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Happy 10th birthday new TLDs!

Kevin Murphy, November 15, 2010, Domain Registries

With all the excitement about ICANN’s weekend publication of the new top-level domain Applicant Guidebook, it’s easy to forget that “new” TLDs have been around for a decade.

Tomorrow, November 16, is the 10th anniversary of the ICANN meeting at which the first wave of new gTLDs, seven in total, were approved.

The recording of the 2000 Marina Del Rey meeting may look a little odd to any relative newcomers to ICANN.

The open board meeting at which the successful new registries were selected took well over six hours, with the directors essentially making up their selection policies on the spot, in the spotlight.

It was a far cry from the public rubber-stamping exercises you’re more likely to witness nowadays.

Take this exchange from the November 2000 meeting, which seems particularly relevant in light of last week’s news about registry/registrar vertical integration.

About an hour into the meeting, chairman Esther Dyson tackled the VI idea head on, embracing it:

the notion of a registry with a single registrar might be offensive on its own, but in a competitive world I don’t see any problem with it and I certainly wouldn’t dismiss it out of hand

To which director Vint Cerf, Dyson’s eventual successor, responded, “not wishing to be combative”:

The choices that we make do set some precedents. One of the things I’m concerned about is the protection of users who register in these various top-level domains… If you have exactly one registrar per registry, the failure of either the registrar or the registry is a serious matter those who people who registered there. Having the ability to support multiple registrars, the demonstrated ability to support multiple registrars, gives some protection for those who are registering in that domain.

Odd to think that this ad-hoc decision took ten years to reverse.

It was a rather tense event.

The audience, packed with TLD applicants, had already pitched their bids earlier in the week, but during the board meeting itself they were obliged to remain silent, unable to even correct or clarify the misapprehensions of the directors and staff.

As a rookie reporter in the audience, the big news for me that day was the competition between the three registries that had applied to run “.web” as a generic TLD.

Afilias and NeuStar both had bids in, but they were competing with Image Online Design, a company that had been running .web in an alternate root for a number of years.

Cerf looked like he was going to back the IOD bid for a while, due to his “sympathy for pioneers”, but other board members were not as enthusiastic.

I was sitting immediately behind company CEO Christopher Ambler at the time, and the tension was palpable. It got more tense when the discussion turned to whether to grant .web to Afilias instead.

Afilias was ultimately granted .info, largely due to IOD’s existing claim on .web. NeuStar’s application was not approved, but its joint-venture bid for .biz was of course successful.

This was the meat of the resolution:

RESOLVED [00.89], the Board selects the following proposals for negotiations toward appropriate agreements between ICANN and the registry operator or sponsoring organization, or both: JVTeam (.biz), Afilias (.info), Global Name Registry (.name), RegistryPro (.pro), Museum Domain Management Association (.museum), Société Internationale de Télécommunications Aéronautiques (.aero), Cooperative League of the USA dba National Cooperative Business Association (.coop);

If any of this nostalgia sounds interesting, and you want to watch seven hours of heavily pixelated wonks talking about “putting TLDs into nested baskets”, you can find the video (.rm format, that’s how old it is) of the MDR board meeting buried in an open directory here.

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New TLD guidebook bans domain front-running

Kevin Murphy, November 15, 2010, Domain Registries

ICANN’s newly published Applicant Guidebook for new top-level domain operators contains a draft Code of Conduct for registries that, among other things, bans “front-running”.

The code, which I think is probably going to be one of the most talked-about parts of the AGB in the run-up to ICANN’s Cartagena meeting next month, is designed to address problems that could arise when registrars are allowed to run registries and vice versa.

Front-running is the name given to a scenario in which registrars use insider information – their customers’ domain availability lookups – to determine which high-value domains to register to themselves.

While there’s plenty of anecdotal evidence that such practices have occurred in the past, a study carried out last year by researcher Ben Edelman found no evidence that it still goes on.

Front-running was however held up as one reason why registrars and registries should not be allowed to vertically integrate, so the AGB’s code of conduct explicitly bans it.

It also bans registries accessing data generated by affiliated registrars, or from buying any domains for its own use, unless they’re needed for the management of the TLD.

Integrated registries will have to keep separate accounts for their registrar arms, and there will have to be a technological Chinese wall stopping registry and registrar data from cross-pollinating.

Registries will also have to submit a self-audit to ICANN, certifying their compliance with the code of conduct, before January 20 every year.

The code is currently a six-point plan, which, given the past “ingenuity” of domain name companies, may prove a little on the light side.

There’s lots more discussion to be had on this count, no doubt.

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Another reason why Go Daddy might not become a registry

Kevin Murphy, November 14, 2010, Domain Registrars

Domain name registries and registrars will soon be able to own each other, but there are plenty of good reasons why many of them, including the largest, may not.

George Kirikos and Mike Berkens are asking very interesting questions today, based on earlier investigative reporting by DomainNameWire, about whether Go Daddy would or should be barred from owning a registry on cybersquatting grounds.

But that’s not the only reason why Go Daddy may have problems applying for a new top-level domain.

I reported back in March, when only my mother was reading this blog, that Go Daddy may have gotten too big to be allowed into the registry market.

If you think Go Daddy wants to apply to ICANN to manage a new TLD registry or two, ask yourself: why did Go Daddy spend most of the year opposing vertical integration?

I have no inside knowledge into this, but I have a theory.

In 2008, CRA International produced an economic study for ICANN that, broadly speaking, recommended the relaxation of the rules separating registries and registrars.

In December that year, less than two years ago, Go Daddy filed its very much pro-VI comments on the study:

Go Daddy has and continues to be an advocate for eliminating the existing limits on registry/registrar cross-ownership.

The arguments that have been presented in favor of maintaining the status quo simply do not hold water. Current and past examples of cross-ownership already serve as test cases that demonstrate cross-ownership can and does work, and it can be successfully monitored.

Over the course of the next 12 months, the company’s official position on VI mellowed, and by this year it had made a 180-degree turn on the issue.

Its comments to the VI working group, filed in April 2010, say:

Go Daddy’s position on the vertical integration (VI) issue has changed over time. When VI discussions first began our position was very much to the left (if left is full, unqualified VI), but it has moved steadily to the right (if right is maintaining the so-called status quo). At this point, we are nearly fully on the right.

The company cited concerns about security, stability and consumer protection as the reasons for its shift. While I’ve no doubt that’s part of the story, I doubt it paints a full picture.

The decision may also have something to do with another economic study, produced for ICANN in February this year, this time by economics experts Steven Salop and Joshua Wright. It was published in March.

This study, crucially I think, suggested that where cross-ownership was to take place and the larger of the two companies had market power, that the deal should be referred to government competition regulators. Salop & Wright said:

We recommend that ICANN choose a market share threshold in the 40-60% range (the market share measured would be that of the acquiring company). The lower end is the market share at which U.S. competition authorities begin to be concerned about market power.

Guess which is the only registrar that falls into this market share window?

In January this year, Go Daddy put out a press release, when it registered its 40 millionth domain, which claimed:

Go Daddy now holds a near 50 percent market share of all active new domains registered in the world and is more than three times the size of its closest competitor.

Correlation does not equal causation, of course, so there’s no reason the second economic study and Go Daddy’s policy U-turn are necessarily linked, but I’d be surprised if the market power issue did not play a role.

The newly published Applicant Guidebook appears to have taken on board a key Salop & Wright recommendation, one that may be relevant:

ICANN-accredited registrars are eligible to apply for a gTLD… ICANN reserves the right to refer any application to the appropriate competition authority relative to any cross-ownership issues.

It seems to me that Go Daddy may be one of the few companies such a provision applies to. The company may find it has a harder time applying to become a registry than its competitors.

In the interests of sanity, I should point of that the AGB has been out for less than 48 hours, and that anything written about its possible consequences at this point is pure speculation.

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Go Daddy’s .co promo is a test

Kevin Murphy, November 14, 2010, Domain Registries

Go Daddy is was “testing” the .co top-level domain as its default extension, .CO Internet has revealed.

It’s been widely reported over the weekend that .co is now the first TLD in the drop-down menu on Go Daddy’s front page, but it looks like the news might not be as shocking as originally thought.

.CO Internet chief executive Juan Diego Calle has just blogged:

The GoDaddy test is exciting. Permanent? Not yet. While we have a great and expanding relationship with GoDaddy, we do not expect .CO to remain as the default TLD on a permanent basis. In fact this is only a test to measure conversions, customer feedback, and much more.

Still, onwards and upwards. It’s certainly good news for the marketing of the Colombian TLD.

Personally, I’d be interested not only in data on conversions but also on refunds. There’s bound to be the odd customer who blindly registers a nice-looking domain thinking it’s a .com, right?

UPDATE: Go Daddy is now showing me (and others) .com as the default TLD once more. I guess the data is in.

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Could vertical integration kill registrar parking?

Kevin Murphy, November 14, 2010, Domain Registries

Will ICANN’s decision to allow registrars and registries to own each other help reduce the practice of registrars parking unused or expiring domain names?

A reading of the new top-level domain Applicant Guidebook in light of the recent “vertical integration” ruling it incorporates certainly raises this kind of question.

The AGB includes a policy called the Trademark Post-Delegation Dispute Resolution Procedure, or PDDRP, which allows trademark owners to seek remedies against cybersquatting registries.

The policy is quite clear that registries cannot be held accountable for cybersquatting by third parties in their TLD, unless they have, for example, actively encouraged the squatters.

But another example of infringement is given thus:

where a registry operator has a pattern or practice of acting as the registrant or beneficial user of infringing registrations, to monetize and profit in bad faith.

Now, this wouldn’t be a cause for concern in the current vertically separated market.

Most registries are only generally able to register domain names in their own TLD by going through an accredited registrar. Proving bad faith intent in that situation would be trivial.

But what of an integrated registry/registrar that also automatically parks recently registered or expiring domains in order to profit from pay-per-click advertising?

This is common practice nowadays. It’s been used to prove a registrant’s bad faith during many recent UDRP proceedings and one registrar is even being sued by Verizon for doing it.

Would a registrar parking an expired, trademark-infringing domain constitute it acting as a “beneficial user” of the domain “to monetize and profit in bad faith”?

Text added to the PDDRP section of the AGB in its most recent revision strongly suggests that “the registrar did it” would not be a defence for a vertically integrated company:

For purposes of these standards, “registry operator” shall include entities directly or indirectly controlling, controlled by or under common control with a registry operator

The PDDRP allows complainants to seek remedies such as injunctions, as well as the suspension of new registrations in a TLD and, exceptionally, the full revocation of their registry contract.

With that in mind, would an integrated registry/registrar want to risk any practice that puts their TLD at risk?

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