Windfalls still biggest money-spinner for M+M

Minds + Machines is still pulling in most of its cash from one-time new gTLD auction defeats, according to its latest trading update.
The company yesterday reported billings for 2015 of $7.92 million, up from $5.03 million in 2013.
But the company brought in $9.15 million by pulling out of private new gTLD auctions, where the winning bid is shared among the losers. That’s down from $37.5 million in 2014.
“Billings” is the money make at the point of sale, rather than audited revenue which is recognized over the life of the registration. Revenue numbers will come in April.
For the fourth quarter, sales of both premium and standard-fee names were up.
Premium names were up 215% at $1.52 million, which standard name billings were up 184% at $2.66 million.
The company said its registry business ended the year with 278,523 names under management, a 158% increase on year-ago numbers.
M+M met or beat its “key performance indicator” targets in terms of average revenue per name (both standard and premium) and sales growth.
However, the Chinese market boom caused it to miss its market share KPI.
It blamed missing the low end of its 3% to 5% new gTLD market share target by half a percentage point on the rapid growth of China.
The money being pumped into domain names from China in the second half of last year tends to favor the budget end of the new gTLD market, where names can be picked up for cents, whereas M+M’s TLD mix is skewed a little higher.
M+M said last week that it plans to open an office in China soon.

Two new gTLD registries open offices in China

Portfolio gTLD registries Famous Four Media and Minds + Machines have both announced that they’re formally entering the Chinese market.
Both companies are establishing “wholly foreign-owned enterprises” (WFOEs), a form of company that does not require local investment, on the mainland.
The moves are aimed at getting the registries’ respective gTLDs accredited by the Chinese government, something that is required before local registrants are allowed to use them.
In a press release, FFM senior legal counsel Oliver Smith said:

It was clear to us soon after launching our first domain registry that domain registrations from China comprised a strong proportion of the total. It was a natural progression of our strategy to build a physical presence in China. The accreditation process is complicated but well-structured and, thanks to the help of advice from the Chinese government, should be completed relatively quickly.

In some of Famous Four’s gTLDs, Chinese registrars are the overwhelming majority of the sales channel.
In .win, the registry’s biggest-seller, China was responsible for about 85% of registrations at the last count, for example.
Meanwhile, M+M is taking a slightly different route into the country.
It said today that while it also shortly plans to open a WFOE, it has also partnered with ZDNS, a local provider of proxy services for registries.
ZDNS was the company XYZ.com partnered with for its controversial launch into China. According to M+M, it’s also working with .CLUB Domains and some Chinese gTLD registries.
M+M is also using the specialist consultancy Allegravita for its marketing there.
Its local entity will be called Beijing Ming Zhi Mo Si Technology Company Limited (which may or may not translate to something like “Wise Mediation”).
M+M’s first Chinese launches will be .beer, .fashion, .fit, .law, .wedding, .work and .yoga, with .vip and .购物 (“.shopping”) coming later in the year.

M+M acquires .boston from Boston Globe

Minds + Machines has added .boston to its stable of geo-gTLDs, buying the contract from the publisher of the Boston Globe newspaper.
The company said today that it has acquired 99% of Boston TLD Management, a new company into which the Globe plans to sign over its .boston ICANN contract.
The deal is contingent on ICANN approving the contract reassignment.
The ink is still moist on the .boston Registry Agreement, which was signed December 10.
The gTLD is officially in pre-delegation testing right now.
But the acquisition also means M+M will take over back-end duties for .boston. Originally, the Globe had intended to use OpenRegistry.
The gTLD was officially a “geographic” string under ICANN rules, and needed support from the local government in Boston.
.boston would become M+M’s fifth geographic gTLD — sixth if you include .london.
The company said it plans to launch the TLD later this year.

Now Uniregistry shifts to Early Access launch model

Uniregistry has become the latest registry to adopt the Early Access Period model for some new gTLD launches.
.cars, .car and .auto will all use the EAP, in place of the more typical landrush period, when they launch in January.
Technically, while Uniregistry is running the back-end, the three gTLDS are all being offered by Cars Registry, a partnership between Uniregistry and .xyz registry XYZ.com.
Uniregistry CEO Frank Schilling said it was felt that EAP was needed due to the “stupendous cost” of acquiring the strings.
EAP is a period lasting usually about a week in which the price of registering any domain descends daily from a very high fee on day one — usually above $10,000 at the storefront — to maybe a hundred bucks when the period closes.
The model was pioneered by portfolio registries Donuts and Rightside, but has since been adopted by the likes of Minds + Machines, Radix and XYZ.com.
It’s rapidly becoming the de facto industry standard for new gTLD launches, replacing the auction-based approach to landrush most registries have used in the past.
The driving factor for the industry switch is surely revenue.
Donuts told us late last month that it had sold 48,381 EAP domains across all of its launches to date, where registry prices are believed to start at around the $10,000 mark.
M+M said yesterday that it sold $1.18 million after it chose to use EAP with its recently launched .law gTLD, where registration restrictions suggest many of the sales will have been to legit end users.
Registrars also get a bigger slice of the pie. In an auction model they might wind up with just the regular registration fee, but with EAP they can mark up day one domains by thousands of dollars.
Cars Registry says its EAP is targeted at “OEMs, dealerships, vendors”, but it will almost certainly get a healthy chunk of domainer interest too.

M+M lays off dozens in focus on S&M, promises profit next year

Minds + Machines has outlined its plan to refocus its business on sales and marketing, which has already resulted in a couple dozen job losses, as the latest stage of its profit runway.
The new gTLD company also outlined plans to return about half of its cash reserves — mostly obtained by losing new gTLD auctions — to its shareholders.
For the first half of the year, the London-listed company reported an EBITDA loss of $1.2 million, compared to income of $5.7 million a year earlier, on revenue that was up to $3.6 million from $113,000 in the comparable 2014 period.
The company said it is “committed to achieving its stated goal of crossing over into profitability in 2016” and blamed high operating costs for the loss, but said it has been restructuring to help it return to profit.
M+M said its headcount has been reduced from 58 to 44, but that it has added ten jobs in sales and marketing, which seems to indicate at least 24 people recently lost their jobs.
The bottom line was also affected by the fact that most of the company’s cashflow to date has been generated by auction losses, and there were more of those last year than this.
The company hit three of its six “key performance indicator” targets — domains under management market share, premium sales growth and standard sales growth — but fell short of the other three.
Average revenue per name for premiums was $184 versus a $200-$225 target, and average revenue per standard name was down from $28 to $10, largely due to a deep discount promotion for .work domains. Higher prices for soon-to-launch .law could increase the average, M+M said.
The company also announced that it will spent £15 million ($23.1 million) of its cash reserves on a share buyback.
That’s almost half of the $48.3 million is has in the bank. This time last year, M+M’s share price peaked at 12p; it’s currently at 8.55p.
The price saw a spike in May, shortly before then-chairman Fred Krueger was asked to resign by the board. Krueger has since sold off the majority of his substantial shareholding, despite explicitly saying that he would not.

Architelos: shadiest new gTLD is only 10% shady

Disputing the recent Blue Coat report into “shady” new gTLDs, domain security firm Architelos says that the shadiest namespace is just under 10% shady.
That’s a far cry from Blue Coat’s claim earlier this week that nine new gTLDs are 95% to 100% abusive.
Architelos shared with DI a few data points from its NameSentry service today.
NameSentry uses a metric the company calls NQI, for Namespace Quality Index, to rank TLDs by their abuse levels. NQI is basically a normalized count of abusive domains per million registered names.
According to Architelos CEO Alexa Raad, the new gTLD with the highest NQI at the end of June was .work.
Today’s NameSentry data shows that .work has a tad under 6,900 abusive domains — almost all domains found in spam, garnished with just one suspected malware site — which works out to just under 10% of the total number of domains in its zone file.
That number is pretty high — one in 10 is not a figure you want haunting your registry — but it’s a far cry from the 98.2% that Blue Coat published earlier this week.
Looking at the numbers for .science, which has over 324,000 names in its zone and 15,671 dodgy domains in NameSentry, you get a shadiness factor of 4.8%. Again, that’s a light year away from the 99.35% number published by Blue Coat.
Raad also shared data showing that hundreds of .work and .science domains are delisted from abuse feeds every day, suggesting that the registries are engaged in long games of whack-a-mole with spammers.
Blue Coat based its numbers on a sampling of 75 million attempted domain visits by its customers — whether or not they were valid domains.
Architelos, on the other hand, takes raw data feeds from numerous sources (such as SpamHaus and SURBL) and validates that the domains do actually appear in the TLD’s zone. There’s no requirement for the domain to have been visited by a customer.
In my view, that makes the NameSentry numbers a more realistic measurement of how dirty some of these new gTLDs are.

M+M gets $3.5m from two gTLD auctions

Minds + Machines secured loser fees totaling $3.5 million from its participation in .art and .data new gTLD auctions, the company disclosed today.
It seems .data was auctioned recently. It was a three-applicant string and none of the applicants have yet withdrawn their applications.
It seems either Donuts or brand applicant Dish DBS won the string.
The .art auction happened well over a month ago, with the final losing applicant withdrawing on July 23.
UK Creative Ideas won .art. Whatever it paid for the string would have been shared between nine competing applicants.
M+M also said that “strong interest” (presumably no sales yet) has been expressed in its $15,000+ “super premium” registry-reserved names, and that it has sold 20 premium names in its .london auction last month.

Carlsberg snaps up 150 .beer domains, including the most British domain I’ve ever seen

Brewing giant Carlsberg has joined Minds + Machines’ pioneer program for the .beer gTLD, buying 150 brand and generic .beer domains.
M+M said today that football.beer, which is arguably a more British domain than gov.uk, is among Carlsberg’s new portfolio.
The registry said in a press release: “football.beer will help support the company’s far-reaching commitment to the football. Carlsberg is a leading sponsor of UEFA EURO 2016, the Barclays Premier League, and Liverpool Football Club.”
The brewer will also use quality.beer in its marketing.
Trademarks baltika.beer, tuborg.beer, holsten.beer and kronenbourg.beer have also been acquired.
Carlsberg is the fifth-largest brewer in the world and fourth-largest in the UK, with annual global revenue of $9.5 billion.
The .beer gTLD could use the publicity. It has been in general availability since September last year. Today, it has fewer than 7,800 names in its zone file.

M+M sells net.work for $100,000

Minds + Machines has made its first six-figure new gTLD domain sale.
The domain net.work was sold in a private deal to business consultancy BearingPoint for $100,000, the company said today.
It added that a “significant annual renewal fee” applies.
It’s one of 430 premium domains to have been sold in .work, M+M said, since it went to general availability in February.
The gTLD had just shy of 55,000 domains in its zone file yesterday, recent growth partly attributable to a deep discounting program.
M+M’s registrar currently sells .work domains for less than $2.

Krueger removed as chair as M+M finally starts seeing some revenue

Minds + Machines co-founder Fred Krueger has been kicked out of his job as executive chairman of the company.
The news came as the new gTLD registry reported its first full year of results as a proper, revenue-generating company.
The company reported revenue of $1.9 million for 2014, compared to $56,000 in 2013.
Its report includes a “cash revenue” line of $5 million, to show off revenues that it has deferred to future periods due to standard domain industry accounting.
For accounting purposes, M+M was profitable to the tune of $22 million for the year, but almost none of that is from actually selling domains — $33.7 million of profit came from losing new gTLD auctions.
That’s not a sustainable or predictable part of the business — nobody knows exactly when or if ICANN will launch the next round of new gTLDs — but it did help M+M grow its cash pile to $45.7 million.
That pile may grow or shrink depending on how aggressive the company is in its 11 remaining new gTLD contention set auctions.
CEO Antony Van Couvering said that M+M is also eyeing acquisition opportunities as the new gTLD industry enters an early consolidation phase.
He said that M+M’s early priorities include a focus on selling premium domains that have higher than usual annual renewal fees.
At the same time as announcing its results, the company said Krueger, who founded M+M with Van Couvering in 2009 in anticipation of the new gTLD program, has quit.
While he’s technically resigned, he left no doubt in his unusually frank resignation letter that he’s actually been forced out by the M+M board of directors.
He wrote that the decision was “initiated by the board” and that his “decision” to leave “was unexpected – for me at least”.
He added that he was “OK with it, indeed supportive of it” and that he has no intention to sell off his substantial stake in the company.
Krueger will now focus on Mozart, a web site building software maker that he’s been leading for the last couple of years. M+M has a deal to offer Mozart to its registrants.
He’s been replaced, albeit in a non-executive capacity, by Keith Teare, an existing director.
Teare is a tech veteran perhaps best known in the domain industry for launching and running RealNames, which attempted to replicate AOL Keywords for the Internet Explorer browser at the turn of the century.