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.CLUB announces three years of price increases

Kevin Murphy, January 15, 2019, Domain Registries

.CLUB Domains is to increase its wholesale registry fees by $1.90 over the next three years.

The company announced that the increases for .club names will come on July 1 this year, next year, and in 2021.

The current price is $8.05 per domain per year. This will go up to $8.95, then $9.45, then $9.95.

They’re the first price changes .CLUB has implemented, other than discounts, since its launch in 2014.

The gTLD had almost 1.5 million names under management at the last public count, and has about 1.16 million names in its zone file today.

It saw a growth surge in the second half of 2018 due to aggressive discounting in China — with AliBaba selling new names for as little as $0.44 — which led to a corresponding increase in abuse.

.CLUB is a rare example of a private TLD operator that is fairly open about its financials.

How new gTLD auctions could kill gaming for good

Kevin Murphy, January 11, 2019, Domain Policy

Ever heard of a Vickrey auction? Me neither, but there’s a good possibility that it could become the way most new gTLD fights get resolved in future.

It’s one of several methods being proposed to help eliminate gaming in the next new gTLD application round that have received some support in a recently closed round of public comments.

ICANN’s New gTLD Subsequent Procedures working group (SubPro) is the volunteer effort currently writing the high-level rules governing future new gTLD applications.

Two months ago, it published a preliminary report exploring possible ways that contention sets could be resolved.

The current system, from the 2012 round, actively encourages applicants to privately resolve their sets. Usually, this entails a private auction in which the winning bid is shared evenly between the losing applicants.

This has been happening for the last five years, and a lot of money has been made.

Losing auctions can be a big money-spinner. Publicly traded portfolio registry MMX, for example, has so far made a profit of over $50 million losing private auctions, judging by its annual reports. It spent $13.5 million on application fees in 2012.

MMX is actually in the registry business, of course. But there’s a concern that its numbers will encourage gaming in future.

Companies could submit applications for scores of gTLDs they have no intention of actually operating, banking on making many multiples of their investment by losing private auctions.

Pointing no fingers, it’s very probably already happened. But what to do about it?

Who’s this Vickrey chap?

One suggestion that seems to be getting some love from diverse sections of the community is a variation of the “Vickrey auction”.

Named after the Canadian Nobel Prize-winning economist William Vickrey, it’s also called a “second price sealed bid auction”.

Basically, each applicant would secretly submit the maximum price they’d be willing to pay for the contested gTLD, and the applicant with the highest bid would pay the amount of the second-highest bid.

This method has, I believe, been used more than once in private contention resolution during the 2012 round.

But under the system suggested by SubPro, each applicant would make their single, sealed, high bid at time of application, before they know who else is gunning for the same string.

That way, contention sets could be mostly eliminated right at the start of the process, leading to time and cost efficiencies.

There’d be no need for every application in a contention set to go through full evaluation. Only the high bidder would be evaluated. If it failed evaluation, the second-highest bidder would go into evaluation, etc, until a successful applicant was found.

For losing applicants, a possible benefit of this is that they’d get much more of their application fees refunded, because they’d be skipping much of the process.

Neither would they have to bear the ambient running costs of sitting on their hands for potentially years while the ICANN process plays itself out.

It could also substantially speed up the next round. If the round has five, 10, 20 or more times as many applications as the 1,930 received in 2012, resolving contention sets at the very outset could cut literally years off processing times.

The SubPro concept also envisages that the winning bid (which is to say, the second-highest bid) would go directly into ICANN’s coffers, eliminating the incentive to game the system by losing auctions.

I must admit, there’s a lot to love about it. But it has drawbacks, and critics.

Why Vickrey may suck

SubPro itself notes that the Vickrey model it outlines would have to take into account other aspects of the new gTLD program, such as community applications, applicants seeking financial support from ICANN, and objections.

It also highlights concerns that bids submitted at the time of application constitute private business-plan information that applicants may not necessarily want ICANN staff seeing (with the revolving door, this info could quite easily end up at a competitor).

Companies and constituencies responding to the recent public comment period also have concerns.

There’s hesitance among some potential applicants about being asked to submit blind bids. There are clearly cases where an applicant would be prepared to pay more to keep a gTLD out of the hands of a competitor.

One could imagine, for example, that Coca-Cola would be ready to spend a lot more money on .cola if it knew Pepsi was also bidding, and possibly less if it were only up against Wolf Cola.

The Intellectual Property Constituency raised this concern. It said that it was open to the idea of Vickrey auctions, but that it preferred that bids should be submitted after all the applications in the contention set have been revealed, rather than at time of application:

Although there is a potential downside to this in that the parties have not put a “value” on the string in advance, the reality is that many factors come into play in assessing that “value”, certainly for a brand owner applicant and possibly for all applicants, including who the other parties are and how they have indicated they intend to use the TLD.

The Brand Registry Group and Neustar were both also against the Vickrey model outlined by SubPro, but neither explained their thinking.

The Business Constituency, which is often of a mind with the IPC, in this case differed. The BC said it agreed that bids should be submitted alongside applications, only to be unsealed in the event that there is contention. The BC said:

This Vickrey auction would also resolve contention sets very early in the application evaluation process. That saves contending applicants from spending years and significant sums during the contention resolution process, which was very difficult for small applicants.

It’s hard to gauge where current registries, which are of course also likely applicants, stand on Vickrey. The Registries Stakeholder Group is a pretty diverse bunch nowadays and it submitted a set of comments that, unhelpfully, flatly contradict each other.

“Some” RySG members believe that the current evaluation and contention process should stay in place, though they’re open to a Vickrey-style auction replacing the current ascending-clock model at the last-resort stage after all evaluations are complete.

“Other” RySG members, contrarily, wholeheartedly support the idea that bids should be submitted at the time of application and the auction processed, Vickrey-style, before evaluation.

“An application process which requires a thorough evaluation of an applicant who will not later be operating the gTLD is not an efficient process,” these “other” RySG members wrote. They added:

if contention sets are resolved after the evaluation process and not at the beginning of it, like the Vickery model suggestion, it would enable applicants who applied for multiple strings to increase the size of their future bids each time they lost an auction. Each TLD needs to be treated on its own merits with no contingencies allowed for applicants with numerous applications.

It’s not at all clear which registries fall into the “some” category and which into “other”, nor is it clear the respective size of each group.

Given the lack of substantive objections to pre-evaluation Vickrey auctions from the “some” camp, I rather suspect they’re the registries hoping to make money from private settlements in the next round.

Other ideas

Other anti-gaming ideas put forward by SubPro, which did not attract a lot of support, included:

  • A lottery. Contention sets would be settled by pulling an applicant’s name out of a hat.
  • An RFP process. This would mean comparative, merit-based evaluation, which has never been a popular idea in ICANN circles.
  • Graduated fees. Basically, applicants would pay more in application fees for each subsequent application they filed. This would disadvantage portfolio applicants, but could give smaller applicants a better shot at getting the string they want.

All of the comments filed on SubPro’s work has been fed back into the working group, where discussions about the next new gTLD round will soon enter their fourth year…

.amazon domain isn’t a slam dunk after all

Kevin Murphy, January 9, 2019, Domain Policy

Amazon’s application for the .amazon dot-brand may not be as secure as it was thought, following an ICANN decision over the Christmas period.

Directors threw out a South American government demand for it to un-approve the .amazon bid, but clarified that ICANN has not yet made a “final decision” to allow the gTLD to go live.

The Board Accountability Mechanisms Committee formally rejected (pdf) a Request for Reconsideration filed by the Amazon Cooperation Treaty Organization, which is made up of the governments of the eight countries near that big foresty, rivery, basiny thing, on December 21.

ACTO had asked the board to overturn its October resolution that took .amazon off its longstanding “Will Not Proceed” (ie, rejected) status and put it back on the path to delegation.

Secretary general Jacqueline Mendoza last month blasted ICANN for multiple “untrue, misleading, unfortunate and biased statements”, in connection with ACTO’s purported acquiescence to the .amazon bid.

Refusing ACTO’s request, the BAMC stated that ACTO had misinterpreted the resolution, and that ICANN did not intend to delegate .amazon until Amazon the company and ACTO had sat down to talk about how they can amicably share the name.

The October resolution “could have been clearer”, the BAMC said, adding:

the Resolution was passed with the intention that further discussions among the parties take place before the Board takes a final decision on the potential delegation of .AMAZON and related top-level domains. The language of the Resolution itself does not approve delegation of .AMAZON or support any particular solution. Rather, the Resolution simply “directs the President and CEO, or his designee(s), to remove the ‘Will Not Proceed’ status and resume processing of the .AMAZON applications.”

There are pages and pages of this kind of clarification. The committee clearly wants to help to smooth over relations between ICANN and the governments.

On the face of it, there’s a slight whiff of ret-conny spin about the BAMC recommendations.

There’s some ambiguity in the public record about what the ICANN board actually voted for in October.

Shortly before the ICANN board voted to resume processing .amazon, CEO Goran Marby stated, in front of an audience at ICANN 63 in Barcelona, both that a decision to delegate was being made and that ACTO was still at the table:

what we in practice has done is, through facilitation process, constructed a shared delegation of .AMAZON where the company has or will provide commitments to the ACTO countries how the .AMAZON will be used in the future. And the decision today is to delegate it, forward it to me to finalize those discussions between the company and those countries.

And I’m also formally saying yes to the invitation to go to Brazil from the ACTO countries to their — finish off the last round of discussions.

While the new clarifications seem to suggest that ACTO still has some power to keep .amazon out of the root, the BAMC decision also suggests that the full board could go ahead and approve .amazon at the ICANN 64 meeting in Japan this March, with or without governmental cooperation, saying:

the BAMC recommends that the Board reiterates that the Resolution was taken with the clear intention to grant the President and CEO the authority to progress the facilitation process between the ACTO member states and the Amazon corporation with the goal of helping the involved parties reach a mutually agreed solution, but in the event they are unable to do so the Board will make a decision on the next steps at ICANN 64 regarding the potential delegation of .AMAZON and related top-level domains. The BAMC encourages a high level of communication between the President and CEO and the relevant stakeholders, including the representatives of the Amazonian countries and the Amazon corporation, between now and ICANN 64.

If you’ve not been following the story, ACTO has concerns about .amazon due to its similarity to the name of the rain-forest region.

Amazon the company has promised to encode cultural safeguards in its ICANN contract and offered to donate a bunch of free stuff to the countries to sweeten the deal

The current Amazon offer has not been published.

The BAMC recommendation will now be considered by the full ICANN board, which is usually just a formality.

ICANN budget predicts small new gTLD recovery and slowing legacy growth

Kevin Murphy, December 18, 2018, Domain Services

The new gTLD market will improve very slightly over the next year or so, according to ICANN’s latest budget predictions.

The organization is now forecasting that it will see $5.2 million of funding from new gTLD registry transaction fees in the fiscal year ending June 30, 2019, up from the $5.1 million it predicted when it past the FY19 budget in May.

That’s based on expected transactions being 24 million, compared to the previous estimate of 23.9 million.

It’s the first time ICANN has revised its new gTLD transaction revenue estimates upwards in a couple years.

ICANN is also now estimating that FY20 transaction fees from new gTLDs will come in at $5.5 million.

That’s still a few hundred grand less than it was predicting for FY17, back in 2016.

Transaction fees, typically $0.25, are paid by registries with over 50,000 names whenever a domain is created, renewed, or transferred.

The FY19 forecast for new gTLD registrar transaction fees has not been changed from the $4.3 million predicted back in May, but ICANN expects it to increase to $4.6 million in FY20.

ICANN’s budget forecasts are based on activity it’s seeing and conversations with the industry.

It’s previously had to revise new gTLD revenue predictions down in May 2018 and January 2018. 

ICANN is also predicting a bounceback in the number of accredited registrars, an increase of 15 per quarter in FY20 to end the year at 2,564. That would see accreditation fees increase from an estimated $9.9 million to $10.7 million.

The budget is also less than optimistic when it comes to legacy, pre-2012 gTLDs, which includes the likes of .com and .net.

ICANN is now predicting FY19 legacy transaction fees of $49.8 million. That’s compared to its May estimate of $48.6 million.

For FY20, it expects that to go up to $50.5 million, reflecting growth of 2.1%, lower than the 2.6% it predicted last year.

Overall, ICANN expects its funding for FY19 to be $137.1 million, $600,000 less than it was predicting in May.

For FY20, it expects funding to increase to $140.1 million. That’s still lower than the $143 million ICANN had in mind for FY18, before its belt-tightening initiatives kicked off a year ago.

The budget documents are published here for public comment until February 8.

ICANN will also hold a public webinar today at 1700 UTC to discuss the plans. Details of the Adobe Connect room can be found here.

DNS inventor says .luxe first innovation in a decade

Kevin Murphy, December 10, 2018, Domain Registries

DNS inventor Paul Mockapetris has endorsed MMX’s foray into the blockchain as “the first genuine piece of DNS related innovation that I have seen in the last decade”.

The quote came in an MMX press release this morning, which provided an update on the launch of .luxe as the first gTLD that publishes information to the Ethereum blockchain as well as the DNS.

As I attempted to describe a few months ago, .luxe is being sold as an alternative way to address blockchain assets such as cryptocurrency wallets, which currently use nonsense, immemorable 40-character hashes.

MMX has built an API that allows registrars to automatically associate .luxe domains with Ethereum addresses.

The registry said today it now has 11 registrars signed up to use this API, along with 60 more selling vanilla .luxe domains.

In addition to its launch distribution partner, the wallet provider imToken, MMX said it has also signed up Bitxbank, BeeNews, BEPAL, Hillstone Partners, Math Wallet, MTC Mesh Network, Qufen, Fbee, and ChainDD, which all appear to be Asian blockchain software companies.

It expects to announce support for two non-Ethereum blockchains in the first half of next year.

Judging by zone files, .luxe names have not exactly been flying off the shelves since launch.

It had around 2,600 names in its zone file yesterday, having entered general availability about a month ago.

Despite this, CEO Toby Hall said in this morning’s press release that MMX’s initial investment in .luxe (I assume he’s referring to the R&D investment rather than the cost of applying for the gTLD) has already been recouped.

New gTLDs continue growth trend, but can it last?

Kevin Murphy, December 10, 2018, Domain Registries

New gTLDs continued to bounce back following a year-long slump in registration volumes, according to Verisign data.

The company’s latest Domain Name Industry Brief, covering the third quarter, shows new gTLDs growing from 21.8 million names to 23.4 million names, a 1.6 million name increase.

New gTLDs also saw a 1.6 million-name sequential increase in the second quarter, which reversed five quarters of declines.

The sector has yet to surpass its peak of 25.6 million, which it reached in the fourth quarter of 2016.

It think it will take some time to get there, and that we’ll may well see a decline in next couple quarters.

The mid-point of the third quarter marked the end of deep discounting across the former Famous Four Media (now GRS Domains) portfolio (.men, .science, .loan, etc), but the expected downward pressure on volumes wasn’t greatly felt by the end of the period.

With GRS’s portfolio generally on the decline so far in Q4, we might expect it to have a tempering effect on gains elsewhere when the next DNIB is published.

Verisign’s data showed also that ccTLDs shrunk for the first time in a couple years, down by half a million names to 149.3 million. Both .uk and .de suffered six-figure losses.

Its own .net was flat at 14.1 million, showing no signs of recovery after several quarters of shrinkage, while .com increased by two million names to finish September with 137.6 under management.

No .web until 2021 after Afilias files ICANN appeal

Kevin Murphy, December 6, 2018, Domain Registries

Afilias has taken ICANN to arbitration to prevent .web being delegated to Verisign.

The company, which came second in the $135 million auction that Verisign won in 2016, filed Independent Review Process documents in late November.

The upshot of the filing is that .web, considered by many the best potential competitor for .com — Afilias describes it as “crown jewels of the New gTLD Program” — is very probably not going to hit the market for at least a couple more years.

Afilias says in in its filing that:

ICANN is enabling VeriSign to acquire the .WEB gTLD, the next closest competitor to VeriSign’s monopoly, and in so doing has eviscerated one of the central pillars of the New gTLD Program: to introduce and promote competition in the Internet namespace in order to break VeriSign’s monopoly

Its beef is that Verisign acquired the rights to .web by hiding behind a third-party proxy, Nu Dot Co, the shell corporation linked to the co-founders of .CO Internet that appears to have been set up in 2012 purely to make money by losing new gTLD auctions.

Afilias says NDC broke the rules of the new gTLD program by failing to notify ICANN that it had made an agreement with Verisign to sign over its rights to .web in advance of the auction.

The company says that NDC’s “obligation to immediately assign .WEB to VeriSign fundamentally changed the nature of NDC’s application” and that ICANN and the other .web applicants should have been told.

NDC’s application had stated that .web was going to compete with .com, and Verisign’s acquisition of the contract would make that claim false, Afilias says.

This means ICANN broke its bylaws commitment to apply its policies, “neutrally, objectively, and fairly”, Afilias claims.

Allowing Verisign to acquire its most significant potential competitor also breaks ICANN’s commitment to introduce competition to the gTLD market, the company reckons.

It will be up to a three-person panel of retired judges to decide whether these claims holds water.

The IRP filing was not unexpected. I noted that it seemed likely after a court threw out a Donuts lawsuit against ICANN which attempted to overturn the auction result for pretty much the same reasons.

The judge in that case ruled that new gTLD applicants’ covenant not to sue ICANN was valid, largely because alternatives such as IRP are available.

ICANN has a recent track record of performing poorly under IRP scrutiny, but this case is by no means a slam-dunk for Afilias.

ICANN could argue that the .web case was not unique, for starters.

The .blog contention set was won by an affiliate of WordPress maker Automattic under almost identical circumstances earlier in 2016, with Colombian-linked applicant Primer Nivel paying $19 million at private auction, secretly bankrolled by WordPress.

Nobody complained about that outcome, probably because it was a private auction so all the other .blog applicants got an even split of the winning bid.

Afilias wants the .web IRP panel to declare NDC’s bid invalid and award .web to Afilias at its final bid price.

For those champing at the bit to register .web domains, and there are some, the filing means they’ve likely got another couple years to wait.

I’ve never known an IRP to take under a year to complete, from filing to final declaration. We’re likely looking at something closer to 18 months.

Even after the declaration, we’d be looking at more months for ICANN’s board to figure out how to implement the decision, and more months still for the implementation itself.

Barring further appeals, I’d say it’s very unlikely .web will start being sold until 2021 at the very earliest, assuming the winning registry is actually motivated to bring it to market as quickly as possible.

The IRP is no skin off Verisign’s nose, of course. Its acquisition of .web was, in my opinion, more about restricting competition than expanding its revenue streams, so a delay simply plays into its hands.

Amazon countries fighting back against .amazon gTLD

Kevin Murphy, December 4, 2018, Domain Policy

When ICANN’s board of directors voted in late October to let Amazon have its controversial .amazon gTLD, it was not entirely clear what governments in the Amazon region of South America thought about it.

Now, it is: they’re pissed.

The governments of the Amazon Cooperation Treaty Organization have cancelled planned peace talks with the retailer and ICANN boss Goran Marby and have filed an appeal against the board’s decision.

It even seems that the negotiations — aimed at obtaining ACTO’s blessing by stuffing the .amazon registry agreement with cultural safeguards and augmenting it with financial sweeteners — may be dead before they even started.

The rapid deterioration of the relationship between ACTO and ICANN plays out in a series of letters between Marby and ACTO secretary general Jacqueline Mendoza, published last week by ICANN.

After the board’s October 25 resolution, which gave .amazon a pardon from its longstanding “Will Not Proceed” death sentence, it took just 10 days for ACTO to file a Request for Reconsideration with ICANN, asking the board to rethink its resolution.

In a cover letter to the November 5 request, Mendoza said that ACTO was still happy to have Marby facilitate talks between the governments and Amazon, “to develop a mutually acceptable solution for the delegation” of .amazon.

Amazon is said to have offered concessions such as the protection of culturally sensitive names, along with $5 million worth of free Kindles, in order to get ACTO to back down.

But the governments had yet to see any proposal from Amazon for them to consider, Mendoza wrote a month ago.

At some point Marby then agreed to meet with the ACTO governments — Bolivia, Brazil, Colombia, Ecuador, Guyana, Peru, Suriname and Venezuela — in Bolivia on November 29.

He froze their reconsideration request pending this meeting, according to his November 20 letter (pdf), which also bulletted out the sequence of events that led to the ICANN resolution.

It seems ICANN has been working rather closely with, and had been hearing encouraging noises from, Brazil’s Governmental Advisory Committee representative, over the last 12 months. Indeed, it seems it was Brazil that said the reconsideration should be put on hold, pending the November 29 meeting.

But on November 22, Mendoza cancelled the summit (pdf), taking a hard line against the unfreezing of the applications.

Four days later, she told Marby and ICANN chair Cherine Chalaby that ICANN should be dealing with ACTO, not its individual members.

She said that a “positive reaction” to the reconsideration request and the request for the board resolution to be “cancelled” are “indispensable pre-requisites for such a meeting to take place”.

The short version: ICANN jumped the gun when it unfroze the .amazon gTLD applications, at least in ACTO’s view.

ACTO didn’t even receive Amazon’s latest proposal until November 23, the day after the talks were cancelled, according to ICANN.

And, judging by the latest missive in this infuriating thread, ICANN may have thrown in the towel already.

Marby informed GAC chair Manal Ismail (pdf) last Wednesday that the “facilitation process” ICANN had resolved to lead “has been unsuccessful” and “has not been able to reach its desired conclusion.”

While he added ICANN remains “open to assist and facilitate this matter, should it be considered useful”, there’s otherwise an air of finality about the choice of language in his letter.

As for the reconsideration request (pdf), it seems to be still active, so there’s a chance for the board to change its mind about .amazon’s status.

It will be interesting to see whether the request will be approved by the board for the sake of political expediency.

Reconsideration requests are almost unfailingly tossed out for failing to reach the threshold of providing the board with information it was not aware of at the time of its contested resolution.

In this case, ACTO claims that the board was wrongly informed that the ACTO members had seen and liked Amazon’s latest proposal, presumably because ICANN had been feeling positive vibes from Brazil.

It’s not impossible that the board might agree this is true, put .amazon back on ice, and try again at the “facilitation” route.

But should it? Part of me wonders why the hell ICANN resources — that is, registrants’ money — should be diverted to pay for ICANN to act as an unpaid lobbyist for one of the world’s wealthiest companies, which can’t seem to actually put a proposal on the table in a timely fashion, or for eight national governments who don’t seem to be even talking to each other on an issue they claim is of the utmost importance.

.cloud gets the China blessing

Kevin Murphy, November 26, 2018, Domain Registries

.cloud, run by Italian registry Aruba, has become the latest TLD to get the official nod to sell in China.

The blessing from the Ministry of Industry and Information Technology came at the end of October and the company announced it today.

The accreditation means .cloud domains sold to residents of the Chinese mainland will now be resolvable, and subject to China’s onerous censorship rules.

It’s the first Latin-script TLD to be approved by MIIT since July.

.cloud says it currently has 155,000 domains registered to customers in 180 countries.

Donuts backs away from .spa fight

Kevin Murphy, November 26, 2018, Domain Registries

Donuts has finally admitted defeat in its long-running fight to run the .spa gTLD, withdrawing its application and leaving rival Asia Spa and Wellness Promotion Council the victor.

ASWPC, run from Hong Kong by .asia’s Edmon Chung, has now entered into contracting with ICANN.

The company had won a Community Priority Evaluation back in 2015, with a passing score of 14 out of 16, which Donuts has been challenging ever since.

Donuts and ICANN were in a so-called Cooperative Engagement Process, a form of informal arbitration designed to stave off a more expensive Independent Review Process fight, from January 2016 until this month.

This meant ASWPC has been sitting twiddling its thumbs, unable to sign its contract or launch its TLD, for the better part of three years.

It’s not clear why Donuts decided not to go to a full-blown IRP. The company declined to comment for this article.

As a community applicant, the company had the backing of hundreds of spas worldwide.

It also had the backing of the Belgian government, which was important because spas are (little-known fact alert!) named after the tiny Belgian town of Spa.

It is believed that ASWPC promised up to 25% of its profits to Spa in order to gain this backing, but only from domains registered by Belgian, Dutch, Luxembourgish, French or German registrants.