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ICANN smacks new gTLDs for pre-sunrise auctions

Running a premium domain name auction before you’ve finished your new gTLD sunrise period is Officially Not Cool, according to ICANN’s compliance department.

People who won premium new gTLD domains in auctions that took place before sunrise periods now face the possibility of losing their names to trademark owners.

.CLUB Domains, and probably XYZ.com, operators of .club and .xyz, two of the highest-volume new gTLDs to launch so far, appear to be affected by the ICANN decision.

ICANN told .CLUB that its “winter auction“, which took place in late February, may have violated the rules about allocating or “earmarking” domains to registrants before sunrise takes place.

Meanwhile, NameJet has cancelled the auction for deals.xyz, which “sold” for $8,100 late last year, suggesting that .xyz’s pre-sunrise auction is also considered ultra vires.

ICANN told .CLUB that its auction sales “constitute earmarking” in violation of the rule stating that registries “must not allow a domain name to be allocated or registered prior to the Sunrise period”.

.CLUB had told its auction winners that a sunrise period registration would prevent them from getting the domain they wanted and that they would be refunded if a sunrise registrant emerged.

But ICANN evidently told the registry:

Irrespective of whether “[a]llocation was expressly conditioned upon any Sunrise claim,” or whether any Sunrise claim was made, the pre-selection, pre-registration or pre-designation to third parties, in this case via .Club Domains’ “winter auction,” constitutes improper allocation.

I kinda thought this would happen.

Back in November, when XYZ.com ran its first .xyz auction — about six months before its sunrise even started — CEO Daniel Negari told us he believed it was “comfortably within the rules“.

We said the auction “seems to be operating at the edge of what is permissible under the new gTLD program’s rights protection mechanisms, which state that no domains may be allocated prior to Sunrise.”

I’ve not yet been able to definitively confirm that .xyz is affected by this ICANN decision, but .club definitely is.

.CLUB Domains told its auction winners today that the names they won are now subject to a 60-day period during which they could be obtained by trademark owners.

If no trademark owner claims the name, .CLUB said it will give the auction winner a 10% rebate on their purchase price.

The email states:

We are placing the domain on hold for 60 days, during which time a Trademark Clearinghouse (TMCH) holder will have the opportunity to purchase the domain at Sunrise rates. Although, the domain is not currently in the TMCH, if a trademark holder should file in the TMCH over the next 60 days, the domain will be offered to that registrant. However, if the name is not claimed by filing in the TMCH over the next 60 days, your transaction will move forward as planned.

Although we disagree with ICANN compliance’s position on this matter, the actions we are taking are necessary to ensure that we are not offside with ICANN compliance in any way. We understand that you have been caught in the middle of this issue due to no fault of your own. Given these circumstances, we are offering you two options:

1) Should you decide to complete this transaction, we will issue you a payment of 10% of the purchase price after the transaction closes in 60 days, assuming the name is not registered by a TMCH mark holder because of the delay.

2) At any time during the 60 day period you have the option to rescind the auction bid and not purchasing the domain.

Are you ready to sell your new gTLD yet?

Applicant Auction wants to know.

The company, which was set up to help resolve new gTLD contention sets, has started pitching its services to the owners of gTLDs that are already delegated.

An email sent out to applicants this week says:

Many people approach us with interest in purchasing strings, so we are offering a new auction where gTLD owners can sell their string in a open auction.

I gather that the company is targeting both live registries and applicants for uncontested strings.

It’s sad to say, but I think there might even be a market for it.

The laid-back “if we build it, they will come” mentality among applicants seems to have been a lot more prevalent than I had anticipated, which has resulted in depressing sales for some new gTLDs.

Will any of them decide to cash out early rather than putting in the time and money to make their businesses work over the long haul? It remains to be seen.

M+M profits by losing new gTLD auctions

Minds + Machines managed to make a profit in 2013, after years of losses, due to its participation in private new gTLD auctions, some of which it “lost”.

The company today reported operating profit of £776,000 for the year to December 31, compared to a £3.07 million loss in 2012, on revenue of £4.12 million. Profit after tax was £729,000.

“Profit was primarily a result from participating three private auctions,” CEO Antony Van Couvering said in a statement.

Chairman Fred Krueger added:

As we expected, private auctions have become the key method of settling contention between applications and we have benefited from this development, as it has enabled our cash to work on a leveraged basis: the domains we have lost in private auction (for example .property and .website) have helped finance new TLDs we have acquired such as .wedding and .garden.

Minds + Machines (then Top Level Domain Holdings) said last October that it had raised £2.97 million by losing the auctions for .lawyer and .website.

Excluding the auctions, it looks like the company made just £36,000 in revenue, all of which came from its registry back-end business.

Afilias loses $600,000 auction for Chinese “.info”

The results of the first “auction of last resort” in the new gTLD program are in, and it’s a bit of a head-scratcher.

Afilias lost out to rival applicant Beijing Tele-info Network Technology in the ICANN-backed auction for .信息 which means “info” or “information” in Chinese.

The winning bid was $600,000, ICANN said.

That money goes into a special ICANN fund, which will be put to some kind of unspecified purpose (to be determined by the ICANN community) at a later date.

It seems like quite a low price. Given what little we know about new gTLD auctions conducted privately, over a million dollars seems to be pretty standard for a gTLD.

It also strikes me as odd that Afilias wasn’t willing to shell out over $600,000 for a gTLD that could take a localized version of its existing .info brand into the world’s largest market.

It’s the only contention set to be settled by ICANN auction so far. The next will take place July 9, and will see Minds + Machines take on Amazon for .coupon.

The third, which will see 22 strings hit the block, will take place August 6.

Ten more new gTLD contests settled in auction

Applicant Auction helped resolved 10 new gTLD contention sets last week, and the first results started trickling through today.

Of the six results we have so far, Uniregistry and Famous Four Media won two auctions, while Minds + Machines and Donuts both won one each.

According to our database, the following five contention sets have been closed:

  • .pizza — Donuts won after withdrawals from Asiamix Digital, Uniregistry and Minds + Machines.
  • .fashion — M+M won after withdrawals from Donuts, Uniregistry and Famous Four Media.
  • .diet — Uniregistry won after withdrawls from Donuts and Famous Four.
  • .cricket — Famous Four won after withdrawals from M+M and Donuts.
  • .help — Uniregistry won after withdrawals from Donuts and Dot Tech.
  • .racing — Famous Four won after withdrawals from Donuts and Uniregistry.

We’ve also seen a withdrawal from Momentous in the .rip competition, suggesting that that gTLD was also settled at auction last week. It’s not yet clear from the database who won.