Industry lays into Verisign over .com deal renewal

Some of Verisign’s chickens have evidently come home to roost.
A number of companies that the registry giant has pissed off over the last couple of years have slammed the proposed renewal of its .com contract with ICANN.
Rivals including XYZ.com (sued over its .xyz advertising) and Donuts (out-maneuvered on .web) are among those to have filed comments opposing the proposed new Registry Agreement.
They’re joined by business and intellectual property interests, concerned that Verisign is being allowed to carry on without implementing any of the IP-related obligations of other gTLDs, and a dozens of domainers, spurred into action by a newsletter.
Even a child protection advocacy group has weighed in, accusing Verisign of not doing enough to prevent child abuse material being distributed.
ICANN announced last month that it plans to renew the .com contract, which is not due to expire for another two years, until 2024, to bring its term in line with Verisign’s contracts related to root zone management.
There are barely any changes in the proposed new RA — no new rights protection mechanisms, no changes to how pricing is governed, and no new anti-abuse provisions.
The ensuing public comment period, which closed on Friday, has attracted slightly more comments than your typical ICANN comment period.
That’s largely due to outrage from readers of the Domaining.com newsletter, who were urged to send comments in an article headlined “BREAKING: Verisign doubles .COM price overnight!”
That headline, for avoidance of doubt, is not accurate. I think the author was trying to confer the idea that the headline could, in his opinion, be accurate in future.
Still, it prompted a few dozen domainers to submit brief comments demanding “No .com price increases!!!”
The existing RA, which would be renewed, says this about price:

The Maximum Price for Registry Services subject to this Section 7.3 shall be as follows:
(i) from the Effective Date through 30 November 2018, US $7.85;
(ii) Registry Operator shall be entitled to increase the Maximum Price during the term of the Agreement due to the imposition of any new Consensus Policy or documented extraordinary expense resulting from an attack or threat of attack on the Security or Stability of the DNS, not to exceed the smaller of the preceding year’s Maximum Price or the highest price charged during the preceding year, multiplied by 1.07.

The proposed amendment (pdf) that would extend the contract through 2024 does not directly address price.
It does, however, contain this paragraph:

Future Amendments. The parties shall cooperate and negotiate in good faith to amend the terms of the Agreement (a) by the second anniversary of the Effective Date, to preserve and enhance the security and stability of the Internet or the TLD, and (b) as may be necessary for consistency with changes to, or the termination or expiration of, the Cooperative Agreement between Registry Operator and the Department of Commerce.

The Cooperative Agreement is the second contract in the three-way relationship between Verisign, ICANN and the US Department of Commerce that allows Verisign to run not only .com but also the DNS root zone.
It’s important because Commerce exercised its powers under the agreement in 2012 to freeze .com prices at $7.85 a year until November 2018, unless Verisign can show it no longer has “market power”, a legal term that plays into monopoly laws.
So what the proposed .com amendments mean is that, if the Cooperative Agreement changes in 2018, ICANN and Verisign are obligated to discuss amending the .com contract at that time to take account of the new terms.
If, for example, Commerce extends the price freeze, Verisign and ICANN are pretty much duty bound to write that extension into the RA too.
There’s no credible danger of prices going up before 2018, in other words, and whether they go up after that will be primarily a matter for the US administration.
The US could decide that Verisign no longer has market power then and drop the price freeze, but would be an indication of a policy change rather than a reflection of reality.
The Internet Commerce Association, which represents high-volume domainers, does not appear particularly concerned about prices going up any time soon.
It said in its comments to ICANN that it believes the new RA “will have no effect whatsoever upon the current .Com wholesale price freeze of $7.85 imposed on Verisign”.
XYZ.com, in its comments, attacked not potential future price increases, but the current price of $7.85, which it characterized as extortionate.
If .com were put out to competitive tender, XYZ would be prepared to reduce the price to $1 per name per year, CEO Daniel Negari wrote, saving .com owners over $850 million a year — more than the GDP of Rwanda.

ICANN should not passively go along with Verisign’s selfish goal of extending its unfair monopoly over the internet’s most popular top-level domain name.

Others in the industry chose to express that the proposed contract does not even attempt to normalize the rules governing .com with the rules almost all other gTLDs must abide by.
Donuts, in its comment, said that the more laissez-faire .com regime actually harms competition, writing:

It is well known that new gTLDs and now many other legacy gTLDs are heavily vested with abuse protections that .COM is not. Thus, smaller, less resource-rich competitors must manage gTLDs laden (appropriately) with additional responsibilities, while Verisign is able to operate its domains unburdened from these safeguards. This incongruence is a precise demonstration of disparate treatment, and one that actually hinders effective competition and ultimately harms consumers.

It points to numerous statistics showing that .com is by far the most-abused TLD in terms of spam, phishing, malware and cybersquatting.
The Business Constituency and Intellectual Property Constituency had similar views about standardizing rules on abuse and such. The IPC comment says:

The continued prevalence of abusive registrations in the world’s largest TLD registry is an ongoing challenge. The terms of the .com registry agreement should reflect that reality, by incorporating the most up-to-date features that will aid in the detection, prevention and remediation of abuses.

The European NGO Alliance for Child Safety Online submitted a comment with a more narrow focus — child abuse material and pornography in general.
Enasco said that 41% of sites containing child abuse material use .com domains and that Verisign should at least have the same regulatory regime as 2012-round gTLDs. It added:

Verisign’s egregious disinterest in or indolence towards tackling these problems hitherto hardly warrants them being rewarded by being allowed to continue the same lamentable
regime.

I couldn’t find any comments that were in unqualified support of the .com contract renewal, but the lack of any comments from large sections of the ICANN community may indicate widespread indifference.
The full collection of comments can be found here.

.shop pricing sunrise renewals at $1,000

If you’ve spent over $40 million on a gTLD, you need to make your money back somehow, right?
It’s emerged that GMO Registry, which paid ICANN a record $41.5 million for .shop back in January, plans to charge $1,000 renewal fees, wholesale, on domains registered during its upcoming sunrise period.
Trademark owners will seemingly have to pay over the odds for domains matching their trademarks, while regular registrants will have a much more manageable annual fee of $24.
The prices were disclosed in a blog post from the registrar OpenProvider last week, in which the company urged GMO to lower its prices.
Sunrise is due to start June 30, running for 60 days, so there’s still a chance prices could change before then.
It’s not the first registry to charge more for sunrise renewals than regular renewals.
Any company that bought a .sucks domain during sunrise was lumbered with a recurring $2,499 registry fee.
.green also had a $50 annual sunrise renewal premium before Afilias took over the gTLD in April.
Others have charged higher non-recurring sunrise fees. With .cars, the sunrise fee was $3,000, which was $1,000 more than the regular GA price.

Patent troll hits registrars with $60m shakedown

A patent troll that claims it invented email reminders has launched a shakedown campaign against registrars that could be worth as much as $62 million.
WhitServe LLC, which beat Go Daddy in a patent lawsuit last year, is now demanding licenses from registrars that could add as much as $0.50 to the cost of a domain name.
According to registrar sources, registrars on both sides of the Atlantic have this month been hit by demands for hundreds of thousands or millions of dollars in patent licensing fees.
The legal nastygrams present thinly veiled threats of litigation if the recipients decline to negotiate a license.
WhitServe is a Connecticut-based IP licensing firm with connections to NetDocket, which provides software for tracking patent license annuities.
It owns US patents 5,895,468 and 6,182,078, both of which date back to the late 1990s and cover “automating delivery of professional services”.
Basically, the company reckons it invented email reminders, such as those registrars send to registrants in the weeks leading up to their domain registration expiring.
Three years ago, GoDaddy, defending itself against WhitServe’s 2011 patent infringement lawsuit, compared the “inventions” to the concept putting “Don’t forget to pick up milk” notes on the fridge: utterly obvious and non-patentable.
In December 2012, GoDaddy implied WhitServe used its patent expertise and exploited a naive 1990s USPTO to obtain “over-broad” patents.
It was trying “to monopolize the entire concept of automatic Internet reminders across all industries, including domain name registrars”, according to a GoDaddy legal filing.
But the market-leading registrar somehow managed to lose the case, opting to settle last August after its last defense fell apart, for an undisclosed sum.
Now, WhitServe is using that victory to shake loose change out of the pockets of the rest of the market.
It’s told registrars that GoDaddy and Endurance International (owner of Domain.com, BigRock and others) are both currently licensing its patents.
The deal it is offering would see registrars pay $0.50 for every domain they have under management, a number that seems to be based on .com registry numbers reported by Verisign.
The fee would be reduced to $0.30 per name for each name over one million, and $0.20 for each name over five million, I gather. That’s still more than registrars pay in ICANN fees.
If WhitServe were to target every .com registrar (which I do not believe it has, yet) its demands could amount to as much as $62 million industry-wide, given that .com is approaching 125 million names right now.
It’s not clear whether these fees are expected to be one-time payments or recurring annual fees.
It’s a trickier predicament for registrars than the usual patent shakedown, because registrars are legally obliged under their contracts with ICANN to send email reminders in a variety of circumstances.
The Expired Registration Recovery Policy requires them to email renewal reminders to customers at least twice before their registrations expire.
There’s also the Whois Data Reminder Policy, which obliges registrars to have their customers check the accuracy of their Whois once a year.
These are not services registrars are simply able to turn off to avoid these patent litigation threats.
Whether registrars will take this lying down or attempt to fight it remains to be seen.

URS coming to .travel under big contract changes

The .travel gTLD, which was approved 10 years ago, will have to support the Uniform Rapid Suspension service, one of several significant changes proposed for its ICANN contract.
I believe it’s the first legacy gTLD to agree to use URS, which gives trademark owners a way to remove domain names that infringe their marks that is quicker and cheaper than UDRP.
Tralliance, the registry, saw its .travel Registry Agreement expire earlier this month. It’s been extended and the proposed new version, based on the New gTLD Registry Agreement, is now open for public comment.
While the adoption of URS may not have much of a direct impact — .travel is a restricted TLD with fewer than 20,000 names under management — it sets an interesting precedent.
IP interests have a keen interest in having URS cover more than just 2012-round gTLDs. They want it to cover .com, .org, .net and the rest too.
Domain investors, meanwhile, are usually cautious about any changes that tilt the balance of power in favor of big brands.
When .biz, .org and .info came up for renewal in 2013, the Intellectual Property Constituency filed comments asking for URS to be implemented in the new contracts, but the request was not heard.
I’m aware of two ccTLDs — .pw and .us — that voluntarily adopted URS in their zones.
Other changes include a requirement for all .travel registrars, with the exception of those already selling .travel domains, to be signatories of the stricter 2013 Registrar Accreditation Agreement.
That’s something Afilias and Neustar only agreed to put in their .info and .biz contracts if Verisign agrees to the same provisions for .com and .net.
The fees Tralliance pays ICANN have also changed.
It currently pays $10,000 in fixed fees every year and $2 per billable transaction. I estimate this works out at something like $40,000 to $50,000 a year.
The proposed new contract has the same fees as 2012-round new gTLDs — a $25,000 fixed fee and $0.25 per transaction. The transaction fee only kicks in after 50,000 names, however, and that’s volume .travel hasn’t seen in over five years.
Tralliance will probably save itself thousands under the new deal.
The contract public comment forum can be found here.

Timing of .com contract renewal is telling

The timing of the publication of the renegotiated .com registry contract may give Verisign and ICANN the chance to duck some criticism about its price-raising powers.
According to ICANN’s announcement last night, the draft contract is up for public comment until April 26, a week before we find out how much new gTLD business Verisign has won.
Verisign is expected to have secured a large share of the burgeoning market for new gTLD back-end registry services.
It is whispered that a great many North American brands planning to apply for their own dot-brand gTLDs prefer Verisign as their registry provider, due to its reputation for stability.
That up-time is of course provided by a robust, distributed infrastructure paid for over the years by the same .com registrants now facing four more years of price increases.
It’s debatable whether Verisign can continue to make a convincing public interest case for .com price hikes if it’s also profiting by hosting dot-brands on the same boxes and pipes.
But because the public comment period closes April 26 and ICANN does not plan to publish the new gTLD applications until May 2, the argument that Verisign is using .com buyers to subsidize its dot-brand business will have to be made without hard data to back it up.
I doubt such arguments would be heard anyway, frankly. ICANN pretty much has its hands bound by the 2006 contract when it comes to messing around with pricing controls.
For those opposed to price increases, a more effective lobbying strategy might head straight to Washington DC, where the Departments of Commerce and Justice will both study the deal from September.