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ICANNWiki could be first victim of budget cutbacks

Kevin Murphy, December 20, 2017, Domain Policy

ICANN is mulling whether to cut funding to ICANNWiki, the independent community encyclopedia, as part of its efforts to rein in spending.

There’s $100,000 at stake, more than half of the Oregon-based non-profit’s annual budget.

Ray King, the gTLD registry CEO who founded ICANNWiki in 2005, told DI today that ICANN has been providing funding for the last three years.

“While no decision has been made yet, there is a possibility that ICANN will not continue it,” he said in an email.

“We’ve poured our hearts and minds into this project for many years so this would be disappointing to say the least,” he said. “We believe in our mission and that it is in the community’s interest for this support to continue”.

An ICANN spokesperson said: “At this time, while it is highly unlikely that ICANN will be renewing its contract with ICANNWiki, we have not come to a final determination.”

ICANNWiki currently carries about 6,000 volunteer-edited articles covering many aspects of the ICANN community and the domain name industry in general.

George Clooney circa 1997It’s perhaps most recognizable for the frequently shared caricatures of community members it produces, such as this handsome devil, and the playing card decks handed out as freebies at ICANN meetings.

According to a letter (pdf) sent to ICANN earlier this month, ICANNWiki receives cash contributions of $161,000 a year, $61,000 of which comes from 10 corporate sponsors.

ICANNWiki estimates the 2,200 hours per year of volunteer work it benefits from is worth about $66,500. It says it has in-kind contributions worth about $40,000 from other companies.

It puts the value of its “reference services” at $339,959 a year.

That’s based on estimated visits to its site of 182,774 in 2017 (not including visits from its editors and staff) and a value per visit of $1.86 (based on an unrelated ROI calculation Texas Public Libraries used to justify its own existence earlier this year).

The ICANN $100,000 contribution is at risk now due to the organization’s plan to cut back on spending in the face of revenues that are coming in lower than expected due to a weak domain name market.

CEO Goran Marby said yesterday that its fiscal 2018 is currently running a million dollars short. Coupled with a perceived need to add an extra $80 million to its reserve budget, ICANN is looking for areas to cut costs.

ICANNWiki funding may be the low-hanging fruit in this endeavor; while it’s no doubt valuable (I probably use it two or three times per week on average), it’s perhaps not straightforward to quantify that value.

Even if the funding is cut, I would not expect ICANNWiki the web site to disappear, given the level of corporate sponsorship and in-kind services it receives and the low overheads suggested by its modest traffic numbers, but perhaps its growth and outreach ambitions would be curtailed.

UPDATE: This post was updated at 2307 UTC with a quote from ICANN.

ICANN, with $143 million budget, running out of cash

Kevin Murphy, December 19, 2017, Domain Policy

ICANN is to tighten its belt over the coming year as lower than expected revenue from domain name registrations has caused a budget shortfall and dwindling reserves.

The organization is $1 million short so far in its fiscal 2018, which CEO Goran Marby says is forcing him to look at making cuts to staffing costs, travel expenses, and community-requested projects.

Meanwhile, chair Cherine Chalaby says the board of directors is worried that ICANN’s reserve fund is $80 million shy of where it ideally should be.

Both men outlined their priorities in separate end-of-year blog posts this week.

It does not yet appear that anyone’s job is on the line.

Marby indicated that headcount would be reduced through attrition — sometimes not replacing staff who leave — rather than lay-offs.

“The reality is, ICANN has a significant budget but not an infinite budget. We need to make some changes, and can’t do everything we are asked,” he wrote, before explaining some areas where “efficiencies” could be found.

For example, when someone leaves ICANN org, we are taking a close look at the vacancy, the team’s needs and other people’s availability and skills before deciding if we are going to fill the role. We are also looking at our staff travel practices for ICANN meetings and other ICANN org commitments, reviewing our language services support levels and offering, and trying to consolidate our collateral and the volume of reports. We are looking at what projects we could delay or stop

Some might say that this renewed focus on how ICANN manages its money is overdue. The organization has bloated fast over the last several years, as over 1,200 new gTLD registries became contracted parties and interest in ICANN’s work grew globally.

In its financial year ending June 2012, it budgeted for revenue of $69.7 million and expenses of $67 million.

For FY2017, which ended this June, it was up to revenue of $132.4 million and expenses of $126.5 million.

Over the same period, headcount swelled from 158 full-time equivalents to 365. That was anticipated to grow to 413 by next June.

For the financial year ending next June, ICANN had budgeted for $142.8 million revenue, growing from $135.9 million, but Marby said in his blog post today that it might actually be flat instead.

As much as 64% of ICANN’s revenue is driven by transaction volumes — registrations, renewals and transfers — in gTLDs. In the quarter to September, revenue was $1 million behind plan due to lower than expected transactions, Marby said.

The message is to expect cuts, possibly to projects you care about.

Adding complexity, the ICANN board has decided following public consultation at 12 months funding is the appropriate amount ICANN should be keeping in reserve — so it can continue to function for a year should its contracted parties all abruptly decide not to pay their dues.

Unfortunately, as Chalaby outlined in his post today, this reserve pool is currently at about $60 million — just five months’ worth — so the organization is going to have to figure out how to replenish it.

Building up reserves to the tune of an extra $80 million is likely to put more pressure on the regular annual budget, leeching cash from other projects.

Chalaby said that the board will discuss its options at its February 2018 workshop.

Marby, meanwhile, said that a new budget will be out for public comment in mid-January.

Anger as ICANN splashes out $160,000 on travel

Kevin Murphy, March 15, 2016, Domain Policy

Should representatives of Facebook, Orange, Thomson Reuters, BT and the movie industry have thousands of ICANN dollars spent on their travel to policy meetings?

Angry registrars are saying “no”, after it emerged that ICANN last month spent $80,000 flying 38 community members to LA for a three-day intersessional meeting of the Non-Contracted Parties House.

It spent roughly the same on the 2015 meeting, newly released data shows.

ICANN paid for fewer than 10 registries and registrars — possibly as few as two — to attend the equivalent Global Domains Division Summit last year, a few registrars told DI.

The numbers were released after a Documentary Information Disclosure Policy request by the Registrars Stakeholder Group a month ago, and published on Friday (pdf).

It appears from the DIDP release that every one of the 38 people who showed up in person was reimbursed for their expenses to the tune of, on average, $2,051 each.

The price tag covers flights, hotels, visa costs and a cash per diem allowance that worked out to an average of $265 per person.

ICANN also recorded travel expenses for another two people who ultimately couldn’t make it to the event.

The NCPH is made up of both commercial and non-commercial participants. Many are academics or work for non-profits.

However, representatives of huge corporations such as Facebook and BT also work in the NCPH and let ICANN pick up their expenses for the February meeting.

Lawyers from influential IP-focused trade groups such as the Motion Picture Association of America and International Trademark Association were also happy for ICANN to pay.

One oddity on the list is the CEO of .sucks registry Vox Populi, who is still inexplicably a member of the Business Constituency.

MarkMonitor, a corporate registrar and Thomson Reuters subsidiary that attends the Intellectual Property Constituency, also appears.

Despite $80,000 being a relatively piddling amount in terms of ICANN’s overall budget, members of the Contracted Parties House — registries and registrars — are not happy about this state of affairs as a matter of principle.

ICANN’s budget is, after all, primarily funded by the ICANN fees registries and registrars — ultimately registrants — must pay.

“CPH pays the bills and the non-CPH travels on our dime,” one registrar told DI today.

One RrSG member said only two registrars were reimbursed for their GDD Summit travel last year. Another put the number at five. Another said it was fewer than 10.

In any event, it seems to be far fewer than those in the NCPH letting ICANN pick up the tab.

It’s not entirely clear why the discrepancy exists — it might be just because fewer contracted parties apply for a free ride, rather than evidence of a defect in ICANN expenses policy.

The NCPH intersessional series was designed to give stakeholders “the opportunity, outside of the pressures and schedule strains of an ICANN Public Meeting to discuss longer-range substantial community issues and to collaborate with Senior ICANN Staff on strategic and operational issues that impact the community”, according to ICANN.

ICANN ups new gTLD revenue forecast

ICANN has increased its new gTLD revenue projections for fiscal 2016.

The organization released its draft FY17 budget over the weekend, showing that it expects its revenue from new gTLDs for the 12 months ending June 30, 2016, to come in at $27.3 million.

That’s a 13% increase — an extra $3.1 million — on what it expected when it adopted its FY16 budget last June.

The anticipated extra money comes from registry and registrar transaction fees, spurred no doubt by the crazy speculation in the Chinese market right now.

Registry transaction fees are now expected to be $2.8 million (up from the earlier prediction of $2 million) and $3 million (up from $2.3 million).

The bulk of the new gTLD revenue — $21.5 million — still comes from fixed registry fees, which do not vary with transaction volume.

For fiscal 2017, which starts July 1 this year, ICANN is predicting new gTLD revenue of $41.5 million, a 52% annual growth rate.

The adopted FY16 budget is here. The new proposed FY17 budget is here. Both are PDF files.

The FY17 proposals are open for public comment.

ICANN slashes new gTLD revenues by 57%, forecasts renewals at 25% to 50%

Kevin Murphy, March 19, 2015, Domain Registries

ICANN has dramatically reduced the amount of revenue it expects to see from new gTLDs in its fiscal 2015.

According to a draft 2016 budget published this morning, the organization now reckons it will get just $300,000 from new gTLD registry transaction fees in the year ending June 30, 2015.

That’s down 75% from the $1.2 million predicted by its FY 2015 budget, which was approved in December.

Transaction fees are paid on new registrations, transfers and renewals, but only by gTLDs with over 50,000 billable transactions per year.

Today, only 14 of the 522 delegated new gTLDs have added more than 50,000 names. ICANN says that only 17 registries are currently paying transaction fees.

It’s not only the transaction fees where ICANN has scaled back its expectations, however.

The organization also expects its fixed new gTLD registry fees — the $6,250 each registry must pay per quarter regardless of volume — to come in way below targets.

The new budget anticipates $12.7 million from fixed registry fees in FY15, down 24% from the $16.7 million in its adopted FY15 budget.

This is presumably due to larger than expected numbers of would-be registries either withdrawing or dragging their feet in the path to delegation.

Registrar transaction fees are now anticipated at $1.1 million, compared to $2 million and $3.2 million predicted by the adopted and draft FY15 budgets respectively.

Taking all three revenue sources together, ICANN now expects new gTLDs to contribute just $14.1 million to its fiscal 2015 revenue, down 29% from the $19.8 million forecast in its adopted FY15 budget.

That’s down 57% from the $32.7 million in the original draft budget for the period.

The current budget assumes 15 million new gTLD registrations in the 12-month period, revised down from the 33 million domains predicted in its draft FY15 budget a year ago.

With just a few months left until the end of the fiscal year, there are currently fewer than 4.5 million domains in published new gTLD zone files.

ICANN plainly no longer expects new gTLDs to get anywhere close to 15 million domains.

Renewals expected to be weak, weak, weak

The organization is taking a conservative view about renewals for 2016.

The 2016 budget expects renewals at just 50% for regular gTLDs and 25% for registries — presumably ICANN has .xyz in mind — that gave away domains for free at launch.

That 50% is both ICANN’s “best” and “high” estimate. Its “low” estimate is 35% for non-free domains.

Obviously, 50% is a very low renewal number for any registry (70%+ is the norm). Even شبكة. (.shabaka) told us recently that 55% of its registrants are renewing before their domains expire.

Conversely, 25% may be a very optimistic number for free domains (when Afilias gave away free .info names a decade ago, almost all of them dropped rather than being renewed).

For fiscal 2016, which begins July 1, 2015, ICANN expects new gTLD revenue to be $24.1 million — about a quarter off its original plan for 2015.

That breaks down as $19.9 million from registry fixed fees, $2 million from registry transaction fees, and $2.3 million from registrar transaction fees.

ICANN said it is is assuming that it will start the year with 602 registries and end it with 945.

The proposed FY16 budget, now open for comment, can be found here.

For comparison purposes, the adopted FY15 budget is here (pdf) and the draft FY15 budget is here (pdf).