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Governments go on a kill-crazy rampage with new two-letter domain veto

Kevin Murphy, March 24, 2015, Domain Registries

ICANN has confirmed to new gTLD registries that governments now get to unilaterally block two-letter domains that match their home ccTLDs.

The organization has essentially given nations a veto — already enthusiastically exercised — over domains including il.army, it.pizza and fr.domains.

I’m not making this up. The Italian government has banned anyone from registering it.pizza.

Governments have already started invoking their new-found right, with dozens of domains already heading to the block-list.

The veto was revealed in a letter from Akram Atallah, president of ICANN’s Global Domains Division, to the Registries Stakeholder Group yesterday.

It has not been published yet, but I’ve had its contents confirmed by a few registries and I understand the RySG mailing list is buzzing about it today.

In it, Atallah says that two-letter strings that do not receive objections from the government with the matching ccTLD will be released within seven to 10 days of comment periods closing.

However, strings that do receive objections will remain blocked.

For labels that receive objections from relevant governments, the labels will remain reserved. Should the registry operator and the objecting government reach an agreement regarding the release of the label, the registry operator shall notify ICANN that it has reached agreement, and ICANN will approve the release request and issue an authorization. The label will no longer be a reserved name.

until there is Consensus Policy or a Board Resolution on this matter, ICANN can only follow the process outlined above. ICANN encourages further community discussions to resolve this matter, and until then, negotiation between the objector and the registry operator as a means to release this class of labels from the reserved names list.

New gTLD registries believe, as they explained in a recent letter (pdf), that neither ccTLD operators nor their governments own these two-character strings. They believe ICANN is creating new rights.

So far, two-character domains have been banned by default in all new gTLDs. It was kind of a placeholder policy in order to get the new gTLD program launched a few years ago.

ICANN did enable the release of letter-number, number-letter and number-number strings in December, but made letter-letter combinations subject to government comments.

Following a GAC outcry last month, the comment periods were extended.

All comments were to be “fully considered”, but it wasn’t clear what that meant until the RySG asked and Atallah replied yesterday.

Some governments are already using the comment period to exercise their new veto.

The European Commission, for example, has objected to eu.credit, eu.creditcard, eu.auction, eu.casino, eu.bingo and eu.law.

The basis for the EU objections is in most of the cases: “The new TLD at hand corresponds to a regulated market in many EU countries. Its release might generate confusion and possible abuses at the end users level.”

It’s a wonder that the EU doesn’t seem to care about those strings in its own .eu ccTLD, where they’re all registered by people that I suspect may lack credentials.

Does credit.eu look to you like the registrant is a credentialed member of a regulated financial services industry? If he was, he may be able to afford a better web site.

The Commission also objects to eu.community, because:

the terms “EU Community” or “European Community” are widely used

That is true, which makes me wonder why the EU is allowing community.eu to languish parked at Sedo. You’d have to ask the Commission.

Israel, meanwhile, objects to il.casino, il.bingo, il.law, il.chat, il.bible, il.country, il.airforce, il.navy and il.army

The Vietnamese ccTLD registry has objected to several vn. domains, but it’s not clear to me whether it has veto authority.

Italy has objected to it.pizza, it.bingo and it.casino. Really, Italy? You’re objecting to “it.pizza”?

Côte d’Ivoire objects to all ci. domains.

Spain objects to es.casino, es.bingo and es.abogado.

Again, I invite you to check out bingo.es and casino.es and make a judgement as to whether the registrants are licensed gambling establishments.

Taiwan has vetoed the release of .tw in all city gTLDs (such as tw.london, tw.berlin etc) over a “concern that the release of above-mentioned domain names may cause the degradation of statehood”.

France has objected to “fr” in .archi, .army, .airforce, .bank, .bet, .bio, .casino, .cloud, .dentist, .doctor, .domains, .finance, .lawyer, .navy and .sarl.

Again again, several of these domains are just parked if you flip the words to the other side of the dot.

As a reminder, ICANN CEO Fadi Chehade said recently:

Come on guys, do not apply rules that you’re not using today to these new folks simply because it’s easy, because you can come and raise flags here at ICANN. Let’s be fair.

Does Chehade agree with Donuts on .doctor?

Kevin Murphy, March 24, 2015, Domain Policy

Should governments have the right to force business-limiting restrictions on new gTLD operators, even though they don’t have the same rules in their own ccTLDs?

ICANN CEO Fadi Chehade evidently believes the answer to that question is “No”, but it’s what ICANN is controversially imposing on Donuts and two other .doctor applicants anyway.

Donuts recently filed a Request for Reconsideration appeal with ICANN over its decision to make the .doctor gTLD restricted to medical professionals only.

It was an unprecedented “Public Interest Commitment” demanded by ICANN staff in order to keep the Governmental Advisory Committee happy.

The GAC has been asking for almost two years for so-called “Category 1″ gTLD strings — which could be seen to represent highly regulated sectors such as law or medicine — to see a commensurate amount of regulation from ICANN.

Governments wanted, for example, registrants to show professional credentials before being able to register a name.

In the vast majority of instances, ICANN creatively reinterpreted this advice to require registrants to merely assert that they possess such credentials.

These rules were put in registries’ contracts via PICs.

But for some reason in February the organization told Donuts that .doctor domains must be “ascribed exclusively to legitimate medical practitioners.”

According to Donuts, this came out of the blue, is completely unnecessary, an example of ICANN staff making up policy on the spot.

Donuts wants to be able to to sell .doctor names to doctors of any discipline, not just medical doctors. It also wants people to be able to use the names creatively, such as “computer.doctor” or “skateboard.doctor”.

What makes ICANN’s decision especially confusing is that CEO Fadi Chehade had the previous day passionately leaped to the defense of new gTLD registries in their fight against unnecessary GAC-imposed red tape.

The following video, in which Chehade uses .dentist as an example of a string that should not be subject to even more oversight, was taken February 11 at a Q&A with the Domain Name Assocation.

The New gTLD Program Committee meeting that authorized ICANN staff to add the new PIC took place February 12, the very next day. Chehade did not attend.

It’s quite remarkable how in line with registries Chehade seems to be.

It cuts to the heart of what many believe is wrong with the GAC — that governments demand of ICANN policies that they haven’t even bothered to implement in their own countries, just because it’s much easier to lean on ICANN than to pass regulations at home.

Here’s the entire text of his answer. He’s describing conversations he’d had with GAC members earlier in the week.

They’re saying stop all the Category 1 TLDs. Stop them. Freeze them!

And we said: Why do we need to freeze them? What’s the issue?

They said: It’s going to harm consumers.

How will it harm consumers? We started having a debate.

It turns out that they’re worried that if somebody got fadi.casino or fadi.dentist, to pick one of Statton’s [Statton Hammock, VP at Rightside, who was present], that this person is not a dentist and will pluck your ear instead of your teeth. How do you make sure they’re a dentist?

So I asked the European Commission: How do you make sure dentist.eu is a dentist?

They said: We don’t. They just get it.

I said: Okay, so why do these guys [new gTLD registries] have to do anything different?

And they said: The new gTLD program should be better or a model…

I said: Come on guys, do not apply rules that you’re not using today to these new folks simply because it’s easy, because you can come and raise flags here at ICANN. Let’s be fair. How do you do it at EU?

“Well, if somebody reports that fadi.dentist.eu is not a dentist, we remove them.”

Statton said: We do the same thing. It’s in our PICs. If fadi.dentist is not, and somebody reports them…

They said: But we can’t call compliance.

You can call compliance. Anyone can call compliance. Call us and we’ll follow up. With Statton, with the registrar.

What we have here is Chehade making a passionate case for the domain name industry’s right to sell medical-themed domain names without undue regulation — using many of the same arguments that Donuts is using in its Reconsideration appeal — then failing to show up for a board meeting the next day when that specific issue was addressed.

It’s impossible to know whether the NGPC would have reached a different decision had Chehade been at the February 12 meeting, because no formal vote was taken.

Rather, the committee merely passed along its “sense” that ICANN staff should carrying on what it was doing with regards implementing GAC advice on Category 1 strings.

While Chehade is but one voice on the NGPC, as CEO he is in charge of the ICANN staff, so one would imagine the decision to add the unprecedented new PIC to the .doctor contract falls into his area of responsibility.

That makes it all the more baffling that Donuts, and the other .doctor new gTLD applicants, are faced with this unique demand to restrict their registrant base to one subset of potential customers.

All eyes on Donuts as first new gTLD renewal figures roll in

Kevin Murphy, March 23, 2015, Domain Registries

Donuts is about to give the world the clearest picture yet of the ongoing demand for new gTLD domain names.

The company has taken the unprecedented decision to disclose its renewal figures on a pretty much live basis.

COO Richard Tindal has been blogging renewal stats for .bike, .clothing, .guru, .ventures, .holdings, .plumbing and .singles for the last few days.

Those were the first seven of its gTLDs to hit general availability.

To Saturday, the renewal status of 6,352 names in these gTLDs was known and the renewal rate was 85.3%.

However, that rate is boosted by the relatively high proportion of the names that were registered during sunrise periods.

Donuts said that “two thirds” of the 6,352 reported domains were registered after sunrise.

That doesn’t make a whole lot of sense to me, given that Donuts has previously put the total number of sunrise regs across the seven TLDs at just 1,404, which would work out at about 22%, not 33%.

On Friday, the company had said that the status of 4,534 names was known and the renewal rate was 91.6%.

If you deduct the Friday numbers from the Saturday numbers, you get to 1,265 renewals and 553 drops, a renewal rate of almost 69.6% for that particular day.

That number, which is a few percentage points off what a gTLD such as .com regularly reports, could of course fluctuate.

The full-year renewal rate, which would factor out much of the domainer activity, of course won’t be known for another year.

Donuts said it expects its renewal rate to drop to the mid-70s in its next daily report, expected today, which will cover an additional 22,910 domains.

The company’s decision to blog its numbers comes a day or two after we reported that ICANN is only budgeting for renewals of 50%.

The 14.6% of names not renewed works out to about 933 domains.

“We believe most of those names will be re-registered by another party within the next 35 days,” Tindal wrote.

As they were all registered in the early days of GA, one might expect them to be of a reasonably high quality.

While GA began at the end of January 2014, renewal rates are not known until the Auto-Renew Grace Period, which can be as long as 45 days, has expired.

ICANN slashes new gTLD revenues by 57%, forecasts renewals at 25% to 50%

Kevin Murphy, March 19, 2015, Domain Registries

ICANN has dramatically reduced the amount of revenue it expects to see from new gTLDs in its fiscal 2015.

According to a draft 2016 budget published this morning, the organization now reckons it will get just $300,000 from new gTLD registry transaction fees in the year ending June 30, 2015.

That’s down 75% from the $1.2 million predicted by its FY 2015 budget, which was approved in December.

Transaction fees are paid on new registrations, transfers and renewals, but only by gTLDs with over 50,000 billable transactions per year.

Today, only 14 of the 522 delegated new gTLDs have added more than 50,000 names. ICANN says that only 17 registries are currently paying transaction fees.

It’s not only the transaction fees where ICANN has scaled back its expectations, however.

The organization also expects its fixed new gTLD registry fees — the $6,250 each registry must pay per quarter regardless of volume — to come in way below targets.

The new budget anticipates $12.7 million from fixed registry fees in FY15, down 24% from the $16.7 million in its adopted FY15 budget.

This is presumably due to larger than expected numbers of would-be registries either withdrawing or dragging their feet in the path to delegation.

Registrar transaction fees are now anticipated at $1.1 million, compared to $2 million and $3.2 million predicted by the adopted and draft FY15 budgets respectively.

Taking all three revenue sources together, ICANN now expects new gTLDs to contribute just $14.1 million to its fiscal 2015 revenue, down 29% from the $19.8 million forecast in its adopted FY15 budget.

That’s down 57% from the $32.7 million in the original draft budget for the period.

The current budget assumes 15 million new gTLD registrations in the 12-month period, revised down from the 33 million domains predicted in its draft FY15 budget a year ago.

With just a few months left until the end of the fiscal year, there are currently fewer than 4.5 million domains in published new gTLD zone files.

ICANN plainly no longer expects new gTLDs to get anywhere close to 15 million domains.

Renewals expected to be weak, weak, weak

The organization is taking a conservative view about renewals for 2016.

The 2016 budget expects renewals at just 50% for regular gTLDs and 25% for registries — presumably ICANN has .xyz in mind — that gave away domains for free at launch.

That 50% is both ICANN’s “best” and “high” estimate. Its “low” estimate is 35% for non-free domains.

Obviously, 50% is a very low renewal number for any registry (70%+ is the norm). Even شبكة. (.shabaka) told us recently that 55% of its registrants are renewing before their domains expire.

Conversely, 25% may be a very optimistic number for free domains (when Afilias gave away free .info names a decade ago, almost all of them dropped rather than being renewed).

For fiscal 2016, which begins July 1, 2015, ICANN expects new gTLD revenue to be $24.1 million — about a quarter off its original plan for 2015.

That breaks down as $19.9 million from registry fixed fees, $2 million from registry transaction fees, and $2.3 million from registrar transaction fees.

ICANN said it is is assuming that it will start the year with 602 registries and end it with 945.

The proposed FY16 budget, now open for comment, can be found here.

For comparison purposes, the adopted FY15 budget is here (pdf) and the draft FY15 budget is here (pdf).

Donuts launches first “not com” ad campaign

Kevin Murphy, March 17, 2015, Domain Registries

Donuts has launched its first ad campaign, part of its plan to raise awareness about new gTLDs as a category.

It’s a digital-only video campaign, expected to run on sites including YouTube, the New York Times, Forbes, Mashable and Fast Company.

The theme is “freedom of choice”, using the slogan “Welcome to the not com revolution”.

“It’s going to be a lot of digital, a lot of online marketing, and it’s going to be about choice and the fact that this new product category represents an opportunity to grab an identity on the internet, that really reflects what it is you are and what you do,” COO Richard Tindal told DI in a recent interview.

The ad campaign going to be US-only, which chimes with what Tindal said as he laid out some of Donuts’ vision and marketing plans for 2015.

“I think that level of awareness is very low at sort of five to ten percent,” he said in the January interview. “It varies from country to country. Probably in the US it is even a little lower than other places.”

Tindal told us that Donuts is primarily concerned with marketing the “category” of new gTLDs, rather than any specific TLD.

“Our mission in 2015 is to have those people be aware of the category before they turn up at the registrar,” he said. “They are still going to get the story from the registrar, but we want them to know all about this new thing before they turn up.”

Donuts says that the new ad campaign will drive traffic to Your.domains.

That domain actually redirects to Domainr — a sparse, but quite smart, name-spinner app developed by the little-known nb.io.

That site, which appears to be monetized with affiliate links, quickly presents relevant domains based on user keywords and sends leads to a selection of registrars.

Such “smart search” is an important part of Donuts’ strategy, but one where the new gTLD industry as a whole is failing to make much of an impact at the moment.

Here in the UK, it’s pretty obvious from Go Daddy’s advertising that the market-leading registrar would sooner take the Verisign shilling and plug .com rather than risk promoting the largest expansion of inventory in its history.

Tindal said in our interview that Donuts’ aim in 2015 is to promote smart search over paid placement.

Asked whether registrars’ economic interests are aligned with new gTLD registries’, he said he’s convinced that for all the domains sold in 2014, new gTLDs have better metrics for registrars than .com. The only problem is volume.

If you look at the metrics of those .com names, under every criteria the registrar is better off selling one of ours.

The customer finds a name more quickly. It’s got more margin for the registrar, because they’re better quality names. They’re going to buy more. The problem, as you’ve just noted is of course just the volume. At the moment, there’s so much volume for them in .com that they tend to stick to that, and so we’re seeing the sort of behaviors, if you like, that are sort of clouding what we would like to see.

Awareness-raising is important, therefore, to get customers actively looking for more relevant domains, rather than being served up .com by default at registrars unwilling to take a risk on new TLDs.

Donuts’ announcement can be found here.

The full interview with Tindal, which also covers topics such as SEO and dot-brands, can be read by DI PRO subscribers here.