Most businesses don’t care about .uk domains

The majority of businesses in the UK don’t care about direct second-level .uk domains, even when the benefits are spelled out for them, according to Nominet research.
The new survey found that only 27% of businesses would “definitely” or “probably” exercise their new right to buy a .uk domain that matches their .co.uk or .org.uk name.
That number only went up to 40% after respondents had seen a brief Nominet marketing pitch, the survey found.
Another 16% said they had no plans to get their .uk, post-pitch, while 44% remained undecided.
This was the value proposition the respondents saw (click to enlarge):

Under the direct .uk policy, all registrants of third-level domains, such as example.co.uk, have the right of refusal over the matching example.uk.
If they don’t exercise that right by June 10, 2019, the matching SLDs will be unfrozen and released into the available pool.
The new Nominet research also found out that most registrants don’t even know they have this right.
Only 44% of respondents were aware of the right. That went up to 45% for businesses and down to 33% for respondents who only owned .uk domain names (as opposed to gTLD names).
A quarter of respondents, which all already own 3LD .uk domains, didn’t even know second-level regs were possible.
Of those who had already bought their .uk names, over two thirds were either parking or redirecting. Individuals were much more likely to actually use their names for emails or personal sites.
The numbers are not terribly encouraging for the direct .uk initiative as it enters into its third year.
They suggest that if something is not done to raise awareness in the next few years, a lot of .co.uk businesses could find their matching SLDs in the hands of cybersquatters or domainers.
Nominet members (registrars and domainers primarily) were quizzed about possible ways to increase adoption during a company webinar today.
Suggestions such as making the domains free (they currently cost £2.50 a year, the same as a 3LD) or bribing a big anchor tenant such as the BBC to switch were suggested.
There’s a lot of dissatisfaction among the membership about the fact that .uk SLDs were allowed in the first place.
The number of second-level .uk names has gone from 96,696 in June 2014 to to 350,088 last year to 593,309 last month, according to Nominet stats.
Over the same periods, third-level regs have been shrinking, from 10.43 million to 10.22 million to 10.08 million, .

UK cybersquatting cases flat, transfers down

The number of cybersquatting cases involving .uk domains was basically flat in 2015, while the number of domains that were transferred was down.
That’s according to Nominet’s wrap-up of last year’s complaints passing through its Dispute Resolution Service.
There were 728 DRS complaints in 2015, the registry said, compared to 726 in the year before.
The number of cases that resulted in the transfer of the domain to the complainant was down to 53%, from 55% in 2014.
That’s quite a bit lower than complainants’ success rates in UDRP. In 2015, more than 70% of UDRP cases resulted in a transfer.
Nominet reckons that the DRS saved £7.74 million ($notasmuchasitusedtobe) in legal fees last year, based on a “conservative” estimate of £15,000 per case, had the complaint gone to court instead.
More stats can be found here.

Nominet to run .blog’s back-end

Nominet is to run the back-end registry systems for .blog, the company announced this evening.
We reported earlier today that .blog has a surprise new owner — Knock Knock, Whois There, which belongs to Automattic, owner of WordPress.com — and it seems the change of ownership comes with a change of back-end.
Primer Nivel, the company that applied for .blog and just transferred the ICANN contract to Automattic, had named Malaysian also-ran Qinetics as its original back-end.
“Nominet will provide the registry services, as well as technical support to the registrar channel,” Nominet said tonight. The deal includes EPP and DNS.
Nominet’s press release confirms that registrants will not need a WordPress.com account to buy a .blog domain name.
It’s the second big back-end deal for Nominet in recent weeks. The company recently revealed it will be taking over technical services for all 28 of Minds + Machines new gTLDs.
Automattic/KKWT is predicting 250,000 .blog registrations in 2016, and general availability is not expected until the fourth quarter.

Greimann wins Nominet board seat

Key-Systems general counsel Volker Greimann has been elected to Nominet’s board as a non-executive director, beating two rival candidates.
Nominated by Blacknight and EuroDNS, he got 1,169,785 of the 2,144,612 votes cast, beating Dot Advice CEO Phil Buckingham and Namesco domain development manager Kelly Salter.
Nominet uses a somewhat complex single transferable vote system in its elections, in which members votes are weighted according to how many .uk domains they have under management.
Voting power is capped at 3% of the total pool for each member, so no one registrar or small group of registrars can capture the election.
Salter, who had been nominated by top-ten registrars Go Daddy and LCN.com, was defeated in the first round of voting, with Greimann picking up the majority of the votes as a second preference, enabling him to win.
Buckingham was essentially the “domainer candidate”, backed by Netistrar and Namedropper, who’d promised to address the controversial issue of Nominet’s 50% price increase.
The price increases are arguably less important to registrars which can pass the increase on to their customers, than they are to domainers, which have to swallow the added costs themselves.
Buckingham secured about 34% of the votes in the second round.
Only 15% of the members eligible to vote did so, though that’s up from 12% last year.
The full results can be found here.
Nominet will hold its Annual General Meeting in London tomorrow.

M+M turns $22m profit into $10m loss

Minds + Machines today reported a 2015 loss of $10 million and further outlined its “transformative” restructuring and China strategy.
It’s the second full year of operating results M+M has posted since its first new gTLDs went live, and they’re not encouraging.
Revenue for accounting purposes was $6.3 million, but the cost of sales was $6.2 million, leaving gross profit of just $101,000.
Factoring in $12.1 million of operating expenses, a $7.9 million gain from losing new gTLD auctions, and other expenses, the total loss before tax was $10 million.
That’s compared to the $22 million profit M+M reported for 2014, a number entirely reliant on $33.7 million of auction loss payments.
The company also reported its “billings”, a line item that does not use the accounting method of deferring revenue across the life of a domain and is therefore more in line with incoming cash.
Billings for 2015 were $7.9 million, compared to $5 million in 2014. Gross profit under that measure was $1.7 million, but the $12 million of operating costs still made the company very unprofitable.
Ignoring the auction benefits in 2015, which will not last forever, it’s pretty clear that M+M was a company spending much more operating new gTLDs than it was making from them.
COO/CFO Michael Salazar said in a statement:

However, billings of $7.9 million for the year were simply not of a sufficient scale to cover the associated cost of sales ($6.2 million) and operating expenses ($12.2 million), which combined reached $18.4 million for 2015. Similarly, the $0.6 million savings achieved in the period by the decisions mid-year to stream-line the existing operational set-up were not of a magnitude to have any material impact in the year under review. That said, forfeited cost of sales and operational expenses as a result of the 2015 cost-cutting decisions will amount to $2.7 million in 2016

It’s perhaps little wonder that activist shareholders, apparently not prepared to play the long game, threw out half of the board and key senior executives during the period.
Former PR man Toby Hall took over as CEO in February, replacing co-founder Anthony Van Couvering, and announced earlier this month that M+M is dumping its registrar and back-end registry businesses.
Its registrar customers have been sold to Uniregistry, and it will outsource its registry back-end to Nominet, to save costs.
Salazar said that the two deals will lead to $2 million in savings, but won’t be complete before the fourth quarter. It seems unlikely they’ll have a great impact on 2016 numbers.
Headcount has been reduced from a peak of 61 to 43 at the end of the year, and is expected to drop further to 25. Salazar said this will save it $4.7 million a year.
Even with these cost reductions, M+M will still need to essentially double its revenue in order to hit operating profitability, it seems.
The company is pinning some of its growth hopes on .vip, which it expects to do well in China. It launches May 18.
Hall said in a statement that M+M would not follow the lead of competitors (Famous Four Media springs to mind) by offering first-year registrations for free to build market share. He said:

Based on the enquiries received during Sunrise and feedback gained through our two recent marketing trips to China, it is clear that there is genuine interest in the domain both within and outside of China. As a result, we will not be using a year-one freemium approach to simply inflate year-one registrations. Instead, we intend to be keenly priced to ensure margin to ourselves — and registrations — as well as protect the integrity of the domain. The volume we anticipate to be generated through keen pricing will then support the sales of our premium names in this domain.

The company also plans to invest in its .law sales team, because billings for that gTLD have been behind expectations.
M+M had $34.6 million in the bank and eight outstanding contested new gTLD applications at the end of the year.

Nominet has sights set on .org after M+M deal

Nominet chief Russell Haworth is hopeful that its new outsourcing deal with Minds + Machines will help it win a much more lucrative back-end contract — .org.
The company is among the 20-plus companies that have responded to Public Interest Registry’s request for proposals, as its back-end deal with Afilias comes to an end.
Nominet is one of a handful of companies — which would also include Verisign, Afilias, CNNIC and DENIC — that currently handles zones the size or larger than .org, which at over 10 million names is about the same size as .uk.
It, like PIR, is also a not-for-profit entity that donates excess funds to good causes, which could count in its favor.
But Haworth told DI today that showing the ability to handle a complex TLD migration may help its bid.
“I personally think that it would stand us in good stead, but we’ll have to see how the process plays out,” he told DI today. “With .org there’s 19-odd players pitching for that, so it’s a fairly competitive field.”
If the migration were to happen today, we’d be looking at around 300,000 domains changing hands. It’s likely to be a somewhat larger number by the time it actually happens.
Collectively, it will be one of the largest back-end transitions to date, though the largest individual affected gTLD, .work, currently has fewer than 100,000 names in its zone.
Haworth said that the plan is to migrate M+M’s portfolio over to Nominet’s systems one at a time.
He was hesitant to characterize the migration process as “easy”, but said Nominet already has such systems in place due to its role as one of ICANN’s Emergency Back-End Registry Operators.
Earlier this year, Nominet temporarily took over defunct dot-brand .doosan, in order to test the EBERO process.
A back-end migration primarily covers DNS resolution and EPP systems.
It sounds like the EPP portion may be the more complex. Some of M+M’s gTLDs have restrictions and tiered pricing that may require EPP extensions Nominet does not currently use in its TLDs.
But the DNS piece may hold the most risk — if something breaks, registrants names stop resolving and web sites go dark.
Haworth said Nominet is also talking to other new gTLD registries about taking over back-end operations. Registries signed three, five or seven-year contracts with their RSPs when the 2012 application round opened, and some are coming up for renewal soon, he said.
Nominet says it will become a top ten back-end after the M+M migration is done.

Minds + Machines dumps back-end and registrar in Nominet, Uniregistry deals

Minds + Machines is to get out of the registrar and back-end registry services markets in separate deals with Nominet and Uniregistry.
The cost-saving shake-up will lead to about 10 job losses, or about 25% to 30% of its current headcount, CEO Toby Hall told DI this morning.
Under the Nominet deal, M+M will outsource the back-end registry functions for 28 new gTLDs, currently managed in-house, to the .uk ccTLD manager.
The deal covers all the gTLDs for which M+M is the contracted party (such as .law, .cooking and .fashion), as well as the four it runs in partnership (eg .london) and the five where it currently acts as back-end for a third party registry (eg .broadway).
The company also plans to dump its “unprofitable” registrar entirely, migrating its existing customers to Uniregistry’s Uniregistrar business.
About 49,000 domains will be affected by this move, Hall said.
Uniregistry will pay M+M a commission over the lifetime of the accounts.
Focusing on the registry business was the plan from the moment Hall took over M+M, following a shareholder coup that kicked out founding CEO Antony Van Couvering in January.
Hall told DI:

It [previously] had a very ambitious plan. It wanted to be vertically integrated, but the considered view is there are people out there who are far better able to run parts of the exercise than ourselves, both on the RSP piece and likewise the registrar piece. The strategy from day one was to rapidly evolve into becoming a business-to-business marketing-led registry business and radically overhauling our cost structure at the same time.

The company is currently in a financial quiet period and will not yet disclose the amount of savings it expects to reap, Hall said. He added:

Reducing cost isn’t a strategy for growth, and as a business that will be where we will be judged. Growing our portfolio, growing our domains under management, growing our revenue within those domains. That’s what the business has to be focused on. We see within the industry that the highest value is in the [TLD] ownership part.

The job losses are expected to be largely on the technical side of the house.
The RSP outsourcing means that Nominet significantly boosts its stable of managed TLDs. While it’s in the top five back-ends in terms of DUM (due to the 11 million in .uk) its portfolio of clients there is relatively small, largely limited to a handful of dot-brands.
Nominet CEO Russell Haworth said in a statement:

This partnership takes us into the top tier of registry operators globally by volume of TLDs and compliments the brands we currently manage, such as .BBC, .Bentley and .Comcast. It also underlines our long-term strategy to provide a more diversified range of services to gTLDs and registrars.”

With the Uniregistry registrar deal, Hall said that competing with its own channel “was just not right for us”.
It might be worth noting that Uniregistry is actually a vertically integrated triple-play along the lines of M+M, also, managing its own back-end, registry and registrar businesses.
Hall said that the M+M registrar had sold mainly to domain investors with little interest in buying value-added services such as email and hosting, which is often where much of the profit lies.
Both deals are subject to ICANN approvals, and client approval in case of the back-end transition, will be phased in over many months, and are expected to be finalized by the end of the year.
UPDATE: M+M said later this morning that it is changing its official company domain to mmx.co from mindsandmachines.com.

Rape ban results in just one .uk takedown, but piracy suspensions soar

Nominet’s controversial policy of suspending domain names that appear to condone rape resulted in one .uk domain being taken down last year.
That’s according to a summary of take-downs published by Nominet yesterday.
The report (pdf) reveals that 3,889 .uk names were taken down in the 12 months to October 31, 2015.
That’s up on the the 948 domains suspended in the six months to October 31, 2014.
The vast majority — 3,610 — were as a result of complaints from the Police Intellectual Property Crime Unit. In the October 2014 period, that unit was responsible for 839 suspensions.
Unlike these types of suspensions, which deal with the allegedly illegal content of web sites, the “offensive names” ban deals purely with the words in the domain names.
Nominet’s systems automatically flagged 2,407 names as potentially in breach of the policy — most likely because they contained the string “rape” or similar — in the 12 months.
But only one of those was judged, upon human perusal, in breach.
In the previous 12 months period, 11 domains were suspended based on this policy, but nine of those had been registered prior to the implementation of the policy early in 2014.
The policy, which bans domains that “promote or incite serious sexual violence”, was put in place following an independent review by Lord Macdonald.
He was recruited for advice due to government pressure following a couple of lazy anti-porn articles, both based on questionable research by a single anti-porn campaigner, in the right-wing press.
Assuming it takes a Nominet employee five minutes to manually review a .uk domain for breach, it seems the company is paying for 200 person-hours per year, or 25 working days, to take down one or two domain names that probably wouldn’t have caused any actual harm anyway.
Great policy.

ICANN tests emergency registry with dead dot-brand

ICANN is running a test of its Emergency Back-End Registry Operator program, using the dead dot-brand gTLD .doosan as its guinea pig.
Doosan Group, a large Korean conglomerate, decided to kill off its gTLD, .doosan, last September. ICANN revealed the news in October.
The dot-brand had never been put to productive use and really only ever had nic.doosan live.
As it’s a dot-brand, it’s protected by the part of the Registry Agreement that prevents it being transferred to another registry operator.
Rather than letting the gTLD slip away into the night, however, ICANN is taking it as an opportunity to test out its EBERO system instead. ICANN says:

Simulating an emergency registry operator transition will provide valuable insight into the effectiveness of procedures for addressing potential gTLD service interruptions. Lessons learned will be used to support ICANN’s efforts to ensure the security, stability and resiliency of the Internet and the Domain Name System.

EBERO is the process that is supposed to kick in when (or if, I guess) a gTLD with a significant number of third-party registrations goes out of business and no other registry wants to take it over.
The EBERO provider takes over the running of the TLD’s critical functions for a few years so it can be wound down in an orderly fashion, giving registrants enough time to migrate to other TLDs.
Nominet, one of the designated EBERO operators, has taken over .doosan for this test, which is only a temporary measure.
Its IANA record was updated today with Nominet named as the technical contact and ICANN as the sponsor and administrator. Its name servers have switched over to Nominet’s.
Right now, www.nic.doosan resolves to ICANN’s EBERO web page. The non-www. version doesn’t seem to do anything.
ICANN said it will provide updates when the test is over.

Complaints over 50% .uk price hike

.uk registrars are petitioning Nominet to complain about plans to increase the price of a .uk domain name by up to 50%.
The registry announced the price increase, which will come into effect March 1 next year, on Wednesday.
A one-year registration will go up to £3.75 ($5.65) wholesale, still cheaper than any gTLD I can think of.
Currently, Nominet charges £3.50 for a one-year reg and £2.50 per year for multi-year registrations.
The company heavily hinted, in an email, that some of this extra cash will wind up in registrars’ pockets, due to promotional spending:

Our new pricing strategy aims to accomplish three things. Firstly, as with any business the price we charge is linked to our ability to deliver a fantastic service. Secondly, we want to invest in the .UK namespace to ensure we can differentiate over the long-term. Thirdly, we want to be able to invest in marketing and promotions in order to secure prominence at point of sale – which our current pricing levels cannot support.

The price of a .uk domain has not increased since 1999, Nominet said.
Increasing the price from a posh coffee to a London beer is presumably not a big deal for most registrants, but domainer-registrars are unhappy.
Andrew Bennett of Netistrar has set up a web site at egm.uk to call for “outraged” registrants and Nominet members to voice their opposition to the changes.
The site points out that Nominet has said it will review its pricing annually.
It calls on Nominet to have a three-month public consultation then a member vote before introducing the changes.
At time of publication, 77 registrants and 47 Nominet members have signed the petition.
On its web site, Nominet lists 2,048 members.