M+M surprised by .mumbai snub

Kevin Murphy, August 25, 2011, Domain Registries

One of Minds + Machines’ key top-level domain applications has been thrown into confusion after government support for its .mumbai bid was apparently revoked.

In a letter that surfaced on the ICANN web site this week, Y.S. Mahangade, deputy director of IT at the Municipal Corporation of Greater Mumbai, wrote (pdf):

Honorable Deputy Mayor of MCGM inadvertently issued a letter to one organization which has been revoked later by Honorable Deputy Major of MCGM. It may please be noted that the official position of the City of Mumbai is communicated by Municipal Commissioner.

Under ICANN’s rules, all applications for geographical gTLDs must be backed officially by the local government, otherwise they get rejected.

According to Wikipedia, the Mayor of Mumbai (and presumably the deputy) has a “largely ceremonial” function, “as the real powers are vested in the Municipal Commissioner”.

Wikipedia does not say what kind of power the deputy director of IT wields. I’m guessing it’s not much.

M+M CEO Antony Van Couvering said in a statement:

This is the first we have heard about this and we are looking into the matter with our client, India TL Domain Pvt Ltd, to whom the original letter of appointment was issued by the Deputy Mayor of Mumbai. Once we understand what the situation is viz-a-viz India TL Domain Pvt Ltd and the City of Mumbai, we will provide an update.

You can view the letter of support from the deputy mayor here.

M+M announced its deal with the .mumbai applicant, India TL Domain, in June. As I noted at the time, not much is known about the company.

But according to official records, the company’s managing director is Ashok Hiremath, who’s also chairman of Mumbai-based fungicide manufacturer Astec Lifesciences.

His brother Suresh, now apparently a British citizen living in London, appears to be the only one of the company’s three directors to have engaged, albeit lightly, in ICANN policy development.

The third director is also Astec’s corporate secretary. The company shares its address with Astec.

In June, M+M’s parent company, Top Level Domain Holdings, issued two million new shares to an unnamed consultant as a result of the .mumbai deal, raising £160,000 ($260,000).

This is not the first time a geographic gTLD applicant that apparently raised support from the necessary governmental entity has had its plans thrown into doubt.

The same happened to DotConnectAfrica, a potential .africa bidder, in May, after the African Union apparently did an about-face.

Mumbai is India’s largest city, with over 20 million citizens. It’s also the richest (although the poverty there is enough to make you weep) making .mumbai a potentially lucrative gTLD.

Former ICANN chair joins M+M

Peter Dengate Thrush, the former ICANN chairman who pushed through approval of the new top-level domains program less than a month ago, is to join new gTLD firm Minds + Machines.

He has become executive chairman of Top Level Domain Holdings, M+M’s parent company, which is listed on the Alternative Investment Market.

The hire will undoubtedly boost M+M’s credibility and raise its profile, but is already also raising eyebrows.

TLDH plans to apply to ICANN for potentially dozens of new gTLD contracts next year, both with partners and customers and on its own.

Dengate Thrush has been granted options to buy 15 million TLDH shares for 8p each, roughly the same as its current price, which he can exercise at a rate of 1.25 million per quarter through July 2014.

TLDH currently has no revenue to speak of. Its future share price will depend on its ability to sign registry services customers and win new gTLDs through the ICANN process.

It’s fairly easy to extrapolate scenarios where Dengate Thrush’s compensation package is worth millions.

His chairmanship of ICANN’s board of directors came to an end June 24, just a few days after it voted to approve the new gTLD program.

During that vote, dissenting director Mike Silber accused the board of voting too soon, saying it was being hurried by “ego-driven deadlines”.

This was a reference to Dengate Thrush and fellow new gTLD cheerleader Rita Rodin Johnston, both of whom were due to see their terms on the board expire that week.

Dengate Thrush is the first ICANN chair to take a high-paying domain name industry job following his time with ICANN.

His predecessor, Vint Cerf, joined Google. Earlier, Esther Dyson went on to invest in and work with a number of technology start-ups.

ICANN does not have a policy preventing former employees or directors taking lucrative jobs working for the companies that they were previously essentially regulating.

Indeed, some of its directors currently work for such companies.

Few in the ICANN community doubted that Dengate Thrush, an IP lawyer by trade, would join a new gTLD company. The question was which one.

I asked him, along with CEO Rod Beckstrom and senior VP Kurt Pritz, at a press conference in Singapore, whether they would be prevented from joining a new gTLD firm.

The answer, basically, was: “No.”

ICANN staff and board sign confidentiality agreements that prevent them taking secrets into future employers, but there’s nothing to prevent a “revolving door” between industry and regulator.

There have already been calls from parts of the ICANN community to create a new ethics policy, after senior registry liaison Craig Schwartz left to join the VeriSign-backed .bank project.

GNSO Council chair Stephane Van Gelder of the French registrar Indom suggested in a blog post this morning that ICANN should consider hiring independent directors and barring them from working in the industry for a year after their terms end.

It would be pretty difficult to enforce such a rule on the board as it is currently made up, given that it draws some of its members, by design, from the domain name industry.

ICANN’s new vice chair Bruce Tonkin works for Melbourne IT, a registrar, for example. He recused himself from the new gTLD vote because of this conflict of interest.

It would be silly for ICANN to ban him from working for Melbourne IT after his term expires if he’s allowed to work there during the term itself.

While no rules appear to have been broken, M+M’s new hire may sit uncomfortably with some.

It will certainly reinforce beliefs, where they are held, that the new gTLD program is largely a money-grabbing exercise by the domain industry.

M+M intros flat-rate new TLD services

Minds + Machines is to offer its back-end registry services to new top-level domain applicants for a flat $100,000 annual fee, the company has announced.

The deal represents a bit of a switch for the registry market, which typically charges on a per-domain, per-year basis and doesn’t talk about pricing.

The $100,000 offer will not be extended to potentially high-volume gTLDs, such as .music, or geographic strings such as .nyc, M+M said.

Customers deemed “disadvantaged or needy” will get a 50% discount.

It’s a pretty aggressive move by the company, which has been waiting for years for ICANN to approve the new gTLD program and needs to grab market and mindshare quickly.

M+M was recently compelled to partner with a larger rival, Neustar, to run the back ends for geo-TLDs supported by governmental entities nervous about using a relatively inexperienced player.

“Until now, pricing for registry services has been shrouded in secrecy, and potential applicants have had to try to decipher convoluted pricing tiers,” M+M CEO Antony Van Couvering said in a press release.

He’s not wrong.

The large incumbent registry players have not publicly disclosed pricing, but I gather it’s usually around a couple of dollars per domain per year, with some additional flat fees.

From up-and-coming registry operators, I’ve heard figures as low as $0.75 per domain per year. Competition for applicant customers is, I’m told, getting pretty fierce.

While the new M+M pricing structure is obviously simpler, it will appeal largely to applicants expecting to take a relatively low registration volume, but still high enough that $100,000 does not work out to a ludicrous per-domain fee.

A 25,000-name community registry, for example, would pay the equivalent of $4 per domain per year, which might not make a heck of a lot of sense if they can get an equivalent service for a buck a name elsewhere.

On the other hand, a company targeting a stable base of 250,000 names may lose money in the years it ramps up to that goal, but it will see its margins swell as its registration volume grows.

Still, the new gTLD program is all about innovation (right?) and this seems to be one of the first tangible examples, so it will be very interesting to see how well it plays in the market.

M+M gets into bed with Neustar

Minds + Machines has committed to use Neustar’s registry services for some of its new top-level domain applications, the companies have announced.

M+M parent Top Level Domain Holdings said in a press release that the companies:

will work together exclusively in respect of all geographic gTLDs pursued by TLDH, apart from a short list of those already in progress. TLDH will oversee sales, marketing, registrar relations, ICANN compliance and other management functions, while Neustar will provide back-end registry and DNS services.

The deal may cover applications including .bayern, .berlin, and .mumbai, judging from the press release.

M+M will continue to use Espresso, its version of the CoCCA registry platform, for non-geo TLDs.

Under ICANN rules, geographical TLDs will require the support of the respective governments.

Reading between the lines, it appears that demand for proven scale and financial stability may have been the primary driver for the deal.

Neustar manages .us and biz, among others, while M+M has a far shorter track record. Neustar has annual revenue of over half a billion dollars, compared to TLDH’s approximately $100,000.

M+M adds .mumbai to client roster

Minds + Machines has been named as the “exclusive registry and consulting services provider” for a .mumbai top-level domain application.

The company said that India TL Domain Pvt Ltd, which appears to be a new company, has also secured the necessary government support for its ICANN application.

According to M+M, Mumbai’s deputy mayor, Shailaja Girkar, has written to ICANN to say:

The city of Mumbai fully and exclusively supports the application of India TL Pvt Ltd for .Mumbai. We believe that this application best represents the interests and the community of the City of Mumbai and we request that ICANN approve this application.

Local government support is a requirement for city TLDs, under ICANN’s current rules. But the latest version of the Applicant Guidebook suggests it can be trumped at the national level.

M+M, owned by Top-Level Domain Holdings, is also linked to applications for .gay, .eco, .berlin and .nyc, among others. Some of these are contested by rival applicants.