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Domain industry likely to suffer from coronavirus as ICANN slashes budget by 8%

Kevin Murphy, April 28, 2020, Domain Policy

ICANN is predicting a miserable time for the domain name industry due to the coronavirus pandemic, today announcing that it’s slashing its revenue outlook for the next year by 8%.

The organization expects to receive revenue of $129.3 million for the fiscal year beginning July 1. That’s $11.1 million lower than its previous estimate, which was made in December.

ICANN’s budget is based on projections based on previous industry performance and its accountants’ conversations with registries and registrars, so this is another way of saying that it expects the industry to suffer due to the pandemic.

ICANN said in its newly revised budget:

ICANN org funding may be impacted because the economic crisis stemming from the pandemic has the potential to impact the funding from domain name registrations and contracted parties through the end of FY20 and into the first months of FY21. ICANN org also anticipates there may be long-lasting effects of such impacts. At the time this document is published, the impact cannot yet be quantified.

The drill-down is not great, showing that ICANN expects registries and registrars in both legacy and new gTLDs to be hit.

New gTLDs are predicted to be hit hardest, with revenue from registry transaction fees dropping by a full 33% from its FY20 forecast. That’s a drop from $6.7 million to $4.5 million.

Extrapolating from its $0.25 registry fee, that means ICANN thinks there will be 8.8 million fewer billable transactions — registrations, renewals and transfers in new gTLDs with over 50,000 names — for the year ending June 30, 2021.

Expected revenue from registrars selling new gTLDs has also been slashed by a third, down from $5.3 million this year to $3.5 million next year.

Legacy gTLDs are expected to fare a little better.

ICANN predicts transaction revenue from legacy gTLDs to decrease over the period, down to $47.7 million in FY21 from $49 million in FY20. Registrars selling legacy gTLDs are expected to bring in revenue of $29.7 million, down from $33.3 million.

That also represents shrinkage measured in the millions of domains.

It gets worse. ICANN is also expecting the number of registries and registrars to decrease even faster over the course of the next year.

It thinks it will end June with 1,174 fee-paying registries, but for this to decrease by 62 in FY21. It decreased by 29 in FY20. Many of these will probably be unused dot-brands having their contracts cancelled.

On the registrar side, it expects to lose 380 accreditations in FY21, compared to a loss of 104 this fiscal year, to end FY21 with 1,977 registrars.

ICANN does not expect its voluntary contributions from ccTLDs and Regional Internet Registries to decrease, but it does expect to lose a few hundred thousand bucks from the absence of sponsorship of its in-person meetings.

This overall predicted decrease in funding has led to a matching decrease in planned expenditure, with ICANN saying it will operate with “increased prudence, frugality, and with heightened conditions of necessity”.

It’s going to save 20% less on travel — $12.4 million — due to coronavirus-related restrictions, but seems to still be planning to take the industry to Hamburg in October for ICANN 69 (even though Munich has cancelled Oktoberfest this year).

ICANN also plans to delay some projects and to reduce its average headcount by 15 to 395.

The lower budget projections come even as some registries —including CentralNic, which looks after some very large new gTLDs — have said they expect the financial impact of coronavirus to be minimal.

The revised budget is published here and ICANN’s board may approve it as early as next week.

CentralNic does not expect big coronavirus impact as it posts almost-doubled revenue for 2019

Kevin Murphy, April 27, 2020, Domain Registrars

CentralNic has added its name to the list of domain name companies not expecting to see a significant financial hit from coronavirus.

The company this morning posted its full 2019 results and first-quarter 2020 trading update, saying it expects to be “resilient” to the pandemic.

For 2019, the company saw revenue grow by 95% to $109.2 million. Profits at the adjusted EBITDA level was $17.9 million, again almost double the 2018 results.

Pre-tax loss was $8.2 million, compared to $5 million for the previous year. At the operating level, CentralNic lost half a million bucks, but that was smaller than the $3.6 million it lost in 2018.

The first quarter trading update was even rosier. It expects revenue to come in at $56 million — the same revenue figure as for the whole of 2018 — with adjusted EBITDA of $8.1 million.

The growth is of course all coming from recent acquisitions. CentralNic sees itself as an industry consolidator. It has recently integrated the reseller-focused businesses Key-Systems, Hexonet, PartnerGate, TPP Wholesale and Toweb, as well as retail registrar Ideegeo and domain monetization outfit Team Internet.

The company said it has delayed a planned shareholder dividend — its first — in order to keep more cash on hand for even more acquisitions.

On coronavirus, CentralNic said:

Despite [the pandemic], trading for the Group in Q1 2020 was in line with expectations, despite the global business restrictions to slow the progress of COVID-19… As a profitable provider of online subscription services with high cash conversion and solid organic growth, we do not expect CentralNic to be severely affected by COVID-19, but we will take the necessary precautions to preserve our cash and review our acquisition pipeline and financing plans to ensure that we maintain stability and optimise our business strategies in the new global climate.

It’s the third domain company in recent days, after Verisignafter Verisign and Dutch ccTLD registry SIDNDutch ccTLD registry SIDN, to say that they don’t expect to be badly hit by the pandemic.

Coronavirus lockdown is working out great for at least one registry

Kevin Murphy, April 23, 2020, Domain Registries

The Dutch ccTLD registry has revealed that its volume of new registrations has been growing rapidly since the Netherlands implemented its coronavirus lockdown measures.

“Since the measures came into effect, Dutch entrepreneurs and private individuals registered over 85,000 .nl domain names, 10,000 more than in the same period in 2019,” SIDN said today (translated from the Dutch by Google).

Only about 2% to 3% of these names relate directly to the pandemic, the registry said.

There were 5,930,715 .nl domains registered as of April 20, an increase of about 17,000 from the start of the month.

A survey of registrants carried out for SIDN found that 100% of them intended to use their domains for online-only activities, as opposed to using them to promote a bricks-and-mortar business, for the first time.

SIDN’s good luck may not be shared by all in the industry, however.

ICANN, which is funded by a tax on registration fees, is to host a call next week in which it will explain how it will have to adapt its budget to respond to the impact of the pandemic.

If we take Verisign’s .com as a benchmark, its zone file has grown by roughly 383,000 domains since the end of March. In the same period last year, the increase was 434,000.

Tonight, Verisign is due to report its first-quarter numbers, and no doubt we will get some color on how its bosses think the virus will affect the market.

Coronavirus could cause “high risk of widespread outages”, ICANN says

Kevin Murphy, April 21, 2020, Domain Tech

There’s a “high risk of widespread outages” in the DNS if ICANN can’t get enough people in the same room for its next root DNSSEC ceremony because of the coronavirus pandemic.

That’s according to ICANN’s own board of directors, which yesterday published a contingency plan that — in the worst case scenario — could see parts of the internet come to a screeching halt in July.

The problem is with the elaborate “ceremonies” that ICANN and its IANA/PTI unit uses to make sure the internet can support DNSSEC — the secure version of the DNS protocol — all the way from the root servers down.

Every quarter, ICANN, Verisign and a select few “Trusted Community Representatives” from all over the world meet in person at one of two secure US-based facilities to generate the public Zone Signing Keys for the root.

In addition to the complex cryptographic stuff happening in the computers, there’s a shedload of physical security, such as retinal scans, PIN-based locks, and reinforced walls.

And the “secret key-holders”, memorably fictionalized in a US spy drama a few years ago, actually have physical keys that they must bring to these ceremonies.

The events are broadcast live and archived on YouTube, where they typically get anything from a few hundred to a few thousand views.

Obviously, with the key-holders dotted all over the globe and most under some form of coronavirus-related lockdown, getting a quorum into the same facility at the same time — originally, Culpeper, Virginia on April 23 — isn’t going to be possible.

So IANA has made the decision to instead move the ceremony to the facility in El Segundo, California, within easy driving distance of ICANN’s headquarters, and have it carried out almost entirely by ICANN staff, wrapped in personal protective equipment and keeping their distance from each other.

The TCRs for El Segundo live in Mauritius, Spain, Russia, Tanzania, Uruguay and on the east-coast of the US, according to ICANN.

Four of these key-holders have mailed their keys to different IANA staff “wrapped in opaque material” and sealed in “tamper-evident bags”. These IANA employees will stand in for the TCRs, who will be watching remotely to verify that nothing fishy is going on.

Verisign and the independent auditors will also be watching remotely.

That’s the current plan, anyway, and I’ve no reason to believe it won’t go ahead, but ICANN’s new contingency plans do provide four alternatives.

It’s already discarded the first two options, so if the current, third, plan for the ceremony can’t go ahead before June 19 for some reason, all that would be left is the nuclear option.

Option D: Suspend signing of the DNS root zone

This is the final option if there is no conceivable way to activate the KSK and perform signing operations. There would need to be a massive education campaign at short notice to have resolver operators disable DNSSEC validation. There is a high risk of widespread outages as it is not possible to ensure global implementation, and high risk this will fatally compromise trust in DNSSEC in general as a technology.

This is considered highly unlikely, but nonetheless the final option. Without exercising the option, in the absence of a successful key signing ceremony, DNSSEC validation would be unsuccessful starting in July 2020.

The reason for this scenario is that DNSSEC keys have a finite time-to-live and after that period expires they stop functioning, which means anyone validating DNSSEC on their network may well stop resolving the signed zones.

ICANN typically generates the keys one quarter in advance, so the current key expires at the start of July.

However, the planned April 23 ceremony will generate three quarters worth of keys in advance, so the root should be good until the end of March 2021, assuming everything goes according to plan.

Clearly, the idea that half the planet might be on the verge of lockdown wasn’t taken into consideration on February 12, the last ceremony, when ICANN’s biggest problem was that it couldn’t get into one of its safes.

If you’re interested in more about the ceremony and the coronavirus-related changes, info can be found here.

GoDaddy signs up 30 partners to lockdown-era marketing scheme

Kevin Murphy, April 15, 2020, Domain Registrars

GoDaddy has signed up 30 companies to a new marketing program that it says is designed to help small business keep afloat during the coronavirus lockdown.

It’s called #OpenWeStand, and the company is doing its level best to cast it as a community “movement” rather than a way to shift product as the world stands on the precipice of pandemic-induced recession.

The companies signed up so far are: Acronis, American Express, Association for Enterprise Opportunity, Avetta, BrandCrowd, Brex, ChowNow, Digital Air Strike, Evite, Gift Up!, GoFundMe, Hello Alice, Inc. Media, Kabbage, Keap, Keysight Technologies, Moneypenny, Next Insurance, Next Street, Nextdoor, PayPal, Rocket Lawyer, Ruby, Salesforce, Seed Spot, ServiceTitan, Shaw Academy, Slack, SurveyMonkey, and Zenefits.

What are all these companies offering worried business owners? It’s not entirely clear yet, but the answer so far appears to be primarily: discounts.

Evite, for example, is offering customers a free year of its premium service, which usually goes for $249, according to the OpenWeStand web site.

Customers of GoDaddy that are also customers of collaboration tool Slack will get a 25% discount on any Slack upgrade they buy.

Food delivery aggregator ChowNow says it’s designed a loyalty scheme product designed to put uo-front fees in restaurants’ pockets at a time when delivery is basically their only option.

Inc magazine’s contribution appears to be limited to a pledge to continue publishing.

GoDaddy itself is offering free social media makeovers and marketing services.

There’s not a whole lot more in the way of offers right now, but the site has placeholders for the likes of PayPal, American Express and Salesforce to promote their offerings soon.

In terms of offering advice to small business owners, we’re looking at a collection of GoDaddy blog posts and a LinkedIn group with about 200 members.

It’s obviously far too early to say whether any of this will ultimately be useful or attractive enough to help small businesses survive the lockdown, but I also think it would be churlish to dismiss it as a cynical marketing ploy at this stage.

A slick GoDaddy video promoting #OpenWeStand, which appears to have been voiced by the soothing, avuncular gravel of Donald Sutherland, has received over 12 million views since it was published March 25, so their may be an appetite for this kind of “movement”.

Kuala Lumpur meeting cancelled and ICANN 68 could be even trickier online

Kevin Murphy, April 9, 2020, Domain Policy

ICANN has as expected cancelled its in-person ICANN 68 meeting, which had been due to take place in Kuala Lumpur in June, due to the coronavirus pandemic.

The decision, which was never really in any doubt, was taken by its board of directors yesterday. The board considered:

Globally, a high number of people are under some form of a “stay at home” or lock-down order, directed to avoid contact with others except to receive essential services such as medical care or to purchase supplies. Schools and offices are closed, gatherings are prohibited, and international travel is largely on pause. We do not know when travel or in-person meetings will be authorized or possible. As it relates to Kuala Lumpur, Malaysia has a Movement Control Order in force at least until 14 April 2020 that prohibits meetings such as ICANN68. The duration of the Movement Control Order has already been extended once.

It appears that the four-day meeting, which will instead go ahead virtually (presumably on the Zoom conferencing service) might be even more disjointed than ICANN 67.

ICANN 67, which took place online in March, did have a centralized component — a bunch of ICANN staffers on location at its headquarters in Los Angeles — but that may not be possible this time around.

The board said that “due to current social distancing requirements, ICANN org is unable to execute a virtual meeting from a single location, and that a decentralized execution model might necessitate changes to the format.”

It added that there is support for “a flexible, modified virtual meeting format that focuses on cross-community dialogues on key policy topics, supplemented by a program of topical webinars and regular online working meetings scheduled around the key sessions.”

While there has been a lot of criticism of the Zoom platform in recent weeks due to security and privacy concerns, ICANN indicated this week that it’s not particularly concerned and will carry on using the service.

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.

ICANN declares coronavirus a “natural disaster” to protect expired domains

Registrants unable to renew their domain names when they expire may not lose them, following a decree from ICANN today.

The organization has declared the coronavirus a “natural disaster” and invoked part of the Registrar Accreditation Agreement that permits registrars to keep hold of domains that have come to the end of their post-expiration renewal period.

Under the RAA, registrars have to delete domains a maximum of 45 days after the reg period expires, unless there are “extenuating circumstances” such as an ongoing UDRP case, lawsuit or technical stability dangers.

There’s no accounting for natural disasters in the contract, but ICANN has the discretion to name any “other circumstance as approved specifically by ICANN” an extenuating circumstance. That’s what it’s done here.

It’s invoked this provision once before, following Hurricane Maria in late 2017.

ICANN said that policies to specifically protect domains in the event of natural disasters should be considered.

The new coronavirus exception applies to all registrars in all gTLDs, although implementation will vary by registrar.

The announcement follows Verisign’s announcement last week that it is waiving its registry-level restore fee for .com and .net domains until June 1.

ICANN to consider cancelling ICANN 68 tomorrow

Kevin Murphy, April 7, 2020, Domain Policy

ICANN is to consider whether to cancel its in-person ICANN 68 gathering at a meeting of its board of directors tomorrow.

The agenda for its meeting tomorrow has one line item: “Impact of COVID-19 on ICANN68”.

The four-day Policy Forum is currently scheduled to take place from June 22 in Kuala Lumpur, Malaysia.

I think the chances of this event going ahead in the midst of the coronavirus pandemic are zero point zero.

March’s ICANN 67 meeting was replaced with a series of virtual Zoom rooms on February 19, when cases of Covid-19 had been reported in just 26 countries and it was still widely thought of as a Chinese problem.

According to today’s data from the European Centre For Disease Prevention and Control, coronavirus cases have been reported in 204 countries and territories. That’s pretty much all of them.

Even if some currently hard-hit countries in North America and Europe are over the hump by June, you can guarantee that somewhere in the world there’ll be a horrific Biblical epidemic going on. I can’t see ICANN taking the risk of opening its doors to the world at a time like that.

Frankly, I think ICANN 69, the annual general meeting slated for Hamburg in October, has a big question mark hanging over it as well.

Germany may have been handling its crisis relatively well compared to other nations, but ICANN has participants from 150 countries and it may well have to make its call based not on the strongest national response but the weakest.

Coronavirus: more delay and free domains for .gay

Top Level Design is delaying its general-availability launch of .gay domains for an indeterminate period due to the coronavirus pandemic.

The company said that the new gTLD, which had been slated to go GA May 20, will instead carry on in its trademark holders’ sunrise period indefinitely, until it’s figured out a new launch date.

But in the meantime it’s going to offer a “limited” number of .gay domains for free to any “LGBTQ organization, community group, individual, or small business looking for ways to foster digital Pride”.

These will presumably come from the pool of 100 domains that ICANN permits new gTLD registries to allocate prior to launch, so it certainly will not be a free-for-all.

It’s not the first time Top Level Design has rescheduled its launch. It had originally planned to come out to coincide with National Coming Out Day last October, but delayed to give it more time to get its marketing ducks in a row.

It looks like prospective .gay registrants are going to have to wait until the world’s attention is not so obsessively focused on coronavirus and life has somewhat returned to normal before they nab their names.