Schilling expects GoDaddy to return after dumping Uniregistry gTLDs

Uniregistry CEO Frank Schilling has expressed his “surprise” that GoDaddy has decided to stop selling his company’s gTLDs, but said he expects the registrar to return in future.
GoDaddy’s decision to stop new registrations and inbound transfers for Uniregistry’s portfolio of gTLDs came after the registry revealed price increases for 16 strings that ranged from nominal to over 3,000%.
The registrar told Domain Name Wire yesterday that Uniregistry’s move presented “an extremely poor customer experience” and “does not reflect well on the domain name industry”.
Registrars are of course the customer-facing end of the domain name industry, and the burden of explaining renewal price increases of 5x falls on their shoulders.
But Schilling seems to expect the ban to be temporary.
“We are extremely surprised by GoDaddy’s reaction but are pleased that our extensions are available at many other registrars who support our approach. We remain ready to support GoDaddy when they decide on a path which works for their customers,” he told DI today.
“We expect them to return,” he added.
It’s a plausible prediction. GoDaddy’s statement to DNW said Uniregistry had been cut off “until we can assess the impact on our current and potential customers”, which suggests it’s not necessarily permanent.
GoDaddy is Uniregistry’s first or second-largest registrar in most of the affected gTLDs.
But because the gTLDs in question have so few domains in them, the number of GoDaddy-sponsored domains is typically under 1,000 per gTLD.
Even in the much larger zones of .click and .link (which are receiving small price increases and will still wholesale for under $10), GoDaddy’s exposure is just a few thousand domains and it’s nowhere near the market leader.
I wonder how much of GoDaddy’s decision to drop Uniregistry has to do with the reaction from domain investors.
Ever since DI broke the news of the price increases a week ago, there’s been a stream of angry domainer blog and forum posts, condemning Schilling and Uniregistry for the decision and using the move as a stick to batter the whole new gTLD program.
For registrars, it doesn’t necessarily strike me a terrible deal.
While they will have to deal with customer fallout, over the longer term higher wholesale prices means bigger margins.
Registrars are already adding about a hundred bucks to the $300 cost of a .game domain, and the price increase from $10 to $300 of the Spanish equivalent, .juegos, likely means similar margins there too.

Schilling: big price increases needed to keep new gTLDs alive

Uniregistry is to massively increase the price of some of its under-performing new gTLDs in an effort to keep them afloat.
Sixteen TLDs from the company’s portfolio of 27 will see price increases of up to 3,000% starting September 8, CEO Frank Schilling confirmed to DI today.
“We need more revenue from these strings, especially the low volume ones, without question,” he said. “We can’t push on a string and stoke demand overnight. So in order for that string to survive as a standalone it has to be profitable.”
While domainers have taken to new gTLDs in greater numbers than Schilling anticipated, demand among worldwide consumers has been slower than expected, Schilling said.
“If you have a space with only 5,000 registrations, you need to have a higher price point to justify its existence, just because running a TLD isn’t free,” he said.
The alternative to repricing would be to sell the TLD in question to a competitor, which in turn would then be forced to reprice anyway, he said.
The TLDs seeing the biggest price hikes are .hosting and .juegos (Spanish for “games”) which are going up from about $20 retail and about $10 retail respectively to about $300 apiece.
Schilling said he believed that true web hosts could afford the new pricing. The .juegos increase is modeled on what Uniregistry has been doing with .game, which currently retails for closer to $400.
At the budget, sub-$10 end of the portfolio, .click and .link are to see fees rise by a buck or two per year.
Names in .audio, .blackfriday, .diet, .flowers, hiphop .guitars and .property, currently priced in the $10 to $25 range, will all start retailing for about $100 per year.
The other affected TLDs are .christmas, .help, .sexy and .tattoo, which will all see big increases but stay in the sub-$100 range.
The TLDs seeing the biggest price increases are among the ones with the fewest registrations — .juegos has about 1,000 names in its zone, while .hosting has fewer than 6,000. Most of the 16 TLDs have fewer than 10,000 names in their zones.
Uniregistry is no stranger to highly-priced domains. It runs .cars, .car and .auto, where it sells every domain at $2,888 a year retail (with no reserved premiums) but has fewer than 500 names in each zone.
Schilling said that in some ways he prefers this model to the more standard model of low-price base fees with high-price premiums.
The higher prices will likely lead in the short term to lower registration numbers (as speculators flee) but will give Uniregistry more cash to invest in marketing.
“That metering effect of high prices, we like that, in terms of trying to grow the namespace, and it gives us money we can use to try to market the strings to prosperity,” Schilling said.
“At a higher price point, the marketing can scale, but we just can’t do it on base registrations of ten bucks or twenty bucks,” he said.
He added that the higher base fee gives Uniregistry more flexibility to provide periodic discounts.
ICANN rules make it much easier to have a high base fee and keep it regularly discounted than to periodically increase fees, which requires six months notice.
“Between renewals promotions and pricing promotions, a lot of the effects of the price increases will be moot,” Schilling said.
Because the new prices don’t kick in until September, registrants are able to lock in pricing at current levels by renewing for up to 10 years.
While the price increases and Schilling’s relatively gloomy commentary will certainly fuel opponents of new gTLDs, whom are legion, Schilling is still bullish on the market, which he continues to characterize as a marathon rather than a sprint.
“Within ten years, will it be bigger? Absolutely. It’ll be quintuple what it is today,” he said. “But we need to get to 10 years, and to keep the lights on between here and there we need higher prices, without question.”

CentralNic says revenue more than doubled in 2016

CentralNic’s revenue was up 110% in 2016, according to the company.
The registry today released its unaudited results for last year, showing EBITDA up 65% at £5.5 million ($6.7 million) on revenue of £22.1 million ($26.9 million)
The company, which has expanded into registrar services via acquisition in the last few years, said its recurring revenue — mainly domain registrations — now account for about 80% of revenue.
CentralNic has about a third of the new gTLD back-end market, primarily because it’s the provider for .xyz’s millions of cheapo registrations.
In its statement, it said it hopes to focus on growing more in China, where clients including .xyz were recently licensed.
It also intends to make more acquisitions, where the deals “meet clear strategic criteria including being earnings accretive in the short term with a strong recurring revenues base”.

How .com became a restricted TLD

Verisign has been given approval to start restricting who can and cannot register .com and .net domain names in various countries.
Customers of Chinese registrars are the first to be affected by the change to the registry’s back-end system, which was made last year.
ICANN last week gave Verisign a “free to deploy” notice for a new “Verification Code Extension” system that enables the company to stop domains registered via selected registrars from resolving unless the registrant’s identity has been verified and the name is not on China’s banned list.
It appears to be the system Verisign deployed in order to receive its Chinese government license to operate in China.
Under Verification Code Extension, Verisign uses ICANN records to identify which registrars are based in countries that have governmental restrictions. I believe China is currently the only affected country.
Those registrars are able to register domains normally, but Verisign will prevent the names from resolving (placing them in serverHold status and keeping them out of the zone file) unless the registration is accompanied by a verification code.
These codes are distributed to the affected registrars by at least two verification service providers. Verisign, in response to DI questions, declined to name them.
Under its “free to deploy” agreement with ICANN (pdf), Verisign is unable to offer verification services itself. It must use third parties.
The company added the functionality to its .com and .net registry as an option in February 2016, according to ICANN records. It seems to have been implemented last July.
A Verisign spokesperson said the company “has implemented” the system.
The Verification Code Extension — technically, it’s an extension to the EPP protocol pretty much all registries use — was outlined in a Registry Services Evaluation Process request (pdf) last May, and approved by ICANN not long after.
Verisign was approved to operate in China last August in the first wave of gTLD registries to obtain government licenses.
Under Chinese regulations, domain names registered in TLDs not approved by the government may not resolve. Registrars are obliged to verify the identities of their registrants and names containing certain sensitive terms are not permitted.
Other gTLDs, including .vip, .club, .xyz .site and .shop have been granted approval over the last few months.
Some have chosen to work with registration gateway providers in China to comply with the local rules.
Apart from XYZ.com and Verisign, no registry has sought ICANN approval for their particular implementation of Chinese law.
Because Chinese influence over ICANN is a politically sensitive issue right now, it should be pointed out that the Verification Code Extension is not something that ICANN came up with in response to Chinese demands.
Rather, it’s something Verisign came up with in response to Chinese market realities. ICANN has merely rubber-stamped a service requested by Verisign.
This, in other words, is a case of China flexing market muscle, not political muscle. Verisign, like many other gTLD registries, is over-exposed to the Chinese market.
It should also be pointed out for avoidance of doubt that the Chinese restrictions do not apply to customers of non-Chinese registrars.
However, it appears that Verisign now has a mechanism baked into its .com and .net registries that would make it much easier to implement .com restrictions that other governments might choose to put into their own legislation in future.

Nominet gets new chair

.uk registry Nominet has appointed a new chair from the world of news media.
Mark Wood will replace outgoing chair Rennie Fritchie on April 28, the company said yesterday.
Wood is formerly a director of Reuters and chair/CEO of the UK television news company ITN. He’s also on the board of CityWire and the advisory board of PwC.
Baroness Fritchie has chaired Nominet for seven years.

Verisign report deletes millions of domains from history

Verisign has dramatically slashed its estimates for the number of domains in existence in its quarterly Domain Name Industry Brief reports, two of which were published this week.
The headline number for the end of the fourth quarter is 329.3 million, a 0.7% increase sequentially and a 6.8% increase annually.
But it’s actually a lower number than Verisign reported in its second-quarter report just five months ago, which was 334.6 million.
The big swinger, as you may have guessed if you track this kind of thing, was .tk, the Freenom ccTLD where names are given away for free and then reclaimed and parked by the registry when they are deleted for abuse expire.
It seems a change in the way .tk is counted (or estimated) is the cause of the dip.
Verisign gets its gTLD data for the report from ICANN-published zone files and its ccTLD data from independent researcher Zooknic.
Problem is, Zook hasn’t had up-to-date data on .tk for a couple of years, so every DNIB published since then has been based on its December 2014 numbers.
But with the Q3 report (pdf), Zook revised its .tk estimates down by about six million names.
In earlier reports, the ccTLD was being reported at about 25 million names (exact numbers were not given), but now that’s been slashed to 18.7 million, relegating it to the second-largest ccTLD after China’s .cn, which has 21.1 million.
I’ve asked Freenom to confirm the latest numbers are correct and will update this post if I get a response.
Verisign does not say what caused the decision to scale down .tk’s numbers, but explains what happened like this:

In Q3 2016, Zooknic reported a significant decline in the .tk zone and restated the estimated zone size of .tk for each quarter from Q4 2014 through Q3 2016 using a proprietary methodology. As a result, for comparative purposes of this DNIB to the Q3 2016 DNIB and the Q4 2015 DNIB, Verisign has applied an updated estimate of the total zone size across all TLDs for Q3 2016 of 327.0 million and Q4 2015 of 307.7 million and an updated estimate of the total ccTLD zone size for Q3 2016 of 140.1 million and Q4 2015 of 138.1 million.

Apples-to-apples comparisons in the Q4 report show the ccTLD universe was up to 142.7 million names, a 1.8% sequential increase and up 3.1% on 2015. Excluding .tk, annual growth was 6.9%.
Verisign’s own .com and .net combined grew 1.7% to 142.2 million names at the end of the year, one percentage point smaller than their 2015 growth.
The full Q4 report can be read here (pdf).

India’s biggest bank switches to dot-brand

State Bank of India has announced plans to migrate all of its web sites to its new dot-brand gTLD.
The company has been responsible for .sbi since it was delegated by ICANN last April, but bank.sbi is its first live domain name.
Currently, while bank.sbi is live and resolving, the old domain sbi.co.in appears to still be its primary address.
However, SBI said “all of the bank’s internet presence… shall soon be migrated to the .sbi gTLD”.
There will be a period of crossover while customers get used to the change, it said in a press release.
The bank said: “a gTLD site like .sbi conveys an assurance to the customer that the site is authorised, genuine and is not an inappropriate or phishing site”.
The move is perhaps significant given that SBI is state-owned, and one might expect some level of nationalism when it comes to domain choice.
But SBI, India’s largest bank with $490 billion in assets under management, is not the first bank to say it plans to use its dot-brand as its primary TLD.
BNP Paribas, the world’s biggest non-Chinese bank, uses .bnpparibas for almost everything, particularly in its native France. It has three domains in the Alexa top 100,000 most-visited web sites.
Others with dot-brands in use include Barclays and Citi.

Activist investor says eNom was sold too cheap

J Carlo Cannell, the activist investor who has been circling Rightside for the last year or so, was unimpressed with the company’s recent sale of eNom to Tucows.
In a letter published as a Securities and Exchange Commission filing last week, Cannell announced that he has started up a support group for fellow “concerned” investors.
In the distinctly loveless Valentine’s Day missive, Cannell called for Rightside to be acquired, go private or issue a big dividend to investors, and said he intends to campaign to have the board of directors replaced.
On the eNom sale, Cannell wrote that the $76.7 million deal “marks a step in the right direction” for the company, but that he was “not satisfied” with the price or the $4 million legal fees accrued. He wrote:

Conversations with management suggest that the Company took only two months to evaluate and close the transaction. Perhaps if they had been more patient and diligent, shareholders would have enjoyed more than the 0.5x 2016 revenues which they received in this “shotgun sale”.
This price was a fraction of Tucows’ own valuation of 2.6x 2016 estimated revenue. For the two trading sessions following the eNom transaction, NAME traded up 10% while TCX was up 32%, suggesting that investors believe it was a better deal for TCX shareholders than NAME shareholders.

The deal was described at the time by Tucows’ CEO Elliot Noss as an “individual opportunistic transaction”.
Noss later told analysts that the eNom business was floundering, “a flat, potentially even slightly negative-growth business”.
Cannell said last week he has formed Save NAME Group, named after Rightside’s ticker symbol, as a means to exert pressure on the board.
He said it is currently “difficult to justify” the company remaining publicly listed, and that the “sale of the entire company” or a “special and substantial dividend” could help appease shareholders.
He said Rightside agreed last August to let him name a new director, but has dragged its feet approving his suggestion, adding:

SNG intends to become more active and vocal in its efforts to force change at NAME. SNG has compiled a slate of qualified candidates. The names and identity of these candidates shall be disclosed periodically together with other neutral and reliable facts to support the contention of SNG that some or all of the board of NAME needs to be replaced.

Cannell, who owns about 9% of Rightside, first emerged as a critic of the company a year ago.
At that time, he called for the company to ditch its “garbage” new gTLD registries in favor of a focus on its higher-margin eNom business.
He was supported by Uniregistry CEO Frank Schilling, then also a Rightside investor in addition to a competitor.

Phishing in new gTLDs up 1,000% but .com still the worst

The .com domain is still the runaway leader TLD for phishing, with new gTLDs still being used for a tiny minority of attacks, according to new research.
.com domains accounted for 51% of all phishing in 2016, despite only having 48% of the domains in the “general population”, according to the 2017 Phishing Trends & Intelligence Report
from security outfit PhishLabs.
But new gTLDs accounted for just 2% of attacks, despite separate research showing they have about 8% of the market.
New gTLDs saw a 1,000% increase in attacks on 2015, the report states.
The statistics are based on PhishLabs’ analysis of nearly one million phishing sites discovered over the course of the year and include domains that have been compromised, rather than registered, by attackers.
The company said:

Although the .COM top-level domain (TLD) was associated with more than half of all phishing sites in 2016, new generic TLDs are becoming a more popular option for phishing because they are low cost and can be used to create convincing phishing domains.
…
There are a few reasons new gTLDs are gaining traction in the phishing ecosystem. For one, some new gTLDs are incredibly cheap to register and may be an inexpensive option for phishers who want to have more control over their infrastructure than they would with a compromised website. Secondly, phishers can use some of the newly developed gTLDs to create websites that appear to be more legitimate to potential victims.

Indeed, the cheapest new gTLDs are among the worst for phishing — .top, .xyz, .online, .club, .website, .link, .space, .site, .win and .support — according to the report.
But the numbers show that new gTLDs are significantly under-represented in phishing attacks.
According to separate research from CENTR, there were 309.4 million domains in existence at the end of 2016, of which about 25 million (8%) were new gTLDs.
Yet PhishLabs reports that new gTLD domains were used for only about 2% of attacks.
CENTR statistics have .com with a 40% share of the global domain market, with PhishLabs saying that .com is used in 51% of attacks.
The difference in the market share statistics between the two sets of research is likely due to the fact that CENTR excludes .tk from its numbers.
Again, because PhishLabs counts hacked sites — in fact it says the “vast majority” were hacked — we should probably exercise caution before attributing blame to registries.
But PhishLabs said in its report:

When we see a TLD that is over-represented among phishing sites compared to the general population, it may be an indication that it is more apt to being used by phishers to maliciously register domains for the purposes of hosting phishing content. Some TLDs that met these criteria in 2016 included .COM, .BR, .CL, .TK, .CF, .ML, and .VE.

By far the worst ccTLD for phishing was Brazil’s .br, with 6% of the total, according to the report.
Also notable were .uk, .ru, .au, .pl, and .in, each with about 2% of the total, PhishLabs said.

Belgium domains will be registered in Ireland after cloud move

DNS Belgium, operator of .be, has moved its shared registration systems to the cloud, the non-profit said last week.
The registry migrated from a self-hosted system to Amazon Web Services on February 11.
It’s an effort to cut costs, increase efficiency, and free up engineering time currently dedicated to non-core functions such as hardware maintenance, executives said.
“As AWS sees to the hardware, connectivity etc., DNS Belgium can focus on the layers above, such as the software,” general manager Philip Du Bois said in a press release.
Business development manager Lut Goedhuys said that while the system has been moved to the cloud, AWS allows customers to select the data centers where their applications will be stored.
DNS Belgium picked Ireland, she said.