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Chinese registrars on the decline

Kevin Murphy, October 1, 2018, Domain Registrars

Having been on a growth trajectory for some years, the number of ICANN-accredited registrars based in China appears to be on the decline.

According to my records, so far this year 26 registrar contracts have been terminated, voluntarily or otherwise, 11 of which were Chinese. I’m excluding the mass drop of Pheenix accreditations from these numbers.

The country with the next-highest number of terminations was the USA, with three.

ICANN has terminated nine registrars for breaches of the RAA this year, six of which were Chinese.

All the Chinese notices included non-payment of ICANN fees as a reason for termination, though it appears that most of them had a negligible number of gTLD domains under management.

ICANN Compliance tells me there’s no particular focus of China at the moment, this is all a result of regular day-to-day enforcement.

ICANN has sent breach notices to 28 companies this year, seven of which were to Chinese registrars.

Meanwhile, 22.cn has moved 13 of its accredited shell registrars to Hong Kong. Another registrar moved its base from China to Australia.

Seven Chinese registrars have been newly accredited this year,

Net, this has all reduced the number of accredited registrars based in China to 91.

The country still has the second-most registrars ahead of the US, with its almost 2,000 registrars, and a clear 31 registrars ahead of third-place India.

MMX waving goodbye to .london? Boss puts focus on renewal profits, China

Kevin Murphy, September 26, 2018, Domain Registries

MMX’s revenue from domain renewals could cover all of its expenses within the next 24 months, if everything goes to plan, according to CEO Toby Hall.

Hall was speaking to DI this evening after the company reported its first-half financial results, which saw revenue up 22% to $6.4 million and a net loss of $14.7 million, which compared to a loss of $526,000 a year earlier.

MMX’s huge loss for the period was largely — to the tune of $11.8 million — attributable to the restructuring of an “onerous” contract with one of its gTLD partners.

Hall refuses point blank to name that partner, but for reasons I discussed last year, I believe it is .london sponsor London & Partners, which is affiliated with the office of the Mayor of London.

When L&P selected MMX to be its registry partner for .london back in 2012, I understand a key reason was MMX’s promise to pay L&P a fixed annual fee and commit to a certain amount of marketing spend.

But two years ago, after it became clear that .london sales were coming in waaaay below previous management’s expectations, MMX renegotiated the deal.

Under the new deal, instead of committing to spend $10.8 million on marketing the TLD itself, MMX agreed to give half that amount to L&P for L&P to do its own marketing.

It appears that L&P has already spunked much of that cash ineffectively, or, as MMX put it:

a significant portion of that marketing budget has been spent by the partner with minimal impact on revenues in the current year and no expectation of any material uplift in future periods

MMX seems to have basically written off the .london deal as a bad call, and now that MMX is no longer in the registry back-end or registrar businesses, it seems unlikely that the .london partnership will be extended when it expires in three years.

Again, Hall would not confirm this bad contract was for .london — I’m making an informed guess — but the alternatives are limited. The only other TLDs MMX runs in partnership currently are .review and .country, and not even 2012 MMX management would have bet the farm on those turkeys.

Another $2.1 million of the company’s H1 net loss is for “bad debt provisions” relating the possibility that certain US-based registrar partners may not pay their dues, but this provision is apparently related to a new accounting standard rather than known deadbeats threatening to withhold payments.

If you throw aside all of this accountancy and look at the “operating EBITDA” line, profit was up 176% to $661,000 compared to H1 2017.

While the loss may have cast a cloud over the first half, Hall is upbeat about MMX’s prospects, and it’s all about the renewals.

“Renewal revenue will be more than all the costs of business within 24 months,” he said. To get there, it needs to cross the $12 million mark.

He told DI tonight that “an increasing percentage of our business is based on renewals… just on renewal revenue alone we’ll be over $10 million this year”.

Renewal revenue was $4.7 million in 2017 and $2.4 million in 2016, he said. In the first half, it was was up 40% to $3.4 million.

MMX’s acquisition of porn domain specialist ICM Registry, which has renewal fees of over $60 per year, will certainly help the company towards its 2018 goal in the second half. ICM only contributed two weeks of revenue — $250,000 — in H1.

Remarkably, and somewhat counter-intuitively, the company is also seeing renewal strength in China.

Its .vip gTLD, which sells almost exclusively in China, saw extremely respectable renewals of 76% in the first half, which runs against the conventional wisdom that China is a volatile market

Hall said that .vip renewals run in the $5 to $10 range, so apparently TLD volume is not being propped up by cheap wholesale renewal fees. The TLD accounts for about 30% of MMX’s renewal revenue, Hall said.

About 60% of .vip’s domains under management are with Chinese registrar Alibaba. The biggest non-Chinese registrar is GoDaddy, with about 3% of the namespace.

More exposure to China, and specifically Alibaba, is expected to come soon due to MMX’s repurposing of the 2012-logic gTLD .luxe, which is being integrated into the Ethereum blockchain.

MMX said last week that some six million (mostly Chinese) users of the imToken Ethereum wallet will in November get the ability to register .luxe domains via imToken and easily integrate them with their Ethereum assets.

The announcement was made at the Alibaba Cloud Computing Conference in China last week, so you can probably guess imToken’s registrar of choice.

Baidu gets Chinese approval for .baidu

It seems China’s Draconian licensing program for TLD registries is not limited to foreigners.

Chinese internet giant Baidu on Friday became the latest new gTLD registry operator to get the nod to run a TLD by the Ministry of Industry and Information Technology.

The approval was for .baidu, which is currently pre-launch with no launch plan on record.

Despite the brand match, it’s not technically a dot-brand gTLD — its ICANN contract has no Specification 13, which contains various carve-outs for single-registrant spaces.

While not particularly well-known in the English-speaking world, Baidu is second only to Google in terms of search engine market share, due to its dominance in China.

The company had 2017 revenue of almost CNY 85 billion ($12.5 billion).

MMX gets four more gTLDs approved for China use

MMX’s Chinese subsidiary has received the government nod for four more of its new gTLDs to operate in the country.

The approved strings are the lifestyle-oriented .fashion, .luxe, .yoga and .fit.

Getting the nod from the Ministry of Industry and Information Technology means Chinese registrants will be able to use domains in the the four gTLDs, albeit subject to China’s much more stringent censorship regime.

MIIT this week also approved .时尚, which is the Chinese version of .fashion, managed by Rise Victory, a subsidiary of Yuwei Registry.

.fashion, .fit and .yoga have about 40,000 domains in their zone files, combined, while .luxe does not yet have a launch date.

MMX has had some success in China with its flagship .vip TLD, which had over 884,000 domains under management at the last public count. It recently said preliminary second-quarter renewals there were a very respectable 75%.

It also recently that that .购物 (.shopping) and .law both went on sale in China, and “will be marketed by in-country specialists as high-value domain names”. Investors were advised not to expect high volumes.

.co first ccTLD to get China approval

Repurposed Colombian ccTLD .co has obtained official government approval to operate in China, according to a consultant whose client worked on the project.

Pinky Brand blogged this week that .co is the “first” foreign ccTLD to get the nod, among the raft of gTLDs that have gone down the same route over the last couple of years.

China’s own .cn and Chinese-script equivalents are of course already approved.

Under China’s policy regime, administered by the Ministry of Industry and Information Technology, TLD registries have to set up a local presence and agree to Draconian takedown policies.

Non-approved TLDs are not permitted to have resolving domains, under the rules.

Most companies seeking Chinese approval tend to use a local proxy provider such as ZDNS, which seems to be the route taken by .co here.

.co is managed by Neustar via its Colombian subsidiary .CO Internet.

Eight more gTLDs get Chinese licenses

Kevin Murphy, October 12, 2017, Domain Registries

Radix and MMX have had four new gTLDs each approved for use in China.

MMX has had .work, .law, .beer and .购物 (Chinese for “shopping”) approved by the Ministry of Industry and Information Technology.

Radix gained approval for .fun, .online, .store and .tech.

The approvals mean that Chinese customers of Chinese registrars will be able to actually use domains in these TLDs rather than just registering them and leaving them barren.

It also means the respective registries have to apply more stringent controls on Chinese registrants.

They’re the first new gTLDs to get the nod from MIIT since April.

Only a couple dozen Latin-script new gTLDs have been given regulatory approval to operate fully in China.

MMX’s biggest success story to date, .vip, is almost entirely beholden to the Chinese market. Before today, it was also the only gTLD in its portfolio to pass the MIIT test.

The company said in a statement it has another four strings going through the approval process.

Radix already had .site on sale in China with government approval.

.xyz back on sale in China

Kevin Murphy, September 25, 2017, Domain Registries

Chinese registrars have started to carry .xyz domains again, about five months after a Chinese government ban.

West.cn and Net.cn are two of the China-based companies that appear to be selling .xyz names at the yuan equivalent of a US dollar, based on a spot check this morning.

West.cn flagged the “restoration” of service on its blog today, saying it was “overjoyed” to resume sales.

XYZ.com revealed back in May that its new gTLD domains were “temporarily” no longer available via Chinese registrars, after the government there suspended its license.

The reason for the suspension has always been a little vague, but the registry told DNW back in May that it related to Real Names Verification.

RNV is the government-mandated identity check that must take place before anyone in China can register and use a domain name.

XYZ had been outsourcing the function to ZDNS, but that relationship fell apart for some reason (rumor has it there was a money dispute) and XYZ decided to switch to Tele-info.

In the interim, Chinese registrars, apparently under order of their government, dutifully stopped carrying .xyz domains.

XYZ also went through ICANN’s Registry Services Evaluation Process to get its move to Tele-info approved at the Registry Agreement level.

The downtime prevented XYZ from masking the precipitous decline in its number of domains under management, which has fallen by over three million since May.

XYZ and the Chinese government have yet to issue statements about the newly reinstated license.

UPDATE 10/10/2017 — XYZ.com got in touch last week to say that .xyz was never “banned” in China.

A spokesperson said in an email: “We had RNV in place with ZDNS and opted to switch. To be compliant with ICANN, we suspended registrations in China.”

He declined to clarify whether the suspension was voluntary or ICANN-mandated.

He also declined to confirm or deny that Chinese registrars been told to suspend .xyz registrations by the government, as local sources have previously told DI and Domain Name Wire.

Other gTLDs owned by other registries have previously obtained Chinese licenses without ICANN first approving their RNV providers.

MMX sells 7,000 domains for $3.4 million

Kevin Murphy, September 12, 2017, Domain Registries

New gTLD registry MMX said it has sold $3.4 million in “premium” .vip domains names to Chinese domainers in the last few months.

In what is believed to be a small number of deals to a limited number of investors, “over 7,000” domains changed hands since they became available in late June.

MMX said that $2.8 million of the deals closed in the last 10 days.

While we don’t have the exact number of domains, it looks to work out in the ball-park of $485 per domain.

As $3.4 million is a materially significant number — the company’s entire revenue for 2016 was $15.6 million — it was disclosed to the financial markets this morning.

.vip has been MMX’s cash cow, so far amassing a zone file with more than 600,000 domains names in it.

For some reason it has been hugely popular in China — the vast majority of its registrations have been through Chinese registrars and 59% of its overall revenue was from China in 2016.

In April, the company sold 200,000 .vip names to a single Chinese investor for $1.3 million.

MMX has also said that renewal rates for .vip, which only launched last year, have been over 75%.

MMX: three gTLDs approved for sale in Beijing

Kevin Murphy, August 31, 2017, Domain Registries

Three foreign new gTLDs have been approved for sale and resolution in Chinese capital Beijing, according to MMX.

The portfolio registry said today that its .vip is among the first to receive approval from the Beijing Communications Administration, one of China’s many regional authorities.

According to MMX, while many gTLDs have managed to pass through the Ministry of Industry and Information Technology’s stringent vetting process, the Beijing local authority has so far been slow to follow the national regulator’s lead.

But BCA approved .vip, along with GMO’s .shop and Donuts’ .ltd on August 16, the registry said in a market update.

This gives .vip national coverage in China, adding Beijing’s 22 million inhabitants.

MMX added that 188,764 different .vip sites, of the over 600,000 in its zone file, are currently indexed by Chinese search engine Baidu.

It also said that it plans to start selling Chinese-script internationalized domain names in .vip (in IDN.ascii format) in November.

MMX says .vip renewals running at 75%

MMX has revealed that its renewal rate for first-month .vip registrations in China were over 75%.

The portfolio gTLD registry, also known as Minds + Machines, said that 317,000 domains that were registered during .vip’s first month of availability have now been renewed.

The news follows a June announcement that the renewal rate would be over 70%.

The large majority of .vip names registered are registered via Chinese registrars, where prices can be around the $3 to $4 mark.

MMX CEO Toby Hall said in a statement that the company now plans to release some of its reserved “premium” .vip names.

He added that the company is confident that its recurring revenue from renewals will soon be high enough to cover its fixed overhead costs, one of its key performance benchmarks.