Vertical integration – bad news for domainers?

ICANN’s decision to allow domain name registrars to operate registries is a game changer on many fronts, but what impact could it have on domain investors?
For the first time, registrars will be able apply for and run new top-level domains, giving them unprecedented insight into registry-level data.
If they also act as registries, registrars will, for example, be able to see what non-existent domains in their TLD get the most type-in traffic.
They will also be able to see how much traffic expiring domains get, even if the registrant does not use the registrar’s own name servers.
As claimed by some participants in ICANN’s vertical integration working group, this data could be used to “harm” registrants; harms that could be especially noticeable to domainers.
There was a concern from some in the WG that combined registry-registrar entities (we’re going to need a name for these) could use registry data to, for example, identify and withhold high-value names, increasing prices to potential registrants.
The possibility of an increase in “domain tasting” and “front-running” – practices generally frowned upon nowadays – was also raised.
However, some registrars are already owned by companies that register large numbers of traffic domains for themselves, even without access to registry data.
Demand Media subsidiary eNom, the second-largest gTLD registrar, is a good example.
As DomainNameWire reported in August, the company already uses domain name lookups to decide what names to register for itself (though it told DNW it does not “front-run”), saying in SEC filings:

These queries and look-ups provide insight into what consumers may be seeking online and represent a proprietary and valuable source of relevant information for our platform’s title generation algorithms and the algorithms we use to acquire undeveloped websites for our portfolio.

Demand also said that it acquires eNom customers’ expiring domains if they are attractive enough:

Domain names not renewed by their prior registrants that meet certain of our criteria are acquired by us to augment our portfolio of undeveloped owned and operated websites.

Access to registry data could prove invaluable in refining this model, and eNom has, unsurprisingly. long indicated its desire to apply for and operate new TLDs.
But will registries be allowed to exploit this data to line their own pockets?
ICANN indicated today that it plans to introduce a code of conduct for registries, to prevent “misuse of data”, and will likely step up its compliance activities as a result.
What this code of conduct will look like remains to be seen, but I expect we’re looking at “Chinese wall” provisions similar to those self-imposed by VeriSign when it still owned Network Solutions.
It should be pointed out, of course, that standalone registries already have the ability to register domains to themselves, based on their own registry data, and I’m not aware of a great many incidents where this has been abused to the harm of registrants.

ICANN cans broke registrar

4Domains.com has lost its registrar accreditation after ICANN decided it had gone insolvent.
ICANN has alleged numerous other violations of the Registrar Accreditation Agreement, but told the registrar that its insolvency allows it terminate the accreditation with immediate effect.
ICANN’s letter to 4Domains (pdf) describes a company unable not only to pay its roughly $6,110 in due ICANN fees, but also to fund its registry accounts, service its customers and pay its staff.
From this, ICANN has concluded that the registrar is insolvent, and has terminated its accreditation.

4Domains is acting in manner that endangers the stability and operational integrity of the Internet, which is a separate grounds to support ICANN’s termination of the 4Domains RAA.

ICANN said 4Domains was also failing to escrow its registrant data, “due to an inability of the 4Domains programmer to resolve the escrow deposit issues”.
But it has this week supplied ICANN with an electronic copy of its customer database, so it appears that most registrants will be protected should their domains be transferred to another registrar.
The company has been told it may now nominate another registrar to take over its accounts in bulk.
4Domains was accredited in 2000, making it one of the first registrars to go live. According to DotAndCo.net, it has about 25,000 active registrations in five gTLDs.

Two registrars get stay of execution

ICANN has given two registrars another year of accreditation, after previously threatening to terminate their contracts for non-payment of fees.
Abansys & Hostytec and Namehouse, two small registrars, have had the terms of their registrar accreditation agreements extended to August 15, 2011 and July 6, 2011, respectively.
In June, ICANN had told both companies they would be de-accredited on July 1, 2010. Together, the two firms owed almost $20,000 in unpaid fees.
Yesterday, a small note appeared on ICANN’s compliance page:

18 August 2010: Abansys & Hostytec, S.L. RAA effective date extended to 15 August 2011.
18 August 2010: Namehouse, Inc. RAA effective date extended to 6 July 2011.

It’s not entirely clear to me whether this means the registrars have paid up or not. Unlike previous occasions, there’s no mention of whether the companies “cured all outstanding contract breaches”.
According to DotAndCo.net, neither registrar has any domains under management in the gTLDs, although Abansys & Hostytec claims to run over 100,000 domains.

ICANN switches off .mobi land-rush flipper

ICANN has terminated a domain name registrar that seems to have been made its business flipping land-rush domains, especially in .mobi.
Mobiline, doing business as DomainBonus.com, is an Israeli outfit that received its registrar accreditations about five years ago.
While it seems to have registered a very small number of domains, domainbonus.com did provide DNS for a few thousand dictionary .mobi domains, registered during the September 2006 land-rush.
A lot of these domains appeared to have been originally registered in the name of Mobiline’s owner, Alex Tesler.
Many have been since been flipped and archives of the DomainBonus front page show the firm was mainly preoccupied with aftermarket sales rather than fresh registrations.
ICANN has revoked its accreditation (pdf) for failure to pay its dues and escrow Whois data with Iron Mountain, as all registrars must.
ICANN is also switching off Western United Domains, a Spanish outfit that appears to have no web presence whatsoever, for the same reasons.

Twenty registrars canned in 2009

ICANN shut down 20 domain name registrars in 2009, and is on course to do the same this year, according to numbers released today.
That’s up from seven de-accreditations in 2008, and twice as many as the previous record year, 2003.
ICANN can withdraw accreditation from a registrar, stopping its ability to register domains, if the registrar fails to escrow Whois information or pay its ICANN dues.
It looks like 2010 could well see a similar level of de-accreditations.
Five registrars were shuttered in the first quarter, and ICANN has sent warnings to five more this month.