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New gTLD revenue cut by HALF in ICANN budget

Kevin Murphy, January 22, 2018, Domain Policy

The new gTLD industry is performing terribly when compared to ICANN’s predictions just six months ago.

ICANN budget documents published over the weekend show that by one measure new gTLDs are doing just 51% of the business ICANN thought they would.

The new budget (pdf) shows that for the fiscal year 2018, which ends June 30, ICANN currently expects to receive $4.6 million in registry transaction fees.

These are the fees registries must pay for each new registration, renewal or transfer, when the TLD has more than 50,000 domains under management.

In a draft budget (pdf) published March 2017, its “best estimate” for these fees in FY18 was $8.9 million, almost double its newest prediction.

That prediction lasted until the approved budget (pdf) published last August.

The budget published at the weekend expects this transaction revenue to increase 31.1% to $6 million by June 30, 2019, still a long way off last year’s estimate.

At the registrar level, where registrars pay a transaction fee regardless of the size of the customer’s chosen gTLD, ICANN expects new gTLD revenue to be $3.9 million in FY18.

That’s just 52% of its March/August 2017 estimate of $7.5 million.

Looking at all reportable transactions — including the non-billable ones — ICANN’s projection for FY18 is now 21.9 million, compared to its earlier estimate of 41.7 million.

ICANN even reckons the number of new, 2012-round gTLDs actually live on the internet is going to shrink.

Its latest budget assumes 1,228 delegated TLDs by the end of June this year, which appears to be a couple light on current levels (at least according to me) and down from the 1,240 it expected a year ago.

It expects there to be 1,231 by the end of June 2019, which is even lower than it expected have in June 2017.

I suspect this is related to dot-brands cancelling their contracts, rather than retail gTLDs going dark.

Revenue from fixed registry fees for FY18 is expected to be $30.6 million, $200,00 less than previous expectations. Those numbers are for all gTLDs, old and new.

Overall, the view of new gTLDs is not pretty, when judged by what ICANN expected.

It shows that ICANN is to an extent captive to the whims of a fickle market that has in recent years been driven by penny deals and Chinese speculation.

By contrast, legacy gTLDs (.com, .info, etc) are running slightly ahead of earlier projections.

ICANN now expects legacy registry transaction fees of $48.6 million for FY18, which is $200,000 more than predicted last year.

It expects registrar transaction fees of $29.5 million, compared to its earlier forecast of $29.4 million.

This is not enough to recoup the missing new gTLD money, of course, which is why ICANN is slashing $5 million from its budget.

A new gTLD kills itself off for the second time

Kevin Murphy, January 18, 2018, Domain Registries

British pharmacy chain Boots has applied to ICANN to terminate its dot-brand contract for the second time.

The company asked for its .boots Registry Agreement, signed in 2015, to be ended in December and ICANN opened the request for public comment this week.

What’s weird about the request is that Boots had already asked for self-termination last April, but that request was subsequently withdrawn by the company.

Boots seems to have changed its mind, twice, in a year.

As I noted first time around, .boots was the first example of a dot-brand that also matches a generic class of goods to chose the easy way out.

It’s quite likely the two-year freeze on re-applying for the string, should anyone want to, will be over by the time the next new gTLD application window opens.

.boots only had the contractually mandated placeholder domain nic.boots live.

Active new gTLD domains drop below 20 million

Kevin Murphy, January 10, 2018, Domain Registries

The number of domain names recorded in new gTLD zone files has dipped below 20 million for the first time in 18 months.

The total crossed the milestone in the wrong direction January 1, according to DI’s records.

As of today, there are 19.8 million domains in zone files, down from a peak of 26 million in March 2017.

The count has gone down by about half a million names in the last 90 days, largely as a result of declines in .top, .xyz and .kiwi, which have each recorded six-figure losses.

It’s the first time that the zone files have showed the number of domains going below 20 million since the beginning of June 2016, when XYZ.com sold millions of .xyz domains for a penny each. Most of those names did not renew a year later.

Zone files do not record every domain that has been registered, just those with active name servers. Others may be registered but unused or on hold for various reasons.

.web closer to reality as antitrust probe ends

Kevin Murphy, January 10, 2018, Domain Registries

Verisign has been given the all-clear by the US government to go ahead and run the new gTLD .web, despite competition concerns.

The Department of Justice told the company yesterday that the antitrust investigation it launched almost exactly a year ago is now “closed”.

Verisign’s secret proxy in the 2016 auction, the original .web applicant Nu Dot Co, now plans to try to execute its Registry Agreement with ICANN.

That contract would then be assigned to Verisign through the normal ICANN process.

The .com registry operator today filed this statement with the US Securities and Exchange Commission:

As the Company previously disclosed, on January 18, 2017, the Company received a Civil Investigative Demand from the Antitrust Division of the United States Department of Justice (“DOJ”) requesting certain material related to the Company becoming the registry operator for the .web gTLD. On January 9, 2018, the DOJ notified the Company that this investigation was closed. Verisign previously announced on August 1, 2016, that it had provided funds for Nu Dot Co’s successful bid for the .web gTLD and the Company anticipates that Nu Dot Co will now seek to execute the .web Registry Agreement with ICANN and thereafter assign it to Verisign upon consent from ICANN.

This basically means that Justice disagrees with anyone who thinks Verisign plans to operate .web in a way that just props up its .com market dominance, such as by burying it without a trace.

People clamoring to register .web domains may still have some time to wait, however.

Rival applicant Donuts, via subsidiary Ruby Glen, still has a pending lawsuit against ICANN in California.

Donuts had originally sued to prevent the .web auction going ahead in mid-2016, trying to force Nu Dot Co to reveal who was really pulling its strings.

After the auction, in which Verisign committed to pay ICANN a record-setting $125 million, Donuts sued to have the result overturned.

But in November 2016, a judge ruled that the no-suing covenant that all new gTLD applicants had to sign was valid, throwing out Donuts’ case.

Donuts is now appealing that ruling, however, filing its most-recent brief just a few weeks ago.

Whether that will stop ICANN from signing the .web contract and delegating it to Verisign is an open question. It managed to delegate .africa to ZA Central Registry despite the existence of an ongoing lawsuit by a competing applicant.

If history is any guide, we may see a rival applicant apply for a temporary restraining order against .web’s delegation before long.

New gTLD to increase prices 10x, add blockchain voting service

Kevin Murphy, January 4, 2018, Domain Registries

The new gTLD .voting is to suffer a steep price increase as its registry bakes a new “e-voting solution” into its offering.

Valuetainment, the Germany-based registry, informed registrars of its decision recently.

While I don’t know the exact figures involved, it appears the annual wholesale cost of a .voting domain will rise more than tenfold.

Currently, the retail price of a .voting domain can range from $60 to $100 per year. After June 1, that price is likely to start around the $600 mark.

But the registry also told registrars it plans to bundle in with each domain an “e-voting solution” in which “votes are anchored in the blockchain”. There would be no additional charge for this service.

This actually smells a bit like innovation, something the new gTLD program has lacked to date but which sometimes scares away registrars that see mainly implementation and support costs.

Steep price increases also have a track record of scaring away registrars, as Uniregistry discovered last year.

I understand the plan is to apply the price increase to renewals for all existing .voting domains, which currently number a little under 1,000.

At the last count, two thirds of .voting domains had been sold via German reseller platform RegistryGate, with GoDaddy a distant second.

Registry representatives have not responded to a request for information about the blockchain-based voting service, so I can’t tell you much more about it other than blockchain-based systems are in vogue right now due to the popularity of speculation in electronic “currencies” such as Bitcoin.