Rightside refuses Donuts’ “opportunistic” $70m gTLD offer

Rightside has rebuffed Donuts’ semi-hostile takeover attempt for its portfolio of gTLD registry contracts.
The question now is: will Donuts up the offer from the $70 million already on the table?
In a pre-markets statement today, Rightside said the offer “undervalued” the assets.
CEO Taryn Naidu is quoted as saying:

After thoughtful evaluation, Rightside’s Board has determined that Donuts’ proposal significantly undervalues Rightside’s Registry assets. We believe Donuts’ proposal is an opportunistic attempt to acquire Rightside’s valuable portfolio of domain extensions with an undervalued price and in a manner that would not be in the best interests of Rightside shareholders.

The company reckons its gTLDs will be bringing in $50 million to $75 million in revenue a year in the next three two five years, which would represent substantial growth over current levels.
It made $2.6 million from the registry business in the first quarter this year.
Donuts’ offer could be considered “opportunistic” given that there’s some shareholder dissatisfaction with Rightside’s success rate with new gTLDs today.
Activist investor J Carlo Cannell and Uniregistry CEO Frank Schilling, both of whom own small but significant chunks of Rightside, have called on the company to get rid of some of its under-performers.
By announcing the offer publicly — apparently after months of private offers — Donuts might have been trying to capitalize on this unrest.
But pissed-off investors don’t necessarily want these gTLDs sold off cheap.
Rightside has 40 new gTLDs. A $70 million offer equals $1.75 million per gTLD. That’s fair way below the average sale price for gTLDs at ICANN auction, which is $7 million (or $3 million if you take the median).
Will Donuts now increase its offer, or back away?

UK cybersquatting cases flat, transfers down

The number of cybersquatting cases involving .uk domains was basically flat in 2015, while the number of domains that were transferred was down.
That’s according to Nominet’s wrap-up of last year’s complaints passing through its Dispute Resolution Service.
There were 728 DRS complaints in 2015, the registry said, compared to 726 in the year before.
The number of cases that resulted in the transfer of the domain to the complainant was down to 53%, from 55% in 2014.
That’s quite a bit lower than complainants’ success rates in UDRP. In 2015, more than 70% of UDRP cases resulted in a transfer.
Nominet reckons that the DRS saved £7.74 million ($notasmuchasitusedtobe) in legal fees last year, based on a “conservative” estimate of £15,000 per case, had the complaint gone to court instead.
More stats can be found here.

Verisign to get .com for six more years, but prices to stay frozen

ICANN and Verisign have agreed to extend their .com registry contract for another six years, but there are no big changes in store for .com owners.
Verisign will now get to run the gTLD until November 30, 2024.
The contract was not due to expire until 2018, but the two parties have agreed to renew it now in order to synchronize it with Verisign’s new contract to run the root zone.
Separately, ICANN and Verisign have signed a Root Zone Maintainer Agreement, which gives Verisign the responsibility to make updates to the DNS root zone when told to do so by ICANN’s IANA department.
That’s part of the IANA transition process, which will (assuming it isn’t scuppered by US Republicans) see the US government’s role in root zone maintenance disappear later this year.
Cunningly, Verisign’s operation of the root zone is technically intermingled with its .com infrastructure, using many of the same security and redundancy features, which makes the two difficult to untangle.
There are no other substantial changes to the .com agreement.
Verisign has not agreed to take on any of the rules that applies to new gTLDs, for example.
It also means wholesale .com prices will be frozen at $7.85 for the foreseeable future.
The deal only gives Verisign the right to raise prices if it can come up with a plausible security/stability reason, which for one of the most profitable tech companies in the world seems highly unlikely.
Pricing is also regulated by Verisign’s side deal (pdf) with the US Department of Commerce, which requires government approval for any price increases until such time as .com no longer has dominant “market power”.
The .com extension is now open for public comment.
Predictably, it’s already attracted a couple of comments saying that the contract should instead be put out to tender, so a rival registry can run the show for cheaper.
That’s never, ever, ever, ever going to happen.

Survey: more people know about new gTLDs but fewer trust them

People are becoming more aware that new gTLDs exist, but there’s less trust in them that there was a year ago, according to an ICANN-sponsored survey.
The second annual Global Consumer Survey, which was published late last week, shows that 16% of respondents had heard of specific new gTLDs, on average.
That’s up 2% on last year’s survey.
The number for TLDs added in the last year was 20%, with .news leading the pack with 33% awareness.
However, fewer people were actually visiting these sites: 12% on average, compared to 15% a year ago. For TLDs added in the last year, visitation averaged 15%.
And the amount of trust placed on new gTLDs added prior to the 2015 survey was down from 49% to 45% — half the level of .com, .org and .net.
For TLDs added since last year’s survey, trust was at 52% on average.
The 2015 survey looked only at .email, .photography, .link, .guru, .realtor, .club and .xyz. For this year’s survey, respondents were also asked about .news, .online, .website, .site, .space, .pics, .top, .bank, .pharmacy, and .builder.
The number of registered domains did not seem to have an impact on how aware respondents were on individual extensions.
.xyz, for example, had the lowest awareness of those used in the survey — 9% versus 5% in 2015 — despite being the runaway volume market leader and having scored PR coups such as Google’s adoption of abc.xyz for its new parent company, Alphabet.
Likewise, .top, second only to .xyz in the size league table, could only muster up 11% awareness.
.news, .email and .online topped the awareness list — with 33%, 32% and 30% respectively — despite having only about 500,000 names between them.
I’m not sure I buy much of this data to be honest. There’s some weirdness.
For example, the survey found that 28% of respondents claim to have visited a .email web site.
That’s a gTLD at least partially if not primarily designed for non-web use, with roughly 20,000 names that are not parked.
If over a quarter of the population were visiting .email sites, you might expect some of those sites to show up prominently in Alexa rankings, but they don’t.
But perhaps, if we take this survey as a measure of consumers perceptions, it doesn’t matter so much whether it reflects the reality of internet use.
The survey, conducted by Nielsen for ICANN, covered dozens of other aspects of internet use, including feelings on cybersecurity, navigation and such, and weighs in at 160 pages. Read it all over here.

Norway bans the Dutch from using dormant .bv

The Norwegian government has intervened to prevent a deal that would have allowed the sale of .bv domain names in the Netherlands.
Norwegian ccTLD registry Norid and Dutch counterpart SIDN said a deal to start using the dormant ccTLD fell apart after the government exercised its right of veto under Norway’s domain regulations.
.bv represents Bouvet Island, the remotest island in the world. It’s a Norwegian territory in the Antarctic, uninhabited but for seals.
It’s been delegated to Norway since 1997, but has never been used.
But BV is also the Dutch acronym for “Besloten vennootschap met beperkte aansprakelijkheid”, a corporate identifier that has pretty much the same meaning as “Ltd” or “LLC”.
Clearly, there was an opportunity to make a bit of extra pocket money for both registries, had SIDN been allowed to licence the use of the ccTLD, but the government intervention has scuppered all that.
SIDN said it had planned to use .bv as “a platform for validated business data”, but that now it will try to implement that idea in .nl instead.

Judge hands DotConnectAfrica another bizarre win

A California judge just handed ICANN another upset in the interminable legal battle waged against it by unsuccessful .africa applicant DotConnectAfrica.
Gary Klausner yesterday admitted he made a mistake when he earlier slapped ICANN with a preliminary injunction preventing .africa being delegated to DCA rival ZA Central Registry, but said his error did not have a huge bearing on that decision.
More remarkably, he’s now suggesting that ICANN may have been wrong to make DCA undergo the same Geographic Names Review as every other new gTLD applicant.
Both DCA and ZACR applied for .africa and had to go through the same evaluation processes, one of which was the Geographic Names Review.
Both had to show that they had support from 60% of the governments in Africa, and no more than one governmental objection.
ZACR had that support — though there’s legitimate dispute over whether its paperwork was all in order — while DCA did not. DCA also had over a dozen objections from African governments.
ZACR passed its geographic review, but DCA’s application was tossed out based on Governmental Advisory Committee advice before the review could be completed.
DCA took ICANN to an Independent Review Process panel, which ruled that ICANN had failed to live up to its bylaws and that DCA’s application should be returned to the evaluation process.
ICANN returned DCA’s application to the process at the point it had left it — before the geographic review was complete.
DCA then failed the review, because it has no support.
But when he granted the injunction against ICANN back in April, Klausner thought that DCA had actually passed the geographic review on the first pass. Not even DCA had claimed that; it was just a brain fart on his behalf.
He’s now admitted the mistake, but says the April ruling was not dependent on that misunderstanding.

The Court finds that the error in its factual finding was not determinative to its ultimate conclusion that there are serious questions going toward Plaintiff’s likelihood of success on the merits.

Now, he says that there may be some merit in DCA’s claim that it should have been allowed to skip the GNR due to the IRP’s recommendation that ICANN “permit DCA Trust’s application to proceed through the remainder of the new gTLD application process.”
Klausner wrote yesterday:

At this stage of litigation, it is reasonable to infer that the IRP Panel found that ICANN’s rejection of Plaintiff’s application at the geographic names evaluation phase was improper, and that the application should proceed to the delegation phase.

The problem with this thinking is that it was not the geographic panel that flunked DCA on the first pass, it was the GAC.
DCA got this document (pdf) from the geographic panel. It just says “Incomplete”.
If DCA succeeds in persuading a jury that it should have skipped the geographic panel, Africa could wind up with a .africa gTLD operator that none of its governments support and in circumvention of ICANN’s rules.
Yesterday’s ruling isn’t a killer blow against ICANN, but it does make me wonder whether Klausner — who is also hearing the much higher-profile Stairway to Heaven case right now — is really paying attention.
Anyway, he’s thrown out the ZACR/ICANN motion to reconsider the injunction, so the case is carrying on as before. Read the ruling here (pdf).

Neustar to split into two

Neustar is to split into two companies and its domain name business is set for a rebranding.
The company said yesterday that it is breaking into an Order Management & Numbering Services company which will be called Neustar, and an Information Services company, which contains the domain business and will get a new name.
“The proposed spin-off will enable Neustar shareholders to own and value each business separately, allowing each company to attract the investor base most appropriate for its distinct investment profile,” said Neustar chair James Cullen.
That’s another way of saying the company is dumping all of its serious risk into the company that will remain Neustar.
Neustar currently holds the Local Number Portability Administration contract with the US government, under which it manages the central database of phone numbers.
It’s worth $496 million a year, but the US Federal Communications Commission has decided to switch to Ericsson unit Telcordia Technologies, which offered a better deal.
While Neustar is fighting the decision in court, its prospects don’t look great.
Separating the domain business from the numbering contract should insulate it from that risk.
The yet-to-be-named spin-off containing the domain business is worth $470 million a year, but most of that is unrelated to domain names. It will also offer Neustar’s marketing and security services.
It will be headed by current Neustar CEO Lisa Hook. CFO Paul Lalljie will bravely take the helm of the (probably) sinking Neustar ship.
The split is expected to take a year to implement.

One in seven new gTLD domain names are actually just numbers

Roughly one out of every seven new gTLD domain names active today is numbers-only before the dot, according to DI research.
It might be surprising to some that the DNS, designed to turn immemorable numbers into memorable names, is actually being used to register millions of numeric domains.
Using the almost 1,000 new gTLD zone files we had access to on July 19*, DI counted 20,933,637 unique domain names of which 3,259,684 were purely numeric.
In other words, 15.57% of new gTLD domain names only contain numbers before the dot.
Fourteen gTLDs have a third or more of their zones fully numeric. One is two-thirds numeric.
The reason for this, of course, is China.
Numeric domains are said to be popular in China due to the fact that digits are the only 10 characters permissible in DNS that Chinese speakers natively understand.
Many popular web sites in China use short, numeric .com or .cn domain names. Some short numeric domains have sold for six or seven figures to end-user companies.
So there’s a thirst for numerics among Chinese domainers, as well as domainers elsewhere who want to exploit the Chinese market.
I talked to a successful domainer recently who acquired thousands of numeric domain names purely to flip to Chinese investors.
Personally, I think the market is overblown. Data suggests there’s a limited appetite for numerics among actual end users.
Fewer than 2,700 of top one million most-visited domains, as ranked by Amazon’s Alexa service, are numeric. A quarter of a percent. Even if Alexa is wrong by a factor of 10, that’s still only 2.7% of the internet’s biggest sites using numeric domain names.
So which gTLDs are most exposed to the numeric market?
Surprisingly, given the registry’s reluctance to deeply discount its domains, two Donuts gTLDs — .gold and .run, both relatively small TLDs — top the table with 66.32% and 54.65% respectively.
I think these are anomalies. The majority of Donuts’ portfolio have far smaller percentages of numerics.
Fellow portfolio players Afilias (.bet, .kim) and Uniregistry (.lol, .mom) also feature prominently on the list.
Here’s the top 30 new gTLDs, ranked by the percentage of their zones that are numeric. It includes every gTLD over 20%.
[table id=43 /]
In absolute terms, the larger-volume registries naturally have the larger number of numeric domains in their zones.
XYZ.com’s .xyz alone has over 867,000 numeric domains in its zone. That’s a lot of names, but in percentage terms it’s below the industry mean.
.top, .wang, .win and club, all heavily marketed in China, fill out the top five in volume terms.
Here’s the top 30 gTLDs with the largest absolute number of numerics. They account for 3,099,981 numeric domains of the 3,259,684 industry total.
[table id=44 /]
While short domains are more attractive to investors and end users, the vast majority of numeric domains in new gTLDs are of course longer than five digits.
.xyz, for example, has over 757,000 numeric domains of six or more characters. .top, .wang and .win are also measured in the hundreds of thousands in this regard.
Four gTLDs — .club, .wang, .top and .xyz — are over 99% full when it comes to five-digit numeric domains (that is, they have over 99,000 numeric domains in their zones).
.win is over 95% full on that basis, after which the numbers drop sharply to 65% and below.
In terms of four-number domains, there are 10 gTLDs that are over 99% full and 16 over 90% full.
There are 36 new gTLDs over 90% full in terms of three-digit numeric domains. More than a dozen appear to be completely full (giving myself some wriggle-room for reserved names and those that otherwise don’t appear in the zone files).
So what to make of all this?
I’m not a domainer, but I’ve sometimes heard domainers compare domains to baseball cards.
Going with that analogy, I’d say that if the typical numeric domain name collection contains the odd vintage Babe Ruth**, he’s far outnumbered by cards depicting some guy’s kid playing catch in the park.
That may be true of all domain portfolios, numeric or otherwise, but I feel numerics exist primarily right now to be traded between domainers.
As long as this continues, new gTLD registries — at least the ones actually charging for their names — will continue to benefit.
* A note on methodology. Due to the way access to zone files via ICANN works (ie, sporadically) we were missing some zone files on July 19. Including the missing gTLD may alter the league tables presented above, but I don’t believe the missing data was significant to the overall totals. Only one of the top 100 gTLDs, a zone of about 28,000 names, was missing.
** I know nothing about baseball.

DI implicated in .sucks “gag order” fight

Vox Populi, the .sucks registry, terminated Com Laude’s accreditation last week due to its belief that the brand protection registrar had leaked a “confidential” document to Domain Incite.
Vox Pop CEO John Berard tonight denied that the company he works for was carrying out a “grudge” against Com Laude, which in January led a charge against a Vox “gag order” on registrars.
As we reported on Friday, Vox terminated Com Laude‘s ability to sell .sucks domains directly, due to a then-unspecified alleged breach of the Registry-Registrar Agreement that binds all .sucks domain registrars.
It now turns out the “breach” was of the part of the .sucks RRA that states that Vox registrars “shall make no disclosures whatsoever” of “confidential informational”, where such confidential information is marked as such.
Berard told DI of the termination: “It was a specific act, violating a specific clause of the contract that had to do with breaching confidentiality, and that’s why the action was taken.”
The specific act was Com Laude allegedly sending DI — me, for avoidance of doubt — a confidential document.
“They have not said they didn’t do it,” Berard said.
He said that, given the amount of scrutiny Vox is under (due to the controversy it has created with its pricing and policies), “it would be crazy of us to ignore a contract breach”.
He declined to identify the document in question.
He said that Vox Pop deployed “forensic research” to discover the identity of the alleged leak.
“It was clear that something that was confidential was distributed, we wanted to know who distributed it,” he said. “We wanted to know who breached confidentiality.”
DI has only published one third-party document related to .sucks this year.
This is it (pdf). It’s a letter drafted by the Registrars Stakeholder Group and sent to ICANN. Here it is (pdf) as published on the ICANN web site.
DI has received other documents related to Vox Pop and .sucks from various parties that I have not published, but I’ve been unable to find any that contained the word “confidential” or that were marked as “confidential”.
According to the .sucks RRA (pdf), “confidential information” is documentation marked or identified “confidential”.
Everything I’ve ever written about .sucks can be found with this search.

.sucks terminates Com Laude as “gag order” row escalates

Vox Populi, the .sucks gTLD registry, has terminated the accreditation of brand protection registrar Com Laude as part of an ongoing dispute between the two companies.
Com Laude won’t be able to sell defensive .sucks registrations to its clients any more, at least not on its own accreditation, in other words.
The London-based registrar is transferring all of its .sucks domains to EnCirca as a result of the termination and says it is considering its options in how to proceed.
The shock move, which I believe to be unprecedented, is being linked to Com Laude’s long-time criticisms of Vox Populi’s pricing and policies.
The registrar today had some rather stern words for Vox Pop. Managing director Nick Wood said in a statement:

We have always been critical of this registry and particularly its sunrise pricing model which we regard as predatory. We have advised clients where possible to consider not registering such names. We hope that all brand owners will think twice before buying or renewing a .sucks domain. After all, it is not possible to block out every variation of a trademark under .sucks. In our view, fair criticism is preferable to dealing with Vox Populi.

Ouch!
The termination is believed to be linked to controversial changes to the .sucks Registry-Registrar Agreement, which Vox Pop managed to sneak past ICANN over Christmas.
One of the changes, some registrars believed, would prevent brand protection registrars from openly criticizing .sucks pricing and policies. They called it a “gag order”.
Com Laude SVP Jeff Neuman was one of the strongest critics. I believe he was a key influence on a Registrar Stakeholder Group letter (pdf) in January which essentially said registrars would boycott the new RRA.
That letter said:

It’s ironic for a Registry whose slogan is “Foster debate, Share opinions” has now essentially proposed implementing a gag order on the registrars that sell the .sucks TLD by preventing them from doing just that

While the RRA dispute was resolved more or less amicably following ICANN mediation, with Vox Pop backpedaling somewhat on its proposed changes, Com Laude now believes the registry has held a grudge.
Its statement does not say what part of the .sucks RRA it is alleged to have breached.
Vox Pop has not yet returned a request for comment. I’ll provide an update should I receive further information.
Com Laude said in a statement today:

Jeff Neuman, our SVP of our North American business, Com Laude USA, led the effort in the Registrar Stakeholder Group to quash proposed changes to Vox Populi’s registry-registrar agreement, in order to protect the interests of brand owners and the registrars who work with them. Since then, Vox Populi has accused Com Laude of breaching the terms of the registry-registrar agreement, a claim we take seriously and refute in its entirety. We are now considering our further options.

Wood added:

We have informed our clients of the action being taken and all have expressed their support for the manner in which we have handled it. We are pleased to have received messages of support from across the ICANN community including other registry operators. Clearly there is strong distaste at the practices of Vox Populi.

Strong stuff.