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ICANN probing Donuts and Tucows over anti-Jewish web site

Kevin Murphy, November 16, 2018, Domain Policy

ICANN is investigating Tucows and Donuts over a web site that hosts antisemitic, white supremacist content.

CEO Goran Marby said in a letter published this week that he has referred a complaint about the web site judas.watch to ICANN’s Compliance department.

The web site in question says it is dedicated to documenting “anti-White traitors, agitators and subversives & highlighting Jewish influence.” It appears to be half database, half blog.

Its method of “highlighting Jewish influence” is possibly the most disturbing part — the site tags people it believes are Jewish with a yellow Star of David, mimicking the way the Nazis identified Jews during the Holocaust.

The site is quite liberal in how it applies these stars, going so far as to label UK Labour Party leader Jeremy Corbyn, who has been fighting off his own allegations of antisemitism for years, as Jewish.

Over 1,600 people and organizations are currently listed. Posts there also seem keen to highlight its subjects’ sexual orientation.

As far as I can tell, there are no direct calls to violence on the site, and the level of what you might call “hate speech” is pretty mild. It publishes the social media handles of its subjects, but I could not find any physical addresses or phone numbers.

The complaint to ICANN (pdf) came from WerteInitiative (“Values Initiative”), which appears to be a small, relatively new Jewish civil society group based in Germany.

WerteInitiative said judas.watch “poses a direct threat to the named persons with unforeseeable consequences for them, and especially so for the identified Jews”.

“We want this site banned from the Internet and ask for your help in doing so: can you help us to find out who behind this page is, so we can get it banned in Germany?” the letter concludes.

The domain has been behind Whois privacy since it was registered in 2014, so the registrant’s name was not public even prior to GDPR.

Marby, in response (pdf), says the complaint “raises a serious issue”.

While he goes to some lengths to explain that ICANN does not have the authority, contractual or otherwise, to demand the suspension of any domain name, he said he has nevertheless referred the complaint to Compliance.

Compliance has already reached out to the organization for more information, Marby said.

He also encouraged WerteInitiative to talk to .watch registry Donuts and judas.watch registrar eNom (owned by Tucows), as well as the hosting company, to see if that could help resolve the issue.

While ICANN is always adamant that it does not venture into content regulation, it strikes me that this exchange shows just what a tightrope it walks.

It comes against the backdrop of controversy over the suspension by GoDaddy of the domain Gab.com, a Twitter clone largely hosting far-right voices that have been banned from other social media platforms.

Namecheap to bring millions of domains in-house next week

Kevin Murphy, January 5, 2018, Domain Registrars

Namecheap is finally bringing its customer base over to its own ICANN accreditation.

The registrar will next week accept transfer of an estimated 3.2 million .com and .net domains from Enom, following a court ruling forcing Enom owner Tucows to let go of the names.

The migration will happen from January 8 to January 12, Namecheap said in a blog post today.

Namecheap is one of the largest registrars in the industry, but historically it mostly acted as an Enom reseller. Every domain it sold showed up in official reports as an Enom sale.

While it’s been using its own ICANN accreditation to sell gTLD names since around 2015 — and has around four million names on its own credentials — it still had a substantial portion of its customer base on the Enom ticker.

After the two companies’ arrangement came to an end, and Enom was acquired by Tucows, Namecheap decided to also consolidate its .com/.net names under its own accreditation.

After Tucows balked at a bulk transfer, Namecheap sued, and a court ruled in December that Tucows must consent to the transfer.

Now, Namecheap says all .com and .net names registered before January 2017 or transferred in before November 2017 will be migrated.

There may be some downtime as the transition goes through, the company warned.

Tucows revenue rockets after Enom buy

Kevin Murphy, August 10, 2017, Domain Registrars

Tucows saw its revenue from domain names more than double in the second quarter, following the acquisition of rival Enom.

The company this week reported domain services revenue for the three months ending June 30 of $62.8 million, compared to $28.4 million a year ago.

That was part of overall growth of 78%, with revenue rising from $47.2 million in 2016 to $84.2 million this year.

Net income for the quarter was up 29% at $5.2 million.

Enom, which Tucows bought from Rightside for $76.7 million earlier this year, now accounts for a little under half of Tucows’ wholesale domains business, the larger portion going through its OpenSRS channel.

Sales from Tucows’ premium portfolio rose to $968,000 from $885,000 a year ago.

Its retail business, Hover, did $7.6 million of revenue, up from $3.6 million.

Activist investor says eNom was sold too cheap

Kevin Murphy, February 20, 2017, Domain Registries

J Carlo Cannell, the activist investor who has been circling Rightside for the last year or so, was unimpressed with the company’s recent sale of eNom to Tucows.

In a letter published as a Securities and Exchange Commission filing last week, Cannell announced that he has started up a support group for fellow “concerned” investors.

In the distinctly loveless Valentine’s Day missive, Cannell called for Rightside to be acquired, go private or issue a big dividend to investors, and said he intends to campaign to have the board of directors replaced.

On the eNom sale, Cannell wrote that the $76.7 million deal “marks a step in the right direction” for the company, but that he was “not satisfied” with the price or the $4 million legal fees accrued. He wrote:

Conversations with management suggest that the Company took only two months to evaluate and close the transaction. Perhaps if they had been more patient and diligent, shareholders would have enjoyed more than the 0.5x 2016 revenues which they received in this “shotgun sale”.

This price was a fraction of Tucows’ own valuation of 2.6x 2016 estimated revenue. For the two trading sessions following the eNom transaction, NAME traded up 10% while TCX was up 32%, suggesting that investors believe it was a better deal for TCX shareholders than NAME shareholders.

The deal was described at the time by Tucows’ CEO Elliot Noss as an “individual opportunistic transaction”.

Noss later told analysts that the eNom business was floundering, “a flat, potentially even slightly negative-growth business”.

Cannell said last week he has formed Save NAME Group, named after Rightside’s ticker symbol, as a means to exert pressure on the board.

He said it is currently “difficult to justify” the company remaining publicly listed, and that the “sale of the entire company” or a “special and substantial dividend” could help appease shareholders.

He said Rightside agreed last August to let him name a new director, but has dragged its feet approving his suggestion, adding:

SNG intends to become more active and vocal in its efforts to force change at NAME. SNG has compiled a slate of qualified candidates. The names and identity of these candidates shall be disclosed periodically together with other neutral and reliable facts to support the contention of SNG that some or all of the board of NAME needs to be replaced.

Cannell, who owns about 9% of Rightside, first emerged as a critic of the company a year ago.

At that time, he called for the company to ditch its “garbage” new gTLD registries in favor of a focus on its higher-margin eNom business.

He was supported by Uniregistry CEO Frank Schilling, then also a Rightside investor in addition to a competitor.

Tucows says eNom may be shrinking as Melbourne IT drives 2016 growth

Kevin Murphy, February 8, 2017, Domain Registrars

Tucows yesterday reported an 11% increase in revenue for 2016, driven partly by an acquisition, but warned that its more recent acquisition, eNom, may be shrinking.

The company reported revenue for 2016 of $189.8 million, up from $171 million in 2015. Net income was up 41% at $16 million.

For the fourth quarter, revenue was up 9% year-on-year at $48.8 million. Net income was down 9% at $2.8 million.

In a conference call, executives linked some of the growth to the April 2016 acquisition of Melbourne IT’s reseller business, which added 1.6 million domains to Tucows’ DUM.

While Tucows also operates its Ting mobile phone service, the majority of its revenue still comes from domains and related services.

In the fourth quarter, revenue was $30 million for this segment. Of that, $23.1 million came from domains sold via its wholesale network and $3.8 million came from Hover, its retail channel.

CEO Elliot Noss noted that the acquisition of the eNom wholesale registrar business from Rightside last month made Tucows easily the second-largest registrar after GoDaddy, but made eNom sound like a neglected business.

“The eNom business is a flat, potentially even slightly negative-growth business in terms of gross margin dollars,” he told analysts.

eNom’s channel skews more towards European and North American web hosting companies, which are a growth challenge, he said. He added:

We acquired a mature retail business and associated customers which for the past few years has been more about maintaining and servicing eNom’s existing customers as opposed to growth. It has not been actively promoted and as a result has a flat to declining trajectory. It’s something we don’t intend to change in the short-term, but as we look under the hood and get a better sense of the platform as we will with all of the operations, the long-term plan might be different.

The acquisition was “overwhelmingly about generating scale and realizing cost efficiencies”, Noss said.

Tucows paid $83.5 million for eNom, which has about $155 million in annual revenue and is expected to generate about $20 million in EBITDA per year after efficiencies are realized.