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ICANN terminates 450 drop-catch registrars

Kevin Murphy, November 6, 2017, Domain Registrars

Almost 450 registrars have lost their ICANN accreditations in recent days, fulfilling predictions of a downturn in the domain name drop-catch market.

By my reckoning, 448 registrars have been terminated in the last week, all of them apparently shells operated by Pheenix, one of the big three drop-catching firms.

Basically, Pheenix has dumped about 90% of its portfolio of accreditations, about 300 of which are less than a year old.

It also means ICANN has lost about 15% of its fee-paying registrars.

Pheenix has saved itself at least $1.2 million in ICANN’s fixed accreditation fees, not including the variable and transaction-based fees.

It has about 50 registrars left in its stable.

The terminated registrars are all either numbered LLCs — “Everest [1-100] LLC” for example — or named after random historical or fictional characters or magic swords.

The move is not unexpected. ICANN predicted it would lose 750 registrars when it compiled its fiscal 2018 budget.

VP Cyrus Namazi said back in July that the drop-catching market is not big enough to support the many hundreds of shell registrars that Pheenix, along with rivals SnapNames/Namejet and DropCatch.com, have created over the last few years.

The downturn, Namazi said back then, is material to ICANN’s budget. I estimated at the time that roughly two thirds of ICANN’s accredited registrar base belonged to the three main drop-catch firms.

Another theory doing the rounds, after Domain Name Wire spotted a Verisign patent filing covering a system for detecting and mitigating “registrar collusion” in the space, is that Verisign is due to shake up the .com drop-catch market with some kind of centralized service.

ICANN reckoned it would start losing registrars in October at a rate of about 250 per quarter, which seems to be playing out as predicted, so the purge has likely only just begun.

ICANN expects to lose 750 registrars in the next year

ICANN is predicting that about 750 accredited registrars will close over the next 12 months due to the over-saturation of the drop-catching market.

ICANN VP Cyrus Namazi made the estimate while explaining ICANN’s fiscal 2018 budget, which is where the projection originated, at the organization’s public meeting in South Africa last week.

He said that ICANN ended its fiscal 2017 last week with 2,989 accredited registrars, but that ICANN expects to lose about 250 per quarter starting from October until this time next year.

These almost 3,000 registrars belong to about 400 registrar families, he said.

By my estimate, roughly two thirds of the registrars are shell accreditations under the ownership of just three companies — Web.com (Namejet and SnapNames), Pheenix, and TurnCommerce (DropCatch.com).

These companies lay out millions of dollars on accreditation fees in order to game ICANN rules and get more connections to registries — mainly Verisign’s .com.

More connections gives them a greater chance of quickly registering potentially valuable domains milliseconds after they are deleted. Drop-catching, in other words.

But Namazi indicated that ICANN’s cautious “best estimate” is that there’s not enough good stuff dropping to justify the number of accreditations these three companies own.

“With the model we have, I believe at the moment the total available market for these sought-after domains that these multifamily registrars are after is not able to withstand the thousands of accreditations that are there,” he said. “Each accreditation costs quite a bit of money.”

Having a registrar accreditation costs $4,000 a year, not including ICANN’s variable and transaction fees.

“We think the market has probably gone beyond what the available market is,” he said.

He cautioned that the situation was “fluid” and that ICANN was keeping an eye on it because these accreditations fees have become material to its budget in the last few years.

If the three drop-catchers do start dumping registrars, it would reveal an extremely short shelf life for their accreditations.

Pheenix upped its registrar count by 300 and DropCatch added 500 to its already huge stable as recently as December 2016.

Pheenix adds 300 more registrars to drop-catch arsenal

Kevin Murphy, December 16, 2016, Domain Services

The domain drop-catching arms race is heating up, with budget player Pheenix this week acquiring 300 more registrar accreditations from ICANN.

According to DI records, the company now has almost 500 registrar accreditations in its family.

More accreditations means more registry connections with which to attempt to acquire expired domains as they return to the available pool.

It also means that Pheenix’s dropnet (a word I just made up that sounds a bit like “botnet” in a pathetic attempt to coin a term for once in my career) is now a bit bigger than that of Web.com, the registrar pool behind Namejet and SnapNames.

It’s still a long way behind TurnCommerce, owner of DropCatch, which two weeks ago added a whopping 500 new accreditations, bringing its total to over 1,250.

An extra 300 accreditations would have cost Pheenix over $1 million in up-front ICANN fees and will incur ongoing fixed annual fees in excess of $1.2 million.

DropCatch spends millions to buy FIVE HUNDRED more registrars

Kevin Murphy, December 2, 2016, Domain Registrars

Domain drop-catching service DropCatch.com has added five hundred new registrar accreditations to its stable over the last few days.

The additions give the company a total accreditation count of at least 1,252, according to DI data.

That means about 43% of all ICANN-accredited registrars are now controlled by just one company.

DropCatch is owned by TurnCommerce, which is also parent of registrar NameBright and premium sales site HugeDomains.

Because gTLD registries rate-limit attempts to register names, drop-catchers such as DropCatch find a good way to increase their chances of registering expiring names is to own as many registrars as possible.

DropCatch is in an arms race here with Web.com, owner of SnapNames and half-owner of NameJet, which has about 500 registrars.

The new accreditations would have cost DropCatch $1.75 million in ICANN application fees alone. They will add $2 million a year to its running costs in terms of extra fixed fees.

That’s not counting the cost of creating 500 brand new LLC companies — named in the new batch DropCatch.com [number] LLC where the number ranges from 1046 to 1545 — each of which is there purely for the purpose of owning the accreditation.

In total, the company is now paying ICANN fixed annual fees in excess of $5 million, not counting its variable fees and per-transaction fees.

Because the ICANN variable fee is split evenly between all registrars (with some exceptions I don’t think apply to DropCatch), I believe the addition of 500 new registrars means all the other registrars will be paying less in variable fees.

There’s clearly money to be made in expiring names.

One company now owns almost a third of all registrars

Kevin Murphy, December 30, 2014, Domain Registrars

TurnCommerce acquired another 299 registrar accreditations from ICANN over Christmas week.

The company, which is behind domain properties including DropCatch.com, now has at least 452 registrars in its stable. That’s over 31% of the 1,456 total currently reported by Internic.

Each of the new accreditations is named “DropCatch”, followed by a number from 446 to 751. Each has a matching .com domain as its nominal base of operations and an associated LLC shell company.

At $4,000 a year for the base accreditation fee, TurnCommerce must be spending close to $2 million a year in ICANN fees alone.

Companies in the drop-catching business acquire large numbers of registrars in order to control more batches of connections with which to spam gTLD registries with “add” requests when potentially valuable domains expire and are deleted.

With almost a third of all accredited registrars now operating under the same control, one imagines TurnCommerce’s chances of securing the names it wants have been significantly improved.

As well as DropCatch, TurnCommerce runs retail registrar NameBright and premium sales site HugeDomains. It has plans to launch additional services at Expire.com and PremiumDomains.com shortly.

Its latest crop of registrars means ICANN has accredited over 2,200 companies since the gTLD registrar market was opened for competition 15 year ago, though many have allowed their contracts to lapse or, less frequently, have been terminated by ICANN compliance efforts.