Latest news of the domain name industry

Recent Posts

Is ICANN still over-estimating revenue from “stagnating” gTLD industry?

Kevin Murphy, March 11, 2018, Domain Policy

ICANN may have slashed millions from its revenue estimate for next year, but it has not slashed deeply enough, according to registrars and others.

Industry growth is flat, and below even ICANN’s “worst case” expectations for the fiscal year starting July 1, registrars told the organization in comments filed on its FY19 budget last week.

The Registrars Stakeholder Group said that “the FY 2019 budget fails to recognize that overall industry growth is flat.”

ICANN’s budget foresees FY19 revenue of $138 million, up $3.5 million on the projected result for FY18.

“These revenue projections presume growth in the domain market that is not aligned with industry expectations,” the RrSG said, pointing to sources such as Verisign’s Domain Name Industry Brief, which calculated 1% industry growth last year.

ICANN’s predictions are based on previous performance and fail to take into account historical “one-time events”, such as the Chinese domain speculation boom of a couple years ago, that probably won’t be repeated, RrSG said.

RrSG also expects the number of accredited registrars to decrease due to industry consolidation and drop-catching registrars reducing their stables of shell accreditations.

(I’ll note here that Web.com has added half a dozen drop-catchers to its portfolio in just the last few weeks, but this goes against the grain of recent trends and may be an aberration.)

RrSG said ICANN’s budget should account for reduced or flat accreditation fee revenue (which as far as I can tell it already does).

The comment, which can be read in full here, concludes:

Taken together, these concerns represent a disconnect between ICANN funding projections, and the revenue expectations of Registrars (and presumably, gTLD Registries) from which these funds are derived. In our view, ICANN’s assessment of budgetary “risks” are too optimistic , and actual performance for FY19 will be significant lower.

For what it’s worth, the Registries Stakeholder Group had this to say about ICANN’s revenue estimates:

Reliable forecasts, characterised by their scrutiny and realism, are fundamental to put together a realistic budget and to avoid unpleasant surprises, such as the shortage ICANN is experiencing in the current fiscal year. The RySG advises ICANN to continue to conduct checks on its forecasts and to re-evaluate the methodology used to predict its income in order to prevent another funding shortfall such as that which the organization experienced in FY18.

Amazon’s .amazon gTLD may not be dead just yet

Kevin Murphy, March 11, 2018, Domain Policy

South American governments are discussing whether to reverse their collective objection to Amazon’s .amazon gTLD bid.

A meeting of the Governmental Advisory Committee at ICANN 61 in Puerto Rico yesterday heard that an analysis of Amazon’s proposal to protect sensitive names if it gets .amazon will be passed to governments for approval no later than mid-April.

Brazil’s GAC rep said that a working group of the Amazon Cooperation Treaty Organization is currently carrying out this analysis.

Amazon has offered the eight ACTO countries commitments including the protection of such as “rainforest.amazon” and actively supporting any future government-endorsed bids for .amazonas.

Its offer was apparently sweetened in some unspecified way recently, judging by Brazil’s comments.

ACTO countries, largely Brazil and Peru, currently object to .amazon on the grounds that it’s a clash with the English version of the name for the massive South American rain forest, river and basin region, known locally as Amazonas.

There’s no way to read the tea leaves on which way the governments will lean on Amazon’s latest proposal, and Peru’s GAC rep warned against reading too much into the fact that it’s being considered by the ACTO countries.

“I would like to stress the fact that we are not negotiating right now,” she told the GAC meeting. “We are simply analyzing a proposal… The word ‘progress’ by no means should be interpreted as favorable opinion towards the proposal, or a negative opinion. We are simply analyzing the proposal.”

ICANN’s board of directors has formally asked the GAC to give it more information about its original objection to .amazon, which basically killed off the application a few years ago, by the end of ICANN 61.

Currently, the GAC seems to be planning to say it has nothing to offer, though it may possibly highlight the existence of the ACTO talks, in its formal advice later this week.

ICANN mulls $68 million raid on auction war chest

Kevin Murphy, March 9, 2018, Domain Policy

ICANN wants to put away another $68 million for a rainy day and it’s considering raiding its new gTLD auction war chest in order to do so.

It’s also thinking about dipping into the pool of cash still left over from new gTLD application fees in order to bolster is “reserve fund” from its current level of $70 million to its target of $138 million.

But, as a relief to registrants, it appears to have ruled out steep fee increases, which had been floated as an option.

The reserve fund is basically a safety net that ICANN could use to keep the lights on in the event that revenue should suddenly plummet dramatically and unexpectedly.

If, for example, Verisign returned to its old antagonistic ways and refused to pay its .com fees for some reason, ICANN would lose about a third of its annual revenue but would be able to tap its reserve until the legal fisticuffs were resolved.

ICANN said in a discussion document (pdf) this week that it took $36 million from the reserve since 2014 in order to complete the IANA transition. Over the same period, its annual budget has swelled from about $85 million to $138 million and contributions back into the reserve have been minimal.

That’s left it with a meager $70 million squirreled away, $68 million shy of its longstanding target level of one year’s budget.

ICANN is now saying that it wants to replenish the fund in less than five years.

About $15 million of its target would come from cost-cutting its operations budget over the period.

It also wants to take at least $36 million from the new gTLD auction proceeds fund, which currently stands at $104 million (with another $132 million incoming should Verisign successfully obtain .web over the objections of rival bidders).

The remaining $17 million could come from “leftover” new gTLD application fees — that fund is currently about $80 million — or from more cost-cutting or more auction proceeds, or from a combination of the three.

A fourth option — increasing the per-transaction fees registrants are charged via their registries and registrars — appears to have been ruled out.

My back-of-the-envelope maths suggests that an annual per-transaction increase of about $0.07 would have been needed to raise $68 million over five years.

The proposal is open for public comment until April 25.

Tech giants gunning for AlpNames over new gTLD “abuse”

A small group of large technology companies including Microsoft and Facebook have demanded that ICANN Compliance take a closer look at AlpNames, the budget registrar regularly singled out as a spammers’ favorite.

The ad hoc coalition, calling itself the Independent Compliance Working Party, wrote to ICANN last week to ask why the organization is not making better use of statistical data to bring compliance actions against the small number of companies that see the most abuse.

AlpNames, the Gibraltar-based registrar under common ownership with new gTLD portfolio registry Famous Four Media, is specifically singled out in the group’s letter.

The letter, sourcing the August 2017 Statistical Analysis of DNS Abuse in gTLDs (pdf), says there “is a clear problem with one particular contracted party”.

AlpNames was the registrar behind over half of the new gTLD domains blacklisted by SpamHaus over the study period, for example, the letter states.

The tiny territory of Gibraltar also frequently ranks unusually highly on abuse lists due to AlpNames presence there, the letter and report say.

The ICWP letter also says that the four gTLDs .win, .loan, .top, and .link were used by over three quarters of abusive domains over the SADAG study period.

The letter calls the abuse rates “troublesome” and says:

We are alarmed at the levels of DNS abuse among a few contracted parties, and would appreciate further information about how ICANN Compliance is using available data to proactively address the abusive activity amongst this subset of contracted parties in order to improve the situation before it further deteriorates.

It goes on to wonder whether high levels of unaddressed abuse could amount to violations of new gTLD Registry Agreements and Registrar Accreditation Agreements, and to ask whether there any barriers to ICANN Compliance pursuing breach claims against such potential violations.

The ICWP comprises Adobe, DomainTools, eBay, Facebook, Microsoft and Time Warner. It’s represented by Fabricio Vayra of Perkins Coie.

Other than the letter (pdf), the Independent Compliance Working Party does not appear to have any web presence, and a spokesperson has not yet responded to DI’s request for more information.

The SADAG report also singled out Chinese registrar Nanjing Imperiosus Technology Co, aka DomainersChoice.com, as having particularly egregious levels of abuse, but noted that this abuse disappeared after ICANN terminated its RAA last year.

AlpNames has not to date had any public breach notices issued against it, but this is certainly not the first time it’s been singled out for public censure.

In November last year, ICANN’s Competition, Consumer Trust, and Consumer Choice Review Team (CCT) named it in a report that claimed: “Certain registries and registrars appear to either positively encourage or at the very least willfully ignore DNS abuse.”

AlpNames seems to have been used often by abusers due to its bargain-basement, often sub-$1 prices — making disposable domains more cost effective — and its tool that allowed up to 2,000 domains to be registered simultaneously.

If not actively soliciting abusive behavior, these factors certainly don’t make abuse any more difficult.

But will ICANN Compliance take action in response to the criticism leveled by CCT and now ICWP?

The main problem with the ICWP letter, and the SADAG report it is based upon, is that the data it uses is now rather old.

The SADAG report sourced abuse databases only up to January 2017, a time when AlpNames’ total gTLD domains under management was at its peak of around three million names.

Since then, the company has been hemorrhaging DUM, losing hundreds of thousands of domains every month. At the end of November 2017, the most recent data compiled by DI shows that it was down to around 838,000 domains.

It’s quite possible that AlpNames’ customer base is no longer the den of abuse it once was, whether due to natural attrition or a proactive purge of bad actors.

A month ago, in a press release connected with a $5.4 million buy-out of an co-founder, AlpNames chairman Iain Roache said he has a “10-year strategic plan” to turn AlpNames into a “Tier-1” registrar and “bring the competition to the incumbents”.

Google’s $25 million .app domain finally has a launch date

One of the questions I get asked fairly regularly is “When is .app coming out?”, but until today I haven’t had a good answer.

Now I do. Google has finally released its launch timeline for the could-be-popular new gTLD.

.app will go to sunrise March 29, the company said last week.

Trademark holder exclusivity will end May 1, at which point a week-long Early Access Period will kick in.

There will be an extra fee, so far undisclosed, for EAP buyers.

Finally, on May 8, everyone will get access to the domain as it goes into general availability.

Registry pricing has not been disclosed.

Unusually for a new gTLD, Google plans to keep its Trademark Claims service — which notifies registrants and trademark owners when there’s a potential trademark infringement — open indefinitely, as opposed to the minimum 90-day period.

.app was delegated in early July 2015, so it’s been a loooong wait for people interested in the space.

Google paid $25 million for .app at an ICANN public auction in February 2015. At the time, that was a record-breaking price for a gTLD, but it’s since between dwarfed by the $135 million Verisign is paying for .web.

Google also said that it’s currently working on a launch plan for .dev, another gTLD that folk have been asking about, but that for now it’s focused on .app alone.

Registries reject lower fees for anti-abuse prowess

Kevin Murphy, February 16, 2018, Domain Policy

Registries have largely rejected a proposal for them to be offered financial incentives to lower the amount of abuse in their gTLDs.

That’s despite the idea gaining broad support from governments, intellectual property interests and restricted-registration registries.

The concept of ICANN offering discounted fees to registries that proactively fight abuse was floated by the Competition, Consumer Trust, and Consumer Choice Review Team (CCT) back in November.

It recommended in its draft report, among other things:

Consider directing ICANN org, in its discussions with registries, to negotiate amendments to existing Registry Agreements, or in negotiations of new Registry Agreements associated with subsequent rounds of new gTLDs to include provisions in the agreements providing incentives, including financial incentives for registries, especially open registries, to adopt proactive anti-abuse measures.

“Proactive” in this case would mean measures such as preventing known bad actors from registering domains, rather than just waiting for complaints to be filed.

Given that registries have been calling for lower ICANN fees in other instances, one might expect to see support from that constituency.

However, the Registries Stakeholder Group said in a document filed to ICANN’s public comment period on the CCT’s latest recommendations that, it “opposes” the idea of such financial incentives. It said:

The RySG supports recognizing and supporting the many [registry operators] that take steps to discourage abuse, but opposes amending the RA as recommended, to mandate or incentivize ‘proactive’ anti-abuse measures.

The RySG complained that such a system would require lots of complex work to arrive at a definition of abuse and what kinds of measures would qualify as “proactive”.

Even if such definitions could be found, and amendments to the standard RA successfully negotiated, there’s still no guarantee that bad registries would sign up for the incentives or stick to their promises, “resulting in no net improvement to the current situation”, the RySG said.

The group is also concerned that adding more anti-abuse clauses to the RA could increase registries’ risk of liability should they be sued over abuse carried out by their customers.

Not all registries agreed with the RySG position, however.

The informal Verified Top-Level Domains Consortium, which comprises the two registries behind .bank, .insurance and .pharmacy, filed comments supporting the proposal.

It said that gTLDs with vetted eligibility requirements see no abuse but have lower registration volumes and therefore pay higher ICANN fees on a per-domain basis. It said:

ICANN should help to offset these costs to create a more level playing field with high-volume unrestricted registries, i.e., to enhance competition as well as consumer trust. If ICANN made it more financially advantageous to verify eligibility, other registries may be encouraged to adopt this model. The outcome would be the elimination of abuse in these verified TLDs.

Outside of the industry itself, the Governmental Advisory Committee and IP interests such as the Intellectual Property Constituency and INTA, filed comments supporting anti-abuse incentives.

The IPC “strongly” supported the recommendation, but added that the finer details would need to be worked out to ensure that lower ICANN fees did not translate automatically to lower registration fees and therefore more abuse.

Shocking nobody, it added that “abuse” should include intellectual property infringements.

Conversely, the Non-Commercial Stakeholders Group said it “strongly” opposes the recommendation, on the basis that it would push ICANN into a “content policeman” role in violation of its technical mandate:

ICANN is not a US Federal Trade Commission or an anti-fraud unit or regulatory unit of any government. Providing guidance, negotiation and worse yet, financial incentives to ICANN-contracted registries for anti-abuse measures is completely outside of our competence, goals and mandates. Such acts would bring ICANN straight into the very content issues that passionately divide countries — including speech laws, competition laws, content laws of all types. It would invalidate ICANN commitments to ourselves and the global community. It would make ICANN the policemen of the Internet, not the guardians of the infrastructure. It is a role we have sworn not to undertake; a role beyond our technical expertise; and a recommendation we must not accept.

Also opposed to incentivizing anti-abuse measures was the Messaging, Malware and Mobile Anti-Abuse Working Group (an independent entity, not an ICANN working group), which said there’s no data to support such a recommendation.

The reports provide no data that showcase what the implications of altering the economic underpinnings of a highly competitive market may entail, including inadvertent side effects such as registries that already sell low price domains being rewarded with lower ICANN fees. In fact, it may ultimately result in a race to the bottom and higher rates of domain abuse.

Instead, M3AAWG said that ICANN should concentrate is contractual compliance efforts on those registries that the data shows already have large amounts of abuse — presumably meaning the likes of .top, .gdn and the Famous Four Media stable.

ICANN itself filed a comment on the proposal, pointing out that it is not able to unilaterally impose anti-abuse measures into registry agreements.

One imagines that lowering fees at a time when its own budget is under a lot of pressure would probably not be something ICANN would be eager to implement.

These comments and more were summarized in ICANN’s report on the CCT public comment period, published yesterday. The comments themselves can be found here.

The comments feed back into the CCT review team’s work ahead of its final report, which is due to be published some time during Q1.

Under its bylaws, the CCT review is one of the things that ICANN has to complete before it opens the next round of new gTLD applications.

Donuts may make .travel names easier to buy after acquiring its first legacy gTLD

Kevin Murphy, February 14, 2018, Domain Registries

Donuts has added .travel to its swelling portfolio of gTLDs, under a deal with original registry Tralliance announced today.

It’s the company’s first acquisition of a legacy, pre-2012 gTLD, and the first “community” gTLD to join its stable of strings, which now stands at 239.

.travel went live in 2005, a part of ICANN’s 2003 round of “sponsored” TLD applications.

As a sponsored TLD, .travel has eligibility and authentication requirements, but executive vice president Jon Nevett told DI that Donuts will look at “tinkering with” the current process to make domains easier to buy.

The current system requires what amounts to basically a self-declaration that you belong to the travel community, he said, but you have to visit the registry’s web site to obtain an authentication code before a registrar will let you buy a .travel domain.

Given that the community captured by .travel is extremely broad — you could be somebody blogging about their vacations and qualify — it seems to be a barrier of limited usefulness.

Nevett said Donuts has no immediate plans to migrate the TLD away from the Neustar back-end upon which it currently sits.

The rest of its portfolio runs on its own in-house registry platform, and one imagines that .travel will wind up there one day.

While .travel is one of Donuts most-expensive domains — priced at $99 retail at its own Name.com registrar — Nevett said there are no plans to cut pricing as yet.

There may be discounts, he said, and possibly promotions involving bundling with other travel-related gTLDs in its portfolio.

Donuts already runs .city, .holiday, .flights, .cruises, .vacations and several other thematically synergistic name spaces.

.travel had about 18,000 domains registered at the last count, with EnCirca, Name.com, 101domain, Key-Systems and CSC Corporate as its top five registrars.

It peaked 10 years ago at just under 215,000 registrations, largely due to to speculative bulk registrations made by parties connected to the registry that were dumped a couple of years later.

It’s been at under 20,000 names for the last five years, shrinking by small amounts every year.

The price of the acquisition was not disclosed.

ICANN chief to lead talks over blocked .amazon gTLD

Kevin Murphy, February 14, 2018, Domain Policy

ICANN CEO Goran Marby has been asked to help Amazon come to terms with several South American governments over its controversial bid for the .amazon gTLD.

The organization’s board of directors passed a resolution last week accepting the suggestion, which came from the Governmental Advisory Committee. The board said:

The ICANN Board accepts the GAC advice and has asked the ICANN org President and CEO to facilitate negotiations between the Amazon Cooperation Treaty Organization’s (ACTO) member states and the Amazon corporation

Governments, prominently Peru and Brazil, have strongly objected to .amazon on the grounds that the “Amazon” river and rain-forest region, known locally as “Amazonas” should be a protected geographic term.

Amazon’s applications for .amazon and two Asian-script translations were rejected a few years ago after the GAC sided with its South American members and filed advice objecting to the gTLDs.

A subsequent Independent Review Process panel last year found that ICANN had given far too much deference to the GAC advice, which came with little to no evidence-based justification.

The panel told ICANN to “promptly” take another look at the applications and “make an objective and independent judgment regarding whether there are, in fact, well-founded, merits-based public policy reasons for denying Amazon’s applications”.

Despite this, the .amazon application is still classified as “Will Not Proceed” on ICANN’s web site. That’s basically another way of saying “rejected” or “denied”.

Amazon the company has promised to protect key domains, such as “rainforest.amazon”, if it gets to run the gTLDs. Governments would get to help create a list of reserved, sensitive domains.

It’s also promised to actively support any future bids for .amazonas supported by the governments concerned.

.amazon would be a dot-brand, so only Amazon would be able to register names there.

Economist would sue ICANN if it publishes private emails

Kevin Murphy, February 14, 2018, Domain Policy

The Economist Intelligence Unit has threatened to sue ICANN if it publishes emails related to its evaluations of “community” gTLDs.

That’s according to a document published by ICANN this week, in which the organization refused to reveal any more information about a controversial probe into the Community Priority Evaluations the EIU conducted on its behalf.

EIU “threatened litigation” should ICANN publish emails sent between the two parties, the document states.

New gTLD applicant DotMusic, which failed its CPE for .music but years later continues to fight for the decision to be overturned, filed a Documentary Information Disclosure Policy request with ICANN a month ago.

DIDP is ICANN’s equivalent of a Freedom of Information Act.

DotMusic’s request among many other items sought the release of over 100,000 emails, many sent between ICANN and the EIU, that ICANN had provided to FTI Consulting during FTI’s investigation into whether the CPEs were fair, consistent and absent ICANN meddling.

But in its response this week, ICANN pointed out that its contract with EIU, its “CPE Provider”, has confidentiality clauses:

ICANN organization endeavored to obtain consent from the CPE Provider to disclose certain information relating to the CPE Process Review, but the CPE Provider has not agreed to ICANN organization’s request, and has threatened litigation should ICANN organization breach its contractual confidentiality obligations. ICANN organization’s contractual commitments must be weighed against its other commitments, including transparency. The commitment to transparency does not outweigh all other commitments to require ICANN organization to breach its contract with the CPE Provider.

DotMusic’s DIDP sought the release of 19 batches of information, which it hopes would bolster its case that both the EIU’s original reviews and FTI’s subsequent investigation were flawed, but all requests were denied by ICANN on various grounds.

In more than one instance, ICANN claims attorney-client privilege under California law, as it was actually ICANN’s longstanding law firm Jones Day, rather than ICANN itself, that contracted with FTI.

The FTI report cleared ICANN of all impropriety and said the EIU’s CPE process had been consistent across each of the gTLD applications it looked at.

The full DIDP request and response can be found here.

ICANN has yet to make a decision on .music, along with .gay, .hotel, .cpa, and .merck, all of which were affected by the CPE reviews.

Full $185,000 refunds offered to risky new gTLD applicants

Kevin Murphy, February 8, 2018, Domain Policy

ICANN is to offer applicants for three new gTLDs identified as too risky to go live full refunds of their application fees.

Its board of directors acknowledged at its weekend retreat that it has no intention of delegating .corp, .home and .mail, and that each applicant should be able to get their entire $185,000 application fee back.

The applicants will have to withdraw their applications in order to get the refund.

Ordinarily, withdrawing an application would only qualify the applicants for a partial refund.

The ICANN board said in its resolution that it “does not intend to delegate the strings .CORP, .HOME, and .MAIL in the 2012 round of the New gTLD Program”.

It added that “the applicants were not aware before the application window that the strings .CORP, .HOME, and .MAIL would be identified as high-risk, and that the delegations of such high-risk strings would be deferred indefinitely.”

The three strings are considered risky because they already receive vast amounts of “name collision” traffic, largely from DNS queries that leak out from private networks.

There’s a concern that delegating any of them would create a big security risk in terms of confidential data leakage and stuff just generally breaking.

It’s been six years since the last new gTLD application window was open, and some applicants for the strings abandoned their bids years ago.

There are five remaining .corp applicants (and one withdrawal), five for .mail (two withdrawals) and ten for .home (one withdrawal).

The refunds will be taken from ICANN’s separate new gTLD program budget so presumably will not have an impact on its current operating budget woes.

The board noted that technically it did not have to give full refunds, under the terms of the Applicant Guidebook, but that it was doing so in the interest of “fairness”.

This may come as little comfort to applicants whose money has been tied up in limbo for the last six years.