Domainers immune from the lockdown bump?

While the can be little doubt that the domain industry saw a boost in the second quarter due to the impact of coronavirus lockdown mandates, the same may not be true for those playing in the secondary market.

Data out from Escrow.com last night shows the weakest quarter for secondary market sales since the company started publishing its data two years ago, with average prices and overall sales volume down.

The company, which acts as a trusted intermediary for domain transfers, said it processed $55.2 million of sales in Q2, down from $85.8 million in the first quarter.

All of the primary geographical markets saw a decline apart from Hong Kong, with the US suffering the worst dip.

The US obviously has taken the biggest dose of the virus and has little in the way of a social safety net, so it’s perhaps not surprising that buyers are being more cautious with their cash.

The declines fly in the face of data and commentary from the primary market, where registries and registrars have generally been seeing unexpected boosts to sales as lockdown-impacted small businesses rush online.t

It’s tempting to speculate that while the virus has created more customers for domain names, fears over the incoming recessions have made buyers less likely to want to splash out on a premium domain.

Escrow.com said that the median price of a domain name without associated content dropped from $3,000 to $2,500 in the quarter.

.com renewals lowest in years, but Verisign sees lockdown bump anyway

.com and .net saw decent growth in the lockdown-dominated second quarter, despite Verisign reporting the lowest renewal rate since 2017.

The company last night reported that it sold more new domains in Q2 than it did in the same period last year — 11.1 million versus 10.3 million a year ago.

It added a net 1.41 million names across both TLDs in the quarter, compared to growth of 1.34 in Q2 2019.

CEO Jim Bidzos did not directly credit coronavirus for the bump, but he told analysts that the growth was driven primarily by small businesses in North America getting online. The US went into lockdown in the last week of March.

Verisign has now upped its guidance for the year. It now expects growth in domains of between 2.75% and 4%. That’s higher than the guidance it was giving out at the start of the year, pre-coronavirus.

The company had lowered this guidance to between 2% and 3.75% in April due to coronavirus uncertainties, which with hindsight clearly seems overly cautious.

On the flipside, Verisign’s estimated renewal rate for the quarter was down to only 72.8%, down from 74.2% a year ago, the worst it’s been since Q1 2017, when renewals were suffering through the tail-end of a massive Chinese junk drop.

But Bidzos said that the low rate was “primarily related to the lower overall first-time renewal rate”, suggesting that it might be more due to registrar promotions or heightened speculation a year ago than any coronavirus-related drag factor.

For Q2, Verisign reported revenue up 2.6% year over year at $314 million, with net income up from $148 million to $152 million.

The company also announced yesterday that it is freezing its prices across all of its TLDs until March 31, 2021.

You’ll recall that it gets the right to increase prices 7% starting on October 26 this year, under its new deal with ICANN and the US government, and Verisign confirmed yesterday that there will definitely be a price increase next year.

Because there’s a six-month notice period requirement in the contract, news of the timing of this increase could come as soon as September this year.

ICANN still has no clue how coronavirus will affect the domain industry

ICANN is still in the dark about how the coronavirus pandemic is going to affect the domain industry’s fortunes and its own budget, judging by a blog post published overnight by CEO Göran Marby.

In the post, Marby outlined his 10 priorities (six created by himself, four by the ICANN board) for the recently commenced fiscal year, and the impact of the virus is front and center.

Notably, it appears that ICANN is thinking about creating a new department or hiring a new senior “economist” to track the domain market and forecast trends.

Bullet #6 on Marby’s list is:

Develop a plan for the potential economist function within ICANN org to follow and evaluate Domain Name System (DNS) market trends.

Background: I’ve heard the question asked, “Is the DNS market changing?” My answer is yes, probably. The questions we need to ask now are, what’s good for the end user, and what will be bad?

My read on this is that we might be looking at a new VP — an astrologer-in-chief, if you like — whose job it would be to read the tea leaves, stare into a crystal ball, rummage through pigeon guts, and predict budget-affecting market moves before they happen.

That’s a function currently occupied by the office of CFO Xavier Calvez, but his track record is spotty, having in previous years failed to predict basic stuff like junk drops in the new gTLD space.

Another of Marby’s goals, set by the board, is:

Develop and implement a plan to ensure continued financial stability in a world affected by COVID-19.

Background: While ICANN’s financial situation is sound at the moment, the impact of the unprecedented effect of the COVID-19 pandemic on the world economy is still unknown.

ICANN’s recently passed FY21 budget predicts an 8% slump in revenue due to an estimated 33% plummet in new gTLD registrations and a 2.3% drop in legacy gTLD regs, as well as a loss of 62 fee-paying dot-brand gTLDs and 380 accredited registrars.

That said, it’s also saving millions by eschewing face-to-face meetings until the whole coronavirus mess is sorted.

It’s not entirely clear how ICANN arrived at its numbers, but it seems the domain industry is looking into unknown waters right now.

It’s undeniable that the pandemic-related lockdown mandates around the world have proved a huge boon to the industry, as bricks-and-mortar businesses retreat online to try to save their livelihoods, but it’s unclear whether this boost will continue as nations emerge from quarantine and into record-setting recessions.

ICANN’s budget is dependent more than anything else on registration volumes in gTLDs, so its fiscal stability will depend on whether people continue to buy and renew domains as they lose their jobs and their companies go out of business.

It seems inevitable that companies going bust and dropping their domains is a trend we’re going to face over the coming few years, but as long as there’s enough liquidity in the domainer community that shouldn’t prove a massive issue for ICANN, which does not care who registers a domain, merely that it is registered.

Aside from budgeting concerns, the impact of coronavirus on ICANN meetings is #1 on Marby’s list of priorities.

Work with Supporting Organization and Advisory Committee leaders, community members, and the Board to define and implement a phased plan to return to face-to-face meetings. This plan will ensure the provision of safe and effective meeting formats that support the ongoing work of the community as well as allow robust remote participation options for anyone unable to attend in person. The final plan will be integrated with regional and global engagement activities.

Background: Face-to-face meetings have always been an important part of ICANN’s DNA. Despite the current pandemic-related restrictions, the Board, community, and org must ensure that we remain able to collaborate, and that we are still able to attract new participants into ICANN.

Since March, every meeting that would usually be held face to face, including the two big public meetings, has instead been held over Zoom, which has drawbacks and limitations. This October’s Hamburg meeting will also be online-only.

Marby to a great extent has his hands tied here.

As long as the virus rages out of control in ICANN’s native US, he’s going to be limited to hosting meetings in locations not only where the coronavirus has been tackled to the degree where large congregations are permitted but also where Americans are allowed to travel quarantine-free.

The next scheduled public meeting is due to take place in Cancun, Mexico in March 2021, but that country currently has locked its border to travelers from the north.

And regardless of what laws are in place next March, ICANN’s going to have to get a read on whether any community members will feel safe enough to travel — to a windowless room where everyone wears masks two meters apart for 10 hours a day — before going ahead with an expensive in-person meeting.

It seems more likely that F2F meetings will resume first on a regional level before going fully international. Travel narriers within the European Union, for example, are relatively low, so it’s not impossible to imagine small meetings going ahead with only participants from that community.

Endurance also got a lockdown bump in Q2

Endurance International Group added its name to the list of registrars to see a lift from the coronavirus pandemic in the second quarter.

The company, which counts brands including Domain.com, BuyDomains and ResellerClub in its stable, this week upgraded its guidance for Q2.

Endurance said it added roughly 97,000 net subscribers in the quarter, compared to a loss of 13,000 in Q2 2019.

It expects revenue to be $274 million compared to an analyst consensus of $271.25 million, and adjusted EBITDA of about $84 million compared to the $76.3 million reported a year ago.

Cash bookings, perhaps a better indicator of actual sales during the quarter were up 5% year over year at $281.6 million.

Unlike other registrars and registries that have reported a lockdown bump, Endurance suggested that it performed well in spite of, rather than because of, the pandemic. In a statement, CEO Jeffrey Fox said:

As we entered the second quarter, the healthcare and economic uncertainties brought on by COVID-19 were impacting global businesses, including the millions of small businesses we serve. Despite these challenges, we remain focused on delivering value to our customers as they navigate this complex environment.

Endurance will report its Q2 results July 30.

One.com takes big chunk of Danish market with third acquisition this year

European registrar One.com says it is now the biggest player in the Danish market after acquiring rival Larsen Data, which does business as GratisDNS, for an undisclosed sum.

One.com says that the deal means it now sponsors over 400,000 of the 1.3 million extant .dk domains, making it the largest local registrar.

GratisDNS has been around since 2001. It’s not a big player in gTLDs, with only 550 names under management at the last count.

It’s the third announced acquisition by One.com this year. It also bought Dutch hosting provider Hostnet and Norwegian registrar SYSE.

The company also recently said that, like so many other registrars, business has been booming during the coronavirus pandemic as bricks-and-mortar businesses relocate online.

Interestingly, sales were up 55% year-on-year in locked-down Denmark, but only up 7% in quarantine-free Sweden.

One.com also runs the .one gTLD, which has almost 78,000 names in its zone file right now. The registrar has been offering first-year regs for free recently.

GratisDNS had planned to apply for a city gTLD for Copenhagen back in 2012, but failed to secure governmental interest.

Coronavirus helps .nl beat 6 million regs

Dutch ccTLD .nl passed the six-million-domains milestone recently due in part to a surge in registrations during coronavirus lockdown.

According to SIDN, the registry, the six millionth domain was deyogiclub.nl and it was registered June 18.

According to my data, .nl has grown by about 100,000 domains since the start of 2020, and by about 80,000 names in the second quarter.

SIDN said (Google-translated from the original Dutch):

The number of registrations rose so rapidly during the corona crisis in recent months that the 6 million .nl domain registrations were reached much earlier than expected on the basis of the growth development.

The Netherlands entered its strongest period of lockdown March 15 and started easing restrictions in mid-May.

World’s most deluded new gTLD applicant makes coronavirus pitch

Indian new gTLD applicant Nameshop, which still refuses to accept defeat eight years after its application for .idn was rejected, has a new coronavirus-related pitch to try to persuade ICANN to please, please, give it a gTLD.

You may recall that this company applied for .idn in 2012, overlooking the fact that IDN was banned as the reserved three-letter country code for Indonesia.

Ever since the mistake was noticed, Nameshop has been trying to convince ICANN to let it change its string to .internet, which nobody else applied for, requests that have been repeatedly rejected.

The newest Nameshop plea to ICANN (pdf) pitches .internet as a space where IGOs, NGOs and others could build or host web sites dedicated to coronavirus-related activities.

The company says it wants to:

temporarily — for the length of the pandemic crisis — operate the TLD with a request for heightened involvement of ICANN and the ICANN Community in the interest of making use of the DNS technologies, to help Government Agencies and Communities involve, increase and optimize their efforts to manage the Crisis and the ensuing recovery and renewal.

It wants to offer:

a clean new space for IGOs and NGOs to come together in their efforts to communicate, collaborate, generate solutions and expeditiously resolve the health crisis while also enabling organizations to collaborate on reconstruction efforts

The company says it would not make any money on .internet until after coronavirus is solved.

It’s also offering to set aside a quarter of its profits for good causes.

I don’t know whether Nameshop is motivated by a genuine desire to do good — as so many are during the pandemic crisis — or a sneaky strategy to shame ICANN into giving it its string change. Either way, the plan is pure delusion.

The reason ICANN has continually rejected Nameshop’s request for a string change from .idn to .internet for the last eight years is that it would set a precedent allowing any applicant to apply for any nonsense string and later change it to a desirable, uncontested string.

That hasn’t changed.

But while Nameshop has been tilting at windmills, ICANN has been earning interest on its $185,000 application fee, which I’m sure could be put to a far better use if Nameshop simply requested the full refund ICANN has offered.

As the world burns, ICANN gives its richest execs huge pay rises

ICANN has just given some of its highest-ranking and richest execs pay rises of up to 15%, even as the world stands on the brink of a global recession and ICANN is predicting its own budget is on the verge of huge shrinkage.

Its board of directors has approved a set of pay deals that would see the CFO, Xavier Calvez — a man who has, year-after-year, consistently failed to predict fluctuations in the domain name industry with any degree of accuracy — a pay rise of 15%.

John Jeffrey, the general counsel, is getting 3.5%, despite his record of losing legal cases and covering up incidents of sexual harassment among ICANN staff.

Theresa Swinehart, newly-minted senior vice president of the Global Domains Division, is getting a 10% pay increase on top of her base salary, which was $459,123 in FY19.

Not only that, but CEO Göran Marby has been granted broad discretion to increase salaries in the same range for other, non-officer ICANN employees.

Marby himself has been granted his second-half bonus, which amounts to over $100,000.

Based on disclosed salaries for ICANN’s fiscal 2019, we can take a punt on how much money this will cost ICANN — and by “ICANN” I of course mean “you”, the domain-registering public, who pays for every cent of ICANN’s budget.

According to ICANN’s fiscal 2019 form 990, Calvez had “reportable compensation” of $445,964. That’s not including another $62,000 in additional compensation.

For him, a 15% pay raise on the base number is an extra almost $68,000 a year, making his salary (excluding extras) now comfortably over half a million dollars a year.

I’m sure there are many readers of this blog who would consider $68k a nice-enough base salary. But no, that’s his annual raise this year.

This is the guy who, for the better part of a decade, has had to wildly meddle with the revenue half of ICANN’s budget every six months because he couldn’t seem to get a grip on how the new gTLD market was playing out.

He’s also the guy predicting an 8% decline in revenue for ICANN’s next fiscal year due to coronavirus, even as he admits its current revenue has been so far unaffected and most of its biggest funders say everything is going really rather well.

Swinehart is going to get an extra $46,000 a year.

Jeffrey’s raise amounts to an extra $21,000 on top of his $604,648 FY19 base salary.

Remember, he’s the guy in charge of ICANN’s legal department, which is consistently beaten in Independent Review Panel cases, and who is ultimately responsible for the decision to not disclose the existence of the sexual harassment cases that have been filed against ICANN by its own employees in recent years.

The reason these three in particular have been given angry-laughable pay rises is the recently-announced executive reshuffle, which I blogged about earlier this month.

The three of them have had their jobs merged with those of two recent departures — COO Susanna Bennett, who’s leaving for undisclosed reasons shortly, and GDD president Cyrus Namazi, who quit following (but, you know, not necessarily because of) sexual harassment allegations earlier this year.

Combined, Namazi and Bennett were taking $860,000 a year out of the ICANN purse, so ICANN is still saving money by increasing the salaries of their replacements by about $134,000.

But the question has to be asked: how much extra work are these execs doing for this money? How many extra hours a day are they putting in to earn what to many people would be a whole year’s salary?

I expect the answer is: none.

I expect the answer is that ICANN didn’t need the number of six-figure execs it had previously, and now that’s it’s lost a couple of them it’s handing out your cash to those who chose to stick around mainly because it can and it hopes nobody will notice or care.

ICANN’s board resolution says that its decision to raise salaries is based on “independent market data provided by outside expert compensation consultants”.

ICANN has long had a “philosophy” of paying its top people in the “50th to 75th percentile for total cash compensation based on comparable market data for the respective positions”.

It’s never been entirely clear which entities ICANN compares itself to when making these judgements.

Over 660,000 “coronavirus” domains registered

There have been hundreds of thousands of domains that appear to refer to coronavirus registered since the start of the outbreak, but the domain industry reckons only a tiny portion of them have been used maliciously.

Speaking on a recent webinar, ICANN security specialist Sion Lloyd said that up until the end of May, ICANN had found 662,111 domains that at first glance appeared to be related to the pandemic.

ICANN had cast a wide net, parsing the zone files for all of the gTLDs and a handful of ccTLDs for strings such as “covid”, “corona”, “mask”, “quarantine” and “lockdown” in multiple languages.

But it also searched for homoglyph variants, such as replacing the O in Covid with a 0, and this brought in hundreds of thousands of false positives.

The actual number of domains that appear to refer to the virus and its impact is more like 170,000, Lloyd said.

The word “mask” was more commonly found than “corona”, but less frequently than “covid”.

The research was done as part of ICANN’s attempt to provide registries and registrars with data they could use to mitigate abuse, such as the sale of fake vaccines, fraud or phishing attacks.

But ICANN said that after it ran thousands of daily registrations through various public threat lists, it found a few hundred per day were potentially suspicious. At the peak, roughly 10 per day were considered serious enough to refer to registrars. That’s now down to three or four a day, Lloyd said.

His research was backed up by similar studies, albeit using slightly different methodologies and different-sized nets, by registries and registrars.

Tucows’ Graeme Bunton showed data reflecting that the registrar was seeing about 300 coronavirus-related regs per day at its peak in March.

The company had its compliance team manually check each domain, and found that only 0.5% were being used for clearly malicious purposes. The large majority — around 70% — were parked or not resolving, he said.

Jim Galvin from Afilias said that at the March peak the registry was seeing almost 900 coronavirus domains across its 25 gTLDs every week. That had dropped to under 100 by the end of March.

Brian Cimbolic of Public Interest Registry said that there had been 14,700 total registrations by the end of May, with the early April peak seeing over 500 in a single day.

While all this work is an example of ICANN and the industry getting involved to some extent in content regulation, Tucows’ Bunton said that it was an “exceptional” circumstance that was unsustainable and of limited use.

More data and the webinar recording can be found here.

Coronavirus is saving ICANN millions of your money, but will it use the cash wisely?

ICANN is saving millions this year due to the coronavirus-related shift to online-only public meetings.

But it’s thinking about using some of the cash to do things like pay for broadband upgrades and hotel rooms for some of its community volunteers.

During a conference call on Thursday, CFO Xavier Calvez gave out figures suggesting that the switch from in-person to Zoom meetings could save as much as $8 million of your money in 2020.

Calvez said that ICANN meetings usually cost an average of $4 million, but that the virtual ICANN 67 in March only cost the org $1.5 million to $2 million.

Because the face-to-face component was canceled only at the last minute, ICANN had already incurred some costs associated with a physical meeting.

The ICANN 68 meeting, which begins tomorrow, is expected to cost $1 million to $1.5 million, Calvez said.

If we assume that October’s ICANN 69, recently moved from Hamburg to Zoom, will see similar savings, then the total 2020 meetings bill could be down by between $6 million and $8 million.

Calvez added that ICANN’s funding during the coronavirus crisis has so far been holding steady.

No sooner had Calvez finished speaking than a pre-submitted community member question was read out wondering whether some of this cash could be redistributed to participants who are usually travel-subsidized.

Intellectual property expert Jonathan Zuck said that money could be handed out to volunteers in order to pay for things such as broadband upgrades and “finding quiet places to participate in the middle of the night”.

Perhaps surprisingly, Calvez and senior VP of global stakeholder engagement Sally Costerton did not rule this out.

In fact, she said such ideas are currently under active discussion and may be floated for public comment after ICANN 68.

One idea, I suggest, might be to compensate the 200-odd people who tuned into Thursday’s “Q&A” session for their time.

The session was scheduled to be an hour long, but the first 45 minutes were devoted to the 12 members of the ICANN executive team introducing themselves and patting themselves on the back for all the awesome work they’ve been doing.