Adjusted OIBDA” numbers in its S-1 to make the company appear profitable.

Meanwhile, Mike Berkens at TheDomains is incredulous looking at the amount of money Demand has lost since its inception: some $52 million.

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Cash-for-gold firm aims UDRP at “sucks” site

Kevin Murphy, August 6, 2010, Domain Policy

An Arizona cash-for-gold company has filed a UDRP claim against a gripe site that says it “sucks”.

HBT Investments, which does business at valleygoldmine.com, has filed its claim with WIPO against the owner of valleygoldminesucks.com.

The gripe site isn’t particularly exciting. It’s a blog with two entries, both dating from May 2009 and both primarily questioning the objectivity of an ABC news report.

The registrant probably has a strong defense.

There’s oodles of UDRP precedent protecting “sucks” sites, mainly on the grounds that there’s nothing “confusingly similar” about a domain that treats the trademark owner with contempt.

Valley Goldmine has a Better Business Bureau A+ rating displayed prominently on its web site, so it obviously values its reputation, which is fair enough.

But filing a UDRP against a gripe site does have the unfortunate effect of making it look like you’re trying to stifle free speech.

Valleygoldminesucks.com is, however, the second domain name that appears when one Googles for “valley goldmine”, which is probably more of a concern.

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Governments want morality veto on new TLDs

Kevin Murphy, August 6, 2010, Domain Registries

ICANN’s Governmental Advisory Committee wants to be able to kill off new top-level domain applications on cultural and religious grounds.

The GAC has finally broken its radio silence on the “morality and public order” or “MOPO” issue that was such a hot topic at the Brussels meeting in June.

A letter to ICANN (pdf), sent by Canadian GAC chair Heather Dryden, leaves little room for doubt where the GAC stands.

The GAC firmly believes that the absence of any controversial strings in the current universe of top-level domains (TLDs) to date contributes directly to the security and stability of the domain name and addressing system (DNS) and the universal resolvability of the system.

As a matter of principle… the GAC believes that the object of stability, security, and universal resolvability must be preserved in the course of expanding the DNS with the addition of new top-level domains.

This is actually quite powerful stuff.

The GAC is basically saying that no new TLDs should be introduced that would be unacceptable to the lowest common denominator world government.

Think Uganda, asked to make a call on .gay.

Think about any oppressed ethnic group without a territory that wants to apply for its own TLD.

The GAC wants ICANN to create a process for governments and others to object to TLD applications on religious, cultural, linguistic, national and geographical grounds.

It could even result in .xxx being objected to, even though it’s technically part of the 2005 round of new TLDs – the GAC wants the objection process to apply to “all pending and future TLDs”.

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It’s Friday, time for the world’s first domain name industry cryptic crossword

Kevin Murphy, August 6, 2010, It's Friday

I love cryptic crosswords.

Not the boring, brain-dead variety you get in the American press, I’m talking about the proper UK-style wordplay-based brain-teasers.

So I’ve written one. A small one. Focused on the domain name industry.

All the answers are the names of people, companies, things, concepts related to the business and politics of domain names. Any domain nerd should easily be able to recognize the answers (though not necessary work out the clues).

Click the image (made with puzzle-maker.com) to see it full size.

Crossword

ACROSS
1. To kick a household pet down the field. They do it in Spain. (7)
8. Messed up dose is secondary concern. (4)
9. Registrar to scratch a computer screen. (10)
11. Lucky if it lands on you? Rick Schwartz ain’t buying it. (6, 4)
13. Captain Car Kid crazily drives really, really fast. (6, 7)
14. A bastard of a registrar gripe site. (7)
15. The Most Important Person On The Internet. (4, 4)

DOWN
2. Scout about the west for a Canuck registrar. (6)
3. Te Kanawa’s first on a Greek island, and first in most ICANN comment periods. (7)
4. Odd tests rot, oddly, a breast-based marketing copycat. (7, 4)
5. May be done by the leader of a race or a registrar with insider information. (5, 7)
6. RFC editor to mail the Spanish. (6)
7. A short haircut. Then, in postscript, burning down a building for kicks. Having a mid-life crisis. (3, 7)
10. Making endlessly confused, up-in-the-air error. A cause for concern two years ago. (8, 3)
12. Registry sounds like the rear end of a young horse. (7)

Did I mention there’s a prize? Yes. The first person to email me with all the right answers. I’ll give them a lovely prize. I’ll think of something. Probably a free ad spot or something.

Feel free to speculate about the answers in the comments.

I’ll post the answers in the comments after we have a winner, or after a week, whichever is sooner.

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.XXX to run the ICANN gauntlet yet again

Kevin Murphy, August 6, 2010, Domain Registries

Bring on the Christians!

The contract between ICANN and ICM Registry to run the .xxx adults-only top-level domain is to be submitted for an ICANN public comment period, again.

ICANN’s board resolved yesterday to publish the proposed registry agreement for comment for at least 30 days.

But it has not yet decided whether to refer the deal to its Governmental Advisory Committee, which remains ICM’s major potential pitfall on its route to the root.

As long as the public comment period kicks off quite soon, the ICANN board could be in a position to make that call at its weekend retreat, September 24.

The .xxx application has generated more public comment over the years than all other ICANN public comment periods combined.

Its last such period, earlier this year, saw thousands of comments, most of them filed in response to outreach by right-wing American Christian groups.

Objections are also regularly received from members of the Free Speech Coalition, a porn trade group.

I expect this forum will be no different. It will be interesting to see what tactics are rolled out this time, given previous failures.

Here’s the meat of the latest resolution:

RESOLVED (2010.08.05.21), upon receipt of ICM’s application documentation, ICANN Staff is authorized to post ICM’s supporting documents and proposed registry agreement for the .XXX sTLD for public comment for a period of no less than 30 days.

RESOLVED (2010.08.05.22), upon completion of public comment period, ICANN Staff shall provide the Board with a summary of the public comments and shall make a recommendation to the Board as to whether the proposed registry agreement for the .XXX sTLD is consistent with GAC advice.

RESOLVED (2010.08.05.23), once the Board has received the above public comment summary and recommendation from the ICANN Staff regarding the proposed registry agreement for the .XXX sTLD, the Board shall at its next possible meeting, consider this recommendation, and determine, consistent with the ICANN Bylaws, whether a GAC consultation shall be required.

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