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Companies losing $10 BILLION by ignoring new gTLDs — report

Kevin Murphy, April 11, 2017, Domain Registries

The world economy is “conservatively” losing out on almost $10 billion of annual revenue due to a lack of support for new gTLDs and internationalized domain names, according to an ICANN-commissioned research report.

The report, conducted by Analysys Mason for the semi-independent Universal Acceptance Steering Group, calculated that patchy new gTLD support means $3.6 billion of activity is lost, with lack of IDN support costing $6.2 billion.

Despite “new” gTLDs being around for a decade and a half, there are still plenty of web sites and apps that incorrectly assume that all TLDs are either two or three characters. Others don’t support non-Latin scripts.

This leads to internet users abandoning transactions, the report says, when their email addresses are rejected as invalid.

Mason calculated the $3.6 billion number by multiplying the estimated number of email addresses using new gTLD domains (152 million) by the estimated average annual revenue generated per email address ($360), then calculating what portion of these transactions cannot happen due to incomplete TLD support.

Earlier research by .CLUB Domains suggests that 13% of sites do not support new gTLDs, so that’s the number Mason used. The researchers then cut the number in half, to account for the 50% of people it reckons would simply switch to an email address in a legacy TLD name.

That gets you to $3.6 billion of potential revenue lost for want of gTLD support.

Another, more cynical way to spin this would be to say that new gTLDs are causing $3.6 billion of economic damage. After all, if everyone were to use legacy TLDs there would be no problem.

For the IDN number, Mason calculated how many users of five major language groups (Russian, Chinese, Arabic, Vietnamese and Indian languages) are not currently online, then estimated how much revenue would be generated if just 5% of these users (17 million people) were persuaded online by the existences of IDN TLDs.

The report was commissioned in order to raise awareness of the financial benefits of universal acceptance.

The UASG has spent most of its efforts so far focusing on UA as a “bug fix” to be communicated to engineers, so the report is intended to broaden its message to catch the attention of the money people too.

The report, which goes into much more detail about how the numbers were arrived at, can be downloaded here.

Uniregistry to grandfather existing domains before big price increases

Uniregistry has backtracked on its plan to hike renewal fees on thousands of domain name registrations.

CEO Frank Schilling described the U-turn, which followed a ferocious backlash from domain investors, as “the right thing to do”.

The company had announced price increases across 16 of its 27 gTLDs that in one case exceeded 3,000% but in many more cases represented increases in the hundreds of percent.

The increases were to apply to new and renewing registrations, and Schilling had said that they were necessary to keep the affected TLDs afloat.

But domainers were furious, taking to blogs and message boards to announce and decry the death of all new gTLDs.

Leading registrar Go Daddy soon said that it would no longer sell Uniregistry TLDs, at least temporarily.

But yesterday Uniregistry announced a change of heart, providing an unusually detailed account of the thought process leading to the price increases that’s worth quoting at length.

“The registration providers we consulted reported that differentiating prices based on the time of the registration was technically difficult and confusing for customers,” said Bret Fausett, head of the Registry Services Team. “Based on that feedback, and considering the small number of registrants affected, we made the difficult decision to raise prices for all registrants.”

“After the announcement, however, we, and our registration partners, have heard clearly from our end users that the ability to register ten-years at the existing price does not ameliorate the pain of subsequent price increases for registrants facing substantial price increases,” said Mr. Fausett. “So, for the names in our highest-priced tiers, the price changes will affect only new registrations. We are asking our registration partners to do whatever is necessary to enable this approach.”

“Creating a legacy tier of prices for inaugural registrants in our niche, premium top-level domains is technically more difficult,” said Frank Schilling, Managing Director of Uniregistry, “but it’s the right thing to do for those pioneering individuals and companies who have staked their claims in the new Internet real estate.”

In other words, if you register a name in the affected gTLDs before September 8, your renewal fee will be at the current lower level.

Whether this will be enough to mitigate Uniregistry’s reputational damage in the domainer community remains to be seen.

But the company also said it plans to overhaul its premium names pricing by the end of the second quarter, scrapping the multi-tier pricing approach in favor of a one-size-fits-all menu.

Schilling said that price reductions will affect “millions” of reserved names and mean “hundreds of millions” of dollars of hypothetical value have been wiped from the portfolio.

China approves more Donuts, Afilias gTLDs

Donuts and Afilias have had two batches of new gTLDs approved for use in China.

The Ministry of Industry and Information Technology approved five Afilias TLDs and six Donuts TLDs last month. This means customers of Chinese registrars will now be able to legally use those names in China.

Afilias was approved for .info, .mobi and .pro, which were delegated following the 2000 and 2003 new gTLD application rounds and .kim and .red from the 2012 round.

Donuts simultaneously was cleared for .ltd, .group, .游戏 (“game”), .企业 (“business”), .娱乐 (“entertainment) and .商店 (“store”).

The approvals more than double the number of new gTLDs in Latin script to get the nod from MIIT, in what now appears to be a monthly occurrence.

In February, .ink and four Chinese-script TLDs passed the regulatory process, following .site and .shop in January and .vip, .club and .xyz in December.

MIIT approval means the chance of usage by Chinese registrants should go up, but it also ties these Western registries to relatively Draconian government policies when it comes to Chinese registrations.

New gTLD registries want a $17 million ICANN rebate

Kevin Murphy, March 24, 2017, Domain Registries

Many gTLDs are performing more poorly than expected and their registries want some money back from ICANN to compensate.

The Registries Stakeholder Group this week asked ICANN for a 75% credit on their quarterly fees, which they estimate would cost $16.875 million per year.

The money would come from leftover new gTLD application fee money, currently stashed in an ICANN war chest valued at nearly $100 million.

The RySG, in a letter to ICANN (pdf), also asked for $3 million from the fund to be used to pay for advertising the availability of new gTLDs.

“These measures combined would support ICANN’s mission to promote competition for the public interest and operational interoperability of the internet,” the proposal states.

Currently, all gTLDs on the 2012-round contract have to pay ICANN $25,000 per year, split into quarterly payments, in fixed fees.

Transaction volume over 50,000 transactions per year is taxed at $0.25 per add, renewal or transfer.

The RySG wants the $6,250 quarterly fee reduced by $4,687.50 for a year, with the possibility of the discount being renewed in subsequent years.

In its letter, it cites an example of 900 delegated gTLDs being affected, which would cost $16.875 million per year.

However, that’s only three quarters of the total number of new gTLDs in the root. That currently stands at over 1,200 string, so the actual cost would presumably be closer to £23 million.

Because the new gTLD program, with its $185,000 application fees, was never meant to turn a profit, the RySG thinks it’s fair that the excess money comes back to the companies that originally paid it.

The rationale for the discount is that many new gTLDs (not all, as the RySG is quick to point out) are struggling under poor sales volumes, meaning a 5,000-name TLD, of which there are many, is in effect costing the registry $5 per name per year in fixed ICANN fees.

But that rationale does not of course apply to all new gTLDs. There are currently almost 470 dot-brand gTLDs in the root, which have business models oriented on harder-to-quantify ROI rather than sales volumes and profits.

It’s not clear from the RySG letter whether the discount would apply to all gTLDs or only those with a straightforward old-school profit motive.

.feedback gTLD in breach of contract after big brand “fraud” claims

Kevin Murphy, March 17, 2017, Domain Registries

ICANN has slapped .feedback operator Top Level Spectrum with a contract breach notice after a huge complaint about alleged fraud filed by a gang of big brands.

The company becomes the third new gTLD to be hit by a breach notice, and the first to receive one as a result of losing a Public Interest Commitments Dispute Resolution Process case.

While TLS dodged the “fraud” charges on a technicality, the breach is arguably the most serious found by ICANN in a new gTLD registry to date.

The three-person PICDRP panel found TLS was in violation of the following commitment from its registry agreement:

Registry Operator will operate the TLD in a transparent manner consistent with general principles of openness and non-discrimination by establishing, publishing and adhering to clear registration policies.

But TLS dodged the more serious charges of “fraudulent” behavior, which it denied, largely on the technicality that its PICs only require it to bar its registrants from such behavior.

There’s nothing in the PICs preventing the registry from behaving fraudulently, so the PICDRP panel declined to rule on those allegations, saying only that they “may be actionable in another forum”.

The complainants, which filed their 1,800-page complaint in October, were MarkMonitor and a bunch of its clients, including Adobe, American Apparel, Best Buy, Facebook, Levi and Verizon.

They’d claimed among other things that 70% of .feedback domains were trademarked names actually registered by the registry, and that TLS had stuffed each site with reviews either paid for or scraped from services such as Yelp!.

They claimed that Free.Feedback, a free domains service hosted by an affiliated entity, had been set up to auto-populate Whois records with the names of brand owners (or whoever owned the matching .com domain) even when the registrant was not the brand owner.

This resulted in brand owners receiving “phishing” emails related to domains they’d never registered, the complainants stated.

TLS denied all all the allegations of fraud, but the PICDRP panel wound up not ruling on many of them anyway, stating:

the Panel finds that Respondent’s Registry Operator Agreement contains no covenant by the Respondent to not engage in fraudulent and deceptive practices.

The only violations it found related to the transparency of .feedback’s launch policies.

The panel found that TLS had not given 90 days notice of policy changes and had not made its unusual pricing model (which included an extra fee for domains that did not resolve to live sites) transparent.

The registry had a number of unusual launch programs, which I outlined in December 2015 but which were apparently not adequately communicated to registrars and registrants.

The panel also found that Free.Feedback had failed to verify the email addresses of registrants and had failed to make it easy for trademark owners to cancel domains registered in their names without their consent.

Finally, it also found that TLS had registered a bunch of trademark-match domain names to itself during the .feedback sunrise period:

self-allocating or reserving domains that correspond to the trademark owners’ marks during the Sunrise period constitutes a failure by the Respondent to adhere to Clause 6 of its Registration and Launch policies, versions 1 and 2. According to the policies, Sunrise period is exclusively reserved for trademark owners

TLS, in its defense, denied that it had self-allocated these names and told the panel it had “accidentally” released them into the zone file temporarily.

As a result of the PIC breaches found by the panel, ICANN Compliance has issued a breach notice (pdf) against the company.

To cure the breach, and avoid having its Registry Agreement taken away, TLD has to, by April 15:

Provide ICANN with corrective and preventative action(s), including implementation dates and milestones, to ensure that Top Level Spectrum will operate the TLD feedback in a transparent manner consistent with general principles of openness and nondiscrimination by establishing, publishing and adhering to clear registration policies;

That seems to me like it’s probably vague enough to go either way, but I’d be surprised if TLS doesn’t manage to comply.