Today’s shock news that Verisign will be subject to a .com price freeze for the next six years will have broad implications.
The US Department of Commerce has told the company it will have to continue to sell .coms at $7.85 wholesale until 2018, barring exceptional circumstances.
Here’s my initial take on the winners and losers of this new arrangement.
Volume .com registrants are of course the big winners here. A couple of dollars a year for a single .com is pretty insignificant, but when you own tens or hundreds of thousands of names…
Mike Berkens of Most Wanted Domains calculated that he’s saved
$170,000 $400,000 over the lifetime of the new .com deal, and he reckons fellow domainer Mike Mann will have saved closer to $800,000 $2 million.
The other big constituency of volume registrants are the brand owners who spend tens or hundreds of thousands of dollars a year maintaining defensive registrations — mostly in .com — that they don’t need.
Microsoft, for example, owns over 91,000 domain names, according to DomainTools. I’d hazard a guess that most of those are defensive and that most are in .com.
There’s potentially trouble on the horizon for new gTLD applicants and existing registry operators. Verisign is looking for new ways to grow, and it’s identified its patent portfolio as an under-exploited revenue stream.
The company says it has over 200 patents either granted or pending, so its pool of potential licensees could be quite large.
Its US portfolio includes patents such as 7,774,432, “Registering and using multilingual domain names”, which appear to be quite broad.
Verisign also owns a bunch of patents related to its security business, so companies in that field may also be targeted.
Verisign’s registrars will no longer have to pass their cost increases on to consumers every year.
While this may help with renewal rates, it also means registrars won’t be able to sneak in their own margin increases whenever Verisign ups its annual fees.
Another area Verisign plans to grow is in internationalized domain names, where it’s applied to ICANN for about a dozen non-Latin variants of .com and .net.
Those registry deals, assuming they’re approved by ICANN, will not be governed by the .com pricing restrictions. Now that Verisign’s growth is getting squeezed, we might expect higher prices for IDN .com variants.
ICANN may have suffered a small reputational hit today, with Commerce demonstrating it has the balls to do what ICANN failed to do six years ago, but money-wise it’s doing okay.
The new .com contract changes the way Verisign pays ICANN fees, and Commerce does not appear to have made any changes to that structure. ICANN still stands to get about $8 million a year more from the deal.
The Department of Commerce
Unless you’re a Verisign shareholder, Commerce comes out of this deal looking pretty good. It played hard-ball and seems to have won a lot of credibility points as a result.
Are Internationalised Domain Names really useful, or just a way for an ASCII-focused internet governance community to feel better about itself?
Beyond all the hoopla about ICANN’s 2009 program to enable countries to operate their own non-Latin script internet suffixes (aka the “IDN ccTLD Fast Track”), what should really matter is the Internet user.
Yes, those sitting in ICANN meeting rooms at the time, listening to the hyperbole about how the internet was now going truly global probably felt like they were feeding the hungry and bringing peace to the world. But do people actually use IDNs?
I will admit that at the time, I was dubious. Of course, saying so in ICANN circles would have been akin to wearing a “Camembert is bad” t-shirt in the streets of Paris: poor form! But still, I couldn’t help ask myself if having a single one-language system unite the world was actually such a bad thing?
“How would you like it if the Internet had been invented in China and you had to use their alphabet,” was the usual rebuke I got if I ever dared to doubt out loud. And there really is no arguing with that. If the internet was Chinese, I’d want the Mandarin version of ICANN to roll out IDNs pretty sharpish.
Nonetheless, can the usefulness of IDNs still be questioned?
Facebook in Latin
Talking to a local internet expert whilst attending last week’s excellent Domain Forum in Sofia, Bulgaria, the answer would seem to be a surprising yes.
“Why would kids in this country use IDNs,” I was told when I suggested that, surely, Bulgaria must be excited about the prospect of natural language web addresses. “What worries the authorities here is the fact that kids are using Latin scripts so much on social media sites that they don’t even know how to write in Cyrillic anymore! So even if they could use IDN web and email addresses, why would they? They want to communicate like everyone else does on Facebook.”
In truth, Bulgaria’s view may be skewed by the horrible experience it’s had with ICANN’s IDN Fast Track. The country was refused its own IDN country code due to a perceived similarity with another TLD that no-one in Bulgaria really feels is warranted. But not all potential IDN users feel they are useless. Neighbors in Russia tell of a different IDN experience.
The Russian registry saw stunning initial take-up when it opened the IDN .РФ (.RF for Russian Federation) to general consumption on November 11, 2010. Registration volumes were explosive, with almost 600,000 names registered in the first month. Strong growth continued for a year, hitting a peak of 937,913 registered names in December 2011.
But the following month, that number fell off a cliff. Total registrations dropped to 844,153 in January 2012. “Initial registrations were driven in part by speculators,” explains ccTLD .RU’s Leonid Todorov. “But when people saw they couldn’t make huge profits on the domains, they started letting them go.”
Even so, .РФ remains a real success. Although November 2012 figures show a year on year decline of 8.63%, the TLD still sports a whopping 845,037 names.
At 66%, .РФ has a slightly lower renewal rate than ASCII Russian equivalent .ru (73%), probably because of those day-one speculators, but it remains widely used. Current delegation figures (i.e. the number of domain names that are actually used for email or websites) stand at a commendable 70% and have not stopped rising since .РФ opened in 2010 with a 45% delegation rate.
The Cyrillic Russian domain sees a vast predominance of personal use, with 77% percent of domains being registered by individuals. “Russians care deeply about their national identity,” says my Bulgarian friend when I suggest that IDNs do seem to matter in some Cyrillic-using countries. “To them, Dot RF is a matter of national pride.”
So IDNs may not really be all that different from ASCII domain names, with take-up depending on perceived use or value. Europe’s IDN experience seems to confirm this, as European registry EURid’s Giovanni Seppia explained in Sofia.
He revealed that since EURid introduced IDNs on December 11, 2009, registrations reached a peak of around 70,000 (a mere fraction of the 3.7 million names currently registered in the .eu space) before dropping off quite sharply.
Why? Well .eu IDNs may not hold much potential for real use or investment value for Europeans. Although web use is possible with IDNs, software primarily designed for an ASCII-only world does not always make it easy.
Email capability would be a real boost, but so far only the Chinese seem to have enabled it for their local script domains. The Chinese registry recently announced this, without giving details on how the use of all-Chinese character email addresses has been implemented or which email clients support IDNs.
Whatever the technology, countries which combine national pride and a character set far removed from our own probably see more desire for IDNs. With two years of hindsight, Russia obviously loves its IDN. And as other countries like China bring more elaborate IDN capabilities online, demand should grow and force even this IDN skeptic to recognize the new character(s) of the internet.
This is a guest post written by Stéphane Van Gelder, strategy director for NetNames. He has served as chair of the GNSO Council and is currently a member of ICANN’s Nominating Committee.
CNNIC, the .cn registry, is going to open up its .中國 internationalized domain name to Latin-script strings next month, and sunrise kicks off this weekend.
Registered trademark owners will be able to apply for domains matching their marks from Sunday, according to registrars. The deadline to apply is October 11.
A second week-long sunrise, starting October 16, will enable owners of ASCII .cn or .com.cn domains to apply for the same string under .中國.
The .中國 IDN ccTLD means “.china” in Simplified Chinese. Previously only Chinese-script domain names could be registered.
ICANN’s board of directors is set to approve مليسيا., the Arabic name for Malaysia, at a meeting next week.
Delegation of the internationalized country-code top-level domain is listed on the board’s consent agenda for next week’s meeting, meaning it’s likely to be a case of simply rubber-stamping the decision.
It will be the 40th IDN ccTLD to enter the root, not including test zones, under ICANN’s Fast Track program.
With the notable exception of Russia’s .РФ, IDN ccTLDs have been commercially underwhelming.
The redelegation of Rwanda’s .rw, currently delegated to NIC Congo/Interpoint SARL, is also on ICANN’s board consent agenda for the August 28 meeting.
There are no issues related to the new gTLD program on the agenda.
The Governmental Advisory Committee has slammed ICANN’s decisions to reject at least three non-Latin ccTLDs because they might pose security risks.
Remarkably, the GAC has also asked ICANN to “urgently reconsider” the rulings, which were made to mitigate the risk of phishing attacks and other types of domain name abuse.
In its official post-Prague communique, published over the weekend, the GAC tells ICANN that the way it decides whether to approve IDN ccTLDs has been “too conservative”.
While the letter does not single out any specific ccTLDs, I understand that the advice was formulated primarily at the behest of the European Union and Greece, which have both had IDN ccTLD applications rejected on the grounds of confusing similarity.
The Prague communique (pdf) states:
The GAC is of the view that decisions may have erred on the too-conservative side, in effect applying a more stringent test of confusability between Latin and non-Latin scripts than when undertaking a side by side comparison of Latin strings.
It goes on to ask ICANN to publish its criteria for evaluating the similarity of IDN ccTLDs, to create an appeals process, to publish its rationales for rejecting bids, and to revisit old decisions.
The communique states, as formal GAC Advice:
Recently refused IDNs, particularly those nominated by public or national authorities should be urgently re-considered in light of the above considerations.
This request instantly loses the GAC credibility points, in my view, casting it as little more than another special interest group focused on the goals of its members first and internet security second.
To be clear, the GAC is appealing ICANN decisions that were designed to prevent phishing.
Greece’s application for .ελ,was rejected by ICANN last year due to its visual similarity with .EA, a non-existent – but potential future – ccTLD.
While there’s not much on the public record about the European case, I understand Eurid’s bid for a Greek version of .eu was blocked because it looks too much like Estonia’s EE.
Bulgarian IDN supporters have also been very vocal the last couple of years in opposition to ICANN’s decision to forbid .бг due to its alleged resemblance to Brazil’s .br.
While decent arguments can and have been made that some of these rulings were a little on the silly side, it’s hard to argue that they were made without the best of intentions.
The GAC has promised to write to ICANN with “further reflections on the methodology that should be followed when evaluating two character IDNs”.
The GAC as a technical regulator? That letter should make for some interesting reading.