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Should new gTLDs be delayed?

Kevin Murphy, August 31, 2011, Domain Policy

Is the world ready for the new generic top-level domains program? Is ICANN ready?

It’s been well over two months since ICANN approved its new gTLD program, and the initial sense of excitement and purpose in the industry seems to have given way to virtual silence from ICANN and a profound lack of audible enthusiasm from the internet at large.

What’s going on with the program? Where’s the final Applicant Guidebook? Who are the experts ICANN is going to hire to actually decide which applications succeed or fail?

Is four months really sufficient time to put the world on notice that new gTLDs are coming and to give everybody enough opportunity to prepare?

Is anybody outside the industry even paying attention?

Read this quote (with my emphasis) from Friday’s wrap-up session at the .nxt conference in San Francisco and see if you can guess whose mouth it came out of.

My takeaways, if I can run through them quickly…

…a sense of relief that this program is finally underway as of June 20 has suddenly now turned into a worry. There’s a whole lot of people who can’t believe it’s happening, and there’s a sense of worry that it’s all going to happen too fast. So that’s quite interesting. There’s a hell of a lot that has to be done between now and launch.

Some things are not yet done… We haven’t got the information about the [Trademark] Clearinghouse yet, we don’t know what the [Governmental Advisory Committee] processes are going to be, and we actually have to design registry systems and explain those two to customers and show how they are going to fit together and we can’t. So there’s a problem there about the rush.

You may be thinking that those are the words of some naysayer in a stuffed shirt – a hater from the trademark lobby or the advertising industry who wants to put the stoppers on new gTLDs.

Actually, that’s the opinion of Peter Dengate Thrush, who was chairman of the ICANN board of directors when it voted to approve the program, despite concerns that it wasn’t ready yet, in June.

Dengate Thrush is now of course executive chairman of Minds + Machines, which is in the position of actually having to deal with the program in its incomplete state.

His words were, I believe, offered up as an analysis of the mood of the conference, rather than some kind of mea culpa, if you were wondering about the context or tone.

Nevertheless, he had a point.

Here are some of things that don’t seem to have been finalized yet:

The Applicant Guidebook

Incredibly, the most recent version of the application rulebook posted on the ICANN web site dates from May. It’s still essentially still an almost-done draft document.

ICANN’s board voted in June to amend the Applicant Guidebook before the first round of applications opens.

So, where is it? Where’s the final Guidebook?

Who’s going to sign a check investing in new gTLDs when the rules are still open to change?

Still minding the GAC

How, precisely, will the Governmental Advisory Committee decide whether to intervene to thwart a gTLD application on public policy grounds?

ICANN has agreed to let the GAC make up its own rules governing how it reaches consensus before it objects to applications, but so far it has not said what those rules are going to be.

If you think you might apply for a potentially controversial gTLD string – or even if you don’t – you still don’t have enough information today to make a fully informed risk analysis.

Your best strategy right now might be to ensure that your string complies with Sharia, or to pay off a bunch of government officials to ensure they fight your corner.

Where are the experts?

ICANN has not yet named the company or individuals who have been or will be hired to process the hundreds of gTLD applications that are likely to be received next year.

As Dengate Thrush noted, it also hasn’t appointed a Trademark Clearinghouse, which is a critical component of two mandatory new gTLD rights protection mechanisms.

Currently, it’s hard to say for certain what integration between registries and the Clearinghouse will entail financially or technologically.

That may not be an enormous problem, but it could make writing an application slightly trickier.

Watching the watchmen

ICANN is in receipt of letters from competition authorities in the US and European Union, telling it in fairly blunt terms that its decision to allow registries and registrars to integrate is Bad Policy.

The rules that separate registrars like Go Daddy from registries such as VeriSign have been good for consumers, they say, and should be kept in place under the new gTLD regime.

ICANN, also in its June 20 vote, has already agreed to talk to these authorities about possibly scaling back the proposed liberalization of the vertical integration rules.

But if this is already happening, it’s happening behind closed doors, because we’ve not heard a peep about it from ICANN or the two governments since June.

If this situation escalates when everybody gets back from vacation, I will not be surprised.

Where’s the outreach?

ICANN has promised a four-month communications campaign before the start of the first round of applications. That means it has to kick off by September 12, just two weeks from now.

This campaign actually began at the press conference about half an hour after the June 20 board vote, ICANN president Rod Beckstrom said at the time, but apart from a couple of plaintive cries for help there’s been precious little visible outreach since then.

Director Bertrand de La Chapelle evidently gave Beckstrom a hard time about this during a board meeting a month ago, according to the minutes.

A new ICANN web site devoted to new gTLDs is expected to launch next month, and I understand that staff including Beckstrom will hit the road for a world tour around the same time.

But given the recent mock outrage from ad industry shills such as the Association of National Advertisers, it’s arguably a little late for ICANN to start to worry about framing the issue.

Most people reading about new gTLDs in the press the last few weeks probably came away thinking new gTLDs are nothing but a money grab by registries and cybersquatters/domainers.

(It is that, of course, but it’s lots of other nicer things too.)

From a public relations perspective, ICANN will be starting on the back foot. Its outreach efforts may turn out to be not be so much about educating the world about its program but re-educating it.

Oh, and it only has $750,000 to pull off this feat.

As a very wise man said at .nxt on Friday: “The size and scale of that [budget] doesn’t really match up to the problem it’s trying to address.”

(Yeah, that was Dengate Thrush again)

Welcome to the cheap seats

ICANN has committed $2 million from reserves to a mechanism whereby needy applicants from developing nations will be able to get a discount (TBC) on their application fees.

That mechanism does not yet exist. Such applicants are today at a disadvantage compared to their wealthier competitors when it comes to planning applications and raising funds.

A volunteer working group known as JAS has been working out the details, meeting by phone two or three times a week, but reaching consensus seems to have been a very tough slog.

Policies developed from the bottom up have a convoluted chain of custody before they get approved. A deadline missed by a day or two can delay the ICANN rubber stamp by weeks.

The way things look today, the JAS applicant support policy is going to be cutting it extremely fine if it wants to make it before the ICANN board’s October meeting in Dakar.

Wither round two?

Perhaps the most intractable problem underlying the whole program is the absence of a launch date for the second-round application window.

Speakers at the .nxt conference last week reckoned lawsuits over individual contested gTLDs are inevitable, and that they could delay the second round until as late as 2017, if it happens at all.

It’s in that context that large companies, already nervous about entering into a new, unmeasurable, unproven marketing paradigm, are being asked to commit potentially millions to new gTLDs today.

It’s arguably like being asked, in 1991, to pay $500,000 for sex.com, with no idea whether this newfangled “hypertext” thing is going to take off.

Sounds like a great deal today, but back then it would have sounded like a 419 scam.

As Yahoo lawyer J Scott Evans said at .nxt, many companies feel they have “a gun to their heads”.

It’s hardly surprising some of them have persuaded their trade groups to lobby against the program, threatening to bring their pocket Congressmen down on ICANN’s head and/or file a lawsuit or two.

Which brings me to my headline

Which brings me to my headline. Would another delay be good for the new gTLD program?

If the ANA were to sic its lawyers on ICANN tomorrow, would a temporary restraining order that delayed the program by a few month actually be healthy for it in the longer term?

A great many people and organizations that could make valuable contributions to the domain name industry will not have heard about new gTLDs before June 20.

A delay before January could give ICANN and its community a bit more time to smooth away the rough edges of the program and to address the issues that have not yet been resolved.

It could give potential applicants from outside the established community more time to decide whether to engage with the program, more time to raise funds or secure budgets, and more time to develop their new gTLD application strategies.

I’m referring here not only to large corporations with lengthy budgeting cycles, but also to entrepreneurs with cool ideas and meager resources that perhaps need more time to be able to get on board.

Could a delay also increase the proportion of applicants from outside Europe and North America, and the proportion of IDN gTLD applicants who truly understand their markets?

Bluntly, would a short delay in the launch, whether it came about as a result of legal action or not, make round one of the ICANN new gTLD program less of a clusterfuck?

Yeah, I’m playing Devil’s Advocate here

The best quote I heard during my remote participation in the .nxt conference last week was offered up by Brian Larson from DotMLS as “Larson’s Corollary to Newton’s Third Law”:

Any discussion about what the post-new-gTLD world is going to look like is inherently speculative… For any argument about the post-new-gTLD world there is an equally plausible but opposite argument.

For the avoidance of doubt, if there was any doubt in your mind, that maxim certainly applies to the opinions expressed in this article. I could just as easily write 2,000 words arguing for the opposing view.

NetNames puts gTLD.com domain to good use

Kevin Murphy, August 31, 2011, Domain Services

European registrar Group NBT has a pretty great domain for its new generic top-level domains consulting business: gTLD.com.

Under its NetNames corporate registrar brand, the company is targeting the “.brand” market, like so many others, judging by its recently relaunched web site.

Its services include pre-application consulting, help with applications, and ongoing management services, provided through its relationships with registry infrastructure partners.

It will also keep track of other ICANN gTLD applications and alert clients about potential cases of trademark infringement.

One thing’s for sure, new gTLD applicants in general are spoiled for choice now when it comes to selecting a consultant.

Domainer Jan Barta invests in dotFree

Kevin Murphy, August 30, 2011, Domain Registries

The Czech company hoping to apply to ICANN for the .free top-level domain next year has secured an undisclosed investment from local domainer Jan Barta.

Jeremie Godreche from dotFree described the deal as “an active and long term relationship”.

Barta is the founder of Elephant Orchestra, a domain investment and lead generation company based in Prague. You can read a recent interview with him in the Prague Post here.

DotFree appears to have recently overhauled its web site also.

It now has a planned launch schedule that would see a .free founders program open in January 2012 and its sunrise period begin a year later.

Now there’s confidence.

I expect .free to be a contested gTLD, and we won’t find out until April at the earliest how many other applicants are also chasing it.

The company plans to monetize .free by charging for 200,000 premium names and imposing an annual upgrade fee on registrants with more than one non-premium domain.

It has had 97,000 pre-registrations since last November.

Now you can outsource your whole gTLD

Kevin Murphy, August 26, 2011, Domain Services

It’s already common practice for domain name registries to outsource their technical operations to a back-end provider such as VeriSign or Afilias, but a new company hopes that new gTLD registries will want to go one step further.

Sedari, which appears to have soft-launched at the .nxt conference today, wants successful new gTLD applicants to outsource their back-office functions too.

The company, headed by former ICANN policy advisor Liz Williams, “helps string owners outsource the risk and responsibility of running a registry in compliance with ICANN’s contracts”, according to its site.

I understand this means functions such as billing, support, compliance, and liaising with the back-end registry and the front-end registrars.

I guess it’s going to be possible for a successful gTLD applicant to sign a registry contract with ICANN and then do very little to actually manage its day-to-day operation.

A registry that outsources its technical infrastructure to the likes of Neustar and its back office to Sedari will presumably be free to focus on nothing but marketing.

Sedari is staffed by a number of familiar faces.

Its CFO is Kevin Wilson, who had the same role at ICANN until January, and former ICANN director Dennis Jennings is on the board.

Its CTO is Wayne MacLaurin, who was previously CTO of Momentous. Jothan Frakes, formerly with Minds + Machines, is senior VP of channel management.

Direct marketers join anti-gTLD bandwagon

Kevin Murphy, August 26, 2011, Domain Policy

The UK Direct Marketing Association has added its voice to the collection of advertising trade groups that oppose ICANN’s new generic top-level domains program.

DMA executive director Chris Combemale said in a statement:

Creating a tranche of new internet domain names will be extremely costly to businesses. As well as the associated costs of registering new domain names and spending money to attract customers to multiple domains, businesses face the legal and financial headache of having to contend with cybersquatters grabbing specific domains.

Customised domain names won’t offer brands any enhanced marketing possibilities because consumers can easily search for specific information with the current domain name system.

Companies are already hard pressed to find cost savings in these tough trading times; adding a further financial burden that won’t reap any commercial benefits cannot be justified.

The organization said it plans to formally ask ICANN to withdraw or revise the program.

The Association of National Advertisers, the Interactive Advertising Bureau and the American Association of Advertising Agencies have already made similar calls.

The DMA UK has over 800 members, according to its web site.

Most new gTLDs will fail

Kevin Murphy, August 26, 2011, Domain Registries

We’re going to see hundreds of new gTLDs over the coming years, but we’re also going to see potentially hundreds of failures.

That’s the view being espoused by some of the biggest cheerleaders of ICANN’s new generic top-level domains program, including its former chairman, at the .nxt conference this week.

During the opening session on Wednesday, a panel of experts was asked to imagine what the domain name industry might look like in 2017, five years after the first new gTLDs go live.

“My assumption is that many TLDs will have completely failed to live up to their promoters’ hype,” said Minds + Machines executive chairman Peter Dengate Thrush, whose last action as ICANN chair was pushing through approval of the program. “But on the other hand many of them, and I hope a majority of them, will be thriving.”

Anyone expecting to build a business on defensive registrations better think again, panelists said.

“Many ill-conceived generic-term TLDs will have failed by that point, especially those generic term TLDs that are taking comfort in the .xxx Sunrise Part B revenue model,” said Paul McGrady of the law firm Greenberg Traurig.

“There’s definitely going to be burnout in the brand-owner community, so don’t expect the brand owners to show up to to fuel that,” he said.

Others, such as Tucows CEO Elliot Noss, went further.

“I think there’ll be more failures than successes and I’m not fussed by that,” said Noss. “For the users in the namespace, it’s not like they’re left high and dry.”

He compared failing gTLDs to the old Angelfire and Geocities homepage services that were quite popular in the late 1990s, but which fizzled when the cost of domains and hosting came down.

But while the disappearance of an entire gTLD would take all of its customers with it, a la Geocities, that’s unlikely to happen, panelists acknowledged.

ICANN’s program requires applicants to post a bond covering three years of operations, and it will also select a registry provider to act as an emergency manager if a gTLD manager fails.

When gTLD businesses fail, and they will, they’re designed to fail gracefully.

In addition, taking on an extra gTLD after its previous owner goes out of business would be little burden to an established registry provider — once the transition work was done, a new string would be a extra renewal revenue stream with possibly little additional overhead.

M+M surprised by .mumbai snub

Kevin Murphy, August 25, 2011, Domain Registries

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

MelbourneIT talks to 270 .brand applicants

Kevin Murphy, August 24, 2011, Domain Registrars

The Australian domain registrar MelbourneIT said it has talked to 270 companies and signed contracts with 17 that want to apply for “.brand” top-level domains.

The news came in the company’s “disappointing” first-half financial results announcement yesterday.

According to its official report (pdf), MelbourneIT has received 230 expressions of interest and has inked deals with 14, but managing director Theo Hnarkis reportedly told analysts the higher numbers.

The company is charging clients between AUD 45,000 ($47,000) and AUD 75,000 ($79,000) to handle the ICANN application process.

MelbourneIT’s preferred partner for back-end registry services is VeriSign, so the clients it signs are likely to become recurring revenue streams for VeriSign if their applications are successful.

Watch the .nxt conference live online

Kevin Murphy, August 24, 2011, Domain Policy

The .nxt conference on new top-level domains kicks off in San Francisco later today, but fear not if you were unable to make it in person – much of the content will be streamed live online.

Roughly half of the three-day meeting’s sessions will be made available live, and it appears that the whole lot will be available on demand for the next three months.

If the conference is as informative as the first one, which took place in February, the $95 fee .nxt is charging to access the streams seems like a pretty good deal.

It’s no substitute for being there in person – much of the value in these things lies in the networking opportunities – but if new gTLDs are likely to effect your business you’d be crazy not to check it out.

More details here.

Want Beyonce.xxx? JustinBieber.xxx? Forget it

Kevin Murphy, August 22, 2011, Domain Registries

ICM Registry has banned a whole bunch of celebrity names from the new .xxx top-level domain, in order to scupper cybersquatters and opportunistic porn webmasters.

Want to register Beyonce.xxx, AngelinaJolie.xxx, OlsenTwins.xxx, Madonna.xxx, BritneySpears.xxx, KimKardashian.xxx, HalleBerry.xxx or WinonaRyder.xxx?

How about JustinBieber.xxx, BradPitt.xxx, CharlieSheen.xxx, SimonCowell.xxx, GeorgeMichael.xxx, EltonJohn.xxx, VerneTroyer.xxx, DonaldTrump.xxx or OsamaBinLaden.xxx?

Forget it. According to Whois records, you’re out of luck on all counts. They’ve all been reserved by the registry.

These are all among what I’m guessing is at least hundreds – maybe more – of celebrity names that ICM has blocked from ever being registered.

The company won’t say how many celebrities have been afforded this privilege, or how it came up with the list, but it has said in the past that a total of about 15,000 domains have been registry-reserved.

That also includes the names of the world’s capital cities, culturally sensitive strings put forward by a handful of governments, and the “premium” names that ICM plans to auction.

I’m wondering what the cut-off point is for celebrities. How famous do you have to be to get your .xxx blocked by default by the registry? B-List minimum? D-List? What database is ICM using?

American Pie actor Tara Reid just entered Celebrity Big Brother here in the UK, which pretty much means her career is over, and she’s managed to make it to ICM’s reserved list.

While ICM has always said it would help protect personal names from abuse, it’s never been entirely clear about how it would go about it.

Its registry agreement with ICANN has for some time said that “unauthorized registration of personal names” would be forbidden, but there were no real details to speak of.

As I reported last week, its souped-up cybersquatting policy, Rapid Evaluation Service, has a special provision for personal names.

But presumptively blocking a subset of the world’s famous people from .xxx is bound to raise questions in the wider context of the ICANN new gTLD program, however.

As far as I can tell, no corporate trademarks have been given the same rights in .xxx as, say, David Cameron or Barack Obama.

If ICM can protect Piers Morgan’s “brand”, why can it not also protect CNN? Or Microsoft or Coke or Google? None of these brands are registry-reserved, according to Whois.

The trademark lobby will raise this question, no doubt. ICM has its own celebrity Globally Protected Marks List for .xxx, which only applies to individuals, they could argue.

There are some differences, of course.

Celebrities sometimes find they have a harder time winning cybersquatting complaints using UDRP if they have not registered their names as trademarks, which can be quite hard to come by, for example.

(UPDATE: And, of course, they may not qualify for ICM’s sunrise period if they don’t have trademarks, as EnCirca’s Tom Barrett points out in the comments below).

In addition, celebrity skin is a popular search topic on the web, which may give cybersquatters a greater impetus to register their names as domains, despite the high price of .xxx.

Also, if a registry were to reserve the brand names of, say, the Fortune 1000, it would wind up blocking many dictionary or otherwise multi-purpose strings, which is obviously not usually the case with personal names.