Latest news of the domain name industry

Recent Posts

New gTLD revenue projections revealed in leaked Famous Four presentation

Kevin Murphy, August 1, 2013, Domain Registries

Famous Four Media expects to make an average of almost $30 million revenue in year one from each of the new gTLDs it secures.

That’s according to a PowerPoint presentation (pdf), written for potential investors, that was provided by an anonymous source (I suspect not a fan of the company) to DI this week.

According to the presentation, “potential year 1 revenues for an average Registry” could amount to $28.4 million, the vast majority of which would come from sunrise, landrush and premium domain sales.

The presentation, dated June 2013, was prepared by Domain Venture Partners, the immediate parent of the 60 shell companies that Famous Four is using to apply for its 60 gTLDs.

The company was unable to provide an executive to discuss this story until August 14.

But according to the PowerPoint, the Domain Venture Partners II fund is an investment vehicle set up to “bridge the gap” in Famous Four’s funding requirements:

Domain Venture Partners II shall provide a unique structured regulated investment opportunity to participate in the new gTLD programme to provide secured fixed annual returns along with additional venture type returns at a time in the process where most of the major risks have been removed.

DVP is looking to raise up to $400 million, having raised £48.3 million ($73.2 million) in 2011 via the Domain Venture Partners I fund, it says. The current round opened in March and is expected to close in November.

Famous Four has applied for 60 gTLDs — mostly highly sought-after strings such as .poker, .music, .shop, .search and .buy — 10 of which were initially uncontested.

According to the presentation, landrush period auctions would account for about a third of year-one revenue in each gTLD: $9.7 million. That’s based on selling 45,697 domains for an average price of $213.34.

Revenue from trademark owners is the second-largest chunk. An average sunrise period could raise $6.9 million, assuming 39,679 domains at an average of $173.5 each, according to the PowerPoint.

Sales of regular domains during the first first year of general availability could raise $4.1 million, based on 225,759 registrations at $18.47 apiece, the presentation says.

Here’s the full slide, one of 33 in the deck:

Domain Venture Partners II presentation

The presentation says that the projections are “based on historical data points established by the existing operational gTLD Registries”, adding:

The figures are averages and therefore would represent projections for a standard gTLD Registry. Potential year 1 revenues for specific Registries may be below or above this average.

Some of the numbers strike me as optimistic. While the likes of .asia and .mobi may have seen these registration volumes due to the novelty and scarcity of new gTLD namespaces, my feeling is that those days are over.

The new gTLD program is likely to see scores of overlapping sunrise and landrush periods; it’s difficult to see registries benefiting from the same focus and excitement as their predecessors.

There’s a limited amount of domainer capital to spread around landrush sales and trademark owners are likely to be much more selective about where they defensively register their brands in a world of 1,300 gTLDs.

That said, Famous Four has applied for some of the nicest strings in the round so I may be wrong.

An appendix to the presentation discussing the first DVP funding round says that while Famous Four hopes to sign contracts for 30 new gTLDs, it has only secured 32% of the money it is looking for.

Securing investment appears to have been tough due in part to the complexity of the ICANN process and investors’ lack of familiarity with it, which looks like risk. It also says:

The costs associated with applications in the new gTLD have increased, the financial strength of most applicants has been reduced and the knowledge barrier to entry is too high to interest large standard venture investors.

Famous Four’s business model is based around consolidation and keeping costs down, according to the pitch. For the most part, this is due to the economies of scale of running a large number of TLDs.

With Neustar as its back-end provider, Famous Four says it has found the “lowest fees in the industry”.

But the model also involves keeping tax to a minimum. Famous Four is based in Gibraltar, where it says it will pay no tax on domain sales:

FFM is operating in a fiscal environment that has multiple advantages over others in the industry. Domain names sales are treated as royalty income which is currently zero rated in Gibraltar. This would result in an instant bottom line gain.

There’s a strong suggestion in the presentation that DVPII is not limiting its ambitions to the new gTLDs it has applied for.

It also seems to discuss acquiring other applicants and ccTLD rights, then bringing them into the Famous Four fold, but the plan was not completely clear to me and executives were unavailable for clarification.

100th new gTLD application withdrawn

Former London mayor Ken Livingstone, rejoice!

L’Oreal has withdrawn its gTLD application for .redken, a dot-brand for one of its hair care products that I am reliably informed is not named after the balding socialist politician.

It’s the seventh of the company’s 14 new gTLD bids to be withdrawn.

Also today, it emerged that portfolio applicant Famous Four Media has withdrawn its application for .health, the only one of the four bids for that string yet to pass Initial Evaluation.

The string is one of the most controversial, being the subject of multiple very expensive to defend objections as well as strong Governmental Advisory Committee advice.

As of today, 100 new gTLD applications have been withdrawn, 53 of which were for uncontested strings.

TLDH and Famous Four ink new gTLD revenue sharing deal

New gTLD portfolio applicants Top Level Domain Holdings and Famous Four Media did in fact make a deal to resolve three contention sets, as suspected.

TLDH has just confirmed that it withdrew its applications for .science and .review in exchange for Famous Four withdrawing its application for .fit.

But the deal also includes a revenue-sharing component — TLDH will get a cut of whatever revenue Famous Four makes selling .review domain names after it goes live.

All three of the gTLDs in question were in two-way contention sets between the two companies, as we reported yesterday.

TLDH gave the following update:

TLDH now has interests in 23 uncontested applications, including 15 wholly/majority owned applications, 6 where it is acting as the registry service provider for client applications, 1 equal joint venture, and 1 where it will receive a minority revenue share. Of the remaining 63 applications which TLDH either wholly-owns, is a joint-venture partner, or is acting as the registry service provider, 7 are in contention with a single other applicant, 17 with two other applicants and 39 are in contention with three or more applicants.

While the dollar amounts concerned were not disclosed, I can’t help but feel TLDH got a good deal with .review.

For the cost of an ICANN application fee*, much of which was recouped in refunds, it seems to be getting an ongoing revenue stream with no ongoing costs and little future risk.

* Of course, in TLDH’s case it has also been burning cash for the best part of five years waiting for new gTLDs to come to life, but you get the point.

Famous Four wins two new gTLD contention sets

Four new gTLD applications were withdrawn overnight, resolving three contention sets.

Top Level Domain holdings has pulled its bids for .review and .science, in both cases leaving subsidiaries of portfolio applicant Famous Four Media as the only remaining applicant.

Meanwhile, Famous Four withdrew its .fit application, leaving TLDH as the only remaining applicant.

Buyouts? It seems possible. The .review application passed its Initial Evaluation a month ago, so the ICANN refund due to TLDH will have been dramatically reduced.

As a publicly traded company, TLDH is likely to issue a statement at some point explaining the current state of its applications.

But one of the side effects of ICANN’s preference for private deals is that we won’t always know when two or more companies privately resolve their contention sets.

There are at least two other contention sets where I have very good reasons to believe that deals have already been done, partially resolving the set, but nothing has yet been disclosed.

Also overnight, L’Oreal’s application for .garnier, a dot-brand, was withdrawn. It’s the fifth, and probably not the last, of L’Oreal’s 14 original new gTLD application to be dropped.

Governmental Advisory Committee advice has been leveled against .fit and .review, but not .science.

UPDATE: The original version of this story erroneously reported that TLDH, rather than Famous Four, had withdrawn its .fit application. This has now been corrected. Apologies for the error.

Fight over new sports gTLDs gets real ugly

Kevin Murphy, January 10, 2013, Domain Registries

The battle for contested new gTLDs .rugby and .basketball is turning nasty.

Roar Domains, a New Zealand marketing firm whose gTLD applications are backed by the official international bodies for both sports, is promising to pull out all the stops to kill off its competition.

The company, which is partnered with Minds + Machines on both bids, has told rival portfolio applicant Donuts that it will attack its applications for the two TLDs on at least three fronts.

Notably, Roar wants Donuts disqualified from the entire new gTLD program, and plans to lobby to have Donuts fail its background check.

The company told Donuts last month:

while we have no desire to join the chorus of voices speaking out against Donuts, it is incumbent on us to pursue the automatic disqualification of Applicant Guidebook Section 1.2.1, and every opposition and objection process available to us.

Applicant Guidebook section 1.2.1 deals with background checks.

Donuts came under more scrutiny than most on these grounds during the new gTLDs public comment period last year due to its co-founders being involved at the sharp end of domain investment over the last decade.

Demand Media and eNom, where founder Paul Stahura was a senior executive, have lost many UDRP cases over the years.

A mystery lawyer who refuses to disclose his clients started pursuing Donuts last August, saying the company is “unsuited and ineligible to participate in the new gTLD program.”

Separate (pseudonymous?) public comments fingered a former Donuts director for allegedly cybersquatting the Olympics and Disney.

While Roar has not claimed responsibility for these specific previous attacks, it certainly seems to be planning something similar in future.

In addition, Roar and International Rugby Board, which supports Roar’s application for .rugby, say they plan to official objections with ICANN about rival .rugby bids.

The IRB told Donuts, in a letter shortly before Christmas:

As the global representative of the sport and the only applicant vested with the trust and representation of the rugby community, we are unquestionably the rightful steward of .RUGBY.

Without the support of the global rugby community your commercialization efforts for .RUGBY will be thwarted. We are also preparing an objection to file against your application in accordance with ICANN rules to which you will be required to dedicate resources to formulate a response.

Roar and the IRB are also both lobbying members of ICANN’s Governmental Advisory Committee, which has the power to file potentially decisive GAC Advice against any application.

Roar told Donuts recently:

Roar serves as the voice and arm for FIBA [the International Basketball Federation] and IRB in the New gTLD area. We are pleased to have obtained four Early Warnings on behalf of our applications, and fully expect the GAC process to be completed to GAC Advice.

The Early Warnings against the two other .rugby applicants were filed by the UK government — the only warnings it filed — while Greece warned the two non-Roar .basketball applicants.

Roar is also involved with the International Basketball Federation (FIBA) on its .basketball bid.

While commercial interests obviously play a huge role, there’s a philosophical disagreement at the heart of these fights that could be encapsulated in the following question:

Should new gTLDs only be delegated to companies and organizations most closely affiliated with those strings?

In response to the UK’s Early Warning, Donut has written to UK GAC representative Mark Carvell asking for face-to-face talks and making the case for a “neutral” registry provider for .rugby.

Donuts told Carvell:

We believe gTLDs should be run safely and securely, and in a manner that is fair to all law-­abiding registrants, not only those predetermined as eligible. A neutral third party, such as Donuts, can be best capable of achieving this outcome.

Donuts believes a neutral operator is better able to ensure that the gTLD reflects the full diversity of opinion and content of all Internet users who are interested in the term “rugby.”

As the IRB is a powerful voice in rugby, an IRB‐managed registry might not be neutral in its operations, raising questions about its ability to impartially oversee the gTLD. For example, will IRB/Roar chill free speech by censoring content adversarial to their interests? How would they treat third parties who are interested in rugby but aren’t part of the IRB? What about IRB critics or potential rival leagues?

Despite these questions, no .rugby applicant has said it plans to operate a restricted registry. There are no applications for .basketball or .rugby designated as “Community” bids.

The IRB/Roar application specifically states “anyone can register a .rugby domain name.”

Both .basketball and .rugby are contested by Roar (FIBA/IRB/M+M), Donuts (via subsidiaries) and portfolio applicant Domain Venture Partners (aka Famous Four Media, also via subsidiaries).

Roar is a sports marketing agency that is also involved in bids for .baseball, .soccer, .football and .futbol. The New Zealand national team football captain, Ryan Nelsen, is on its board.

Here are the letters (pdf).