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MMX’s year marked by terrible renewals

MMX saw its revenue dip in 2020, and it reported shocking renewal rates at two of its highest-volume gTLDs, according to the company’s annual financial results, published this morning.

The portfolio registry, which is in the process of selling off essentially its entire operating business to GoDaddy, reported revenue of $16.8 million for the year, down from $17.2 million in 2019.

Profit was up very slighty, to $2.9 million from $2.8 million.

The 2019 results included a few one-off gains, including $588,000 from losing a new gTLD auction, which accounted for most of the 2020 revenue decline.

But the company also reported a 19% decline in domains under management, from 2.46 million to 1.99 million, based on some terrible renewal rates in its .vip and .work gTLDs.

The DUM decline can be attributed mostly to .vip, a popular TLD among Chinese speculators, which started 2020 with around 1.4 million domains but finished the year with just over a million.

.work actually ended the year up on where it started, with around 709,000 names under management.

But MMX today disclosed that the renewal rates for .vip and .work were 36% and 18% respectively. In a business where 70%+ is considered healthy, these are some poor numbers indeed.

However, the company discontinued first-year promotions on these TLDs in 2020, focusing instead on selling domains likely to lead to recurring renewal revenue, which lead to 14% (.vip) and 19% (.work) increases in revenue.

Fewer domains. More money.

MMX said that it is seeing these trends continuing into 2021. Public transaction reports show both these TLDs losing 40-50,0000 names in January. The company expects revenue to fall 4% in the first quarter compared to Q1 2020.

One bright spot appears to be “The Great Relese”, the company’s move last month to mark down hundreds of thousands of premium-priced domains. That’s brought in $170,000 since its April 23 launch.

One basket where the company is placing a lot of its eggs is AdultBlock, the trademark protection service it inherited when it acquired ICM Registry a few years back. It enables customers to block their brands in .xxx, .porn, .adult and .sex without actually having to register the names.

The 10-year period ICM allowed brands to block when it launched in 2011 is coming to an end, so MMX is banking on renewals (which retail at $349 to $799 per year before multi-year discounts) to boost revenue.

“While it is early in the AdultBlock Sunrise B renewal period, we are encouraged by Registrar interest and some early sales of this product,” CEO Tony Farrow said in a statement.

This reliance on AdultBlock for short-term organic growth was one of the reasons MMX is selling up to GoDaddy.

The market-leading registrar and fast-emerging registry consolidator agreed to pay $120 million for MMX’s portfolio, which will leave MMX as a shell company only long enough to distribute the cash to investors before fading away quietly.

That deal has an August deadline to close and is dependent on approvals from business partners, ICANN and the Chinese government.

China could block GoDaddy’s $120 million MMX swoop

GoDaddy’s proposed $120 million acquisition of essentially all the meaningful assets of portfolio gTLD player MMX will be subject to Chinese government approval, it emerged this morning.

Following GoDaddy’s bare-bones press release announcing the deal last night, this morning MMX added a whole bunch of flesh, including a list of closing conditions, in its statement to shareholders.

GoDaddy is proposing to buy essentially MMX’s entire operating business — the 28 gTLD registry agreements with ICANN, including the four porn-related strings belonging to subsidiary ICM Registry.

Not only do MMX shareholders have to approve the deal — and holders of 64% of the shares have already promised they will — but ICANN approval will be required for the registry contracts to be reassigned.

This may prove a hurdle or delay if third parties raise competition concerns, but ICANN’s pretty opaque approval process generally doesn’t frown too much on industry consolidation.

Another known unknown is China.

MMX told shareholders that it needs: “Approval of Chinese authorities for the change of control of MMX China (including change of control in respect of relevant licenses held by MMX China permitting it to distribute TLDs in China).”

The reason for this is quite straightforward: in volume terms, quite a lot of MMX’s business has been in China in recent years. Popular sellers such as .vip, with over 800,000 names today, have been driven primarily by Chinese investors.

A local presence (in this case MMX China) and approval from the Ministry of Industry and Information Technology is required to legally sell a TLD to Chinese registrants via Chinese registrars.

I’ve no particular reason to believe MIIT will withhold its approval for MMX China to move into GoDaddy’s ownership, but a failure to get the nod from China appears to be a deal-breaker.

MMX’s statement to the markets this morning also provided some clarity on what exactly it is that GoDaddy is proposing to buy.

The gTLDs to be acquired are: .vip,.nrw, .casa, .vodka, .xxx, .fit, .miami, .fishing, .porn, .beer, .surf, .boston, .adult, .yoga, .garden, .abogado, .work, .fashion, .horse, .rodeo, .sex, .wedding, .luxe, .dds, .law, .bayern, .cooking, and .country.

It seems that when Tony Farrow took over as MMX CEO last year, after his predecessor left due to an accounting snafu, he had the portfolio audited and came to the conclusion that it could expect only pretty crappy growth over the coming years.

It had banked on selling expensive defensive trademark blocks in its four porn-themed gTLDs to big brands to make up the shortfall, but then GoDaddy approached in December brandishing its rather large checkbook.

MMX reckons the deal values the company at a 92% premium over its closing share price Tuesday, and 87% and 78% premiums over its 20-day and 90-day average selling price.

.bayern, .nrw and the four porn gTLDs belong to subsidiaries that GoDaddy will acquire outright, but GoDaddy is not proposing to buy MMX itself.

Rather, MMX will likely stay alive and publicly traded long enough to redistribute its cash windfall to investors and sell or wind down about a dozen non-operating subsidiaries.

It has a transition services agreement to manage certain business functions of the registry until January next year, which sounds a bit like what fellow GoDaddy acquisition .CLUB Domains explained to me last night.

After that, London’s Alternative Investment Market rules will treat MMX as a “cash shell”, and it will either have to acquire an operating business from somewhere or make itself the subject of a reverse takeover by a company looking for a quick way to the public markets.

CSC becomes first foreign registrar to get the China nod

It’s probably not the best time, politically, to be bragging about doing business in China, but CSC has nevertheless just announced that it’s been given the nod to act as a registrar in China.

The company claims to be the first non-Chinese registrar to be given an official government license to operate in the country, though many registries have obtained one over the last few years since harsh new regulations came into power.

Under the Chinese rules, web site owners need a license to operate, and they can only register domains from approved registrars in approved TLDs.

It’s basically a great big censorship tool, but it doesn’t seem to have stopped every Chinese citizen from registering domains via foreign-owed registrars.

CSC has a corporate client base, so it’s got more incentive than most to follow the rules to the letter.

“CSC’s success in becoming licensed as a foreign-owned registrar positions the company as a go-to resource for global organizations doing business in China,” the company said in a press release.

No ICANN tax relief for Chinese registrars

ICANN has declined a request from dozens Chinese registrars for a fee waiver due to the impact of coronavirus.

In February, almost 50 China-based accredited registries and registrars said they were suffering financially as a result of the outbreak and asked ICANN for an “immediate fee waiver” to “greatly help stabilize our business in the difficult time”.

ICANN has denied this request. In a letter (pdf), senior director of gTLD accounts and services Russ Weinstein wrote:

While we sympathize with the potential financial impact this unprecedented event may have on contracted parties, we are not prepared to provide a waiver at this time. We are closely monitoring the situation and its impact on the domain industry. We are interested in hearing more from representatives from the contracted parties to better understand the problems both the contracted parties and the registrants are facing and ideas for potential solutions.

As I said back in February, what was then largely a Chinese problem looked likely to quickly become a global problem, which unfortunately seems to be the course we’re on. Just six weeks later, China isn’t even the worst-affected country any more.

Even without fee waivers, ICANN has noted that it expects a “significant” impact on it is 2020-21 budget due to the pandemic.

Ethos clarifies .org price rises, promises to reveal number of censored domains

Public Interest Registry and would-be owner Ethos Capital have slightly revised the set of promises they hope to keep if ICANN approves the $1.13 billion acquisition.

Notably, in updating their proposed Public Interest Commitments (pdf), they’ve set out in plain dollar terms for the first time the maximum annual price PIR would charge for a .org domain over the coming seven years.

Applicable Maximum FeeTime Period
$9.93June 30, 2019 to June 29, 2020
$10.92June 30, 2020 to June 29, 2021
$12.02June 30, 2021 to June 29, 2022
$13.22June 30, 2022 to June 29, 2023
$14.54June 30, 2023 to June 29, 2024
$15.99June 30, 2024 to June 29, 2025
$17.59June 30, 2025 to June 29, 2026
$19.35June 30, 2026 to June 29, 2027

Previous versions of the PICs just included a formula and invited the reader to do the math(s).

The two companies are proposing to scrap price caps altogether after June 2027.

If ICANN rejects the deal, under its current contract PIR would be free to raise its prices willy-nilly from day one, though some believe it would be less likely to do so under its current ownership by the non-profit Internet Society.

The new PICs also include a nod to those who believe that PIR would become less sensitive to issues like free speech and censorship — perhaps because China may lean on Ethos’ shadowy billionaire backers. The document now states:

Registry Operator will produce and publish annually a report… This report will also include a transparency report setting forth the number of .ORG domain name registrations that have been suspended or terminated by Registry Operator during the preceding year under Registry Operator’s Anti-Abuse Policy or pursuant to court order.

A few other tweaks clarify the launch date and composition of its proposed Stewardship Council, a body made up of expert outsiders that would offer policy guidance and have a veto on issues such as changes to .org censorship and privacy policy.

The PICs now ban family members of people working for PIR from sitting on the council, and clarify that it would have to be up and running six months after the acquisition closes.

Because .org is not a gTLD applied for in 2012, the PICs do not appear to be open for public comment, but post-acquisition changes to the document would be.

ICANN currently plans to approve or deny the acquisition request by April 20, just 11 days from now.

Chinese registrars ask ICANN to waive fees due to Coronavirus

Almost 50 registries and registrars based in China have asked ICANN to temporarily waive its fees due to the economic impact they say Covid-19 — the new Coronavirus — is having on them.

They’ve all put their names to a February 21 letter (pdf) that ICANN published over the weekend, saying they “believe that it’s essential that ICANN provides immediate fee waiver to registries and registrars in China”.

The letter, signed by more than half of the currently accredited registrars in China, notes the cancellation of the Cancun public meeting, adding:

We highly respect and welcome ICANN’s approach to keep our community safe. Meanwhile, the contracted parties in China, including their staff, suppliers, and relevant business counterparts, are being hit and suffered by the 2019-nCoV in a much greater scale than in other countries and regions combined since January 2020. Many of the staff members have been restrained to perform sales and support functions at the level they are required to. There are significant delays in collections, payments and wire transfers. While we expect that the scale of 2019-nCoV could not go greater, the business growth estimate in 2020 has been jeopardized and the time of recovery can be very long.

While domestic aid on tax, rentals, etc. are being discussed and confirmed, we believe that it’s essential that ICANN provides immediate fee waiver to registries and registrars in China. The waiver of 2020 fees, including annual fees and transaction fees, will greatly help stabilize our business in the difficult time.

This is not a small ask. ICANN collects fees based on transaction volume, and many millions of transactions originate in China. That’s particularly true in the new gTLD space, where China dominates.

The Chinese companies say that ICANN could afford to waive the fees due to the money they say ICANN will save by cancelling Cancun and other international travel.

My hunch is that ICANN won’t agree to these demands. While China is currently undoubtedly disproportionately affected by Covid-19, that situation is rapidly changing.

In the coming weeks and months it’s quite possible — worst-case scenario — the rest of the world could be similarly affected. Is ICANN prepared to set a precedent that could see it sacrifice its entire annual budget? I doubt it.

All previous requests for ICANN to waive its fees for various other reasons have been denied.

As Cancun looms, ICANN bans China travel because of Coronavirus

Kevin Murphy, February 5, 2020, Domain Policy

ICANN has banned its staff from travelling to China because of Coronavirus.

The organization said at the weekend that it has implemented the ban, which includes connecting flights of “an abundance of caution”. The ban includes the mainland as well as Hong Kong and Macau.

The move matches travel bans imposed on staff by other multi-national technology outfits, and comes as countries including the US place precautionary restrictions on flights from China.

ICANN has in the recent past changed the venues of public meetings twice due to worries about the unrelated Zika virus, but it has no meetings lined up in China any time soon.

Next month, the community will meet in Cancun, Mexico. According to the European Centre for Disease Control, there are currently no reported cases of the disease in that country.

There are usually plenty of Chinese nationals at ICANN meetings, of course, which could put ICANN in a tricky ethical/practical position as 67 draws closer, depending on how the global spread of the disease progresses.

ICANN said: “As of now, we fully intend to move forward with ICANN67 in Cancún, Mexico.”

The ECDC says there have been 20,626 confirmed cases of the virus since it was identified in December, almost all in China, and 427 deaths, all Chinese.

Paranoid ICANN opens another root server in China

Kevin Murphy, September 5, 2019, Domain Tech

ICANN has announced the creation of another root server instance in China, which definitely, DEFINITELY won’t let the Chinese government mess with the interwebs.

ICANN said this week that it’s opened an instance of the L-root that it manages in Shanghai.

It’s the third L-root in China but only the first outside of Beijing.

In a press release announcing the installation, which was carried out with technical support from CNNIC and Shanghai Telecom, ICANN decided to preemptively head off any concerns that putting an important piece of internet infrastructure in China comes with added security risk:

Contrary to common misconception, root servers do not control the Internet. The operation of an instance also does not provide any mechanism to alter content of the DNS. Any modification of root zone content will be mitigated by a part of the DNS protocol known as the DNS Security Extensions (DNSSEC) and if an instance fail to respond to a query, resolvers will ask the same question to another instance or root server.

It’s merely the latest of 168 L-root installations and 1,015 copies of the 13 logical root servers, which all use IP Anycast to more quickly serve DNS answers to their local users.

Given how big and populous China is, there are surprisingly few root server instances in the country, according to root-servers.org.

In addition to ICANN’s three boxes, Verisign’s J-root and Internet Systems Consortium’s F-root have three in Beijing and two in Hangzhou between them. The K, I and F roots each have one instance in Beijing.

That’s eight nodes in China proper, which has 800 million internet users. Cross the border into semi-autonomous Hong Kong, which has a population of under eight million people, and there are nine root instances.

The city of Bucharest, Romania (pop. 1.8 million) has the same number of root instances as China.

.wang cut off with Chinese red tape

The registry behind .wang and several Chinese-language gTLDs has seen its official registry web site blocked due to Chinese regulations.

Zodiac Registry, which also runs .商城, .八卦 and .网店 (“mail”, “gossip” and “shop”), has seen zodiacregistry.com intercepted by its web host and replaced with a placeholder message explaining that the site lacks the proper government license.

Wang blocked

It seems to have happened relatively recently. Google’s cache shows results from the page resolving normally in late May.

Ironically, its host is Alibaba, which also happens to be its largest registrar partner.

There’s no suggestion that registry operations or registrants have been affected. Domain availability checks at registrars for Zodiac TLDs appear to be working as normal.

The downtime appears to be a configuration problem. Alibaba requires customers to submit their Internet Content Provider license number before it will allow their sites to resolve properly.

ICP licenses are part of China’s censorship regime, issued by the Ministry of Industry and Information Technology. They must be obtained by any Chinese web site that wants to operate in China.

Zodiac does in fact have such a license, which according to the MIIT web site is active on at least six other domains.

While zodiacregistry.com is the domain officially listed with IANA for the company, it also operates TLD-specific sites such as bagua.wang for the “gossip” registry. None of these have been affected by the licensing issue.

UPDATE June 12: The site is now back online as normal.

.icu gets China nod as it tops 900,000 regs

Chinese regulators have approved .icu for sale and use in China, according to the registry.

ShortDot COO Kevin Kopas told DI today that the Ministry of Industry and Information Technology has approved its year-old gTLD for mainland use.

The company plans to launch .icu there formally June 12, he said.

Kopas also said that .icu has recently topped 900,000 registrations.

It’s a remarkable growth achievement for a gTLD with barely a year on the clock, given that SpamHaus stats show that its level of spam abuse is still comparable to .com.

But with prices at around $1.50 at its largest registrars and very little semantic value, one has to assume that a lot of its registrations are speculative. Its first junk drop could be brutal.

MIIT approval may help it continue its growth trend. To date, China-based registrars have recorded no .icu sales.