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New TLD competition group throws in the towel

Kevin Murphy, September 29, 2010, Domain Registries

The ICANN working group tasked with deciding whether registrars should be allowed to apply for new top-level domains has failed to reach agreement after over six months of talks.

This means it will be down to the ICANN board of directors to decide, possibly at its next meeting, what the rules should be on vertical integration and cross ownership in new TLDs.

It’s been pretty clear from the Vertical Integration Working Group’s recent discussions that there would be no chance of the group reaching a consensus on the headline topics in the remaining time allotted to it.

Within the last two hours, the GNSO Council has been notified that the group has failed to reach consensus.

Should ICANN-accredited registrars be allowed to apply for new TLDs? Should registries be allow to sell direct to consumers? Should registrars be able to own stakes in registries? Vice versa? How much? Whither the .brand?

All these questions will now have to be resolved by the ICANN staff and board.

Currently, the Draft Applicant Guidebook limits registry/registrar cross-ownership to 2%, effectively barring existing registrars from applying to run new TLD registries.

While the VI working group has been working on the problem since February, positions quickly became entrenched based on the commercial interests of many participants. There has been no substantial progress towards compromise or consensus in months.

But the group did manage to reach rough agreement on a number of peripheral problems that will have a lesser economic impact on the incumbent registries and registrars.

For example, the board will likely be told that “single registrant, single user” TLDs, a variant of the .brand where the registry is the only registrant, should be looked into further.

On the core issue of cross ownership, three proposals are on the table.

One, the Free Trade Proposal, would eliminate such restrictions entirely. Two others, RACK+ and JN2+, would increase the limits to 15%.

The RACK+ proposal is the closest to the status quo in terms of barring vertical integration, while JN2+ contains explicit exceptions for .brand TLDs and smaller community registries.

Given the lack of consensus, it’s quite feasible that the ICANN board may decide to cherry pick from two or more proposals, or come up with something entirely novel. We’ll have to wait and see.

New TLDs get their own conference

Kevin Murphy, September 28, 2010, Domain Registries

Former ICANN staffer Kieren McCarthy is organizing a conference dedicated to new top-level domains, set to run in San Francisco for two days next February.

The .nxt conference will be hosted by the Internet Society’s SF Bay Area chapter. Pricing is expected to be in the $300 to $500 range.

The organizers are currently looking for speakers, exhibitors and attendees from registries, registrars, potential TLD applicants, consultants and marketers.

McCarthy told me that the idea is to focus more on the business opportunity side of things, rather than the policy-making that dominates ICANN meetings.

“Once all the argument is over and the rules are set, I thought it would be great to have a conference focused on what we were all going to do with the Internet,” he said in an email.

The agenda is expected to be split into four tracks: policy, implementation, models and marketing, tackling subjects such as how to run a registry and how to effectively market a TLD.

New TLD guidebook could be finalized in Cartagena

Kevin Murphy, September 27, 2010, Domain Policy

I’ve got the official line from ICANN — it’s possible that the final Applicant Guidebook for new top-level domain applications could be approved as early as December.

I reported late last night that, following its weekend board retreat, the final version of ICANN’s new TLD rulebook would be published before its public meeting in Cartagena, Colombia.

This morning, based on some reader comments and a closer reading of the board’s latest resolutions, I concluded that there was a pretty good chance I was wrong, so I asked ICANN for clarification.

I essentially asked whether we were looking at another six months of pondering Draft Applicant Guidebook version 5, or whether the next iteration would be the final one.

This is the official ICANN spokesperson line:

The next guidebook to be posted for public comment will be called the “next version” of the applicant guidebook – depending on public comment, the Board will decide whether to approve it as final (with changes) or request another iteration.

As stated above, the Board could consider approving the next version of the Guidebook as early as the Cartagena meeting or set a timeline for approval sometime thereafter.

So, there’s the answer: it depends.

Frankly, given the number and gravity of the unresolved issues on the table, I think Cartagena may be optimistic. But it’s not impossible.

(Cheers to @mneylon and @dot_scot for the constructive criticism.)

Do uncontroversial new TLDs exist?

Kevin Murphy, September 27, 2010, Domain Policy

ICANN’s Governmental Advisory Committee wants ICANN to drastically scale back the first round of new top-level domain applications, limiting it to “uncontroversial” strings.

In a letter last Thursday, interim GAC chair Heather Dryden wrote that ICANN should consider a “road test” or “fast track first round” made up of “relatively straightforward, non-sensitive and uncontroversial gTLD proposals”.

This doesn’t make much sense to me, for a few reasons.

First, Dryden’s letter does not attempt to define what such a TLD would look like, other than noting that they should include “community, cultural and geographical applications”.

Neither does it give ICANN any ideas about how it might separate out uncontroversial applications for special treatment before any applications have actually been received.

The idea might have worked had the Expressions Of Interest plan not been canned in Nairobi, but right now I can’t see an obvious way to do it without actually asking all applicants to file their apps before they have any idea of the rules their applications will be subject to or on what timeline.

It’s a recipe for, if not disaster, then for at least months and months of more delays as ICANN tries to design a parallel pre-approval process for uncontroversial strings.

Second, there’s no category of new TLD that is exclusively “uncontroversial” in nature.

The GAC wants “an initial fast track round for a limited number of non-controversial applications which should include a representative but diverse sample of community, cultural and geographical applications”.

This would seem to suggest that community, cultural and geographical TLDs are somehow less prone to controversy than other categories of application, which is not the case.

On the geoTLD front, you only need look at the large number of contested regional/city domains that we already know about – Berlin, Barcelona and Bayern, without leaving the B’s – to see that controversy is likely.

Even uncontested cityTLDs have potential for conflicts. Take .london, for example. Last time I checked, the one .london applicant we know of made it clear that .london would exclusively represent London in the UK.

If you’re a business in London, Ontario, or any other London, and nobody contests the .london bid, you’re forever excluded from the namespace. That, I would argue, could be controversial.

As for the cultural/ethnic TLDs, are the proposed .kurd, .eus (Basque) and .sic (Székely) TLDs really totally uncontroversial?

I genuinely don’t know the answer to that question, but I do know they are designed to represent peoples largely originating from (relatively recently at least, if not currently) contested territories.

And what of “community” TLDs? It’s almost impossible to argue that this category is by definition less controversial, given that essentially any applicant is eligible to designate itself a “community” TLD.

There’s a pretty decent chance that one or more .gay bids will be a community-backed application. And I strongly suspect that the GAC doesn’t like the prospect of that TLD one little bit.

Third, ICANN has already executed two limited new TLD rounds.

The whole point of the 2000 round of new TLDs was to create a “test-bed”. Similarly, a key reason the 2003 round was limited to “sponsored” TLDs was to increase the TLD pool in an orderly fashion.

The reason the GAC says wants a limited launch this time is to help ICANN in “collecting relevant information” relating to the “economic impacts of a large number of new gTLD strings”.

There’s an assumption here that the behavior of registrants, such as trademark holders, will be the same when a small number of TLDs are released as when a large number are released, or that one can extrapolate the latter from the former, which may not be the case.

If ICANN wants a limited launch in order to measure the economic impact, it has two previous such rounds to study already. But if it wants empirical data on a large number of TLDs being launched, there’s unfortunately only one way to get it.

Personally, I think the GAC’s talk of “economic analysis” and “uncontroversial strings” is more likely a smokescreen for its real concerns about nations unilaterally blocking strings they don’t like at their borders, potentially leading to root fragmentation.

Anti-terror rule dropped from new TLD guidebook

Kevin Murphy, September 27, 2010, Domain Policy

ICANN will cut references to terrorism from its Draft Applicant Guidebook for new top-level domains, after criticism from some Arab stakeholders.

The ICANN board of directors decided on Saturday at its retreat in Trondheim that it will revise its policy of doing background checks on new TLD applicants:

The background check should be clarified to provide detail and specificity in response to comment. The specific reference to terrorism will be removed (and the background check criteria will be revised).

The reference to “terrorism” first showed up in DAGv4, the latest draft. It caused a bit of a stir, with at least two Arab community members harshly criticizing ICANN for its inclusion.

Khaled Fattal of the Multilingual Internet Group told ICANN it would “be seen by millions of Muslims and Arabs as racist, prejudicial and profiling” while Abdulaziz Al-Zoman of SaudiNIC observed that’s it’s not globally accepted “who is a terrorist and who is a freedom fighter”.

It appears that their complaints have been heard.

ICANN to publish final new TLD rulebook before December

Kevin Murphy, September 26, 2010, Domain Registries

The ICANN board of directors said it will publish the final Applicant Guidebook for new top-level domains before the public meeting in Cartagena this December.

(UPDATE: that statement is not 100% accurate. See this post for an update.)

The decision came at the end of its two-day retreat in Trondheim, Norway yesterday, which seems to have left a number of important issues as yet unresolved.

The matters of registry-registrar cross ownership and morality and public order objections are both still unfinished business, while the intellectual property lobby has at least one bone thrown its way.

On the morality or “MOPO” problem, now known as the “Rec6” problem, the board had this to say:

The Board will accept the Rec6 CWG recommendations that are not inconsistent with the existing process, as this can be achieved before the opening of the first gTLD application round, and will work to resolve any inconsistencies.

The Rec6 working group had recommended a re-framing of the issue that would eliminate the possibility of any one government blocking a new TLD application based on its own laws and interests.

So the board resolution sounds like progress, until you realize that every decision on new TLDs made at the retreat is going to be re-evaluated in light of a shamefully eleventh hour wish-list submitted by the Governmental Advisory Committee on Thursday.

Having failed to get what it wanted through cooperation with the Rec6 working group, the GAC essentially went over the heads of the GNSO, taking its demands directly to the board.

So much for bottom-up policy making.

Resolved (2010.09.25.02), staff is directed to determine if the directions indicated by the Board below are consistent with GAC comments, and recommend any appropriate further action in light of the GAC’s comments.

In other words, the board may only accept the parts of the Rec6 recommendations that the GAC agrees with, and the GAC, judging from its latest missive, wants the first round of applications limited to purely “non-controversial” strings, whatever those may be.

The board also made no firm decision of the issue of registry vertical integration and cross-ownership. This is the entirety of what it said on VI:

The Board will send a letter to the GNSO requesting that the GNSO send to the Board, by no later than 8 October 2010, a letter (a) indicating that no consensus on vertical integration issues has been reached to date, or (b) indicating its documented consensus position. If no response is received by 8 October 2010, then the Board will deem lack of consensus and make determinations around these issues as necessary. At the time a policy conclusion is reached by the GNSO, it can be included in the applicant guidebook for future application rounds.

That’s actually borderline amusing, given that the GNSO working group on VI has recently been waiting for hints from the board about what it intends to do, rather than actually getting on with the job of attempting to create a consensus policy.

The bone I mentioned for the trademark crowd amounts to knocking a week off the length of time it takes to resolve a complaint under the Uniform Rapid Suspension policy.

The Trondheim resolutions also make it clear that the ICANN board will only be required to vote on a new TLD application in limited circumstances, such as when an objection is filed.

For all other applications, a staff mechanism for rapidly signing contracts and adding TLDs to the root will be created.

Crunch day for new TLDs

Kevin Murphy, September 24, 2010, Domain Registries

The ICANN board has kicked off a two-day retreat during which it will attempt to finalize the rules for applying for new top-level domains.

The big question for many is this: are more delays or the cards, or will ICANN finally put a firm timeline on the first new TLD application round?

One constituency that seems bent on more delays is the intellectual property community.

Dozens of organizations, including Microsoft, AT&T, Time Warner, Adobe and Coca-Cola, told ICANN in late July that the current IP protections in version 4 of the Draft Applicant Guidebook are not good enough.

The proposed Uniform Rapid Suspension process has become bloated and burdensome and the Trademark Clearinghouse does not go far enough to proactively protect trademarks, they say.

Just this week, it emerged that the International Trademark Association has called for further studies into the potential economic harms of new TLDs, which could easily add a couple of quarters of delay.

But there are good reasons to believe ICANN is done with being pushed around by IP interests.

As I reported earlier this week, chairman Peter Dengate Thrush has recently publicly stated that the current state of intellectual property protection in the DAG is a compromise position reflecting the views of all stakeholders and that IP lawyers “have had their chance”.

It’s not just IP interests that will be affected by the ICANN board’s discussions this weekend. The board’s decisions on “vertical integration” will make or break business models.

The VI issue, which governs whether registrars can apply for new TLDs and whether registrars can act as registrars, is perhaps the most difficult problem in the DAG. The working group tasked with sorting it out failed to reach consensus after six months of debate.

The DAGv4 currently says, as an explicit placeholder, that there can be no more than 2% cross-ownership of a registry by a registrar and vice versa.

This would mean that registrars that want to get into the TLD game, such as Demand Media’s eNom, would not be allowed to apply.

It may also cause problems for publicly listed registries such as VeriSign and Neustar, or registries that already have registrar shareholders, such as Afilias.

The proposals on the table include raising the ownership cap to 15% to eliminating it altogether.

A move by ICANN to restrict ownership will certainly attract allegations of anti-competitive behavior by those companies excluded, while a move too far in the opposite direction could lead to accusations that the rules do not go far enough to protect registrants.

There are no correct answers to this problem. ICANN needs to find a balance that does the least harm.

Also up for debate will be the rules on how governments and others can object to new TLD applications on “morality and public order” grounds.

Following the report of a working group, which I blogged about here, it seems likely that the term “morality and public order” will be replaced entirely, probably by “Objections Based on General Principles of International Law”.

If the board adopts the recommendations of this “Rec6” working group, there will be no special provision in the Guidebook for governments to make objections based on their own national laws.

There’s also the suggestion that ICANN’s board should have to vote with a two-thirds super-majority in order to deny a TLD application based on Rec6 objections.

It’s another almost impossible problem. Some say the Rec6 recommendations as they currently stand are unlikely to appease members of the Governmental Advisory Committee.

In summary, ICANN’s board has just two days to define the competitive parameters of a market that could be worth billions, figure out how to politely tell some of the world’s largest IP rights holders to back off, and write the rule-book on international governmental influence in the new TLD process.

I predict a small boom in sales of coffee and pizza in the Trondheim region.

Group wants trademark study before new TLDs launch

Kevin Murphy, September 21, 2010, Domain Services

The International Trademark Association has told ICANN it believes a study into the economic “harms” of launching new TLDs is “essential” before the program gets under way.

INTA president Heather Steinmeyer wrote, in a September 8 letter (pdf) published today (my emphasis):

We applaud the recommendation… to conduct a study to assess the harms associated with intellectual property abuse and related forms of consumer fraud in the domain name system, including how the current gTLDs have affected intellectual property and consumers since their introduction. Indeed trademark owners believe that such a study is not only a sensible recommendation, but an essential prerequisite before any rollout of new gTLDs.

Steinmeyer offered INTA’s assistance with any such study.

The recommendation she refers to can be found in “An Economic Framework for the Analysis of the Expansion of Generic Top-Level Domain Names”, a report prepared for ICANN by three independent economists in June.

That report made a number of suggestions for possible further studies of the possible benefits and harms (although Steinmeyer only mentions the harms) of introducing new TLDs. It did not make any firm conclusions.

Following a public comment period that ended July 22, the status of that report appears to be ‘in limbo’.

The public comments have not yet been compiled into a summary and analysis document and as far as I can tell no other action has been taken on the report’s recommendations.

At least one ICANN director, chairman Peter Dengate Thrush, seems to consider the problem of balancing trademark protection and other parties’ interests pretty much resolved.

Just last week, in a fairly strongly worded statement at the Internet Governance Forum in Vilnius, Lithuania, he said:

The IP lawyers… have had their chance to make all these cases in a five-year process, and the intellectual property protections that have been put in place are the result of a delicate balance that has been wrought with everybody in the community, not just with the IP lawyers. IP lawyers always want more protections.

Monster.com slams .jobs plan

Kevin Murphy, September 17, 2010, Domain Registries

Monster.com and the US Chamber of Commerce have ripped into Employ Media’s plans to liberalize the .jobs top-level domain, with Monster calling the plan “anti-competitive”.

Both organizations have over the last two days said they support the ICANN Reconsideration Request I reported on here.

Essentially, they want ICANN’s board to reverse the decision that would allow Employ Media, the .jobs registry, to start leasing thousands of .jobs domains to whichever company offers it the best deal.

Monster said (pdf) this:

The Board has, without proper consideration and deliberation, consented to the privatization and capture of a sponsored top-level domain (“sTLD”) by a single registrant or small group of registrants.

The jobs boards market is pissed that Employ Media has already made it pretty obvious that it plans to lease thousands of premium domains to the DirectEmployers Association.

Monster claims that the ICANN decision to allow the registry to start accepting “non-company-name” registrations violates the original .JOBS Charter, which limited the registrant pool to companies that wanted to advertise their own vacancies at “company.jobs” URLs.

The company says that the move could create “serious consequences for ICANN’s credibility” as it rolls out new TLDs, on the basis that it sets a bad precedent for ostensibly restricted “community” TLDs:

ICANN will be viewed as willing to tolerate sweeping, unauthorized changes to community based TLDs with no regard for the representations made during the application process.

Monster also says that the board’s decision “has broad anti-competitive implications that were not examined by staff”.

The US Chamber of Commerce, which has previously opposed TLD expansion in principle, has also chipped in (pdf) with its opposition, echoing Monster’s thoughts and adding that the proposed .jobs expansion fails to protect IP rights.

dotFree to allow pre-registrations October 1

Kevin Murphy, September 8, 2010, Domain Registries

The dotFree Group, which plans to apply for the top-level domain .free, plans to start allowing pre-registrations from October 1, this year.

While .xxx has had an open pre-registration period for years, I believe .free is the first of the next round of new TLD applicants to offer a similar pre-launch phase.

It would be well over a year from now before .free would be able to actually start taking live registrations, assuming its application was even successful.

The Czech company has just relaunched its web site with a new look and new information. It appears to be closely modelled on the .CO Internet site, even copying big chunks of text in some cases.

It also includes a page targeting registrars, containing this text:

How much do I earn for every free registered .FREE domain?

We plan to pay each reseller $0.05 for every .FREE domain name which was referred to us. The definitive reseller commission is still under review.

Now there’s a way to get Go Daddy beating down your door.

It’s not much of an incentive, and it suggests that dotFree isn’t planning on targeting a traditional registrar channel, at least as far as the free .free domains go.

If you can make a recurring $10 mark-up (my estimate) on a .co domain, or a one-off $0.05 on a .free, which TLD would get your store-front real estate?

However, as I’ve previously reported, not all .free domains will be free, so there may yet be opportunities for the ICANN-accredited registrar market.