.xyz, .club and .vip get the nod to sell in China

The Chinese government has granted licenses to operate in the country to its first tranche of new gTLDs — .vip, .club and .xyz.
The agreements mean that Chinese registrars will be able to give their Chinese customers the ability to actually use their domains for web sites.
It also means the companies will be obliged to censor domains the government does not like, but only those domains registered via Chinese registrars.
The Ministry of Industry and Information Technology announced the licenses, given to the Chinese subsidiaries of Minds + Machines, .CLUB Domains and XYZ.com respectively, today.
M+M CEO Toby Hall told DI that it’s “a great moment of support for Chinese registrars”, giving them a “very clear signal about which TLDs they can focus on”.
XYZ.com said in a blog post that some of its Chinese registrars (its biggest channel) are planning on offering discounts to celebrate the approval.
It’s always been possible for Chinese people to register new gTLD domains via Chinese registrars — it’s estimated that 42% of the 27 million new gTLD domains in existence today are Chinese-owned.
However, Chinese citizens need a government license if they want to launch a web site, and the government only issues licenses for domains in approved TLDs.
In addition to .cn and China-based gTLDs, which were the first to be given the nod, Verisign was approved earlier this year for .com.
Hall said that while .vip has been popular with Chinese domainers, the MIIT license means it can start to tap the small business market there too.
Obtaining the license means that the three registries, which are all based in the US or Europe, will have to comply with Chinese regulations when it comes to Chinese customers.
That basically means the Chinese government gets to censor pretty much anything it doesn’t like, up to and including sites that “spread rumors”.
Hall said that there’s no chance of this censorship bleeding out to affect non-Chinese customers.
M+M, along with XYZ and .CLUB, are using Chinese registry gateway ZDNS to act as a proxy between their own back-ends (Nominet for .vip, Neustar for .club and CentralNic for .xyz) and Chinese registrars.
“All of our Chinese web sites go through ZDNS, so only web sites going through ZDNS would be affected,” Hall said, referring to the censorship rules.
Hall added that he was “not aware” of there being a blocklist of politically sensitive strings that Chinese customers are not allowed to register.

NameCheap stops selling .xyz domains

NameCheap may have sold over a million .xyz domains, but apparently it will sell no more than that.
The registrar confirmed to DI this evening that it is no longer taking .xyz registrations. It declined to explain why.
It has also stopped selling .college and .rent domains — two other gTLDs owned by XYZ.com. Other new gTLDs are not affected.
It’s reportedly not accepting inbound transfers either, though existing domains can be renewed.
The switch-off happened at the end of last month, a NameCheap representative said.
That’s just one month after the registrar celebrated its one millionth .xyz registration, which XYZ.com commemorated with a blog post bigging up NameCheap’s user-customers.
The move is peculiar indeed. NameCheap is the third highest-volume .xyz registrar, behind West.cn and Uniregistry, responsible for about 15% of .xyz’s domains under management.
It’s also NameCheap’s biggest direct-selling gTLD by a considerable margin.
NameCheap is well-known as primarily an eNom reseller — it accounts for 28% of eNom’s domains under management and 18% of its revenue, largely from .com sales.
But with new gTLDs it has started selling domains on its own IANA ticker, meaning a direct connection to the registry and more gross profit for itself.
According to June’s registry reports, the million .xyz names accounted for roughly two thirds of NameCheap’s total DUM (not counting names sold via eNom).
The closet rival in its portfolio is .online, which provided the registrar with about 81,000 DUM.
The registrar added about 350,000 .xyz domains in June, a month in which it briefly offered them at $0.02 each.
At that time, the company reported technical issues that led to a 12-24 hour backlog of registrations to process, though its blog post announcing the problem appears to have since been deleted.
NameCheap has declined to comment on the reason for the surprise move, and XYZ did not immediately respond to a request for comment.
The fact that all of XYZ.com’s TLDs have been cut off suggests some kind of dispute between the two companies, but the fact that renewals can still be processed would suggest that NameCheap has not lost its .xyz accreditation.
More info if I get it…

XYZ hires .top guy as first China employee

XYZ.com has hired its first Beijing-based employee, as part of its ongoing plan to formally enter the Chinese market.
The company said yesterday that it has appointed Mason Zhang, until recently chief marketing office at .top gTLD registry Jiangsu Bangning Science & Technology Co, as its new director of business development for China.
It’s part of XYZ’s seemingly interminable entry to the Chinese market, which is over a year old.
While the majority of .xyz’s registrations have been into China, the registry (along with pretty much every other Western registry) still does not have the necessary government permissions so that its customers can start using their names.
It kicked off a process to get ICANN approval for its Chinese gateway, operated by ZDNS, a year ago, and set up the mandatory Wholly Owned Foreign Enterprise in January.
The company said in a blog post that it expects to get its Chinese accreditation “very soon”.
Zhang’s former employer, .top, is second only to .xyz in terms of new gTLD registration volume, also due to Chinese sales. It has about 3.7 million names in its zone file, compared to .xyz’s 6.1 million.

Verisign data shows new gTLDs drive almost three quarters of Q2 growth

New gTLDs were responsible for the large majority of domain name industry volume growth in the second quarter, but you’d never know it reading Verisign’s latest Domain Name Industry Brief.
The domain universe increased to 334.6 million names at the end of June, according to the latest DNIB, which was published (pdf) last week.
That’s a 8.2 million increase on the 326.4 million it reported in its Q1 DNIB report (pdf).
Verisign reports the increase as 7.9 million, possibly due to new data that emerged after the Q1 report was published.
Whether it was 7.9 million or 8.2 million, most of the growth was due to new gTLDs.
In the DNIB, data on new gTLDs is always presented on page three of the three-page report in such a way to make apples-to-apples comparisons with .com and ccTLDs not straightforward.
While the reports highlight the growth of ccTLDs and Verisign’s own .com and .net registries in absolute and percentage terms, they do not do so for new gTLDs.
(They’ve also been calling ccTLDs “geographic gTLDs” for years and nobody seems to have noticed.)
But comparing Q1 and Q2 DNIB reports shows that new gTLDs contributed 5.9 million of the 8.2/7.9 million quarterly increase, in other words just shy of 72% of the industry’s total volume growth.
That’s the biggest contribution new gTLDs have made to growth in any quarter to date.
The growth can be attributed to .xyz’s penny deals in June, which saw domainers acquire millions of names for essentially nothing.
Meanwhile, .com and .net combined contributed just 700,000 domains to growth and .net actually shrunk by 100,000 names, its first dip since Q1 2015.
The ccTLD market data presented in the DNIBs is probably not entirely reliable. Verisign is still using the December 2014 number for free ccTLD .tk, which I think is about six million names lower than its current level.

.xyz tops 5 million domains as penny deals continue

XYZ.com became the first new gTLD operator to top five million domains in a single TLD last night, when .xyz added almost 1.5 million names.
According to our parse of today’s zone file, .xyz has 5,096,589 names, up 1,451,763 on yesterday’s 3,644,826.
On Monday, the number was just under 2.8 million.
The massive spike came after what was supposed to be the final day of a three-day discounting blitz, as registrars sold the names for $0.02, $0.01 or even nothing.
Uniregistry, which sold for a penny, seems to have claimed the lion’s share of the regs.
The company supplied DI with data showing it had processed over 1.16 million registrations on June 2, about 90% of which CEO Frank Schilling said were .xyz sales.
At its peak, Uniregistry created 95,793 new domains in an hour, this data shows.
Judging by the numbers published on its home page, the registrar has pretty much doubled its domains under management overnight.
The rapid growth of .xyz is very probably not over.
Some registrars said they will carry on with the penny giveaways for an extra day.
At least one popular registrar, NameCheap, told irritated customers that the popularity of its $0.02 offer meant it had a backlog of registration requests that would take 12 to 24 hours to process. Those may not have showed up in the zone file yet.
In addition, .xyz prices are expected to be dirt cheap — just $0.18 at Uniregistry, for example — for the rest of the month, at least at the 50-odd registrars XYZ says are participating in its promotion.

.xyz adds 788,000 domains in a day

Blimey.
XYZ.com managed to “sell” at least 788,167 .xyz domain names yesterday, as registrars gave them away for peanuts.
According to this morning’s zone file count, the gTLD has 3,644,826 domains, compared to 2,856,659 yesterday.
And its sale is not even over until midnight tonight.
The company has pumped millions into marketing .xyz for the second anniversary of its general availability launch, and many registrars dropped their prices accordingly.
Registrars are currently selling the names for $0.02, $0.01 or, apparently in the case of at least one Chinese registrar, nothing.
It goes without saying that this is the biggest one-day spike for a 2012 new gTLD, blowing the previous record of 238,616 out of the water.
While XYZ.com no doubt gets bragging rights, one has to wonder how much value has actually been created here.
The vast majority of these names will have been acquired by investors and will sit idle before eventually dropping. It’s possible that some have also been registered for nefarious purposes.
Some number will no doubt renew, otherwise the promotion will have been a wasted enterprise.
If you look at XYZ’s first big giveaway — the controversial free push into Network Solutions customer accounts — you’ll see very low retention.
NetSol had 360,683 .xyz names under management after the promotion finished in July 2014, but that was down to 18,919 by October 2015, when most had deleted.
That’s a drop of 95%.
The difference here is of course that registrants this week have had to pick their domains and hand over nominal payment.
Investors have been known to form emotional attachments to their portfolios, which could increase renewals this time around.
XYZ.com will have to pay around $200,000 in ICANN fees for yesterday’s added domains.

These might be the top 10 biggest new gTLD daily growth spikes

With news seeping out this evening that XYZ.com’s latest marketing blitz has very possibly added half a million domains to its .xyz gTLD today, I thought I’d knock out some data on the previous largest one-day growth spikes in new gTLDs.
With some caveats, which I’ll get to, I think these might be the top 10 growth days for new gTLDs.
[table id=41 /]
They’re the only 10 spikes of over 100,000 domains I could confirm in the DI PRO database, at least in 2012-round gTLDs.
With .xyz reportedly adding at least 400,000 domains today, due to several registrars basically giving them away, it’s certainly going to be at the top of this table tomorrow.
XYZ is celebrating its second anniversary of general availability tomorrow, and has invested several million bucks in promotions on registrars which are in turn selling .xyz names for as little as a penny apiece.
As mentioned, there are some caveats to the data in the table above.
It’s based on the zone files published daily by ICANN’s Centralized Zone Data Service, which can be patchy.
CZDS is set up in such a way that each user has missing days here and there, and it has in the not too distant past had a tendency to balk when it receives an unexpectedly large zone file.
In other words, there’s a pretty good chance I’ve missed some spikes, but I’m confident there’s nothing else approaching 400,000 in a day.
UPDATE: .vip should be on the table, with a one-day spike of 115,245 on May 18 2016.

CentralNic doing okay out of new gTLDs

Local former rival Minds + Machines may be struggling to turn a profit, but CentralNic seems to be doing quite well out of this new gTLD malarkey.
But not as well as you might expect. Large growth at its clients does not appear to have translated to a whole lot more revenue for CentralNic itself.
The company yesterday reported 2015 profit before tax of £1.45 million ($2.13 million), compared to £520,000 in 2014, on revenue up 71% at £10.39 million ($15.28 million).
While it may be best known nowadays as a back-end registry provider, its revenue is now fairly evenly split over its three reporting segments.
CentralNic runs the back-end registry for volume gTLDs including .xyz and Radix’s .site, .online, .website, and .space.
The company calls this “wholesale domain sales”, and it brought in £3.12 million last year, compared to £2.82 million in 2014.
You might think that the volume success of .xyz, which added about a million names in 2015, might have translated into a bigger boost, but it didn’t.
Its registrar business, which it got into through the acquisitions of Internet.bs and Instra, brought in £3.4 million, compared to £1.55 million in 2014.
Its third segment, “Enterprise including Premium Domain Name Sales” saw revenue of £3.85 million, compared to $1.69 million.
The enterprise business, which also included two software licenses and revenue from dot-brand clients, is easily the most profitable segment, with a 67% EBITDA margin. For wholesale, it’s 44%.
The £3.8 million of enterprise revenue included £3.22 million premium name sales, of which over £3 million came from a single buyer.
It’s not clear whether this was a single domain deal or a package of premiums, but it represents the most volatile element of CentralNic’s revenue.
Update (May 30) — This article originally misidentified “Company A” and “Company B” in CentralNic’s accounts as registry clients. In fact, according to CEO Ben Crawford, they’re registrar channel partners.

Rightside rejects Negari’s $5m new gTLD offer

Rightside has turned down Daniel Negari’s $5 million offer to acquire four of its new gTLDs, according to Negari.
The XYZ.com CEO told DI via email tonight:

I was looking forward to operating .Army, .Dance, .Dentist, and .Vet under the XYZ umbrella. I’m disappointed that Rightside didn’t entertain my offer, especially since I believe $5MM was more than fair. I believe these and other new TLDs are worth more to me than any other registry operator due to my growing enterprise. However, it’s understandable for Rightside to want to monetize on these assets.

Rightside has told him it had reviewed the offer and was not interested, he said.
The offer was made in a March 30 open letter to the company and Securities and Exchange Commission filing and expired last night, April 7.
There was some speculation about whether it was a genuine offer, just an attempt to boost Rightside’s share price, or both.
Negari and his COO, Mike Ambrose, own about 5% of Rightside between them, following an $8.5 million investment.
Rightside’s ability to grow revenue from its new gTLD portfolio has become the focus of attention due to the intervention of activist investor J Carlo Cannell of Cannell Capital, who reckons the company is paying too much attention to rubbish TLDs at the expense of its profitable registrar businesses.
Negari thinks he would be able to grow .army, .dance, .dentist, and .vet.
The largest of those gTLDs is .vet, with about 5,200 names in its zone file. It grew by 794 names in the last 90 days.
The other three are below 3,000 names, and are either shrinking or adding fewer than 10 names per day.
XYZ.com’s second-tier portfolio strings, such as .college, .rent and .theatre, are faring a little better, at least in terms of growth. But they are a little younger, and none are over 10,000 names.

New gTLDs top 12 million domains

The new gTLD universe passed 12 million domains for the first time today, according to zone files.
Today, we counted 12,001,346 domains across all the 2012-round gTLD zones, up by just under 60,000 names on the day.
Over 50,000 of the new names were split fairly evenly between .xyz and .club, which seem to be the beneficiaries of a domainer surge that’s been going on for the last four days.
As of today, .club has overtaken .wang to be the third-largest zone, with 638,565 names.
It’s taken less than one month for the new gTLDs to add their latest million names.
Our total zone file count topped 11 million on January 12.
.xyz alone has added over 380,000 names since then; .club another 90,000. Most of that growth has come in the last seven days.
Second-placed budget Chinese-run gTLD .top has added over 95,000 names in the last 30 days.
Zone files don’t take account of domains that are registered but don’t have name servers, so the actual number of registered names will be slightly higher.