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MMX vows to refocus under new boss after crappy 2020

Kevin Murphy, January 25, 2021, Domain Registries

MMX says it plans to refocus its business on higher-margin products after a 2020 marred by plummeting registrations, product delays and financial irregularities that led to senior management being oustered.

The new gTLD registry also revealed that it laid off 20% of its staff in a “right-sizing” exercise last year. Due to its modest size, this means about four or five people lost their jobs.

The company said today that acting CEO Tony Farrow has been confirmed for the job full-time, and that he will join the board of directors after regulatory checks.

Farrow took over last October, when CEO Toby Hall and CFO Michael Salazar were both ejected after admitting to over-stating MMX’s revenue and profit in 2019.

Now, Farrow says MMX will spend 2021 focusing on “quality” regs — those with a higher chance of renewing or with higher-margin reg fees — and on its AdultBlock services, which block trademarks and typos across its four porn-themed gTLDs.

Overall domains under management declined 19% in 2020, which appears to be almost entirely down to .vip, a cheap gTLD that initially performed strongly with Chinese speculators, losing about half a million names.

AdultBlock, which covers the old ICM Registry portfolio, launched at the end of 2019 with a high price tag and a couple bulk sales, but stalled during 2020. MMX blames this for a 3% decline in overall billings last year.

The company also hinted that it may try to offload some of its crappier gTLDs, saying:

The new executive team is also reviewing the contribution received from each of its TLDs and the growth prospects for each from new sales initiatives to ensure the carrying values associated with each TLD is appropriate going forward.

Farrow said in a news release:

Our FY 2021 plan will focus on AdultBlock sales, extensive release of inventory to the market, quality registrations with the view of future renewal revenue and standardized promotions for our channel partners. It is a straightforward business where focus must remain on the quality of our domain registrations and promotions with our channel partners. We lost some of the momentum after the initial launch of AdultBlock in FY 2019. However, FY 2021 was always the target year for the full rollout of this new product, and I am encouraged by the dialogue with our channel partners to really move AdultBlock in FY 2021.

AdultBlock, which sets trademark-match domains aside as non-resolving reserved names, launched with a price tag of between $349 and $799 per trademark per year.

MMX separately announced today that it is paying ICM Registry’s investors, primarily founder Stuart Lawley, over alleged (and denied) breaches of unspecified warranties made at the time of the acquisition in May 2018.

Farrow was COO of ICM from the 2011 launch of .xxx until the MMX acquisition.

Crackdown looms for new gTLD auction gaming

Kevin Murphy, January 21, 2021, Domain Policy

ICANN will be urged to consider taking a stronger position against companies who apply for new gTLDs simply to lose them at auction or immediately flip them to others.

A community working group, known as SubPro and tasked with developing rules for the next new gTLD round, delivered its final Final Report this week, and the one area that failed to gain a designation of “consensus” or stronger was private auctions.

In the 2012 application round, several companies applied for large portfolios of strings that look — in hindsight at least — like efforts to game the system by forcing rivals to auctions they planned to deliberately use.

Companies such as MMX made millions losing auctions during the round, some of which was reinvested in winning auctions for other TLDs.

Applicant Nu Dot Co was notable for losing every private auction it participated in, then quickly flipping its successful .web application when Verisign stepped up with a $135 million bankroll.

While it’s difficult to know the extent to which this was all planned in advance, it proved the business model — filing spurious applications for new gTLDs you have no intention of launching — could be lucrative in future rounds.

But SubPro has put forward a slew of recommendations that, should they pass the remaining hurdles of the policy development track, could bring in substantial sanctions for those applicants and registries found to be gaming the system.

The SubPro recommendations are heavily buttressed with square parentheses, indicating disputed text, and supplemented by some minority statements from members of the working group who think that private auctions should be banned outright in future application rounds.

But the headline recommendation, numbered 35.3, is this:

Applications must be submitted with a bona fide (“good faith”) intention to operate the gTLD. Applicants must affirmatively attest to a bona fide intention to operate the gTLD clause for all applications that they submit.

Far from merely providing a check-box assertion that they’re legit, which would itself be easily gamed, applicants would also find their applications scrutinized by ICANN and its external evaluators to check for signs of a lack of bona fides.

Factors used to determine shadiness could include how many applications for contested strings are applied for, how many private auctions are lost, whether the successful applicant has not launched its gTLD within two years, and whether contracts are flipped within the first year.

SubPro discussed penalties for gaming could include the loss of registry contracts, a ban from future rounds or straight-up monetary fines. But the group did not put forward any recommendations.

SubPro couldn’t seem to come to agreement on most of this. The recommendations were determined to have “strong support but significant opposition” during the group’s recent consensus call.

One strong objection came from a somewhat diverse group of SubPro participants comprising Alan Greenberg (At-Large), Christopher Wilkinson (At-Large), Elaine Pruis (Verisign), George Sadowsky (Afilias/ISOC), Jessica Hooper (Verisign), Jim Prendergast (consultant), Jorge Cancio (Swiss government, but signed in a personal capacity) and Kathryn Kleiman (non-commercial users). They said:

The recommendations in the final report are a mix of overly complex disclosures and attestations that needlessly complicate the program to allow for private auctions. And they will not work. The only way to prevent a repeat of the activity from the 2012 round is to ban private auctions

They also claimed that allowing private auctions would putter smaller, niche and community applicants at a disadvantage, and that ICANN’s reputation would be harmed if it was seen to be overseeing gaming.

The At-Large Advisory Committee also issued a strong objection to private auctions along the same lines:

We remain concerned about attempts to “game” the application process through use of private auction and share the ICANN Board’s concerns on the consequences of shuffling of funds between private auctions. The ability for a loser to apply proceeds from one private auction to fund their other private auctions only really benefits incumbent registry operators or multiple-string applicants and clearly disadvantages single-TLD/niche applicants. We believe there should be a ban on private auctions, and that by mandating ICANN only auctions, the proceeds of ICANN auction can be directed for uses in public interest

The assumption there of course is that an ICANN “last resort” auction, in which the winning bid is funneled into ICANN’s cash pile, would be spent on stuff genuinely in the public interest, rather than frittered away on secretly settling employee lawsuits or indulging in more expensive, self-important navel-gazing.

Perhaps unsurprisingly, the ICANN board of directors has indicated that it prefers the idea of last resort auctions to private auctions.

But SubPro has also made some recommendations that could potentially keep the price of last-resort bids down, completely redesigning the auction process compared to the 2012 round.

If the recommendations are implemented, applicants would have to submit bids towards the start of the application process, when they don’t even know who they’re bidding against.

After all the applications have been submitted, ICANN evaluators would group them all according to whether they’re identical or confusingly similar to each other, then inform each applicant in a contention set how many bidders — but not their identities — they’re up against.

Applicants would then have to submit a sealed bid stating the maximum price they’d be willing to pay for the gTLD in question. It would be only after “reveal day”, when ICANN publishes the applications themselves, that everyone would learn who they’re bidding against.

They’d then be able to engage in private resolutions (auctions could come into play at this point), but it would only be after contention resolution phases such as objections and Community Priority Evaluations were complete that applicants would find out who’d submitted the highest bid.

The winning bidder would pay the amount of the second-highest bid to ICANN.

The 400-page final report (pdf), along with the minority statements, will now be sent to the GNSO Council for approval, before it makes its way to the ICANN board.

Given how much work remains to be done on private auctions and other issues that I’ll get to in later coverage, it seems that a lot of the mechanics of how contention resolution will work will have to be devised by ICANN and the community during the Implementation Review Team and Operation Design Phase phases, along with at least one round of commentary on at least one edition of the next Applicant Guidebook.

The next round of new gTLDs has moved a step closer, but it’s still going to be well over a decade after the last application window before we see the next one.

Would-be new country wants to share another country’s ccTLD

Kevin Murphy, January 21, 2021, Domain Policy

What do you do if you’re the government of a country without a ccTLD, because the rest of the world does not recognize you as a country?

Perhaps the strangest solution to this predicament is to ask another country with a semantically meaningful ccTLD of its own if you can share that national resource.

And that’s reportedly what the government of Somaliland has done, reaching out to Sierra Leone for permission to use its .sl TLD.

According to the Somaliland Chronicle, its IT minister has written to his counterpart in Sierra Leone to propose “a commercial partnership with your esteemed office regarding the internet Top Level Domain”.

The east African country, which has its own government and a small degree of international recognition, is not currently acknowledged by the United Nations — it’s considered part of neighboring Somalia — and as such does not qualify for a ccTLD under International Standards Organization (and therefore ICANN) policies.

The minister has reportedly forbidden the use of Somalia’s .so domain, and the government itself uses a .org.

Sierra Leone, on the other side of the continent, uses .sl, which would also be the perfect choice for Somaliland if it were not already taken.

It’s not clear to what extent Somaliland wishes to share the ccTLD, but if it were to go as far as full joint ownership that would be unusual indeed.

Of course, the quickest way into the DNS root in its own right could be to apply for a memorable, relevant gTLD in ICANN’s next application round, which is probably not too many years away right now.

In 2012, there were several applications for geo-gTLDs representing regions that want, to a greater or lesser extent, independence.

This trail was over course blazed almost in 2003 by Catalonia’s .cat and now includes the likes of .scot (Scottish), .eus (Basques) and .krd (Kurds).

New gTLD consultants, start your engines.

Rules for the next new gTLD round near the final straight

Kevin Murphy, January 7, 2021, Domain Policy

The ICANN working group tasked with creating policies for the next round of new gTLDs is wrapping up its work this week, setting up the battle lines for the next phase of the program’s development.

Members of the cross-constituency Subsequent Procedures for new gTLDs group, known as SubPro, have until a minute before midnight UTC Friday night to declare whether they’re not happy with any parts of the 373-page document (pdf).

It’s expected that some groups and individuals will have beef with some of the SubPro recommendations, which will be included in the Final Report as dissenting minority statements before it is sent off to the GNSO Council later this month.

The report, the product of five years of discussions, will largely affirm that the next new gTLD round will proceed along roughly the same lines as the 2012 round, with some of ICANN staff’s historical ad-libs being codified and a few new big concepts introduced.

New additions include the idea of a pre-evaluation process for registry service providers, enabling applicants to pick from a menu of pre-approved back-ends and avoid the cost of having their technical prowess evaluated for every string they apply for.

The price of applying could be kept artificially high, however, to discourage gTLD stockpiling, and the report will also recommend banning the coexistence of single/plural variants of the same word.

One area where there was definitely no consensus was the issue of “closed generics” — a non-brand string reserved for the sole use of the registry — it’s going to be up to the GNSO Council and ICANN to muddle through this one.

While the consensus call marks the end of the working group phase of new gTLD policy development, there are still many substantial hurdles to leap before the next application round opens.

In the last round, the policy was approved by the GNSO Council in 2007, and ICANN didn’t start accepting applications until the start of 2012.

it may not take five years between policy and launch this time, if only because many of the new recommendations are merely affirmations of the status quo, but there are new mechanisms ICANN will have to implement before the next round opens, and we should probably expect more than one comment period on iterations of the next Applicant Guidebook.

The road between now and the next round is still likely measured in years.

Donuts punter welcomes our new alien overlords in December premium sale

Kevin Murphy, January 5, 2021, Domain Registries

When humanity finally confirms the existence of intelligent extraterrestrial life, what’s the new gTLD domain name you’d want to have in your portfolio?

Why, first.contact, of course. The domain name was registered with premium pricing from Donuts in December, according to registry data published this week, and is currently listed for resale with a $1 million price tag.

If domaining is often likened to gambling, first.contact has to be one of the biggest lottery tickets of them all — you’re betting on the biggest news story in human history breaking during your lifetime.

The chances of a final solution to the Fermi paradox may be unknowable, but a million bucks might not be an unreasonable ask if the gamble pays off.

I like the name, anyway, even if it’s more likely to be a drain on the registrant’s resources for the rest of his life.

It’s one of three .contact domains Donuts counted among its top 20 premium-priced sales for December, the others being my.contact and business.contact.

The company took over .contact from Top Level Spectrum in 2019 and took it to general availability last month.

.contact does not rank in the top 10 of Donuts’ portfolio of gTLDs for the month.

While Donuts does not publish sale prices for its premiums, the top name for December appears to have been category-killer office.furniture.

Fuji Xerox kills off gTLD after rebrand

Kevin Murphy, January 4, 2021, Domain Registries

Fuji Xerox has become the latest multi-billion-dollar company to ditch its dot-brand gTLD.

The Japanese-American company, a joint venture of Xerox and Fuji, has told ICANN it wants to terminate its registry contract for .fujixerox, and ICANN has indicated its intention to let the string die.

The gTLD was not in use, beyond the mandatory nic.fujixerox placeholder site.

That said, the termination appears to be primarily due to a rebranding as the joint venture fizzles out.

Fuji Xerox is, according to Wikipedia, the world’s oldest Japanese-American joint-venture company, at 59 years old. It’s in the document processing space and had $11 billion in annual revenue.

But the companies said last year they would end the relationship, with Xerox no longer providing its tech, leading to rebranding the company Fujifilm Business Innovation. The dot-brand is clearly no longer needed.

Xerox also owns .xerox, and it’s not using that either. There is no .fuji or .fujifilm.

.fujixerox the first dot-brand to jump off the cliff this year, and the 86th in total.

ICANN could block Donuts from buying Afilias

Kevin Murphy, December 14, 2020, Domain Registries

In what appears to be an almost unprecedented move, ICANN is to review Donuts’ proposed acquisition of rival Afilias at the highest level, raising a question mark over the industry mega-merger.

The org’s board of directors will meet Thursday to consider, among other things, “Afilias Change of Control Approval Request”.

It’s highly unusual for a change of control to be discussed at such a high level.

Every registry contract contains clauses requiring ICANN’s consent before a registry switches owners, and it has approved hundreds over the last decade. But the process is usually handled by legal staff, without board involvement.

The only time, to my memory, that the board has got involved was when it withheld consent from .org manager Public Interest Registry earlier this year.

It’s not entirely clear why Afilias has been singled out for special treatment.

It’s probably not due to its status as a legacy gTLD registry operator because of .info — when GoDaddy bought .biz operator Neustar’s registry business earlier this year, there was no such board review.

In addition, the .info contract’s change of control provisions are very similar to those in the standard new gTLD contract.

Could it be due to Donuts executives former ties to ICANN and the perception of a conflict of interest? Again, it seems unlikely.

While Donuts CEO Akram Atallah is former president of ICANN’s Global Domains Division, former ICANN CEO Fadi Chehadé is no longer involved with Donuts owner Abry Partners, having jumped to erstwhile PIR bidder Ethos Capital this July.

Are there competition concerns? It’s a possibility.

Afilias holds the contracts for 24 gTLDs new and legacy, but supports a couple hundred more, while Donuts is contracted for over 240.

But between them, they have barely 10 million domains under management. Donuts isn’t even the market leader in terms of new gTLD registrations.

And ICANN avoids making competition pronouncements like the plague, preferring instead to refer to national competition regulators.

Could ICANN’s interest have been perked by the fact that Afilias is the back-end provider for .org’s 10 million domains, and the proposed Donuts deal comes hot on the heels of the failed PIR acquisition? Again, it’s a possibility.

But none of the dangers ICANN identified in the .org deal — such as pricing, freedom of speech, and the change from a non-profit to for-profit corporate structure — appear to apply here.

There could be technical concerns. Atallah told DI a couple weeks ago that the plan was to ultimately migrate its managed TLDs to its Amazon cloud-based registry.

But moving its clients’ TLDs to a new back-end infrastructure would require their consent — it would be up to PIR and its overlords at the Internet Society to agree to moving .org to the cloud.

I think it’s likely that a combination of all the above factors, and maybe others, are what’s driving the Afilias acquisition to the ICANN boardroom. It will be interesting to see what the board decrees.

Westerdal offloads two more gTLDs to Donuts

Kevin Murphy, December 9, 2020, Domain Registries

Donuts has bulked out its gTLD portfolio yet again, acquiring two more strings from Fegistry and Top Level Spectrum.

ICANN records show that it recently took over the contracts for .observer and .realty.

They’re both launched, active TLDs. Both selling registries are backed by investor Jay Westerdal.

.observer was bought dormant by TLS from the British newspaper of the same name in 2016 and launched the following year with .com-competitive prices.

TLS has been marketing it as a place for news organizations, though it’s unrestricted. Registrations plateaued at about 1,000 a couple of years ago and haven’t seen much movement since.

.realty is a different story.

Fegistry paid ICANN $5,588,888 at a public auction — beating Donuts, in fact — in 2014, and launched it in 2017 with a roughly $300-a-year retail price.

It’s been cruising along with about 2,200 names under management for the last couple of years, until this September and early October, when its zone file shot up to almost 18,000 domains.

This seems to have been the result of a $0.99 promotion at Epik, which has since ended.

One would have to assume that the vast majority of those new domains will be speculative and are unlikely to renew at the full $300 reg fee a year from now.

While the contracts changed hands in late October, it’s inconceivable that Donuts was not aware of the quality of the recent registrations.

It’s not the first time Westerdal’s businesses have sold to Donuts, which took .contact off Top Level Spectrum’s hands in April 2019. That gTLD entered general availability this week.

It’s also handed off responsibility for .forum to MMX, which plans to launch it with a puzzling $1,000 price tag next March, although TLS is still listed as the ICANN contractor.

TLS still runs the controversial gripe site TLD .feedback, along with the unlaunched head-scratcher .pid.

Fegistry is still fighting for .hotel, along with rival applicants, in ICANN’s quasi-judicial Independent Review Process.

Three more new gTLDs blink out of existence

Kevin Murphy, December 8, 2020, Domain Registrars

Another new gTLD registry operator, representing three dot-brands, has told ICANN that they want their contracts scrapped.

The registry is CNH Industrial, and the gTLDs are .case, .caseih and .newholland.

To be honest, if you’d asked me yesterday whether these TLDs existed or not, I would have guessed not.

But CNH is a pretty big deal — a New York-listed multinational maker of construction and agricultural equipment and vehicles with over $28 billion in revenue last year. Case and New Holland are two of its brands.

The brands do not appear to have been discontinued, so this seems to be a typical case of company simply deciding against using its TLDs, which it probably shouldn’t have applied for in the first place.

None of them has any domains beyond the mandatory nic.example site.

Interestingly, it has a fourth dot-brand, .iveco, representing a vehicle brand, that so far it does not seem to have terminated, judging by ICANN records. But that’s not in use either.

The terminations bring the total dead dot-brands to 85, 16 of which died this year.

Credit union gTLD changes hands to perhaps surprising buyer

Kevin Murphy, December 4, 2020, Domain Registries

Yet another new gTLD is moving to a new registry, but this time it’s not a case of a large gTLD holder bulking up its portfolio.

This time it’s .creditunion, and the new registry is 18-year-old .coop registry DotCooperation, according to ICANN records.

.creditunion was delegated to the Credit Union Nation Association, the trade group for US credit unions, in 2015 and launched in 2017.

Like .coop, it’s a tightly restricted TLD, with eligibility only for those with a “meaningful nexus to the credit union sector”.

It had 580 domains at the last count, having peaked at 640 a couple years ago. The domains are being used as primary domains by at least a couple dozen credit unions.

But volume was never the plan for .creditunion, with CUNA specifically citing .coop as its role model in its 2012 new gTLD application.

“The success of the gTLD will not be measured by the number of domain names registered. Instead, it will be measured by the level of consumer recognition and trust,” CUNA said back then.

CUNA actually announced the DotCooperation deal in a press release on its web site at the end of September, but I don’t think anyone in the domain industry noticed.

.coop, which is reserved for co-operative associations, was one of the original 2000-round new gTLDs. It’s been chugging along at relatively low volume for the last two decades, peaking at 15,000 in February 2013.

For the last few years, it’s been growing by maybe a dozen or so domains a month, and currently stands at about 8,300 names.

DotCooperation is jointly owned by the National Cooperative Business Association and the International Cooperative Alliance.