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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.

ANA’s response to the Beckstrom letter in full

Kevin Murphy, August 11, 2011, Domain Policy

The Association of National Advertisers has issued statements in response to ICANN president Rod Beckstrom’s admonishment of its attempt to hold up the new top-level domains program.

ANA appeared out of nowhere last week, vaguely threatening to sue ICANN unless it suspended the program, which it believes will cost brand owners billions of dollars.

But yesterday Beckstrom replied, saying the program was developed through a “multi-stakeholder” policy-making process over several years in which ANA had ample opportunity to participate.

He also pointed out that ANA appears to have made faulty assumptions about how the program is supposed to work, particularly with regards “.brand” gTLDs.

This the official response to Beckstrom’s letter from Bob Liodice, ANA’s president and CEO:

We are not surprised by ICANN’s response although disappointed that ICANN chose to defend its process and deny any doubt as to consensus. Rather, ICANN needs to respond to the real concern from the brand owner community.

There is no question that this Program will increase brand owners’ costs by billions of dollars. We should not be debating if 40 or 45 comment periods were held; instead, ICANN should be justifying its economic analysis regarding the Program against the staggering costs to brands.

ANA welcomes further discussions and an opportunity for further economic study to quantify the need for more TLDs and what it will mean for industry and other stakeholders, such as the public interest community who will face the same brand dilution concerns.

ANA general counsel Doug Wood, from the law firm Reed Smith, stated:

Now is not the time for either side to ‘dig in its heels’ much less defend the process, especially in a depressed economy. ANA has raised real concerns regarding economic losses, brand dilution and resultant privacy/cyber-security harms.

In light of our shared goals of a safe and stable global Internet, ICANN should return to the negotiating table and work with all concerned parties, including the ANA and its members, to resolve brand owners’ legitimate concerns in a manner consistent with ICANN’s consensus obligations.

These are of course concerns that have been debated to death for several years in the ICANN community, lately without ANA’s participation.

The organization submitted a couple of comments more than two years ago and then seemed to disappear from the process.

One could argue that’s very odd behavior for an apparently well-funded outfit now loudly claiming that it’s “horrified” by new gTLDs.

Last chance to win newdomains.org tickets

Kevin Murphy, August 11, 2011, Domain Services

Congratulations to Jim Davies, you’ve just won a free conference pass for newdomains.org worth $1,000 for entering the latest DomainIncite competition.

Random.org’s random number sequence generator selected the winning order of tweets qualifying for the draw, and Twitter handle @PerthPom came top of the list.

That’s a second Australia-based winner, by the looks of things, after Michael’s win on Monday. I hope you guys can both afford the airfare.

Competition Day Three

I have two final tickets to give away.

To reiterate, they’re Full Conference passes for the newdomains.org conference in Munich, Germany, on September 26 and 27. Flights, hotels and Oktoberfest not included. Details here.

If you want a pass, just leave a comment here before 2359 UTC Sunday August 14, saying why you think you should get one. Make something up.

I’ll use Random.org again to pick the two lucky winners and announce the names on Monday.

All winners will be contacted by somebody from the conference organizer, United-Domains, next week.

UPDATE: Proving just how random Random.org is, the winning order it selected was 1, 2, 3, 4, 5. The winners are TAG and Daniel. I’ll be in touch.

Beckstrom strikes back at ANA threat

Kevin Murphy, August 10, 2011, Domain Policy

ICANN president Rod Beckstrom has come out swinging against the latest attack on its new top-levels domains program, promising to “vigorously defend” it.

In his response to a harshly critical missive from the Association of National Advertisers, Beckstrom calls ANA’s claims “either incorrect or problematic in several respects”.

I think “firmly worded” would be an appropriate way to characterize his letter (pdf).

In it, he notes that the new gTLD program has been on the cards since 1998, and has been developed over several years using input from the entire ICANN community, including ANA itself.

He further states that some of the complaints outlined by ANA president Bob Liodice show a lack of research.

As I noted in my interview with Liodice yesterday, ANA seems to think cybersquatting at the top-level will be enabled unless companies defensively apply for their “.brand” gTLDs.

Beckstrom said that these statements “demonstrate a lack of understanding of Program details”.

The letter suggests that companies have no choice but to apply for their own gTLDs. Operating a gTLD means assuming a number of significant responsibilities; this is clearly not for everyone. Indeed, it is hoped that those without an interest in making a contribution to expanded choice or innovation in the DNS will not apply. One clear directive of the consensus policy advice on which the program is built is that TLDs should not infringe the existing legal rights of others. The objection process and other safeguards eliminate the need for “defensive” gTLD applications, because where an infringement of legal rights can be established using these processes, an application will not be approved.

The response goes on to outline some of the mandatory second-level trademark protection mechanisms that have been included in the program’s Applicant Guidebook.

ICANN is arguably on shakier ground here – making use of these mechanisms is still going to cost brand owners time and money, which is the basis of ANA’s objections.

The question now is whether Beckstrom’s responses will be enough to get ANA to call off the dogs.

He has offered to talk to ANA to “to discuss how the ANA might participate more actively in the policy development activities and other ICANN processes going forward”.

That’s specifically not an offer to get into negotiations with ANA about the contents of the Guidebook or to delay the launch of the program.

That was never going to happen, particularly not in response to a thirteenth-hour complaint from an organization that hasn’t commented on the program for the last two years.

Liodice said yesterday that unless ICANN agrees to suspend the program, ANA plans to lobby the US Congress, its Department of Commerce, and may sue.

Reaction from the domain name industry to Beckstrom’s letter has so far been predictably positive.

ANA chief calls for new gTLDs to be suspended

Kevin Murphy, August 9, 2011, Domain Policy

The president of the Association of National Advertisers said the organization may sue ICANN unless it suspends its new top-level domains program.

Speaking to DomainIncite, ANA’s Bob Liodice said that American industry is “horrified” by the program, which he believes will cost his members a “quite humongous sum of money”.

Liodice wrote to ICANN president Rod Beckstrom a week ago, demanding the program be abandoned and dropping major hints that a lawsuit would be the alternative.

ANA’s board of directors, comprised of representatives of 36 of the largest companies in the US, is “unanimous” in its opposition to the program, he told me.

“We’ve had many conversations with our members, brand owners in the US, and nobody supports this to our knowledge,” Liodice said. “If American industry is not supporting the recommendation to do this, then who is? What is the benefit if brands owners are saying they’re horrified?”

ANA’s members simply do not understand why the program has been introduced, Liodice indicated.

“What’s the problem, what is ICANN trying to solve?” he said.

I put it to him that increasing competition in the registry space is in many ways ICANN’s raison d’etre, built into its founding principles.

“Just because this is something that was supposed to be done back in the Clinton days doesn’t mean it has to be done today,” he said. “The world has changed.”

“I think this is more for the benefit of ICANN than for the benefit of the [advertising] industry,” he said. “ICANN will secure substantial revenue for these changes and put incredible burdens on the industry to no benefit for the industry.”

ICANN, which is obviously a non-profit, says it has priced the program on a cost-recovery basis.

Not convinced by .brands

I asked Liodice if any of ANA’s members had expressed interest in “.brand” gTLDs, and put it to him that enjoy.coke or iwantmy.mtv might be innovative ways to advertise.

“That is not an issue right now,” he said. “The brand for the most part is in the URL anyway, what benefit does it get from moving to right of the dot?”

“The industry is in a period of stability and is very satisfied with status quo,” he added.

Liodice was not aware of the .brand announcements from Canon and Hitachi, but expressed skepticism about their reasons for applying.

“Are those companies saying this is important to me and will further my business interests?” he asked.

Canon USA does appear to be a member of ANA, although it does not have a seat on its board. Hitachi is not a member.

ANA’s plan

Last week’s letter gave Beckstrom an August 22 deadline to respond. The first thing ANA intends to do is wait for his reply, Liodice said.

Anything other than an undertaking to suspend the program for talks is likely to see an escalation.

“We first have to ensure this program is suspended,” Liodice said. “We’re trying to halt the introduction at this point in time and suspend it until we can have these conversations.”

ANA also hopes to speak to the US Department of Commerce, which has an oversight relationship with ICANN, as well as to members of Congress.

“We are lobbying members of Congress to make sure they’re aware of the detrimental characteristics of this, particularly at a time when the world is in great disorder with the financial crisis,” Liodice said.

There’s also the possibility of court action.

While stopping short of saying ANA will definitely sue, Liodice did say that the organization’s lawyers are looking into possible causes of action.

“If the reply is not consistent [with ANA’s requests] we will explore that possibility,” he said.

ANA would be represented by the law firm Reed Smith, which has already published its own statement of support for Liodice’s letter on its web site.

It’s good to talk

My feeling is that some of ANA’s concerns are already dealt with by the program’s Applicant Guidebook, and that a conversation explaining this could help reduce tensions.

Liodice, for example, appears convinced that top-level cybersquatting will be possible – that .coke could be registered by somebody other than Coca-Cola.

My view is that such an obvious transgression would be easily (and relatively cheaply) dealt with using the Legal Rights Objection mechanism already in the Guidebook.

That’s assuming, of course, that the $185,000 application fee failed to be a deterrent, and that a registry back-end provider dumb enough to put its name to the bid could be found.

But even if ANA can be convinced that the risk of TLD-squatting is negligible, its concerns about the potential for problems at the second level will be harder to address.

Let’s face it, while estimates of the increased cost of trademark enforcement vary wildly, nobody has disputed that there will be a cost.

One ANA member has estimated that the per-brand cost to companies would be $2 million over 10 years, Liodice said.

ANA does not appear to have spent much time getting involved in the development of the new gTLD program lately — the most recent submission I could find dates from 2009 — but Liodice said its counsel Reed Smith has been representing it in the ICANN process.

Your second chance to win a $1,000 conference pass

Kevin Murphy, August 8, 2011, Domain Services

Congratulations to “Michael”, you’ve just won a free conference pass for newdomains.org worth $1,000 just for leaving a comment on DomainIncite.

Random.org’s random number sequence generator selected the winning order of comments earlier today, and Michael came top of the list.

His winning answer to the question of “What new gTLD(s) do you think will be successful, and why?” was:

If success is defined by the value it offers the Internet community and not by the number of registrations then I think that a cause based TLD like .Eco or .HIV will be the most successful as they will revolutionize the way we interest with charities online and show our support, ushering in a new era.

I’ve hooked the winner up with conference organizer United-Domains.

And now on to…

Competition Day Two

To be in with a chance at winning the second Full Conference pass to newdomains.org, simply:

1) Follow me on Twitter (if you’re not already doing so).

2) Send a tweet mentioning @domainincite and including the hashtag #conferencecompo

Tweets must be sent by 2359 UTC, Tuesday August 9. I’ll announce the randomly-selected winner here on Wednesday.

Again, the prize does not include transportation or accommodation, but it does include a certain amount of food and drink, along with access to all the panels and exhibits.

The show runs September 26-27 in Munich, Germany.

These Full Conference passes are currently selling for €699 ($1,000) each, so if you’re currently wondering whether or not to attend, a free ticket may help make your mind up.