.wedding and .green gTLD auctions raise millions

Two more new gTLDs — .wedding and .green — have been auctioned off, with proceeds amounting to millions of dollars.
Top Level Domain Holdings said in a press release that it won .wedding and lost .green, which cost it a net $2.23 million.
That’s the amount it paid for .wedding, minus its share of the .green winning bid and its ICANN refund for withdrawing its .green application.
I don’t think we can infer the exact sale price of .wedding from that, other than to say that it was definitely over $2.2 million.
TLDH did not say who won the .green auction. The only other remaining applicants, after Dot Green’s withdrawal last year, were Rightside and Afilias. Neither has withdrawn their applications yet.
In the .wedding auction, conducted by Applicant Auction, it beat rival portfolio applicants Donuts and What Box?

ROTD conducts first new gTLD auction as One.com wins .one

Danish registrar One.com has won the .one contention set in the first private auction carried out by new gTLD consultancy Right Of The Dot.
One.com beat Radix, the United Arab Emirates-based portfolio applicant, to the string. Radix withdrew its application last week. The price has not been disclosed.
ROTD, Mike Berkens and Monte Cahn-managed company, has been competing with Applicant Auction for contention set resolution services and this is its first win.
The .one auction was carried out using a “single sealed bid second price” methodology, in which all participants privately submit a single bid and the winner pays the second-highest losing bid.
In this case, One.com will have paid Radix whatever bid Radix had put forward, with ROTD and escrow partner Escrow.com taking their fees from the winning bid.
Applicant Auction uses an “ascending clock” method, where bids are set in increments by the auctioneer over the space of several rounds, with bidders choosing to stay in or drop out in each round.
Cahn said in a press release: “Our Single Sealed Bid Second Price auction method protects the participants from ‘auction fever,’ which often causes over-bidding as people get emotionally tied to the process of winning at any cost due to time committed and sometimes throw their budgets out the window.”

Uniregistry doing private new gTLD auctions? Company deals with Donuts on five strings

Uniregistry and Donuts have settled at least five new gTLD contention sets this week, raising the question of whether Uniregistry has reversed its objection to private auctions.
I think it has.
In five of the six head-to-head contention sets between the two companies, Donuts has won the rights to .furniture, .auction and .gratis, and Uniregistry has won .audio and .juegos.
The losing company has already withdrawn their applications in all five cases.
I gather that a deal was made, but Uniregistry won’t say whether it was via a private auction or not and I’ve not yet had a reply to a request for comment from Donuts.
The withdrawals come the same week as Applicant Auction was scheduled to conduct its latest private auction for new gTLD contention sets. The auction was slated for February 18.
But Uniregistry, which has previously spoken out against the private auction concept — saying it raises antitrust concerns — declined to confirm or deny whether these five contests were resolved by auction.
“We’re grateful to have found a way through the impasse and resolved the contention,” was all Uniregistry CEO Frank Schilling would say.
Applicant Auction’s project director Sheel Mohnot confirmed that a new gTLD auction took place this week but said he could not disclose the participants or the strings.
To the best of my knowledge, that’s a new line — the auctioneer has always kept quiet about sales prices in the past, but has always revealed which companies were involved.
So has Uniregistry changed its mind about the legality of private new gTLD auctions? My guess is: “Yes.”
The only remaining string where the two companies are competing in a two-horse race is .shopping, according to the DI PRO database, but that’s subject to some weird string similarity nonsense and probably not suitable for a private auction yet.

Second private auction nets $1.2m per gTLD

Only eight new gTLD contention sets were resolved during Innovative Auctions second round of private auctions this week, and the average winning bid has gone down.
The eight strings sold for a combine $9,651,000, or an average of $1.2 million per string. That’s down from the $1.5 million average reported from the first round of auctions in June.
The overall average winning bid from Innovative’s auctions is now $1.33 million.
Over 100 gTLDs had been committed to the second round by various applicants — which put up 68 strings and wound up winning three — but the auctions can obviously only go ahead if the whole contention set agrees to participate.
According to Innovative, these are the winners this week:

• .guide: Donuts
• .construction: Donuts
• .storage: Extra Space Storage (applying as Self Storage LLC)
• .desi: Desi Networks
• .expert: Donuts
• .fishing: Top Level Domain Holdings
• .casa: Top Level Domain Holdings
• .网址 (.wangzhi): Hu Yi Global

These were all two-applicant contention sets (Go Daddy had originally applied for .casa, but withdrew its application months ago).
Losing applicants — which get to take home the winning’s bidder’s cash, net Innovative’s fees — were Demand Media, Afilias, Dot Construction, and Red Circle.
The DI PRO Application Tracker will be updated daily as and when the losing applications are withdrawn. So far, only Donuts’ bid for .casa has had its withdrawal processed by ICANN.
Innovative seemed to blame the low turnout on the August holiday period, and said it has scheduled its third round of auctions for September 10.

TLDH commits to four private gTLD auctions

Top Level Domain Holdings has committed four of its applied-for gTLDs to private auctions due to kick off tomorrow.
The four strings are .guide, .casa, .网址 (“web address” in Chinese) and .fishing, each of which has only one competing applicant.
The company will bid against Donuts on .casa and .guide, Demand Media on .fishing and Hu Yi Global Information Resources on .网址.
Results of the auctions, managed by Innovative Auctions, are expected to be announced next week.
TLDH was initially cautious about the idea of private auctions, but later decided to participate, for reasons CEO Antony Van Couvering explained in this June article.
Over 100 strings, including 68 from Donuts, are expected to be hitting the block with Innovative this week. The first six strings to be auctioned this way raised an average of $1.5 million per string.
TLDH has 49 strings in active contention.

Next new gTLD auction set for August 13

Innovative Auctions today announced that its second new gTLD auction is scheduled for August 13 and that several companies have already signed up to participate.
The news follows the settlement of the first round of auctions, which saw $9.01 million shared between losing applicants and Innovative for the rights to six new gTLD strings.
“[A]ll of the participants from this auction who have additional strings in contention have signed on to use the process to resolve their remaining contentions,” Innovative said.
That would mean Afilias, Merchant Law Group and XYZ.com, which took part in this month’s auctions, are all likely to attempt to settle their outstanding contention sets with Innovative.
That’s another roughly 40 strings on top of Donuts’ already-committed monster portfolio.
Of course, the auctions will only be able to go ahead if all of the other applicants in each contention set also agree to participate, which in some cases will be a non-starter.
The money from the first auctions has already been distributed to the losing applicants, according to Innovative.

Donuts puts 63 new gTLDs to private auction, but at least 17 are dead on arrival

Donuts has committed 63 of its 307 new gTLD applications to a private auction next month, but at least 17 of them are doomed already because rival Uniregistry won’t take part.
Donuts, which does not want to enter into joint ventures with competing gTLD applicants, has decided to use a private auction managed by Cramton Associates instead of an ICANN auction.
The first round of auctions are due to kick off June 3, but Cramton has set a deadline of next week for applicants to commit the strings they want to bid on.
Donuts has put forward these ones (note that they’re different to those reported elsewhere earlier due to a couple of typos in the original press release):

.apartments, .auction, .audio, .baseball, .boats, .cafe, .church, .college, .construction, .direct, .discount, .fish, .football, .forsale, .furniture, .fyi, .global, .gratis, .guide, .juegos, .jewelry, .legal, .living, .luxury, .phone, .photography, .plus, .red, .run, .storage, .theater, .trading, .vote, .beauty, .broadway, .city, .club, .forum, .garden, .help, .hosting, .hot, .marketing, .media, .memorial, .wedding, .chat, .online, .pizza, .sale, .salon, .school, .search, .show, .soccer, .team, .group, .site, .style, .law, .store, .blog, and .art.

Running the list through the DI PRO database, we quickly discover that 33 of these strings are in two-horse races, 13 have three applicants, nine have four and three have five.
The remaining four contention sets have six, seven, nine and 10 applicants respectively.
Uniregistry, the portfolio applicant run by domainer Frank Schilling, is involved in 17 of the contention sets, and Schilling confirmed to DI today that the company does not intend to participate.
As we’ve previously reported, Uniregistry says it has concerns that private auctions may be illegal under US antitrust law, though substantial doubt has been cast over that assertion since.
Because all applicants in a contention set need to commit for the auction to be meaningful, we can assume that at least 17 of Donuts’ proposed auctions will not go ahead, unless Uniregistry changes its mind.
Top Level Domain Holdings has applied for 13 of the strings Donuts wants to take to auction. TLDH has also expressed concern in the past about the private auction concept.
Directi, Famous Four Media and Google are each involved in eight of the contention sets, while Amazon is involved in five.
According to Cramton, each auction will take place in bidding rounds, with the first round having a maximum bid of $50,000 multiplied by the number of applicants and subsequent rounds increasing that by 10% multiplied by the number of bidders.
If any applicant in a given auction requests privacy, then the winning amount will not be disclosed.

Did Uniregistry over-sell the auction antitrust risk?

Uniregistry’s revelation that it believes private auctions to resolve new gTLD contention sets may be illegal — based on its talks with the US Department of Justice — has caused widespread angst.
Following yesterday’s news, some commentators — some interested — questioned the company’s motive for revealing that Justice had declined to give private auctions a clean bill of health under antitrust law.
Others wondered whether Justice had been given the full facts, whether it had understood the new gTLD program, and whether Uniregistry had accurately reported Justice’s advice.
Given that yesterday’s piece was straight news, I figured it might be good to delve a little deeper into the situation and, yes, indulge in some quite shameless speculation.
What is it that Uniregistry is saying?
Here’s the argument, as I understand it.
“Bid-rigging” is illegal in many countries, including ICANN’s native US, where the Department of Justice prosecutes it fairly often, securing billions of dollars in damages and sometimes criminal sentences.
More often than not, it seems, the prosecutions are related to government contracts, where agencies are looking for a company to carry out a job of work for the lowest possible price.
Bid-rigging emerges when contractors decide among themselves who is going to win the contract. If two contracts are up for grabs, two companies may agree to submit separate high-ball bids so that they can guarantee getting one contract each.
This, of course, inflates the price the government agency pays for the work. There’s no true competition, so prices are artificially high, harming the tax-payer. That’s why it’s illegal.
The ICANN new gTLD program is a bit different, of course.
First, ICANN isn’t a government agency. While it has quasi-governmental powers, it’s a private corporation. Second, it’s looking for high bids, not low bids. Third, it doesn’t care if it doesn’t see any money.
There can be little doubt that private auctions technically harm ICANN, because the winning bidder’s money would be divided up between applicants rather than flowing into ICANN’s coffers.
Uniregistry seems to believe that a new gTLD applicant signing a private auction agreement — basically, competitors agreeing to pay or be paid to decide who wins a contract — that takes money out of ICANN’s pocket could be considered illegal collusion.
But ICANN has stated regularly that it prefers applicants to work out their contention sets privately, explicitly endorsing private auctions and/or applicant buy-outs.
ICANN, it seems, doesn’t care if it is harmed.
According to Uniregistry, however, that doesn’t matter. Its view, following its conversations with Justice, is that what ICANN says is completely irrelevant: the law’s the law.
As the company said yesterday:

the Department emphasized that no private party, including ICANN, has the authority to grant to any other party exemptions to, or immunity from, the antitrust laws. The decision means that the Department of Justice reserves its right to prosecute and/or seek civil penalties from persons or companies that participate in anti-competitive schemes in violation of applicable antitrust laws.

In other words, just because it’s very unlikely that ICANN would start filing antitrust suits against new gTLD applicants, the DoJ could feasibly decide to do so anyway.
Why would it do so? Well, consider that the thing ICANN is auctioning is a spot in the DNS root server, and the root server is ultimately controlled by the US Department of Commerce…
ICANN may not care about the money, but the thing it is selling off “belongs” to the United States government.
That’s the argument as I understand it, anyway.
Isn’t this all a bit self-serving?
Uniregistry’s press release and DI’s blog post yesterday were met with disappointment (to put it mildly) among some new gTLD applicants, auction providers and others.
They noted that Uniregistry had no documentary evidence to back up information it attributed to Justice. Some accused DI of reporting Uniregistry’s statement without sufficient skepticism.
It seems to be true that the company has not been a big fan of private auctions since the concept was first floated.
Uniregistry has applied for 54 new gTLDs, the majority of which are contested. Its main competitors are Donuts, with 37 contention sets, and Top Level Domain Holdings, with 21.
Who wins these contention sets depends on who has the most money and how much they’re prepared to pay.
Unlike Donuts, Uniregistry hasn’t gone to deep-pocketed venture capital firms. It’s reportedly funded to the tune of $60 million out of CEO Frank Schilling’s own pocket.
And unlike TLDH, which is listed on London’s Alternative Investment Market, Uniregistry doesn’t have access to the public markets to raise money. It seems to be better-funded, however.
Donuts raised $100 million to fund its new gTLD ambitions. It’s more than Schilling claims to have put into Uniregistry, but Donuts has spent much more on application fees.
Donuts is involved in 307 applications, many more than Uniregistry’s 54.
The money remaining for auctions is also spread much thinner with Donuts. It’s also in 158 contention sets, more than three times as many as than Uniregistry’s 45.
Private auctions arguably benefit Donuts because, depending on the auction model, it could reinvest the money it raises by losing an auction into a future auction. Its VC money would last longer.
The same logic applies to all applicants, but it becomes more of a pressing issue if you’re on a tight budget or have a large number of applications.
Uniregistry may have calculated that it stands a better chance of winning more contention sets against Donuts and TLDH if its competitors don’t get the chance to stuff their war chests.
Of course, Uniregistry could have simply refused to participate in private auctions in order to force an ICANN auction in its own contention sets. All new gTLD applicants have that power.
But by publicizing its antitrust concerns too, it may have also torpedoed private auctions for some contention sets that it’s not involved in.
That could limit the amount of money flowing from losing auctions to its competitors.
Another theory that has been put forwards is that Uniregistry went public with its Justice conversations — over-selling the risk, perhaps — in order to give its competitors’ investors jitters.
That might potentially reduce the capital available to them at auction, keeping auction prices down.
So did Uniregistry stand to benefit from playing up the risk of antitrust actions against new gTLD applicants? Probably.
Does it mean that its interpretation of its Department of Justice conversations is not completely accurate? Ask a lawyer.

DoJ says new gTLD private auctions might be illegal

Companies hoping to resolve their new gTLD contention sets via private auction are about to get a rude awakening: according to the US Department of Justice, they might be illegal.
Portfolio applicant Uniregistry, the company founded by domainer Frank Schilling, said today that the DoJ has told it that:

arrangements by which private parties agree to resolve gTLD string contentions solely to avoid a public auction present antitrust issues.

The company contacted the department last October to get a “business review” decision, basically asking the DoJ for an assurance that it would not be prosecuted if it participated in a private auction.
The DoJ refused to give that assurance.
Uniregistry counsel Bret Fausett told DI that private auctions might be seen as “bid rigging”, an illegal practice in which competitors fix the awarding of contracts.
Schilling said that Uniregistry asked the DoJ for its advice because “we don’t want to go to jail”.
According to the company:

On March 18, 2013, Uniregistry was informed that the Department of Justice has declined to issue a business review of various private gTLD contention resolution mechanisms. In making its decision, the Department emphasized that no private party, including ICANN, has the authority to grant to any other party exemptions to, or immunity from, the antitrust laws. The decision means that the Department of Justice reserves its right to prosecute and/or seek civil penalties from persons or companies that participate in anti-competitive schemes in violation of applicable antitrust laws.

New gTLD applicants are now being advised to consult their own lawyers before participating in a private auction.
The news will come as a huge blow to companies such as Right Of The Dot and Cramton Associates, which have been at the forefront of pushing the private auction concept to applicants.
It’s also going to be a massive blow to any company that had banked on getting a pay-off to withdraw their applications following a private auction.
The benefit of private auctions — over the ICANN-managed auctions of last resort — is that the losing applicants get a share of the winning applicant’s winning bid.
In an ICANN auction, all the money goes to ICANN, which has promised to use to money to fund worthy causes.
Uniregistry has issued a press release on its talks with the DoJ here (pdf).