Latest news of the domain name industry

Recent Posts

After outcry, ICANNWiki to get ICANN funding next year

Kevin Murphy, May 23, 2018, Domain Policy

ICANNWiki will continue to get funding from its namesake, after community members complained about ICANN’s plan to abandon its $100,000 annual grant.

The independent wiki project will get $66,000 instead in the year beginning July 1, which will drop to $33,000 in ICANN’s fiscal 2020.

The funding will then disappear completely.

It’s a slight reprieve for ICANNWiki, which uses the money not only for its 6,000-article web site but also in-person outreach at events around the world.

The organization had complained about the plans to drop funding back in December, and fans of the site later called on ICANN to change its mind.

Supporters say the site fulfills a vital educational service to the ICANN community.

ICANNWiki also receives over $60,000 a year from corporate sponsors.

ICANN has also offered a reprieve to its Fellowship program in the new draft budget, reducing the number of people accepted into the program by fewer than expected.

It said in January it would slash the program in half, from 60 people per meeting to 30. That number will now drop to 45, at a cost of $151,000.

As discussed in this February article, the community has differing opinions about whether the program is an important way to on-board volunteers into ICANN’s esoteric world, or a way for freeloaders to vacation in exotic locations around the globe.

ICANN slashes new gTLD income forecast AGAIN

Kevin Murphy, May 23, 2018, Domain Policy

ICANN has yet again been forced to lower its funding expectations from new gTLDs, as the industry continues to face growth challenges.

In its latest draft fiscal year 2019 budget, likely to be approved at the end of the month, it’s cut $1.7 million from the amount it expects to receive in new gTLD transaction fees.

That’s even after cutting its estimates for fiscal 2018 in half just a few months back.

New gTLD registry transaction fees — the $0.25 collected whenever a new gTLD domain is registered, renewed or transferred, provided that the gTLD has over 50,000 domains under management — are now estimated at $5.1 million for FY19

That’s up just $500,000 from where it expects FY18, which ends June 30 this year, to finish off.

But it’s down $900,000 or 15% from the $6 million in transaction fees it was forecasting just four months ago.

It’s also still a huge way off the $8.7 million ICANN had predicted for FY18 in March 2017.

Registrar new gTLD transaction fees for FY19, paid by registrars regardless of the size of the TLD, are now estimated to come in at $4.3 million, up $400,000 from the expect FY18 year-end sum.

But, again, that number is down $800,000 from the $5.1 million in registrar fees that ICANN was forecasting in its first-draft FY19 budget.

In short, even when it was slashing its FY18 expectations in half, it was still over-confident on FY19.

On the bright side, at least ICANN is predicting some growth in new gTLD transactions.

And the story is almost exactly reversed when it comes to pre-2012 gTLDs.

For legacy gTLD registry transaction fees — the majority of which are paid by Verisign for .com and .net — ICANN has upped its expectations for FY19 to $49.6 million, compared to its January estimate of $48.7 million (another $900,000 difference, but in the opposite direction).

That growth will be offset by lower growth at the registrar level, where transaction fees for legacy gTLDs are now expected to be $30.2 million for FY19, compared to its January estimate of $30.4 million, a $200,000 deficit.

None of ICANN’s estimates for FY18 transaction fees have changed since the previous budget draft.

But ICANN has also slashed its expectation in terms of fixed fees from new gTLD registries — the $25,000 a year they all must pay regardless of volume.

The org now expects to end FY18 with 1,218 registries paying fees and for that to creep up slightly to 1,221 by the end of FY19.

Back in January, it was hoping to have 1,228 and 1,231 at those milestones respectively.

Basically, it’s decided that 10 TLDs it expected to start paying fees this year actually won’t, and that they won’t next year either. These fixed fees kick in when TLDs are delegated and stop when the contract is terminated.

It now expects registry fixed fees (legacy and new) of $30.5 million for FY19, down from expected $30.6 million for FY18 and and down from its January prediction of $31.1 million.

ICANN’s budget documents can be downloaded here.

ICANNWiki fans protest funding cut

Kevin Murphy, March 11, 2018, Domain Policy

ICANN should continue to fund the independent ICANNWiki project, according to high-profile industry supporters.

As I first reported back in December, ICANN plans to stop giving a $100,000 annual grant to ICANNWiki, a repository of about 6,000 community-sourced articles on the people and organizations involved in the ICANN community.

While ICANNWiki does not merit an explicit mention in ICANN’s latest proposed budget, both organizations have confirmed to DI that the funding is for the chop, as ICANN attempts to rein in spending in the face of depressed revenue.

About a quarter of the 41 comments filed on the budget express support for the wiki.

Consultant Kurt Pritz, a 10-year veteran of ICANN and one of the key architects of its new gTLD program, wrote that the wiki “has been an essential part of the ICANN culture for many years… often saving ICANN meetings from terminal ennui.”

Roland LaPlante, chief marketing officer of Afilias (one of about 15 sponsors listed on ICANNWiki’s front page), wrote:

The complete withdrawal of funding from ICANN so abruptly not only threatens the viability of the project, but rather disrespectfully junks the valuable time and resources that the community has invested over the years. Ultimately the loss of ICANNWiki would be a loss to our overall sense of community.

ICANN should continue to support ICANNWiki at a reasonable level in the next fiscal year. At a minimum, please consider giving the team time to find other sources of funding.

Sandeep Ramchandani, CEO of Radix, concurred, writing:

ICANNNWiki benefits the entire ICANN community. Cutting the funding entirely would effectively halt its operations and be a disservice to the community it serves. It is in ICANN and the community’s best interest to continue funding it in an amount that works for ICANN long-term, and provide ICANNWiki sufficient time to develop a more sustainable business plan.

Simon Cousins, CEO of Chinese market localization specialist Allegravita, said:

Before ICANNWiki, there was precious little information on industry fundamentals in China, and since Allegravita has supported the pro-bono translation of ICANNWiki content into Chinese, the vital platform that is ICANNWiki has been acknowledged hundreds of times.

We do not support the immediate and full withdrawal of funding for ICANNWiki. We guardedly support incremental, annual decreases to give ICANNWiki the time necessary to generate new sponsorship income to cover their costs.

Pablo Rodriguez of .pr ccTLD operator PRTLD, host of ICANN 61 and an ICANNWiki sponsor, wrote:

We believe that they should not be cut out from the ICANN’s Budget, instead, they should be supported and embraced to continue their engaging approach and work with ICANN’s Community and as well newcomers, veterans, special programming for beginners and others in order to deliver what is ICANN and what does the organization do and so forth.

Several other commentators on ICANN’s budget asked ICANN to maintain the funding and I was unable to find any comments supporting its withdrawal.

It’s worth noting that ICANN’s $100,000 is not ICANNWiki’s only financial support. It says it receives an additional $61,000 a year from corporate sponsorship, and as a wiki much of its output is produced by volunteers.

It has been in existence for a decade, but ICANN has only been giving it money for three years.

The costs associated with running it appear to be mostly centered not on maintaining the web site but on its outreach and promotional activities, such as attending meetings and the popular caricatures and card decks it distributes.

It could be argued that ICANNWiki is pretty good value for money when compared to cost of a dedicated outreach professional (the average cost of an ICANN staffer has been estimated at $175,000+ in the latest budget).

ICANNWiki will host an “Edit-A-Thon” during the current ICANN 61 public meeting in San Juan, Puerto Rico on Tuesday at 0900 local time.

Is ICANN still over-estimating revenue from “stagnating” gTLD industry?

Kevin Murphy, March 11, 2018, Domain Policy

ICANN may have slashed millions from its revenue estimate for next year, but it has not slashed deeply enough, according to registrars and others.

Industry growth is flat, and below even ICANN’s “worst case” expectations for the fiscal year starting July 1, registrars told the organization in comments filed on its FY19 budget last week.

The Registrars Stakeholder Group said that “the FY 2019 budget fails to recognize that overall industry growth is flat.”

ICANN’s budget foresees FY19 revenue of $138 million, up $3.5 million on the projected result for FY18.

“These revenue projections presume growth in the domain market that is not aligned with industry expectations,” the RrSG said, pointing to sources such as Verisign’s Domain Name Industry Brief, which calculated 1% industry growth last year.

ICANN’s predictions are based on previous performance and fail to take into account historical “one-time events”, such as the Chinese domain speculation boom of a couple years ago, that probably won’t be repeated, RrSG said.

RrSG also expects the number of accredited registrars to decrease due to industry consolidation and drop-catching registrars reducing their stables of shell accreditations.

(I’ll note here that Web.com has added half a dozen drop-catchers to its portfolio in just the last few weeks, but this goes against the grain of recent trends and may be an aberration.)

RrSG said ICANN’s budget should account for reduced or flat accreditation fee revenue (which as far as I can tell it already does).

The comment, which can be read in full here, concludes:

Taken together, these concerns represent a disconnect between ICANN funding projections, and the revenue expectations of Registrars (and presumably, gTLD Registries) from which these funds are derived. In our view, ICANN’s assessment of budgetary “risks” are too optimistic , and actual performance for FY19 will be significant lower.

For what it’s worth, the Registries Stakeholder Group had this to say about ICANN’s revenue estimates:

Reliable forecasts, characterised by their scrutiny and realism, are fundamental to put together a realistic budget and to avoid unpleasant surprises, such as the shortage ICANN is experiencing in the current fiscal year. The RySG advises ICANN to continue to conduct checks on its forecasts and to re-evaluate the methodology used to predict its income in order to prevent another funding shortfall such as that which the organization experienced in FY18.

Community calls on ICANN to cut staff spending

Kevin Murphy, March 11, 2018, Domain Policy

ICANN should look internally to cut costs before swinging the scythe at the volunteer community.

That’s a key theme to emerge from many comments filed by the community last week on ICANN’s fiscal 2019 budget, which sees spending on staff increase even as revenue stagnates and cuts are made in other key areas.

ICANN said in January that it would have to cut $5 million from its budget for the year beginning July 1, 2018, largely due to a massive downwards revision in how many new gTLD domains it expects the industry to process.

At the same time, the organization said it will increase its payroll by $7.3 million, up to $76.8 million, with headcount swelling to 425 by the end of the fiscal year and staff receiving on average a 2% pay rise.

In comments filed on the budget, many community members questioned whether this growth can be justified.

Among the most diplomatic objections came from the GNSO Council, which said:

In principle, the GNSO Council believes that growth of staff numbers should only occur under explicit justification and replacements due to staff attrition should always occur with tight scrutiny; especially in times of stagnate funding levels.

The Council added that it is not convinced that the proposed budget funds the policy work it needs to do over the coming year.

The Registrars Stakeholder Group noted the increased headcount with concern and said:

Given the overall industry environment where organizations are being asked to do more with less, we are not convinced these additional positions are needed… The RrSG is not yet calling for cuts to ICANN Staff, we believe the organization should strive to maintain headcount at FY17 Actual year-end levels.

The RrSG shared the GNSO Council’s concern that policy work, ICANN’s raison d’etre, may suffer under the proposed budget.

The At-Large Advisory Committee said it “does not support the direction taken in this budget”, adding:

Specifically we see an increase in staff headcount and personnel costs while services to the community have been brutally cut. ICANN’s credibility rests upon the multistakeholder model, and cuts that jeopardize that model should not be made unless there are no alternatives and without due recognition of the impact.

Staff increases may well be justified, but we must do so we a real regard to costs and benefits, and these must be effectively communicated to the community

ALAC is concerned that the budget appears to cut funding to many projects that see ICANN reach out to, and fund participation by, non-industry potential community members.

Calling for “fiscal prudence”, the Intellectual Property Constituency said it “encourages ICANN to take a hard look at personnel costs and the use of outside professional services consultants.”

The IPC is also worried that ICANN may have underestimated the costs of its contractual compliance programs.

The Non-Commercial Stakeholders Group had some strong words:

The organisation’s headcount, and personnel costs, cannot continue to grow. We feel strongly that the proposal to grow headcount by 25 [Full-Time Employees] to 425 FTE in a year where revenue has stagnated cannot be justified.

With 73% of the overall budget now being spent on staff and professional services, there is an urgent need to see this spend decrease over time… there is a need to stop the growth in the size of the staff, and to review staff salaries, bonuses, and fringe benefits.

NCSG added that ICANN could perhaps reduce costs by relocating some positions from its high-cost Los Angeles headquarters to the “global south”, where the cost of living is more modest.

The ccNSO Strategic and Operational Planning Standing Committee was the only commentator, that I could find, to straight-up call for a freeze in staff pay rises. While also suggesting moving staff to less costly parts of the globe, it said:

The SOPC – as well as many other community stakeholders – seem to agree that ICANN staff are paid well enough, and sometimes even above market average. Considering the current DNS industry trends and forecasts, tougher action to further limit or even abolish the annual rise in compensation would send a strong positive signal to the community.

It’s been suggested that, when asked to find areas to cut, ICANN department heads prioritized retaining their own staff, which is why we’re seeing mainly cuts to community funding.

I’ve only summarized the comments filed by formal ICANN structures here. Other individuals and organizations filing comments in their own capacity expressed similar views.

I was unable to find a comment explicitly supporting increased staffing costs. Some groups, such as the Registries Stakeholder Group, did not address the issue directly.

While each commentator has their own reasons for wanting to protect the corner of the budget they tap into most often, it’s a rare moment when every segment of the community (commercial and non-commercial, domain industry and IP interests) seem to be on pretty much the same page on an issue.