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CentralNic grabs more of the reseller market with $16.5 million acquisition

CentralNic is living up to its self-described role as an industry “consolidator” with the acquisition of Australian domain wholesaler TPP Wholesale.

The company, assuming it manages to find the financial backing, will pay AUD 24 million ($16.5 million) for the business, currently a unit of ARQ Group (formerly known as Melbourne IT).

TPP has 14,000 resellers and 840,000 domains under management, including 19% of all .com.au registrations, according to CentralNic.

The company reckons the unit had revenue of AUD 17 million ($11.7 million) and EBITDA of AUD 3.9 million ($2.7 million) in 2018, which makes the purchase look like a bit of a bargain when compared to its acquisition of Instra a few years ago.

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.

Burr to replace Tonkin on ICANN board

Kevin Murphy, April 19, 2016, Domain Policy

ICANN lifer Becky Burr is to replace Bruce Tonkin on the ICANN board of directors when his term expires in November.

She’ll take the seat reserved for the Contracted Parties House of the Generic Names Supporting Organization, following a vote by registries and registrars a few weeks ago.

Tonkin, CTO of Aussie registrar Melbourne IT, has held the seat for the last nine years. He’s limited to three consecutive three-year terms under ICANN bylaws.

Burr, a lawyer by trade, is currently chief privacy officer at TLD registry Neustar, a position she has held since 2012.

Before that, she was a partner at the law firm Wilmer Hale.

But way back in 1998, in a senior role at the US National Telecommunications and Information Administration, she was one of the key people responsible for ICANN’s creation under the Clinton administration.

Tucows pays $6.5 million for Melbourne IT’s channel

Kevin Murphy, March 17, 2016, Domain Registrars

Canadian registrar Tucows has acquired the reseller network of Australian rival Melbourne IT for up to $6.5 million.

The company said the deal will “add hundreds of resellers and approximately 1.6 million domains under management to Tucows’ OpenSRS wholesale domain business.”

Melbourne IT said that the low-margin business was a “drag” on the performance of its core business as a retail registrar focused on small and medium sized businesses.

The price, the Aussie company said, will be between AUD 8.1 million and AUD 8.5 million, depending on exchange rates. That’s as much as $6.5 million.

Tucows did not disclose the price, saying it was “immaterial”.

DomainsBot to be “at the heart” of new gTLD sales

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.

There’s a demo online already. If you type “chocolate”, it suggests domains such as chocolate.food, chocolate.menu and chocolate.health. Domain Name Wire did a quick test run today too.

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.

Melbourne IT gets out of brand protection with $157m sale to CSC

Kevin Murphy, March 12, 2013, Domain Registrars

Corporation Service Company has acquired Melbourne IT’s flagship digital brand management service for a ridiculously expensive AUD 152.5 million ($157m).

The shock news takes Melbourne out of the high-margin defensive registration and brand monitoring market, leaving it as a basic domain registrar focused on small businesses.

For CSC, the deal leaves it with a considerably strengthened hand in the DBS space, which is poised to benefit from the massive influx of new gTLDs over the next few years.

It also means that all of the over 100 new gTLD applications Melbourne was supporting as a consultant will now be managed by CSC.

The price of AUD 152.5 million is far more than Melbourne IT could have hoped to ask for, equal to almost its entire market capitalization of AUD 160 million.

Melbourne has had a rocky time on the markets of late, and had previously disclosed that it was looking to sell off some units in order to appease shareholders and rationalize its business.

But DBS was considered a core business, bigger now than Melbourne’s regular domains business, and likely not for sale. CSC’s high-premium offer was too good, it seems, to be responsibly refused.

“While this was not a business that we had specifically earmarked for sale, given the value creation provided by the transaction, this was an opportunity which could not be ignored,” CEO Theo Hnarakis, said in a statement.

The deal follows the sale of MarkMonitor, a key Melbourne competitor, to Thomson Reuters last July. When it comes to brand protection in the domain name space, it’s a big boy’s game nowadays.

Melbourne will remain a domain registrar with over four million names under management.

The DBS business was formed in 2008, largely as a result of Melbourne’s purchase of Verisign’s brand services division for $50 million.

Melbourne IT may sell off businesses as ICANN delays hit bottom line

Kevin Murphy, November 26, 2012, Domain Registrars

Melbourne IT is looking into selling some of its business units after warning the Australian markets today that 2012 profit is likely to come in below 2011 levels.

The brand protection registrar, listed on the Australian Stock Exchange, partly blamed delays to ICANN’s new gTLD program for an expected 10% dip in earnings before interest and tax.

The company said it is “in the process of pursuing possible ownership alternatives for its current portfolio of businesses”, and that overseas buyers have already been identified.

While Melbourne did not specify which units face the chop, my hunch is that it’s not talking about its domain name business.

Digital Brand Management services, which includes its registrar, is performing “strongly” despite the delays, the company said.

However, its small business, enterprise and legal content management businesses are suffering from competition and spending freezes among government clients, the company said.

Even the registrar business is facing challenges. In the first half of 2012, its total domains under management dropped 8%. The brand management side of that business is now bigger.

Melbourne IT scales back HARM proposal

Kevin Murphy, November 14, 2012, Domain Policy

Melbourne IT has published a revised, less-complicated version of its High At-Risk Marks (HARM) proposal for protecting famous brands in the new gTLD program.

The new version throws more than a few bones to trademark lawyers, most of whom rejected many aspects of the original proposal at a meeting in Washington DC this September.

It’s a lot closer to the eight-point wish-list published jointly by the Intellectual Property Constituency and Business Constituency last month.

HARM envisions a two-tier set of trademark rights protection mechanisms in new gTLDs, with the super-famous brands that get cybersquatted and phished on a regular basis enjoying greater privileges.

Companies that could prove their trademarks were subject to regular abuse would, for example, benefit from a perpetual Trademark Claims notification service on “brand+keyword” domains.

The new version would lower the bar for inclusion on the list.

The first HARM said trademarks should be registered on five continents, but the new version reduces that to a single registration, provided that the jurisdiction does substantive review.

A provision to only extend the protection to five-year-old marks has also been removed, and the number of UDRP wins required to prove abuse has also been reduced from five to one.

I’ve previously expressed my fondness for the idea of using UDRP decisions to gauge the risk profile of a trademark, but it was recently pointed out to me that it may incentivize mark holders to pay people to cybersquat their marks, in order to win slam-dunk UDRPs and thus benefit from better RPMs, which makes me less fond of it.

Even if such skullduggery is an outside risk, I think a single UDRP win may be too low a bar, given the number of dubious decisions produced by panelists in the past.

The revised HARM would still exclude dictionary words from the special protections (as the paper points out, Apple and Gap would not be covered). The proposal states:

Melbourne IT believes it will be difficult to get consensus in the ICANN community that this mechanism should apply to all trademark owners, most of whom do not suffer any trademark abuse. Many trademarks also relate to generic dictionary words that would be inappropriate to block across all gTLDs.

The original HARM paper was put forth as compromise, designed to help prevent or mitigate the effects of most cybersquatting, while being slightly more palatable to registries and registrars than the usual all-or-nothing demands coming from trademark lawyers.

While not particularly elegant, most of its recommendations were found wanting by the ICANN community, which is as bitterly divided as always on the need for stronger rights protection mechanisms.

The IPC and BC did adopt some of its ideas in their recent joint statement on enhanced RPMs, including the idea that frequently squatted names should get better protection, but rejected many more of the Melbourne-proposed criteria for inclusion on the list.

Meanwhile, many registrars shook their heads, muttering something about cost, and new gTLD applicants staunchly rejected the ideas, based on the mistaken notion that paying their $185,000 has rendered the Applicant Guidebook immutable.

Read the new Melbourne IT paper here (pdf).

Melbourne IT holding new gTLD trademarks summit

Kevin Murphy, August 29, 2012, Domain Services

Melbourne IT will hold a half-day conference on trademark protection in new gTLDs next month in Washington DC.

Google, Microsoft, Donuts, and the Association of National Advertisers are among those expected to take part in the discussion.

The meeting follows on from Melbourne IT’s recent anti-cybersquatting proposal, which calls for stronger protections for brands that are frequent targets of trademark infringement.

The panel includes many familiar faces from ICANN meetings. Applicant interests are represented, albeit by a minority of the panelists.

It will be moderated by Melbourne IT chief strategy officer (and ICANN vice-chair) Bruce Tonkin. Here’s the full line-up:

Andrew Abrams, Trademark Counsel, Google

James L. Bikoff, Partner, Silverberg, Goldman & Bikoff

Steve DelBianco, Executive Director, NetChoice and Vice Chair Policy Coordination, ICANN GNSO Commercial Business Users Constituency

Dan Jaffe, Group EVP Government Relations, Association of National Advertisers

Jon Nevett, Co-Founder, Donuts

Russell Pangborn, Associate General Counsel – Trademarks, Microsoft

Craig Schwartz, General Manager – Registry Programs, BITS/The Financial Services Roundtable

Brian J. Winterfeldt, Partner, Steptoe & Johnston and ICANN GNSO Counselor (Intellectual Property Constituency)

The event starts at 1.30pm local time at the Capital Hilton in DC on September 18. An RSVP is needed. There’s no official word on remote participation yet.

What’s wrong with Melbourne IT’s new anti-cybersquatting plan?

Kevin Murphy, August 16, 2012, Domain Policy

Genuine question.

Melbourne IT, the Aussie registrar with the increasingly vocal brand-protection focus, has come up with a new scheme for protecting super-famous brands after new gTLDs start to launch.

It draws on elements of the abandoned Globally Protected Marks List, ICM Registry’s Sunrise B policy, .CO Internet’s launch program, and various recent demands from the intellectual property community.

It’s called the paper Minimizing HARM (pdf), where HARM stands for High At-Risk Marks.

The title may set off grammatical alarm bells, but the rest reads like the least-unreasonable proposition for protecting big brands from cybersquatters that I’ve come across in a long time.

What I like about it is that it’s actually contemplating ways to prevent gaming from the outset, which is something the IP lobby hardly ever seems to do when it demands stronger rights protection mechanisms.

The idea calls for the forthcoming Trademark Clearinghouse to flag a narrow subset of the trademarks in its database as High At-Risk Marks that deserve special treatment.

Melbourne IT has organizations such as PayPal and the Red Cross in mind, but getting on the list would not be easy, even for famous brands.

First, companies would have to prove they’ve had trademark protection for the brand in three of ICANN’s five geographic regions for at least five years — already quite a high bar.

Implemented today, that provision could well rule out brands such as Twitter, which is an obvious high-risk cybersquatting target but might be too young to meet the criteria.

Dictionary words found in any of UN’s six official languages would also be banned, regardless of how famous the brand is. As the paper notes, that would be bad news for Apple and Gap.

Companies would also have to show that their marks are particularly at risk from phishing and cybersquatting.

Five successful UDRP complaints or suspensions of infringing domains by a “top ten registrar” would be enough to demonstrate this risk.

But that’s not all. The paper adds:

In addition to meeting the minimum criteria above, the High At-Risk Mark will need to obtain a minimum total points score of 100, where one point is awarded for each legal protection in a jurisdiction, and one point is awarded for each successful UDRP, court action, or domain registrar suspension undertaken in relation to the mark.

That appears to be setting the bar for inclusion high enough that an OlympicTM pole-vaulter would have difficulty.

Once a brand made it onto the HARM list, it would receive special protections not available to other brands.

It would qualify for a “Once-off Registration Fee”, pretty much the same as ICM’s .xxx Sunrise B, where you pay once to block your exact-match domain and don’t get pinged for renewal fees every year.

Any third parties attempting to register an available exact-match would also have to have two forms of contact information verified by the gTLD registry before their names resolved.

The Trademark Claims service – which alerts mark owners when somebody registers one of their brands – would run forever for HARM-listed trademarks, rather than just for the first 60 days after a gTLD goes into general availability.

The always controversial Uniform Rapid Suspension service would also get tweaked for HARM trademarks.

Unless the alleged cybersquatter paid the equivalent of a URS filing fee (to be refunded if they prevail) their domains would get suspended 48 hours after the complaint was filed.

I’m quite fond of some of the ideas in this paper.

If ICANN is to ever adopt a specially protected marks list, which it has so far resisted, the idea of using favorable UDRP decisions as a benchmark for inclusion – which I believe Marque also suggested to ICANN back in February – is attractive to me.

Sure, there are plenty of dumb UDRP decisions, but the vast majority are sensible. Requiring a sufficiently high number of UDRP wins – perhaps with an extra requirement for different panelists in each case – seems like a neat way of weeding out trademark gamers.

The major problem with Melbourne IT’s paper appears to be that the system it proposes is just so complicated, and would protect so few companies, that I’m not sure it would be very easy to find consensus around it in the ICANN community.

I can imagine some registries and registrars might not be too enthusiastic when they figure out that some of the proposals could add cost and friction to the sales process.

Some IP owners might also sniff at the some of the ideas, just as soon as they realize their own trademarks wouldn’t meet the high criteria for inclusion on the HARM list.

Is Melbourne IT’s proposal just too damn sensible to pass through ICANN? Or is it riddled with obvious holes that I’ve somehow manged to miss?

Discuss.

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