Demand Media has confirmed its plan to spin off its domain name business into a separate company.
The new firm will be called Rightside. As the (rather good) name suggests, it will include the company’s interests in over 100 new gTLD applications and registries.
As well as United TLD, it will also include eNom, Name.com and Demand’s stake in NameJet.
Rightside will be based in Kirkland, Washington, and headed by new appointed CEO Taryn Naidu, who’s been running Demand’s domain unit internally for the last couple of years.
Demand Media CEO and co-founder Richard Rosenblatt has resigned and will be replaced by co-founder Shawn Colo, the company has announced.
In a statement filed with the Securities and Exchange Commission today, no reason was given for his departure.
Colo will take the CEO spot at the end of the month, while director James Quandt takes over as chairman immediately.
The company also said last night that it is still planning to spin off its domain name business, but “is currently in the process of evaluating the timing for completing the separation.”
This implies the plan, which was announced in February, has been delayed.
Demand Media’s domains business includes eNom, dozens of smaller registrars, and United TLD, which has applied for a portfolio of new gTLDs.
DomainsBot, which powers the name suggestion feature on most major registrar storefronts, has unveiled a significant update designed to make selling new gTLD domains easier.
The company reckons its new technology will soon be promoted from a follow-up sales tool, rolled out if a customer’s first choice of domain is not available, to “replacing the availability check” entirely.
“The idea is to be at the heart of the process of promoting new gTLDs,” CEO Emiliano Pasqualetti told DI.
The idea is pretty straightforward: a customer types a word into a search box, the service suggests available domain names with conceptually similar TLDs.
While it may not be perfect today, it was pretty good at finding appropriate TLDs for the keywords I tested.
And Pasqualetti said that under the hood is a machine learning engine that will make its suggestions increasingly more relevant as new gTLD domains start to go on sale.
“It tries to predict which TLD we need to show to each individual using a combination of their query, their IP address and as much history as we can legally collect in partnership with registrars,” Pasqualetti said.
If, for example, customers based in London show a tendency to buy lots of .london domains but hardly ever .rome, Londoners will start to see .london feature prominently on their registrar’s home page.
“We learn from each registrar what people search for and what people end up buying,” he said.
Some registrars may start using the software in their pre-registration portals, increasing relevance before anything actually goes on sale, he said.
My feeling is that this technology could play a big role in which new gTLDs live or die, depending on how it is implemented and by which registrars.
Today, DomainsBot powers the suggestion engine for the likes of Go Daddy, eNom, Tucows and Moniker. Pasqualetti reckons about 10% of all the domains being sold are sold via its suggestions.
Judging by today’s press release, registrars are already starting to implement the new API. Melbourne IT, Tucows and eNom are all quoted, but Pasqualetti declined to specify precisely how they will use the service.
It’s been widely speculated that Go Daddy plans to deploy an automated “pay for placement” system — think AdSense for domains — to determine which TLDs get prominence on its storefront.
Pasqualetti said that’s the complete opposite of what DomainsBot is offering.
“We’re relevance for placement,” he said. “We want to give every TLD a chance to thrive, as long as they’re relevant for the end user.”
According to Pasqualetti (and most other people I’ve been talking to recently) there are a lot of new gTLD applicants still struggling to figure out how to market their TLDs via registrars.
There are about 550 “commercially interesting” applied-for gTLD strings in the DomainsBot system right now, he said. New gTLD applicants may want to make sure they’re one of them.
Next week, the company will reveal more details about how it plans to work with new gTLD registries specifically.
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.