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Verisign: 41% of new gTLD sites are parked

Kevin Murphy, August 13, 2014, Domain Registries

As much as 41% of domains registered in new gTLDs are parked with pay-per-click advertising, according to research carried out by Verisign.

That works out to over 540,000 domains, judging by the 1.3 million total I have on record from June 29, the day Verisign carried out the survey.

Domains classified as carrying “business” web sites — defined as “a website that shows commercial activity” — accounted for just 3% of the total, according to Verisign.

There are some big caveats, of course, not least of which is .xyz, which tends to skew any surveys based on “registered” names appearing in the zone file. Verisign noted:

XYZ.COM LLC (.xyz) has a high concentration of PPC websites as a result of a campaign that reportedly automatically registered XYZ domains to domain registrants in other TLDs unless they opted out of receiving the free domain name. After registration, these free names forward to a PPC site unless reconfigured by the end user registrant.

On June 29, .xyz had 225,159 domains in its zone file. I estimate somewhat over 200,000 of those names were most likely freebies and most likely parked.

The practice of registry parking, carried out most aggressively by Uniregistry and its affiliate North Sound, also threw off Verisign’s numbers.

Whereas most new gTLD registries reserve their premium names without adding them to the zone files, Uniregistry registers them via North Sound to park and promote them.

Tens of thousands of names have been registered in this way.

Coupled with the .xyz effect, this leads me to conclude that the number of domains registered by real registrants and parked with PPC is probably close to half of Verisign’s number.

That’s still one out of every five domains in new gTLDs, however.

Judging by a chart on Verisign’s blog, .photography appears to have the highest percentage of “business” use among the top 10 new gTLDs so far.

Verisign also found that 10% of the names it scanned redirect to a different domain. It classified these as redirects, rather than according to the content of their final destination.

ICANN smacks new gTLDs for pre-sunrise auctions

Running a premium domain name auction before you’ve finished your new gTLD sunrise period is Officially Not Cool, according to ICANN’s compliance department.

People who won premium new gTLD domains in auctions that took place before sunrise periods now face the possibility of losing their names to trademark owners.

.CLUB Domains, and probably XYZ.com, operators of .club and .xyz, two of the highest-volume new gTLDs to launch so far, appear to be affected by the ICANN decision.

ICANN told .CLUB that its “winter auction“, which took place in late February, may have violated the rules about allocating or “earmarking” domains to registrants before sunrise takes place.

Meanwhile, NameJet has cancelled the auction for deals.xyz, which “sold” for $8,100 late last year, suggesting that .xyz’s pre-sunrise auction is also considered ultra vires.

ICANN told .CLUB that its auction sales “constitute earmarking” in violation of the rule stating that registries “must not allow a domain name to be allocated or registered prior to the Sunrise period”.

.CLUB had told its auction winners that a sunrise period registration would prevent them from getting the domain they wanted and that they would be refunded if a sunrise registrant emerged.

But ICANN evidently told the registry:

Irrespective of whether “[a]llocation was expressly conditioned upon any Sunrise claim,” or whether any Sunrise claim was made, the pre-selection, pre-registration or pre-designation to third parties, in this case via .Club Domains’ “winter auction,” constitutes improper allocation.

I kinda thought this would happen.

Back in November, when XYZ.com ran its first .xyz auction — about six months before its sunrise even started — CEO Daniel Negari told us he believed it was “comfortably within the rules“.

We said the auction “seems to be operating at the edge of what is permissible under the new gTLD program’s rights protection mechanisms, which state that no domains may be allocated prior to Sunrise.”

I’ve not yet been able to definitively confirm that .xyz is affected by this ICANN decision, but .club definitely is.

.CLUB Domains told its auction winners today that the names they won are now subject to a 60-day period during which they could be obtained by trademark owners.

If no trademark owner claims the name, .CLUB said it will give the auction winner a 10% rebate on their purchase price.

The email states:

We are placing the domain on hold for 60 days, during which time a Trademark Clearinghouse (TMCH) holder will have the opportunity to purchase the domain at Sunrise rates. Although, the domain is not currently in the TMCH, if a trademark holder should file in the TMCH over the next 60 days, the domain will be offered to that registrant. However, if the name is not claimed by filing in the TMCH over the next 60 days, your transaction will move forward as planned.

Although we disagree with ICANN compliance’s position on this matter, the actions we are taking are necessary to ensure that we are not offside with ICANN compliance in any way. We understand that you have been caught in the middle of this issue due to no fault of your own. Given these circumstances, we are offering you two options:

1) Should you decide to complete this transaction, we will issue you a payment of 10% of the purchase price after the transaction closes in 60 days, assuming the name is not registered by a TMCH mark holder because of the delay.

2) At any time during the 60 day period you have the option to rescind the auction bid and not purchasing the domain.

How NetSol opts you in to cybersquatted .xyz names

Clear-cut cases of cybersquatting seem to be among those .xyz domain names that Network Solutions has registered to its customers without their explicit request.

Some of the domains I’ve found registered in .xyz, via NetSol to the registrants of the matching .com or .net names, include my-twitter.xyz, facebook-liker.xyz and googledia.xyz.

Domains including other brands, such as Rolex, Disney, iPhone, Amazon and Pepsi can also be found registered to third parties, via NetSol, in .xyz’s zone today.

They’re all registered via NetSol’s Whois privacy service, which lists the registrant’s “real” name in the Whois record, but substitutes mailing address, email and phone number with NetSol-operated proxies.

I think the chance of these names being paid for by the registrant is slim. It seems probable that many (if not all) of the squatty-looking names were registered via NetSol’s promotional program for .xyz.

As previously reported, NetSol has been giving away domain names in .xyz to owners of the matching .com names. Tens of thousands of .xyz names seem to have been registered this way in the last week.

The “registrants” did not have to explicitly accept the offer. Instead, NetSol gave them the option to “opt-out” of having the name registered on their behalf and placed into their accounts.

The effect of this has been to propel .xyz into the leading spot in the new gTLD league table. It had 82,236 names in today’s zone file. a clear 15,000 names ahead of second-place .club.

But it’s not clear how much, if any, support NetSol has received from the registry, XYZ.com. CEO Daniel Negari told Rick Schwartz, in a coy interview last week:

The Registry Operator is unable to “give away” free domain names. I never even saw the email that the registrar sent to its customers until I discovered it on the blogs.

The opt-out giveaway has also prompted speculation about NetSol’s right to register domains without the explicit consent of the registrant, both under the law and under ICANN contract.

Under the Registrar Accreditation Agreement, in order to register a domain name, registrars “shall require” the registrant “to enter into an electronic or paper registration agreement”.

That agreement requires the registrant to agree to, among many other things, the transfer or suspension of their domains if (for example) they lose a UDRP or URS case.

But that doesn’t seem to be happening with the opt-out names,

Barry Shein, president of The World, had shein.xyz registered on his behalf by NetSol on Saturday. He already owns shein.com, also registered with NetSol.

NetSol’s email informing him of the registration, which Shein forwarded to DI, reads as follows:

Dear Valued Network Solutions Customer,

Congratulations, your complimentary SHEIN.XYZ domain has arrived!

Your new .XYZ domain is now available in your Network Solutions account and ready to use. To go along with your new .XYZ domain, you have also received complimentary access to Professional Email and Private Registration for your .XYZ domain.

If you choose not to use this domain no action is needed and you will not be charged any fees in the future. Should you decide to keep the domain after your complementary first year, simply renew it like any other domain in your account.

We appreciate your business and look forward to serving you again.

Sincerely,

Network Solutions Customer Support
www.networksolutions.com
http://www.networksolutions.com/help/index.jsp

Importantly, a footnote goes on to describe how NetSol will take a refusal to opt out as “continued acceptance” of its registration agreement:

Please note that your use of this .XYZ domain name and/or your refusal to decline the domain shall indicate acceptance of the domain into your account, your continued acceptance of our Service Agreement located online at http://www.networksolutions.com/legal/static-service-agreement.jsp, and its application to the domain.

So, if you’re a NetSol customer who was picked to receive a free .xyz name but for whatever reason you don’t read every marketing email your registrar sends you (who does?) you’ve agreed to the registration agreement without your knowledge or explicit consent, at least according to NetSol.

I am not a lawyer, but I’ve studied enough law to know that this is a dubious way to make a contract. Lawyers I’ve shown this disclaimer to have laughed out loud.

Of course, because each registrant already owns a matching .com, they’ve already accepted NetSol’s registration agreement and terms of service at least once before.

This may allow NetSol to argue that the initial acceptance of the contract also applies to the new .xyz domains.

But there are differences between .com and .xyz.

Chiefly, as a new gTLD, .xyz registrants are subject to policies that do not apply to .com, such as the Uniform Rapid Suspension policy.

URS differs from UDRP in that there’s a “loser pays” model that applies to complaints involving over 15 domains.

So these .xyz registrants have been opted into a policy that could leave them out of pocket, without their explicit consent.

Of course, we’re talking about people who seem to be infringing famous trademarks in their existing .com names, so who gives a damn, right?

But it does raise some interesting questions.

Who’s the registrant here? Is it the person who owns the .com, or is it NetSol? NetSol is the proxy service, but the .com registrant’s name is listed in the Whois.

Who’s liable for cybersquatting here? Who would Twitter file a UDRP or URS against over my-twitter.xyz? Who would it sue, if it decided to opt for the courts instead?

.xyz is now the biggest new gTLD (kinda)

The controversial new gTLD .xyz is now officially the biggest, with 67,504 domains under management.

That’s according to today’s zone files, which see former number ones .club at 65,630 and .guru at 60,480.

Due to what appears to be an ICANN screw-up, there were no zone files available for any new gTLDs via the Centralized Zone Data Service yesterday, so I can’t tell you what the daily growth numbers are.

But .xyz had 36,335 names in its zone on Wednesday. It’s grown by 85% in two days.

That’s a shocking, unprecedented growth spurt.

The question is, of course, how many of these registrations are legit?

.xyz has come under a great deal of fire from domainers the last few days, after it emerged that the majority of its growth in the first days of general availability was questionable.

Network Solutions, it transpired, had seriously inflated .xyz’s numbers by registering .xyz names matching existing .coms on behalf of its customers without their permission and for no charge.

NetSol seems to have paid .xyz a few hundred thousand dollars for domain names its customers have not requested.

Data from today’s .xyz zone file is likely to reinforce the perception that most of .xyz’s apparent popularity is bogus.

I see that 56,019 domain names in .xyz today — 82% of the gTLD’s total — are using register.com name servers.

Those name servers belong to Web.com, NetSol’s parent company.

There were 27,000 such names on Wednesday. While .xyz as a whole has grown by about 31,000 names in two days, NetSol’s .xyz share has grown by about 29,000 names.

Nobody believes that NetSol, with its $40 retail price for .xyz (with a wholesale price I peg at around $6 to $7), could have obtained this market share with actual, paid-for sales.

I believe that the large majority of NetSol’s roughly 56,000 .xyz names are freebies, not reflective of buyer demand.

Many domainers are incandescent about this.

They look to registration numbers as a measurement of demand, which could be a predictor of the resale market for a TLD, so they’re upset at anything that looks like a manipulation of that number.

Daniel Negari, the charismatic CEO of .xyz, has borne the brunt of this criticism, despite the fact that there’s no evidence out there yet that .xyz supported or had prior knowledge NetSol’s mass giveaway.

Negari has so far refused to comment on the situation (he hasn’t responded to several inquiries from yours truly), which has only served to reinforce the suspicion that the registry was somehow complicit in NetSol’s promotion and used the registrar to artificially inflate its numbers.

I have no evidence one way or the other.

NetSol refused to even confirm the existence of the promotion when DI inquired earlier this week.

.xyz launch inflated by massive NetSol giveaway

Network Solutions gave away thousands of .xyz domain names for free to people who hadn’t requested them, artificially inflating the new gTLD’s launch day numbers.

As of last night, there were 36,335 domains in the .xyz zone, with something like 27,000 listed as having name servers belonging to NetSol and its parent, Web.com.

Before .xyz launched, only 1,287 new gTLD domains used NetSol name servers.

What this means is that for some reason thousands upon thousands of .xyz domain names were registered via one of the industry’s more expensive registrars.

That reason, as Mike Berkens at The Domains scooped, is that many names were given away for free to existing NetSol customers.

Not only that, but the giveaway was opt-out — if you were selected for the promotion you had to click a link in an email in order to prevent NetSol registering the .xyz that matches your .com.

So not only did the registrants of a significant portion of .xyz’s new registrations not pay for their names, they didn’t even request them.

A lot of garbage strings — some of which have matching .coms I suspect are being used for nefarious purposes — have therefore made it into .xyz’s zone alongside many decent-enough names.

When I asked NetSol, a spokesperson refused to confirm the giveaway, calling it a “market rumor”. This is apparently the kind of promotion you don’t want anyone hearing about.

It’s not clear how many of these 27,000 names were genuine registrations and which were part of the promotion, but I suspect, given NetSol’s prior performance in new gTLDs, that the vast majority were freebies.

This has happened before.

About 10 years ago, Afilias temporarily dropped its first-year price for .info to zero dollars, hoping to attract more registrations and paying renewals.

Instead, eNom decided to register a million .info names matching its customers’ .com names, put them in its customers’ accounts, and park the lot.

A year later, over 99% of those names were allowed to expire by registrants who hadn’t requested them in the first place.

The difference in this case seems to be that .xyz itself is still getting paid its registry fee for each of the names NetSol gave away.

But if history is any guide, .xyz’s numbers could be in for a big drop 15 months from now.