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Chehade declines to backtrack on domain “hogging” comments

Kevin Murphy, February 10, 2015, 01:19:56 (UTC), Domain Policy

ICANN CEO Fadi Chehade responded yesterday to anger from domain investors over recent comments in which he talked about “hogging” domain names and implied a link to cybersquatting.
But he did not, at least as far as I understood his explanation, backtrack on his original remarks.
Chehade was cheekily asked his current thoughts on domain “hoggers” by blogger David Goldstein during a press conference at the ICANN 52 meeting in Singapore yesterday.
This is the entirety of his reply:

I think the statement I made to a different media outlet about that was conflated to signify I was including in this all those who are in the domain name business. And that’s not true. There are those that do this as a business and do it very well and actually enhance the market and there are those that do it and make the business and the market less attractive and less desirable. So I think any insinuation that that statement engulfs everyone that is in this business is not true. As you know very well I’ve a very big supporter of the industry groups and was one of the people who was frankly very happy when the Domain Name Association was created and I attended their first formation meeting. This is where we stand and we continue to feel good about how this market is evolving and how these players are making this a good market that serves the public interest.

Having listened to it a few times, I wonder whether Chehade deliberately didn’t backtrack on his original remarks, or whether he doesn’t quite understand why they caused offense in the first place.
A couple of weeks back, Chehade was talking to the Huffington Post about new gTLDs during an interview at the World Economic Forum in Davos.
The interviewer asked about “concerns about a land-grab going on” among domain speculators.
It was a bit of a silly question, if you ask me. A speculative land-grab is pretty low down the list of concerns held by critics of the new gTLD program. Regardless, Chehade replied:

The reality is, the more there are names, the less people will actually be hogging names in order to charge a lot for them. Because if somebody took your name on dot X, you can go get another name on dot Y now.

I’d personally agree with that characterization of the program. It’s meant to make finding a good name at a cheap price easier. “Hogging” was probably a poor choice of words, but Chehade was talking off the cuff so I could give him a pass.
But later in the same reply, he used the term “cybersquatting” in such a way as to make it easy to infer he was conflating domain investing with cybersquatting. That’s a loaded term that is usually reserved for trademark infringement, at least when used inside the industry.
Obviously this was guaranteed to get investors’ hackles up.
First up with the hackles was Mike Berkens, who called Chehade out on The Domains, saying he “throws large domain investors under the bus and then backs up the bus and rolls over them again”.
Berkens pointed out, quite reasonably I thought, that ICANN is funded to a great extent by domain investors. He estimates that he alone pays ICANN about $15,000 a year in the fees that are collected at the point of registration and renewal.
By some estimates, which may even be conservative, about a third of new gTLD registrations to date have been made to speculators.
Berkens made the even better point that many of the people who have pumped hundreds of millions of dollars into the new gTLD program — Uniregistry’s Frank Schilling, XYZ.com’s Daniel Negari and multiple Donuts executives, for example — made their fortunes investing in second-level domains.
He concluded:

All and all some pretty ignorant statements in our opinion made by the CEO of ICANN and an insult to those domain investors that are some of the biggest buyer’s of new gTLD’s domain names who have paid ICANN a small fortune over the years allowing them to travel the world, pay millions a year in salary and other benefits.

Phil Corwin Jeremiah Johnston of the Internet Commerce Association followed up a few days ago with an open letter to Chehade which explained the outrage in slightly more formal and lawyerly way, with all the apostrophes in the right places. He wrote:

The ICA objects to your statement as it expresses a disdainful view towards the legitimate activity of domain investing, a hostile view of domain investors who are significant ICANN stakeholders who are deeply affected by its policies, a lack of awareness of the market realities of domains as an asset class, and an unwarranted promotion of new gTLD domains over those at legacy gTLDs.
…
Domain investors are not “hogs” and they most certainly are not deliberate trademark infringers, or “cybersquatters”. It is not clear what you intended by your reference to “cybersquatting”, though it is concerning that you used this pejorative term just after making disparaging remarks about domain investors.

With all these criticisms in mind, let’s go back and parse what Chehade said in Singapore yesterday.
First, he said his remarks had been wrongly “conflated to signify I was including in this all those who are in the domain name business”.
I’m not sure that’s what happened. I’m pretty certain Berkens and his commenters, and then Corwin Johnston, got the hump purely because Chehade dismissed domain investing as “hogging” and then implied a link between investing and trademark infringement.
Who is Chehade talking about when he draws a distinction between those who “enhance the market” and those who “make the business and the market less attractive”?
Is the line drawn between the trademark infringers and the legitimate investors, or its it drawn somewhere else?
Why did Chehade go on to express his support for the DNA, a sell-side trade group funded largely by registries and registrars? Was he drawing the line between regular second-level domainers (hogging) and those that in many cases are essentially just top-level domainers (enhancing)?
Chehade was given the opportunity to backtrack and he didn’t take it.
I’m not a domainer, but if I were I don’t think I’d be particularly satisfied about that.

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Comments (12)

  1. Philip Corwin says:
    February 10, 2015 at 2:30 am

    Kevin:
    Thank you for reporting on CEO Chehade’s further comments on this subject made at the referenced press conference.
    For the record, while I played a role in drafting the ICA letter responding to his “hogging/cybersquatting” remarks made in Davos, the letter was signed by ICA President Jeremiah Johnston. Prior to being sent it was shared with all ICA members who provided feedback and strong support for making an official response.
    In regard to his statement that “There are those that do this as a business and do it very well and actually enhance the market and there are those that do it and make the business and the market less attractive and less desirable. So I think any insinuation that that statement engulfs everyone that is in this business is not true.”, I would only say that ICA members comprise the majority of top professionals in the domain portfolio monetization business and, as our letter states, are scrupulous in their efforts to avoid trademark infringement. So I will presume that he meant to state that our members are among those who enhance the market and make it more attractive, although it would have been preferable if he had been clear in stating that those individuals and companies that own and manage large domain portfolios are not automatically presumed to be “hogs” or “cybersquatters”.
    I would also note that ICA specifically requested that our letter be published at ICANN’s Correspondence page and that ICANN has yet to do so. We hope that oversight will soon be corrected.

    Reply
  2. Shaun. M says:
    February 10, 2015 at 3:46 am

    Hi Kevin,
    Thank you for your insights and the excerpts from the speech. Many in the domain industry are frustrated as his speech when it is those in the domain aftermarket (and business eco-system) that actually helped to alleviate ICANN to where it is today.
    Cheers and Best Regards

    Reply
  3. Philip Corwin says:
    February 10, 2015 at 3:50 am

    It’s nice to be recognized, Kevin.
    While I was the lead draftsman, the letter reflects the consensus views of all ICA members.

    Reply
  4. who says:
    February 10, 2015 at 4:19 am

    > Who is Chehade talking about when he draws a distinction between those who “enhance the market” and those who “make the business and the market less attractive”?
    Perhaps his distinction is between those who are prepared to sell at a small markup of market value and those who want such a large markup that they sell only a tiny fraction of their inventory each year.

    Reply
  5. Acro says:
    February 10, 2015 at 4:49 am

    Once again, the ICANN CEO pulled the rug from under the very industry that pays his wages. Gotta love this new Internet he’s planning to roll out.

    Reply
  6. Jason Thompson says:
    February 10, 2015 at 7:45 am

    It sounds like ICANN needs a new CEO. One that understands the marketplace better.

    Reply
  7. Michael Shohat says:
    February 10, 2015 at 10:07 am

    Oh come on domainers. Everybody in and outside the indudstry – except domainers and companies serving them of course – feels domain investors are “hogging” domain names. This constant whining is getting a bit out of hand.
    Financially, ICANN would also do very well just with registrations that are actually used. So no need to shout about how your fees are paying for the CEOs travels. I can’t hear registrars, registries and other registrants making this point all the time.
    Fadi has made his point. I’m sure many think it’s a valid point. Now get over it please.
    Domain speculating and investing has obviously become a tolerated/accepted business model over the years. The touchy reactions from domainers seem to suggest that some of them need more acceptance.

    Reply
  8. Jimmy says:
    February 10, 2015 at 5:48 pm

    Quote: “As you know very well I’ve a very big supporter of the industry groups and was one of the people who was frankly very happy when the Domain Name Association was created and I attended their first formation meeting. …….”
    Notice how he just acts as if the ICA does not exist?
    The ICA has been around almost a decade longer than the Domain Name Association.
    Yeah, he supports the Domain Name Association whose existence was apparently created to disintermediate the current domain market by creating or suggesting policies that are beneficial only to registries, registrars, and big corporations like Google and Amazon.
    They don’t exist to help protect individual domain owners or domain investors, so yeah, Chehade in my opinion is being a disingenuous turd who is throwing all of us under the bus with this comment.
    I call for him to be fired for his comments.
    IMO, he’s a total asshole. Fire him!

    Reply
  9. Avtal says:
    February 10, 2015 at 11:33 pm

    Domain investors need to look at this from a broader perspective.
    The domain investment “industry” exists in its current form because of some fundamental decisions made by ICANN and its predecessors:
    1) .com domains can be leased (“registered”) for a rather low annual fee, independent of the market value of the domain;
    2) these leases are infinitely renewable, as long as the annual fee is paid;
    3) these leases are transferable.
    Other common goods (electromagnetic spectrum, say, or subsurface mineral rights in much of Europe) are made available for lease under much different terms.
    I have nothing against legitimate domain investors; they operated according to the rules that ICANN set, and the skillful ones made money. But it seems possible that if ICANN had made .com domains available under a different set of rules, more money would have ended up in ICANN’s hands, and less in the hands of private individuals.
    So my advice to domain investors: grow a thicker skin, and don’t expect to be loved; it is sufficient that ICANN leases out domains under rules that let you make money.
    Avtal

    Reply
    • Acro says:
      February 12, 2015 at 5:03 pm

      Avtal, it’s clear the CEO does not represent domainers in any way; the media circus that ICANN meetings have become is a clear indication of how disconnected these people are from the domain industry.

      Reply
    • Avtal says:
      February 13, 2015 at 1:40 am

      Acro, I agree that the ICANN CEO doesn’t represent domain investors. But this is not surprising, and it doesn’t mean that he is failing to do his job. Domain investors, I would argue, are not a fundamental ICANN constituency.
      Domains (.com domains anyway) are an investment asset only because ICANN and its predecessors chose not to lease them out at market-based rates. I assume ICANN decided on this flat-rate policy in order to make .com domains available worldwide, even in countries where $10 per year is a lot of money.
      If this is the case, then it would be reasonable for ICANN to consider the entire domain investment “industry” to be an unfortunate side-effect of a well-intended policy, rather than a constituent group whose interests should be looked after.
      Avtal

      Reply

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