Are we witnessing the beginning of the end for the premium renewal business model?
MMX, aka Minds + Machines today became the latest new gTLD registry to announce it is getting rid of premium renewal fees for all of its premium domain names.
The price changes are retroactive to January 6 and affect all MMX gTLDs, such as .beer, .fishing and .horse.
“We started the process of rebooting our strategy in July last year, when we alerted our many registrar partners that 100% of our premium names sold after January 6th 2017 would have standard, GA [general availability] renewal prices,” CEO Toby Hall said in a statement.
MMX also said today that it is “revisting” its existing pricing tiers.
The reduced pricing will make the domains more attractive to domainers and end users alike, but I suspect the former will be more likely to exploit the new deal at first.
It’s the second new gTLD registry, after Rightside, to announce such a move this month.
Rightside said it was abolishing premium renewals on its expensive Platinum-level domains, though they will remain on more modestly priced premiums.
A few gTLD registries have announced changes to senior management positions and new hires over the last several days, so I thought I’d lump them all together into one post.
Donuts has appointed a new CEO. Venture capitalist Bruce Jaffe, who’s been on the board as an independent director for about a year, has taken over from founding CEO Paul Stahura.
Stahura is sticking around as executive chair.
The company also appointed outsider John Pollard, a veteran of Micrsoft, Expedia and various other companies, to the new role of chief revenue officer.
The company has cast the moves as a case of Donuts growing out of its startup phase.
Across the pond, Minds + Machines — which now insists on being called MMX — today announced that it has poached former Sedo chief sales officer Solomon Amoako to head up channel management as a VP.
Amoako has also held positions with Rightside and Tucows.
He’s tasked with broadening MMX’s distribution channel in the Americas and Europe.
Finally, CentralNic announced last week that it’s shipping London-based director of marketing Lexi Lavranos to Los Angeles to head up its registry business there.
As well as its stable of new gTLDs, CentralNic of course also sells the Laos ccTLD, .la, “repurposed” for the LA market.
Remember the Coalition Against Domain Name Abuse? The lobby group that campaigned for stronger cybersquatting laws and against new gTLDs?
CADNA on Thursday used the imminent inauguration of new US president Donald Trump to announce that it’s back in the game, hoping a Republican-dominated government will be friendlier to its agenda.
It told its supporters on “the 2016 general elections outcomes for both the U.S. Congress and the White House present a unique and timely opportunity to push through legislation”.
It wants new federal laws modeled on 2010 Utah state legislation, the E-Commerce Integrity Act, which creates liability for non-registrant third-parties including domain name registrars.
The Utah law is closely modeled on the federal Anticybersquatting Consumer Protection Act of 1999, but has some crucial differences.
CADNA noted at the time the law was up for a vote that it:
expands the liability for cybersquatting activity to include the registrant’s authorized licensee, agent, affiliate, representative, domain name registrar, domain name registry, or other domain name registration authority that knowingly and actively assists a violation
That’s something ACPA does not allow for, and CADNA wants the federal law amended to include provisions such as this. It said:
The Coalition Against Domain Name Abuse (CADNA) is now mobilizing the global business community to promote and pass legislation that will greatly enhance the available protection mechanisms for online trademark protection and limit the appeal of cybersquatting.
The last time US cybersquatting laws came close to being amended was with the Anti-Phishing Consumer Protection Act of 2008, aka the Snowe Bill, which ultimately did not pass.
The Internet Commerce Association, which lobbies on behalf of domain investors, expressed concern with CADNA’s new efforts to revive its noughties lobbying tactics, telling members:
for now this is more of a CADNA recruiting effort than an active legislative natter. As you can see, CADNA announced a similar Federal effort in 2010, which went nowhere. Nonetheless, we should proceed on the assumption that CADNA will secure a sponsor and have such legislation introduced in the new Congress and that such legislation may well gain traction in the current political environment.
The ICA also expressed concern about the amount of statutory damages the Utah law permits compared to the ACPA.
While both Utah and ACPA allow damages of $1,000 to $100,000 per domain, the Utah law assumes the highest amount if a “pattern or practice” of cybersquatting can be demonstrated.
CADNA has been pretty quiet for the last few years.
Before the US elections last November, its most recent press release dated from October 2013.
The group is managed by the same people who run Fairwinds Partners, a new gTLD consultancy specializing in managing dot-brand gTLDs for some of the world’s biggest names.
Its gTLD clients include L’Oreal, Marriott and Walmart.
Fairwinds used its links to CADNA and its staunch opposition to the new gTLD program to pitch for these clients back in 2012.
Tucows is to become “the second largest registrar in the world” by acquiring eNom from Rightside, paying $83.5 million.
The deal will give Tucows another 14.5 million domains under management and 28,000 resellers, giving it a total of 29 million DUM and 40,000 resellers.
That DUM number, which appears to include ccTLDs, makes Tucows the undisputed volume leader in the reseller world and the second-largest registrar overall.
GoDaddy, the DUM leader, had about 55 million domains just in gTLDs at the last count.
Tucows CEO Elliot Noss told analysts that the deal, along with the April 2016 acquisition of Melbourne IT’s reseller business, were “individual opportunistic transactions”.
He said that Tucows will take its time integrating the two companies, but expects to realize cost savings (presumably read: job losses as duplicate administrative positions are eliminated) over 24 months.
The reseller APIs will not change, and Tucows will not migrate names over to its own existing ICANN accreditations. This could help with reseller retention.
For Rightside, the company said the spin-off will allow it to focus on vertical integration between its gTLD registry business and its consumer-facing registrar, Name.com.
Rightside had come in for a certain amount of high-profile investor criticism for its dogged focus on new gTLDs at the expense of its eNom and Name.com businesses.
Activist investor J Carlo Cannell, supported by fellow investor and Uniregistry CEO Frank Schilling, a year ago accused Rightside of putting too much emphasis on “garbage” new gTLDs instead of its more profitable registrar businesses.
Last June, it also announced plans to modernize eNom, which Cannell and others had accused of looking stale compared to its competitors.
The biggest dot-brand gTLD active today has about 50,000 domains under management, but the vast majority of them may not be compliant with ICANN rules.
Real Estate Domains LLC runs .realtor in partnership with the National Association of Realtors, a US-based real estate agent membership organization.
RED/NAR has an ICANN policy exemption that means it does not have to open .realtor to competition between registrars, but it does not appear to be sticking to the promises it made when it asked for that exemption.
RED has told DI that it believes it is fully compliant with its contractual obligations.
The .realtor gTLD is highly unusual, possibly even unique, in the market.
It is, by most comparisons, a thriving new gTLD. It has tens of thousands of domain names and thousands of active web sites.
It’s the 59th-biggest 2012-round gTLD, according to zone file counts. It has more names than .blog, .webcam and .ninja.
It currently has about 48,000 names in its zone file, a bit less than half of its November 2015 peak of 110,000. It’s been offering a free first-year name to NAR members since launch, which may account for the first-year peak and second-year trough.
It’s arguably a “dot-brand”, but its domains are primarily used by fee-paying third parties, which is not the case for the over 500 other dot-brands out there today.
The string “realtor” is in fact an trademark, fiercely guarded by the NAR and apparently at genuine risk of genericide.
To call yourself a realtor, you have to pay NAR local and national membership fees that can run into hundreds of dollars a year.
To register a .realtor domain, you have to be an NAR member. So, even though the price of a .realtor domain is only around $40 at Name Share (the only approved .realtor registrar), the cost of eligibility is much higher.
I think that the way the NAR is selling its names to third-party realtors is very possibly a breach of ICANN rules, but explaining why I think that will get a bit complicated.
To begin with, whether a gTLD is a “dot-brand” depends to a great extent on your definition of the term.
I usually take “dot-brand” to mean any new gTLD that has Specification 13 — which allows registries to ignore ICANN policies such as the otherwise mandatory Sunrise period — in its Registry Agreement.
There are 463 gTLDs that have Spec 13 so far. They’re being used to a greater or lesser extent by the respective registries to promote their own brands.
Some have set up a bunch of domains with redirects to specific URLs on their .com or ccTLD site. Others have built a modest number of custom sites to promote various products, services, offers or marketing campaigns.
A small number have been using their domains to help business partners. Spanish car maker Seat points scores of .seat domains to cookie-cutter sites promoting local car dealerships, but I’ve seen no evidence these dealers have any control over these domains.
Almost all of the time, the only entity actually using the domain is the registry — that is, the brand owner — itself.
There’s also another definition of dot-brand — any gTLD that does not have Spec 13, but does have an exemption to Specification 9 of the standard ICANN Registry Agreement.
Spec 9, also called the “Code of Conduct”, is the part of the RA that requires registries to give equal, non-discriminatory access to all ICANN-accredited registrars.
It’s there to stop registries favoring registrars they have close relationships with and therefore to keep the market competitive.
Every Spec 13 dot-brand has a Spec 9 exemption, but not every TLD with a Spec 9 exemption has signed Spec 13.
There are 66 gTLDs that have the Spec 9 exemption but do not have Spec 13 in their contracts. Almost all of these have fewer than 100 domains in their zone file today.
The Spec 9 exemption was created to avoid the stupid and undesirable situation where a big-name company has to open access to its dot-brand back-end registry to multiple registrars, even though it is the only registrant permitted to register names there.
The Code of Conduct is there to protect registrants. When there is only one registrant, there’s no need for protection. With multiple registrants, competition needs to be enforced.
To get the Spec 9 exemption, dot-brands have to send a letter to ICANN promising three things:
- All domain name registrations in the TLD are registered to, and maintained by, Registry Operator for the exclusive use of Registry Operator or its Affiliates (as defined in the Registry Agreement);
- Registry Operator does not sell, distribute or transfer control or use of any registrations in the TLD to any third party that is not an Affiliate of Registry Operator; and
- Application of the Code of Conduct to the TLD is not necessary to protect the public interest
Those bullets are copied from the March 2014 .realtor letter (pdf), but they’re all basically the same.
The first bullet says that domains have to be registered to the registry operator. In the case of .realtor, that’s RED/NAR.
And in fact, as far as I can tell, every .realtor domain has the RED/NAR listed in the “Registrant” field of its Whois record. The registry owns the lot.
But that bullet also says that .realtor domains have to be “maintained by” and “for the exclusive use of” the registry operator (in this case, the NAR) and its “Affiliates”.
The second bullet says that the registry cannot give “control or use” of any .realtor domain to a third party that is not an “Affiliate” of the registry.
The term “Affiliate” is important here. The Spec 9 exemption states that it is defined by the RA, and the RA defines it like this:
For the purposes of this Agreement: (i) “Affiliate” means a person or entity that, directly or indirectly, through one or more intermediaries, or in combination with one or more other persons or entities, controls, is controlled by, or is under common control with, the person or entity specified, and (ii) “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person or entity, whether through the ownership of securities, as trustee or executor, by serving as an employee or a member of a board of directors or equivalent governing body, by contract, by credit arrangement or otherwise.
My reading of this is that an Affiliate is an entity that is controlled, in a corporate sense, by the registry. The definition came about as a way to stop domain companies trying to avoid policy obligations by hiding behind shell companies.
However, in my opinion, the vast majority of .realtor domains today are in fact being controlled and used by third parties that are not registry Affiliates by the RA definition.
The first giveaway is Whois. While RED/NAR is listed as the “Registrant” of pretty much all .realtor domains, in most cases the “Administrative” contact is listed as the person or company who caused the name to be registered. Third-party realtors, in other words.
Second, the registry’s web site states plainly that NAR member realtors can “get” and “use” .realtor domains and goes on to specify that they can use the names to build a web site, set up an email address, and even redirect the domain to an existing site.
Doing a Google search for .realtor sites, you’ll find that realtors are in fact using .realtor domains for these permitted purposes.
This seems to be a case of thousands of non-registry parties paying for “control” and “use” of domains that are supposed to be restricted to the registry’s control and use.
It seems to be true that they don’t “own” the domains that they “use”, but they nevertheless do “use” them in much the same way as I expect a significant majority of non-domainer registrants in other TLDs “use” their domains.
NAR/RED is of course fully aware of its RA obligations, and has written its own terms to accommodate them.
On a .realtor registry web site, its registration agreement, or “License Agreement”, states:
You represent, warrant and agree that you are a REALTOR®, an NAR member, the Canadian Real Estate Association (“CREA”), a member of CREA, an NAR or CREA member Board or Association, an NAR affiliate, an NAR licensee, or otherwise in a contractual relationship with NAR relating to use of NAR’s REALTOR® mark and that, in such capacity, you are deemed an “Affiliate” of RED as such is defined in the Registry Agreement, including as specifically set forth in the Code of Conduct Exemption.
The NAR is basically asking its members to affirm, via the small print of their registration agreement (that the majority won’t read) and the .realtor RA (which I’m sure none of them will read), that the NAR has some kind of corporate control over them.
That’s clearly not the case, in my understanding. The NAR’s members are generally fully independent sole traders or limited companies.
Realtors causing .realtor domains to be registered on their behalf are no more “Affiliates” of RED or the NAR than I would be an Affiliate of Facebook if, perchance, there’s a similar clause in the Facebook terms of service.
While I’ve been asking industry experts about this for the last couple of weeks, it was suggested to me that the fact that .realtor registrants have a “contract” with the registry (to license the Realtor trademark) is enough to satisfy the “Affiliate” definition.
I don’t buy it. Every registrant in every TLD signs a contract whenever they register a domain name. If a contract were sufficient for a Spec 9 opt-out, every gTLD would have the opt-out.
At this point you may be wondering what the harm of this business model is. I wondered the same thing myself.
The main harm, as far as I can see it, is that it sets a precedent for other gTLDs to avoid contractual obligations.
The other is that .realtor registrants (for want of a better term) are locked into the one approved registrar, Name Share, forever. If Name Share were to raise its prices, they would not have the option to move to another registrar.
Name Share, part of the EnCirca registrar family, specializes in niche TLDs and currently charges a not-unreasonable $39.95 per year for a .realtor domain.
There’s also the fact that gTLDs themed around real estate are thin on the ground right now.
RED/NAR also controls the new gTLD .realestate, but it has yet to launch for unknown reasons.
.realtor went from delegation to general availability in less than three months back in mid-2014 — a fast launch — but .realestate was delegated in April 2016 and hasn’t even set out its launch plan yet.
It’s a fully generic, non-brand gTLD but it hasn’t told ICANN when its sunrise, trademark claims or GA dates are yet. It hasn’t even launched its nic.realestate web site yet, which is a contractual obligation also in the RA.
I don’t know why RED/NAR has not started to launch .realestate yet. When I asked RED’s top brass I did not get a reply.
But I do know that a real estate agent in North America today who wants to get a domain in a semantically valuable TLD has one fewer option due to the absence of .realestate from the market.
Another option, buying a .realty domain from Top Level Spectrum, is not possible either because, 18 months after delegation, it also has not launched.
Then there’s .homes, a restricted gTLD operated by Dominion Enterprises, but that has virtually no registrar support and fewer than 100 names in its zone eight months after general availability started.
The only real option right now (other than using an unrelated TLD) is to buy a .realtor domain, but they’d have to pay hundreds of dollars to NAR for membership and then would not have a choice of registrars through which to register.
I put all of my questions about the business model and the Spec 9 exemption to RED last week.
“We believe we are in full compliance with the Spec 9 exemption as granted by ICANN based on our request and posted publicly here,” CEO Matthew Embrescia said in an email (link in original).
Brian Johnson, general counsel for RED, said in a separate email:
our position is that RED is in full compliance as such relates to Spec 9 for .REALTOR. In fact, we think .REALTOR is a very successful example of a TLD with a legitimate business model which incorporates a Spec 9 exemption.
I also pushed Johnson and Embrescia for specific explanations of why I might be wrong in my interpretation of the Spec 9 exemption and how RED is applying it, but I did not get any replies.
A senior ICANN staffer, while declining to comment on the specifics of any TLD or any compliance investigation, told me that my understanding of the Spec 9 exemption is correct.
I gather that all Spec 9-exempt registries are obliged to submit an annual report about their exemption compliance, and that the 2016 report is due tomorrow.
However, I believe .realtor’s business model is well over one year old already, so it’s debateble whether ICANN has been paying attention.