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New TLD ownership rules punted to ICANN board

Kevin Murphy, August 16, 2010, Domain Policy

The ICANN board will be asked to untangle the policy mess that currently bans domain name registrars from applying for new top-level domains, after a GNSO working group failed to reach consensus.

The Vertical Integration WG was tasked with figuring out whether registrars should be allowed to own new TLD registries and vice versa, but only managed to reach deadlock.

The GNSO Council is now likely to punt the issue to the ICANN’s September 24-25 retreat, asking the board to consider the issues raised by the WG’s non-committal interim report.

It’s a dismaying case of pass-the-parcel that highlights both the trickiness of the VI problem and the limits of ICANN’s bottom-up policy-making process.

ICANN’s Draft Applicant Guidebook currently says that cross ownership between registrars and new TLD registries should be limited to 2% and that all new TLDs need to be offered to all accredited registrars.

This was in response to fears from some quarters that if a registrar also owned a new TLD registry, it would have an unfair advantage over other registrars, ultimately harming registrants.

The DAGv4 text was an overt, deliberately Draconian placeholder – it would ban all registrars and some registries, as well as making “.brand” TLDs unworkable – designed to force the GNSO find a better solution to the perceived problem.

The WG, which is ongoing, has so far failed to do so, and now seems set to pass the hot potato back from whence it came.

What all this means is that the ICANN board (and, let’s face it, staff) will be forced to assemble a workable VI policy for the first round of new TLD applications from the piecemeal suggestions of the WG; to do over two days or less what the WG failed to do over six months.

What the board will decide remains to be seen, but it could wind up governing the first round of new TLD applications, potentially making it a considerably smaller round.

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dotFree’s “free” domain names explained

Kevin Murphy, August 12, 2010, Domain Registries

As I reported a couple of days ago, a Czech company called The dotFree Group wants to apply to ICANN for a .free top-level domain, and will offer domain names for free.

Now for the small print – not all .free domain names will be free, and there will be strict limitations on how many free domains any given individual is able to register.

Here is an email interview I conducted with dotFree chief executive Dominique Piatti, which I think covers the basics of the business model and contains a few surprises.

I’ve corrected a few typos, but other than that it’s unedited.

DI: Applying for a new TLD will cost hundreds of thousands of dollars, and running it over the longer term will cost more. How does dotFree plan to cover the cost of running a free TLD?

Piatti: We are working with Venture Capital companies together from Eastern Europe and have an estimated turnover of EUR 1.25 million for 2011. In addition to this we are generating substantial revenue with our current projects www.cz.cc (which is a free second-level domain name registry) and with the Domain Registrar Script which is currently in version 1.3.5 (www.registrar-script.cz.cc).

DI: .free could be a desirable TLD for domain investors. Will there be any limitations on how many .free domains an individual is allowed to register? What would prevent a single person registering hundreds of thousands of .free domains?

Piatti: Yes, currently we plan that each individual is allow to have 1 .free domain at no costs within their account. If a user plans to have more domain names he can upgrade to VIP status (eg. $5/year and you can hold up to 20 domains in your account) similar like we have it successfully tested with www.cz.cc over the past 12 months. We have an advanced fraud detection tool developed which identifies double accounts owned by the same person.

DI: Do you anticipate a .free aftermarket? Would somebody be able to register, for example, “poker.free” for free and then sell it to somebody else for hundreds of thousands of dollars?

Piatti: Yes, we launch .free the same way as any other TLD in the market with the difference that every individual can have a .free domain at no costs. We will launch similar to the most recent TLD’s like .co and .me with premium domains, auctions etc. Also, aftermarket sales are possible therefore.

DI: Would “premium” domains also be free, or would you charge for them like you do with premium .cz.cc names?

Piatti: All our premium domains will cost around $5/year and will not be free. There are around 200,000 premium domains planned.

DI: Do you anticipate selling .free domains via registrars like Go Daddy and eNom, or would you expect to sell direct to the end user?

Piatti: Both. In our business plan we have the ICANN accredited registrars as distribution channels listed but we will also distribute those .free domain names directly over our own website.

DI: Would there be a “landrush” period? Would you auction premium names or would it be first-come-first-served?

Piatti: The launch will be very similar to .co and .me with everything it takes to make .free a highly successful gTLD.

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Porno union will try to shaft .xxx

Kevin Murphy, August 11, 2010, Domain Registries

The fight between ICM Registry and the Free Speech Coalition over the proposed .xxx top-level domain is not over yet.

The porn trade group has a plan to block ICM’s passage through the ICANN process, and has already stepped up efforts to rally the adult entertainment industry to its cause.

Last weekend at the AVN Show in Florida, FSC chair Diane Duke reportedly said:

ICM is saying this is a done deal… but it is not a done deal. We [the FSC] have a strategy to block the application. I have spoken with people from ICANN, and they agreed that this is not a done deal.

Asked whether lawsuits would be required, Duke reportedly answered: “There are other avenues to block this.”

These comments and others suggest that the FSC intends to use ICANN processes to, at the very least, delay .xxx’s delegation.

A public comment period will be launched soon on the proposed ICM-ICANN registry contract. This will likely be oversubscribed by FSC supporters.

If the contract ends up being bounced to ICANN’s Governmental Advisory Committee for consideration, there’s another opportunity for FSC lobbying.

Then, crucially, if ICANN votes to approve .xxx, the FSC could attempt to temporarily block the actual delegation to the DNS root by filing a Reconsideration Request.

Under my reading of the Reconsideration procedure, the actual delegation of the TLD could be delayed by anything between 30 and 120 days. Possibly longer.

The FSC would need to show at the very least that it would be harmed by .xxx’s introduction. If successful, the best case scenario for the FSC would see the resolution approving .xxx bounced back to the ICANN board for a second vote.

Beyond that, there’s always an Independent Review Panel. For that, the FSC would need to show that the .xxx approval breached ICANN’s bylaws or articles of incorporation, which seems to me to be a more challenging proposition. Also very expensive.

Another interesting quote from the AVN article – reportedly Allan Gelbard, lawyer to John “Buttman” Stagliano, said that the adult industry may be unduly worrying because:

anti-trust and trademark legal challenges would be brought immediately following the final approval by the ICANN board

Make of that what you will.

There’s also a new anti-.xxx blog, written by Theresa “Dark Lady” Reed, containing a new “satirical” video spoofing ICM.

To be honest, the funniest thing about it for me was the decision to cast a handsome, shiny-toothed American anchorman type as British ICM president Stuart Lawley.

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Want thousands of free .jobs domains? Now’s your chance

Kevin Murphy, August 11, 2010, Domain Registries

Employ Media wants to hear from companies interested in registering .jobs domain names in bulk, at the start of its recently approved landrush process.

The company has set up a web site to handle expressions of interest of “high level business concepts on how these domain names could be developed either individually or in bulk”.

Before now, .jobs domains have been limited to the name of the company registering them. IBM, for example, uses ibm.jobs to bounce to its HR pages.

Employ Media applied to ICANN to liberalize the namespace, allowing the registration of the names of professions and places, and was successful over the objections of many existing jobs boards.

From the press release:

“We believe accepting EOI’s will facilitate dialog with potential RFP applicants. We’re particularly interested in hearing ideas comprising a bulk number of domains,” states Tom Embrescia, Chairman of Employ Media. “Up to now, we’ve only allowed company names such as www.Applebees.jobs and www.UnionPacific.jobs. Now we are looking for ideas for how companies can easily and uniformly distribute their jobs and related information to user-intuitive sites such as www.Chicago.jobs, www.sales.jobs, and www.restaurant.jobs.”

Right now, the company is only looking for 150-word outlines of business ideas. The RFP period will begin shortly after the EOI period closes on August 24 (less than two weeks from now).

Employ Media already has plans in place with the DirectEmployers Association to launch universe.jobs, a free jobs portal using thousands of premium .jobs domains as entry points.

It remains to be seen how concrete these plans are, although the two outfits have already run a “beta test” of the scheme, so I’m guessing they’re quite firm.

If you fancy your chances, the RFP site is RFP.jobs.

There are at least two filthy domain hacks I intend to apply for. All I need to do is think of a way I can pretend they benefit the global HR community, which is an unfortunate prerequisite.

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Will Go Daddy be the next domain name IPO?

Kevin Murphy, August 11, 2010, Domain Registrars

It was four years ago this week, August 8, 2006, when Bob Parsons unexpectedly canceled Go Daddy’s planned IPO at the eleventh hour.

But with its closest competitor, eNom parent Demand Media, ready to go public, eyes inevitably turn to Scottsdale to see if the market leader is ready to follow suit.

I’ve no doubt Go Daddy will be watching Demand’s IPO carefully, but there are some reasons to believe a me-too offering is not a short-term certainty.

Bob Parsons owns Go Daddy

First, and most importantly, Bob Parsons owns Go Daddy. At the time of the 2006 S-1, he was the company’s sole investor, and I believe that’s still the case.

Unlike Demand Media, which raised about $355 million in financing in its early days, Go Daddy doesn’t have a gang of institutional investors clamoring for a return on their investments.

The flip-side of this argument is that it does have is a loyal senior management team holding share options they’re not yet able to cash in on the public markets.

The fact that Parsons is still in charge may cause some investor nerves, given the trust hit he will have taken on Wall Street four years ago, but I don’t think that’s a massive consideration.

The IPO market is still poor

The first attempt at an IPO was canceled mainly due to poor market conditions, according to Parsons’ blog post at the time.

It had only been a few months since Vonage’s catastrophic offering, which saw early-mover investors lose millions, and there was little appetite for tech IPOs.

A lot has changed in the last four years, but the current tech IPO market is still struggling, with many companies recently under-pricing their offerings or losing value since.

According to VentureDeal stats reported at GigaOm, of the 21 tech IPOs in the first half of this year, only five were trading above their IPO price at the end of July. Most had seen double-digit declines.

While some analysts think the upcoming Skype and Demand Media IPOs could breathe life into the market, it’s far from a certainty.

Go Daddy is a cash cow

Go Daddy’s financial statements will look a lot healthier today that back in 2006.

Parsons said he yanked the IPO in part because there was too much focus on Go Daddy’s performance under Generally Accepted Accounting Principles.

Under GAAP, Go Daddy was a loss-making company, due to the way that revenue from domain names has to be recognized over the course of the registration while the associated costs are incurred up-front.

This meant that Go Daddy was a cash machine – with something like $95 million of deferred revenue on its balance sheet at the time of the 2006 filing – but technically unprofitable.

Whether this has changed or not, I don’t know; Go Daddy is still growing. But it’s a lot larger now than it was in 2006, and its cashflow and balance sheets will certainly look impressive even if its income statement does not.

I’m guessing a lot will depend on how Demand performs over the coming months as to whether Go Daddy follows its lead.

But Parsons said four years ago that the firm would revisit the public markets again, and I’m sure we won’t have too long to wait until it does.

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