Demand Media has become the first new gTLD applicant to put its head above the parapet and tell ICANN that its latest batch of Governmental Advisory Committee advice is unworkable.
While its comment on the GAC’s Beijing communique is very diplomatically worded, it’s obvious that Demand reckons most of the “safeguard” advice it contains would be difficult, if not impossible, to implement.
The company has urged ICANN to refuse to adopt the advice, saying:
the spirit and actual letter of the GAC Advice related to these additional safeguards comes in a manner and form that is completely antithetical and contrary to ICANN’s bottom-up, multi-stakeholder, consensus-driven policy development process. Because the proposed safeguards, if implemented, would effectively change how new gTLDs are managed, sold, distributed, registered, operated, and used in the marketplace, the GAC Advice is tantamount to making “top-down,” dictatorial, non-consensus, policy which undermines the entire ICANN model. If ICANN chose to adopt any one of these three safeguards, ICANN itself would lose all legitimacy.
Demand seems to agree with many of the points raised in this DI post from a few weeks ago related to the GAC’s demand that hundreds of new gTLD registries should compel their registrants to stick to data security standards when they handle sensitive financial or healthcare data.
The GAC’s advice is extremely broad here and pays scant attention to the innumerable implementation questions raised. As such, Demand says in its comment (filed by applying subsidiary United TLD Holdco):
United TLD believes applicable laws and recognized industry standards should be developed and implemented by appropriate legislative, law enforcement and industry expert bodies and should not be developed by the registry operator.
It also takes issue with the GAC’s demand for registry operators to “establish a working relationship with the relevant regulatory body including developing a strategy to mitigate abuse.”
The company points out that many TLDs listed in the Beijing communique will have multiple uses, and even if there is a regulatory body for a subsection of registrants, it may not cover all.
For example, should a software engineer (an unregulated profession) have to agree to abide by rules developed for civil engineers when they register a .engineer domain name?
it would be inappropriate, and impossible, to find a “relevant regulatory body” with whom to establish a relationship related to the use of .ENGINEER. Additionally, what if the relevant regulatory body simply declined to work with a registry operator or does not respond to requests for collaboration?
The Demand comment is full of examples of problems such as this.
In broader terms, however, the registrar and applicant is utterly opposed to the GAC’s insistence that “certain” unspecified gTLDs representing regulated sectors should be forced, in effect, to transform into tightly restricted sponsored gTLDs.
The GAC wants these applicants to forge tight links with regulatory and self-regulatory bodies and vet each registrant’s credentials before allowing domains to be registered.
applicants, including United TLD, submitted their new gTLD applications believing that that they would be operating, managing and distributing generic TLDs. These three Safeguards completely change the nature of the new TLDs from being generic and widely available, to being “sponsored” TLDs restricted only to those individuals who must prove their status or credentials entitling them to register domain names with certain extensions. These three Safeguards are patently adverse to the core purpose of the new gTLD program and ICANN’s mission generally which is to promote consumer choice and competition.
While Demand is the first application to slam the GAC advice as a whole (a few others have submitted preliminary comments on specific subsets of advice), I’m certain it won’t be the last.
That said, .secure applicant Artemis Internet submitted what is possibly the most amusing example of “sucking up” I’ve ever seen in an ICANN public comment period.
The company actually requests to be added to the list of strings covered by the GAC advice on the grounds that its application was so gosh-darn wonderful it already planned to do all that stuff anyway.
I expect, by the time the comment period closes next Tuesday the prevailing mood from applicants will be more Demand and less Artemis.
A lawyer apparently representing a rival new gTLD applicant has questioned ICANN’s background screening processes after Demand Media managed to get a pass despite its history of cybersquatting.
Jeffrey Stoler, now with the law firm Holland & Knight, last July said ICANN should ban Demand Media and its partner Donuts from applying for new gTLDs under the rules of the program.
This month, he’s written to ICANN, the GAC and the US government to express “alarm” that both companies have managed to pass their background checks. Stoler wrote:
This alarm arises from the overwhelming evidence, as referenced below, that: (a) Donuts is a “front” for Demand Media, Inc. (“Demand Media”), and (b) Demand Media’s status as precisely the kind of proven cybersquatter that ICANN’s rules were designed to weed-out of the gTLD application process.
How ICANN’s background screening panel could — in the teeth of that evidence — approve the continued participation of Donuts in the new gTLD program (the “Donuts Decision”) requires justification. This letter formally requests that ICANN, pursuant to its obligations of accountability and transparency, provide an explanation of how, and on what basis, the Donuts Decision was made.
Both Donuts and Demand Media responded with anger and disdain.
CEO Paul Stahura told ICANN that Donuts has discovered that Stoler, who has still not disclosed which client he’s representing in this matter, is actually on the payroll of a rival.
Donuts suspected his client was a competing applicant seeking to gain commercial advantage, and we have since confirmed this in fact is the case.
Not only do the letters intentionally misrepresent facts, they are a preposterous, extra-procedural tactic that is a regrettable waste of time and community resources.
David Panos, director of Demand’s applying subsidiary, United TLD Holdco, was similarly dismissive:
Clearly, Mr. Stoler’s client has a substantial commercial interest in the new gTLD program and is seeking to eliminate its competition by mischaracterizing the relationships of other competing applicants and by restating factually inaccurate statements
What’s notable from both the Stahura and Panos letters is that neither company actually addresses Stoler’s allegations directly, resorting instead to mainly fudging and ad hominem arguments.
Stoler probably is seeking a competitive advantage for his mystery client, and his claims about Donuts being a “front” for Demand do come across as a bit of a stretch even for a lawyer, but that doesn’t mean that all of his arguments are wrong.
ICANN’s Applicant Guidebook for the new gTLD program is pretty clear: if you’ve had more than three adverse UDRP decisions, with at least one in the last four years, you’re “automatically disqualified” from the program.
Demand Media, as Stoler alleges and the public record supports, has lost about three dozen UDRP cases through subsidiaries such as Demand Domains, the most recent of which was in 2011.
So how did Demand pass its ICANN background screening?
The Guidebook does say “exceptional circumstances” are enough to get an applicant off the hook, but it’s hard to see how that would apply to Demand’s over 30 UDRP losses.
And Demand doesn’t want to talk about it.
None of its responses to ICANN that have been published to date even attempt to say why Stoler is wrong, and the company declined to comment when we asked for clarification today.
Donuts, which is using Demand as its back-end registry and has given the company the right to acquire interests in over 100 of its new gTLDs (should they be approved) didn’t want to comment either.
Which, some might say, plays right into Stoler’s hands.
If there’s a simple, straightforward explanation for why the background screening rules apparently didn’t apply to Demand Media, is it unreasonable to ask what that explanation is?
Are the synergies between domain name registrars and content farms not all they were cracked up to be?
That’s a question emerging from last night’s news that Demand Media is planning to spin off its domains business, which includes number-two registrar eNom, into a separate public company.
The company, reporting its fourth-quarter earnings, said that it’s looking into the possibility of breaking up content and domains into two separately-owned businesses.
The new domain company would comprise eNom (wholesale) and Name.com (retail) on the registrar side, any new gTLDs Demand manages to win, the formative registry back-end business, and its stake in NameJet.
“We believe that a separation of the two independent companies will better position each business to pursue their increasingly diverse strategic priorities and opportunities,” CEO Richard Rosenblatt told analysts.
The spin-off would have revenue of over $150 million a year and margins of almost 20%, chief financial officer Mel Tang added.
Rosenblatt said new gTLDs will be “transformative” for the domain industry, saying that Google, Amazon and dot-brands will help grow consumer awareness of the world beyond .com.
Demand has filed 26 new gTLD applications of its own, and has 50-50 rights to 107 more with Donuts.
Previously, Demand has stated in regulatory filings that it used data gathered from domain name lookups to create ideas for the content farm side of its business. It’s not clear if that would continue after a split.
Demand Media executive vice president Taryn Naidu said newly acquired registrar Name.com plans to carry as many TLDs as possible, but urged new gTLD applicants to start distribution talks with registrars as soon as possible.
“It’s going to be challenging to offer all of them,” Naidu told DI today. “We’re asking registries to come talk to Name.com early and often to make sure they get the shelf space.”
“They have to come with a plan, and make sure they’re ready to go to market,” he said.
Demand Media announced the acquisition of Name.com earlier today. The deal, for an undisclosed amount, will see the 30-strong Denver, Colorado-based company join number two registrar eNom in the Demand stable.
Name.com is almost 10 years old and has almost 1.5 million domains under management, the majority of them in gTLDs. eNom has over 12 million domains spread across scores of registrar accreditations.
Naidu said that the forthcoming new gTLD market was a major reason for the deal.
While eNom is primarily a channel player, Name.com is all about the customer-facing retail side of the registrar business.
Owning Name.com could give Demand Media a faster way to market the dozens of new gTLDs that it has itself applied for, as well as the 300 it has partnered with uber-applicant Donuts on.
Naidu declined to comment on details of the Donuts relationship, but I’d be quite surprised if a commitment to carry its TLDs is not part of the deal.
He also said he’s not too worried about alienating eNom’s existing reseller channel, pointing out that main retail rivals such as Go Daddy and Tucows also have extensive reseller networks.
“In many regards having access to a retail player like this will help us serve our resellers by better understanding their needs,” he said.
Long-time Demand Media software architect Chris Ambler claims he was fired when his own company, Image Online Design, sued ICANN over the .web gTLD.
Ambler says he was canned by Demand October 26, eight days after IOD sued ICANN over its unsuccessful 2000-round application for .web.
He told DI on Friday that he believes he was fired unfairly and illegally and, after negotiations with Demand Media broke down last week, has retained a lawyer to explore his options for redress.
“You can’t say you’re firing somebody because they’re suing somebody,” he said. “There are legal options open to me and I am pursuing them.”
Ambler says he was hired by eNom’s then-CEO Paul Stahura in 2003 as its chief software strategist, a role in which he took a lead role in creating NameJet’s proprietary domain name drop-catching software.
When the company was acquired by Demand Media, he took the role of senior software architect.
But in the 1990s, as founder of IOD, he ran .web in an alternative DNS root system. His application to move the gTLD into the official ICANN root in 2000 was not approved.
In October he sued ICANN claiming it was “improper, unlawful and inequitable” for ICANN to solicit more applications for .web while IOD’s bid was still “pending” and unrejected.
While Demand Media is not directly applying for .web, it has an extremely tight relationship with Donuts — the portfolio gTLD applicant founded by Stahura and other former Demand executives — which is.
Demand is Donuts’ back-end registry provider and is believed to have an interest in Covered TLD LLC, the parent company of about 100 of Donuts’ new gTLD applicants, including .web.
Ambler’s contract with Demand Media acknowledged his IOD work and allowed him to pursue it, he claims.
“They’ve known for the past ten years that I was working on this,” he said.
A Demand Media spokesperson said the company does not comment on legal matters.