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ICANN drops the bomb – registries can buy registrars

Kevin Murphy, November 10, 2010, Domain Registries

ICANN has just authorized the biggest shake-up of the domain name industry in a decade, lifting all the major cross-ownership restrictions on registrars and registries.

A surprise resolution passed on Friday at the ICANN board’s retreat could enable registries such as VeriSign to acquire registrars such as Go Daddy, and vice-versa.

The new rules will also allow registrars to apply for and run new top-level domains and, subject to additional conditions, may enable existing registries to eventually start selling direct to end users, potentially bypassing the registrar channel.

The implications of these changes could be enormous, and I expect they could be challenged by affected parties.

The board resolved that ICANN “will not restrict cross-ownership between registries and registrars”, subject to certain yet-to-be written Code of Conduct for preventing abuse.

These looser ownership restrictions will be included in the new TLD Applicant Guidebook. Existing registries will be able to transition to the new rules over time through contract changes.

ICANN will develop mechanisms for enforcing anti-abuse rules through contractual compliance programs, and will have the ability to refer cross-ownership deals to competition authorities.

These provisions may be enhanced by additional enforcement mechanisms such as the use of self-auditing requirements, and the use of graduated sanctions up to and including contractual termination and punitive damages.

The decision appears to have been made partly on the grounds that while almost all existing registry contracts include strict cross-ownership restrictions, it has never been a matter of formal policy.

A vertical integration working group which set out to create a bottom-up consensus policy earlier this year managed to find only deadlock.

ICANN chairman Peter Dengate Thrush said:

In the absence of existing policy or new bottom-up policy recommendations, the Board saw no rationale for placing restrictions on cross-ownership. Any possible abuses can be better addressed by properly targeted mechanisms. Co-ownership rules are not an optimal technique in this area.

Most members of the VI working group broadly favored some level of cross-ownership restriction, such as a 15% cap, while a smaller number favored the “free trade” position that ICANN seems to have gone for.

The companies campaigning hardest against cross-ownership being permitted were arguably Afilias and Go Daddy, though the likes of NeuStar and VeriSign also favored some restrictions.

Opponents of integrating registry and registrar functions argued that giving registrars access to registry data would harm consumers; others countered that this was best addressed through compliance programs rather than ownership caps.

The big winners from this announcement are the start-up new TLD registries, which will not be forced to work exclusively within the existing registrar channel in order to sell their domains.

NeuStar wins UrbanBrain .brand contract

Kevin Murphy, October 6, 2010, Domain Registries

NeuStar has become the preferred provider of registry services to UrbanBrain, a consultancy that hopes to launch “.brand” top-level domains with major Japanese companies.

The companies said in a press release:

Under the alliance, Neustar and UrbanBrain will provide brand owners with the expertise and support required to prepare and submit their applications to ICANN, and will provide all of the registry services necessary for brands to launch and operate their own Internet extensions.

NeuStar already operates the .biz and .us registries under contract with ICANN and the US government respectively, as well as providing back-end services for a number of other TLDs.

UrbanBrain is currently associated with a proposed bid for .site.

The only formally announced commercial .brand to date is .canon. Canon is working with GMO Registry, another Japanese firm.

Price increase on the cards for .biz

Kevin Murphy, September 30, 2010, Domain Registries

NeuStar is to raise its registry fee on .biz domain names by $0.45, to $7.30 year, according to a letter sent to ICANN by the company’s vice president of registry services.

The changes will come into effect April 1, 2011, following the mandatory notice period registries have to give their registrar partners.

NeuStar has just seen a monthly decrease in total .biz registrations, from 2,070,343 to 2,065,389 at the start of the month, according to HosterStats.com.

.CO fastest-growing new TLD in years

Kevin Murphy, September 15, 2010, Domain Registries

.CO Internet today announced that it has taken over 500,000 .co domain name registrations in the less than two months since the names went into general availability.

By my reckoning, that makes .co the fastest-growing new TLD launch since .eu, back in 2006. EurID managed to take 1,691,069 .eu registrations in its first month of availability, a hard act to follow.

But .co easily beats .mobi, which took about eight months to reach the 500,000 registrations landmark after it launched in September 2005.

Fellow 2005-round launch DotAsia never (or has yet to) hit the 500k mark. It peaked at 245,196 in March 2009 and has been on the slide ever since, according to HosterStats.com.

If you go back as far as the 2000 round, you’ll find Afilias’ .info TLD took almost three months to hit 500,000 names. Three months after that, it had added another quarter-million.

But it only took Neustar (then Neulevel) a measly 30 days to pass the same milestone with .biz. Ten years on, it has over two million names on its books.

Afilias adds DNSSEC to .info zone

Kevin Murphy, September 9, 2010, Domain Tech

The .info domain has become the latest gTLD to be signed with DNSSEC, the security standard for domain name lookups.

Afilias, which runs the .info registry, said today that it has signed its zone and added the necessary records to the DNS root.

DNSSEC is designed to prevent cache poisoning attacks, which can be used to hijack domain names and carry out phishing campaigns.

For registrants, DNSSEC in .info doesn’t mean much in practical terms yet. If you have a .info, you’ll have to wait for registrars to start to support the standard.

At the moment, only 19 second-level .info domains, including afilias.info and comcast.info, have been signed, as part of a “friends and family” testbed program.

The .org zone, which Afilias also provides the back-end for, was signed in June.

Neustar added full DNSSEC support for .biz in August, according to an announcement this week.

For .com and .net, VeriSign is currently planning to roll out the technology in the first quarter of 2011.

EurID picks Netnod for .eu resolution

Kevin Murphy, August 2, 2010, Domain Registries

EurID, the .eu registry manager, has inked a deal to have its domain names resolved internationally via Netnod’s network of name servers.

Netnod is the not-for-profit Swedish internet exchange operator which also runs one of the internet’s 13 DNS root servers.

The deal means .eu domains will be resolved from Netnod’s constellation of Anycast DNS servers.

Anycast is a technology for mirroring servers on a large scale by enabling them to all advertise the same IP address from diverse locations on the internet.

EurID already has similar deals to run .eu on Anycast networks belonging to NeuStar and CommunityDNS, reducing its exposure to a failure at any single provider.

That’s some serious redundancy.

The registry says that .eu domains are now resolved by 35 server locations around the world.

Stalemate reached on new TLD ownership rules

Kevin Murphy, July 26, 2010, Domain Policy

An ICANN working group tasked with deciding whether domain name registrars should be able to apply to run new top-level domains has failed to reach a consensus.

For the last several months, the Vertical Integration working group has been debating, in essence, the competitive ground rules of the new TLD market, addressing questions such as:

  • Should existing ICANN registrars be allowed to run new TLD registries?
  • Should new TLD registries be allowed to own and control ICANN registrars?
  • Should new TLD registries be allowed to sell domains directly to end users?
  • What if an approved registry can’t find a decent registrar willing to sell domains in its TLD?
  • Should “.brand” TLDs be forced to sell via ICANN accredited registrars?
  • Should “registry service providers” be subject to the same restrictions as “registries”?
  • Where’s the harm in allowing cross-ownership and vertical integration?

It’s an extraordinarily complex set of questions, so it’s perhaps not surprising that the working group, which comprised a whopping 75 people, has managed to reach agreement on very few answers.

Its initial report, described as a “snapshot” and subject to change, states:

It is impossible to know or completely understand all potential business models that may be represented by new gTLD applicants. That fact has been an obstacle to finding consensus on policy that defines clear, bright line rules for allowing vertical integration and a compliance framework to support it

Having lurked on the WG’s interactions for a few months, I should note that this is possibly the understatement of the year. However, the WG does draw four conclusions.

1. Certain new gTLDs likely to be applied for in the first round will be unnecessarily impacted by restrictions on cross-ownership or control between registrar and registry.

I believe the WG is referring here primarily to, for example, certain “cultural” TLDs that expect to operate in linguistic niches not currently catered for by registrars.

The operators of the .zulu and .kurd TLDs would certainly find themselves without a paddle if the rules obliged them to find an ICANN-accredited registrar that supports either of their languages.

There are other would-be registries, such as .music, that call themselves “community” TLDs and want to be able to sell directly to users, but my feeling is that many in the WG are less sympathetic to those causes.

2. The need for a process that would allow applicants to request exceptions and be considered on a case-by-case basis. The reasons for exceptions, and the conditions under which exceptions would be allowed, vary widely in the group.

There’s not a great deal to add to that: the WG spent much of the last couple of weeks arguing about “exceptions” (that they could not agree on) to a baseline rule (that they could not define).

3. The concept of Single Registrant Single User should be explored further.

An “SRSU” is a subset of what a lot of us have been calling a “.brand”. The proposed .canon TLD, under which Canon alone owns .canon domains, would likely fall into this category.

The WG’s report suggests that SRSU namespaces, should they be permitted, should not be subject to the same restrictions as a more open and generic TLD that sells to the average man on the street.

The alternative would be pretty crazy – imagine Canon owning the registry but being forced to pay Go Daddy or eNom every time it wanted to add a record to its own database.

I do not believe that a hypothetical .facebook, in which Facebook is the registry and its users are the registrants, falls into the SRSU category. Which is also pretty nuts, if you’re Facebook, forced to hand your brand over to the world’s domain name registrars.

4. The need for enhanced compliance efforts and the need for a detailed compliance plan in relation to the new gTLD program in general.

One principle that has come through quite clearly whilst lurking on the WG mailing list is that the degree of distrust between participants in this industry is matched only by the lack of confidence in ICANN’s ability to police bad actors effectively.

Domain name companies are masters of the loophole, and ICANN’s enforcement mechanisms have historically been slow enough that yesterday’s scandal often becomes today’s standard practice.

This sums it up pretty well:

Some members feel that loosening vertical integration/ownership controls may let the proverbial “genie out of the bottle that can’t be put back” should competitive harms result in the marketplace. Others believe that adopting restrictions on vertical integration or cross ownership is the wrong approach altogether, and that the focus should be on protecting against harms, and providing sanctions where harms take place.

The WG currently has six policy proposals on the table, which vary from the “no VI allowed” of the current Draft Applicant Guidebook to “some VI allowed” to “full VI allowed”.

There was a poll of WG members a few weeks back, to see which proposal had most support. It was inconclusive, but it left three proposals clearly in the lead.

The so-called Free Trade proposal, which advocates no limits on cross ownership, was originally authored by Sivasubramanian Muthusamy of ISOC India Chennai.

The proposal as it currently stands puts the focus on ICANN troubleshooting undesirable activities through compliance programs rather than ownership restrictions.

Opposed, a proposal known as RACK+, offered up primarily by Afilias, some of its partners, and Go Daddy, favours a much more restrictive policy that is more aligned with business models established under the last ten years of gTLDs dominated by .com.

RACK+ would impose a 15% ownership limit between registries, registrars and registry service operators, ostensibly in order to prevent registrars abusing privileged registry data.

But under RACK+, all TLDs, including .brands and obscure community TLDs, would be obliged to accept registrations only through ICANN registrars, on a non-discriminatory basis.

This would probably render the .brand TLD market stillborn, if adopted by ICANN, I reckon.

A third proposal, called JN2+, originally authored by representatives of NeuStar and Domain Dimensions, occupies a spot somewhere in the middle ground.

It also proposes 15% ownership caps between registrars, registries and registry service providers, but it contains explicit carve-outs for SRSU-style .brands and “community” TLDs.

Because I’m a wimp, and I have no desire to be drawn into the kinds of arguments I’ve been reading and listening to recently, I’m going to quote Milton Mueller here, saying JN2 “had the highest acceptability ranking of all the proposals” when the WG was polled.

(Sorry.)

I find it rather surprising that the WG seems to be calling for more policy work to be done on ICANN’s compliance programs before the issue of vertical integration can be fully resolved.

If anything, this seems to me to be yet another way to risk adding more delay to the new TLD program.

There’s a public comment period now open, here. And here’s the report itself (pdf)

The .CO launch, by the numbers

The .co top-level domain is now live and open for general registrations, following a well-planned and self-evidently successful launch period.

The TLD is the country-code for Colombia, but it’s being sold as a generic alternative to .com by .CO Internet.

Here’s the story of the launch, explained with numbers:

27,000 – approximate number of active .com.co registrations made before the start of 2010, under the previous, much more restrictive regime (source).

5,000 – roughly how many of these .com.co registrants chose to participate in sunrise grandfathering, which would allow them to grab the equivalent .co domain before anybody else (source).

100 – number of brands on .CO Internet’s Specially Protected Marks List. These 100 companies, selected by Deloitte, had their brands placed on a registry-reserved list during the launch period.

83 – brands on the SPML who had chosen to register their .co names by the time the sunrise closed (source). Companies on the SPML who continue to decline their domain will see their brand released back into the pool.

10 – registrars initially approved to take .co registrations. Many more companies are selling the domains, but they’re all acting as resellers for these 10. More registrars will be approved in future.

225 to 335 – price in US dollars of a sunrise registration for trademark holders (source).

11,000 – approximate number of sunrise registrations

1,500 – approximate number of rejected sunrise applications (source)

27,905 – applications made during the landrush (source)

451 – landrush applicants applying for 10 or more domains

2,523 – domains receiving more than one landrush application. These domains will now be offered at auction. (source)

133 – number of countries where landrush applicants resided

350– Fortune 500 companies that have registered their trademarks under .co as of today

81,000 – the price in US dollars of the first .co domain to be auctioned, the single-letter e.co. The domain sold on Sedo to Bookmarks.com on June 10 (source)

350,000 – price in US dollars of the biggest seller to date, the single-letter o.co. The domain was sold to Overstock.com, directly by the registry, earlier this week. (source)

91,613 – registrations in the first 12 minutes of general availability, which started at 6pm UTC yesterday. (source)

216,159 – currently active registrations as of 10am UTC today, 16 hours into general availability (source)

? – number of .co domains still active July 22, 2011.

Have I missed anything? Let me know in the comments and I’ll add your data to the list.

Second-tier TLDs gain aftermarket traction

Kevin Murphy, May 4, 2010, Domain Sales

The average aftermarket selling price of domain names in second-tier TLDs is creeping up, according to the latest numbers from Sedo.

Sedo’s latest quarterly sales review shows that namespaces such as .biz, .info and .org are selling for far better money than they were a year ago.

In fact, the median selling price of .biz, .org, and .net domains is now higher than that of .com.

The price of .biz names, which only accounted for 1% of overall sales, has almost doubled in the last four quarters, up 97% at $537.

The .info namespace fared almost as well, recording a median price of $418, up 91% on the $219 recorded in the second quarter of 2009.

The long-established .org has also appreciated over the last 12 months. Its median price rose 45% to $550.

While there’s no doubt that .com is still where the high-end money is, the median price for a .com was only $510, a 24% increase over the same period.

Sedo has started reporting median prices because big one-off sales can have an impact on the mean averages it also reports.

Its full Q1 Domain Market Study report can be downloaded here.

AusRegistry scores Japanese .brand deal

Kevin Murphy, April 28, 2010, Domain Registries

AusRegistry, the .au registry, has inked a deal with Brights Consulting, a company offering .brand domain services to the Japanese corporate market.

The company said the deal will mean AusRegistry will provide the technical back-end for any successful new gTLD applications that Brights manages to secure.

Other companies competing for new gTLD business include old hands VeriSign, Neustar and Afilias, as well as hungry newcomers such as Minds + Machines.

AusRegistry currently manages Australia’s .au, .qa for Qatar and .ae for the United Arab Emirates.

Brights is a corporate, rather than retail, ICANN registrar. I may be wrong, but it looks like the company counts Sony among its clients.

Could there be a .sony on the horizon?