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.

dotBERLIN pulls plug on free domain giveaway

The .berlin registry has apparently halted the promotion that has given away tens of thousands of free domain names, citing unexpectedly high demand.
According to 101domain, a registrar that started giving away .berlin domains for free yesterday:

As of 1pm PST today, June 18th, the free .BERLIN promotion will unfortunately come to an end.
According to the dotBERLIN registry, demand was exceedingly above their anticipated volumes, so they have decided to pull the plug early.

The promotion, which led to domainers registered tens of thousands of names, was due to end on Friday.
Why has dotBERLIN pulled the plug? I have to wonder whether it is related to the company’s own registration policies, which are not particularly domainer-friendly.
The .berlin TLD started today at 121,193 names, according to its zone file, up 5,227 on the day.
Over 70,000 of those names were registered in the last two days, and most of those are believed to be freebies handed out by InternetX and, as of yesterday, 101domain.
As we reported yesterday, one domainer, DomainProfi, is responsible for over 23,000 of these registrations.
Another massive registrant, as DNW reported today, is Sedo-affiliated DomCollect, part of the same group (United Internet) as InternetX. It has over 30,000 .berlin names.
It’s difficult to see any of these names being developed or used in any meaningful way — they seem to be currently parked — yet the dotBERLIN registration policy may require it.
The English translation of the policy (pdf) states:

5.2. Conditions for the content and use of domain names
As the gTLD .BERLIN is a so-called “community based” gTLD, where the registration of domain names is subject to restrictions, a domain name must be put into use within 12 months of registration.
If the registrant sets up a web site which can be reached via the registered domain name, the content of this site must have be directly related to the authorisation to register

The first part of that seems simple: you have to “use” the domain within a year or risk losing it.
The “authorisation to register” appears to be the registrant’s self-declared “economic, cultural, historical, social or other connection to the German capital, Berlin”.
I interpret the two paragraphs together to read: “You must use the name in a manner that reflects your connection to Berlin”.
Does this mean parking is prohibited? There’s nothing explicit banning it, but I’d say it’s definitely a grey area. It seems to be down to the decision of the registry.
I asked dotBERLIN for clarification this morning but have not yet received one.
For the registrants, there seems to be little risk, however. They haven’t paid for their names and probably don’t intend to renew any that they can’t sell before renewal time.

Are you ready to sell your new gTLD yet?

Applicant Auction wants to know.
The company, which was set up to help resolve new gTLD contention sets, has started pitching its services to the owners of gTLDs that are already delegated.
An email sent out to applicants this week says:

Many people approach us with interest in purchasing strings, so we are offering a new auction where gTLD owners can sell their string in a open auction.

I gather that the company is targeting both live registries and applicants for uncontested strings.
It’s sad to say, but I think there might even be a market for it.
The laid-back “if we build it, they will come” mentality among applicants seems to have been a lot more prevalent than I had anticipated, which has resulted in depressing sales for some new gTLDs.
Will any of them decide to cash out early rather than putting in the time and money to make their businesses work over the long haul? It remains to be seen.

CentralNic pays up to $7.5m for Internet.bs

CentralNic has acquired the unfortunately named Bahamas-based registrar Internet.bs for up to $7.5 million, in an effort to bolster its registrar business.
The deal is for a mixture of cash ($2.7 million), newly issued shares ($2.5 million) and a delayed performance-related payout of up to $2.3 million.
CentralNic is best known as a registry and back-end provider, but it also has a registrar, TLD Registrar Solutions, which is aimed primarily at registries that want to vertically integrate.
The acquisition means the company now has a medium sized ICANN-accredited retail registrar arm too.
Internet.bs has well over half a million gTLD names under management, according to registry reports. According to CentralNic, it has 28,000 customers in 199 countries.
The company made a profit of $730,000 last year, CentralNic said.

.berlin rockets to 116k on free domain offer

A promotion from dotBERLIN saw .berlin more than double its registration count yesterday, as speculators (apparently) swooped to claim over 61,000 free domain names.
The new gTLD ended the day with 115,966 domains in its zone, up 67,347 or 138% on the day.
That makes it the number two new gTLD again, snipping at the heels of .xyz, which has 144,474 names.
But, like .xyz, the numbers are not an accurate reflection of demand.
Giving away free domains seems to be the way to go if you want to quickly rack up your registration count with scant regard for actual end user purchases or renewal rates.
dotBERLIN said yesterday that it was celebrating 50,000 registrations with a five-day offer seeing registrars sell the names for no more than €5.55 ($7.53).
But some registrars are actually offering them for free.
InternetX is one such registrar, and it appears to have taken the vast, vast majority of all the new .berlin registrations yesterday.
Digging into name server records, it appears that at least 61,000 names were registered via InternetX-owned registrars. Of those, over 23,000 appear to have been registered to a single domainer.
InternetX, to the best of my knowledge, wasn’t forcing the domains on its customers, which is what Network Solutions did with .xyz.
According to its web site, the offer was limited to 50 domains per customer, though there appears to be an option to purchase obtain more.
The domainer with the cache of 23,000 names appears to be an InternetX reseller.
The numbers are big, and they may well convert into revenue-generating renewals for dotBERLIN, but right now I don’t think they’re especially reflective of demand among end user registrants.

Donuts wins .immo gTLD

Donuts has acquired the .immo new gTLD after its three rival bidders withdrew their applications.
Minds + Machines, dotimmobilie and Starting Dot have all withdrawn from the contest in the last few days, presumably due to an auction.
Starting Dot had applied for a Community Priority Evaluation, which would have allowed it to avoid an auction altogether, but it failed to score enough points to pass.
“Immo” is short for “immobilien”, which means “real estate” in German. The contraction is also widely used in other European countries, potentially making it more attractive a string.
The gTLD will compete with .immobilien, which is delegated to RightSide. That TLD has been in general availability since May 28 and has 5,136 domains under management as of today.
It would be fascinating to know whether .immobilien’s performance to date had any bearing on how much the applicants were prepared to bid at auction. But, as usual, I doubt we’ll ever know for sure.

Donuts spends $50 million on new gTLD auctions

Donuts has revealed that its bill for new gTLD auctions has so far come to $50 million.
That, coupled with some other data released in a blog post last week, suggests that it’s spent over $2 million, on average, per gTLD.
CEO Paul Stahura wrote that the company has participated in “roughly” 50 auctions and that it’s won more than 50% of those it’s participated in.
“We’ve spent $50M to win those auctions to secure the resulting TLDs,” Stahura wrote.
According to my numbers, Donuts has been in 45 auctions and won 23. I may be missing a couple, but the numbers fit with Stahura’s. That would make an average spend of $2.17 million per gTLD.
That doesn’t mean the company has burnt through $50 million of its funding, of course.
In private gTLD auctions, the winner pays the losers. By losing at least 22 auctions, Donuts could just as easily be breaking even.
Not all of Donuts’ auctions have been organized by Applicant Auction. A few were settled via other means. Applicant Auction takes a 4% cut, which means its take so far is approaching $2 million.

Amazon snubs ICANN auction to win .coupon privately

Amazon has won the new gTLD .coupon, after Minds + Machines withdrew its application this week.
I understand that the two-way contention set was settled privately via a third party intermediary, possibly via some kind of auction, with M+M ultimately being paid off to withdraw its bid.
.coupon was the only ICANN-managed “auction of last resort” scheduled for July, following the $600,000 sale of .信息 last week.
The next batch of ICANN auctions is now not due to happen until August, unless of course ICANN rejigs its schedule in light of the .coupon settlement.
It’s not clear why Amazon has suddenly decided it prefers the idea of a private commercial settlement after all, but it appears to be good news for M+M, which will see the majority of the cash.
However, it could be related to the fact that .coupon, and dozens of other Amazon new gTLD applications, recently made the switch from being “closed generics” to more inclusive proposals.
Amazon had originally intended that itself and its subsidiaries would be the “only eligible registrants” for .coupon, but in March it changed the application, among many others.
Now, Amazon talks in vague terms about .coupon names being available to “eligible trusted third parties”, a term that doesn’t seem ready to define before the TLDs are actually delegated.
It seems to me, from Amazon’s revised applications, that .coupon and its other gTLDs will be locked down tight enough that they could wind up being effectively closed generics after all.
When Amazon publishes its first eligibility requirements document with ICANN, I expect members of the Governmental Advisory Committee will be watching closely.

.hotel avoids auction with CPE win

A new gTLD applicant backed by the hotel industry has won a Community Priority Evaluation, meaning it gets to automatically win the .hotel contention set without going to auction.
If the decision stands, no fewer than six rival applicants for the string — including the likes of Donuts, Radix, Famous Four and Minds + Machines — are going to have to withdraw their applications.
It’s a bit of a shocker.
The CPE winner is HOTEL Top-Level-Domain, which scored 15 out of 16 available points in the CPE. The minimum required to vanquish all foes is 14 points.
The company will have spent a fair bit of cash fighting the CPE, but nothing compared to the millions of dollars an auction for .hotel would be likely to fetch.
Crucially, where HOTEL prevailed was on the “Nexus” criterion — demonstrating a link between the string and the community supporting the application — where four points are available.
In the first four CPE results to come through, back in March, each applicant scored a 0 on Nexus and none scored more than 11 points overall.
Dot Registry, which failed four CPEs (.inc, .llc, .corp and .llp) this week, also repeatedly flunked on this count.
HOTEL, however, scored a 3.
Rival applicants such as Donuts and M+M had argued that HOTEL’s stated community failed to take into account smaller hoteliers, such as bed and breakfast owners.
But the CPE panelist decided that the application did not “substantially overreach”:

The string nexus closely describes the community, without overreaching substantially beyond the community. The string identifies the name of the core community members (i.e. hotels and associations representing hotels). However, the community also includes some entities that are related to hotels, such as hotel marketing associations that represent hotels and hotel chains and which may not be automatically associated with the gTLD. However, these entities are considered to comprise only a small part of the community. Therefore, the string identifies the community, but does not over-reach substantially beyond the community, as the general public will generally associate the string with the community as defined by the applicant.

There’s no formal appeals mechanism for CPE, but rival applicants could try their luck with more general ICANN procedures such as Requests for Reconsideration.
HOTEL Top-Level-Domain is a Luxembourg-based entity, founded in 2008 to apply for the gTLD, backed by about a dozen international hotelier associations, including the International Hotel and Restaurant Association.
The IHRA counts 50 major hotel chain brands among its members and claims to be officially recognized by the UN for its lobbying work on behalf of the hospitality industry.
HOTEL intends to keep the .hotel gTLD restricted “initially” to only hotels as defined in the international standard ISO 18513.
Registrants will be verified against hotel industry databases. This will happen post-registration, but before the domain name can be activated in the DNS.
In other words, unless you’re a member of the hotel industry, you won’t be getting to use a .hotel domain name. Domainers are apparently not wanted.
All .hotel names will also be checked a year from registration to ensure that they have a web site displaying relevant content. Redirection to other TLDs may be allowed.
I was so convinced that the CPE was designed in such a way that it would be failed by all the applicants which had applied for it, I bet $50 (to go to an applicant-nominated charity) that none would.
If HOTEL wants to let me know which charity they want the $50 to go to, I’ll get it donated forthwith. I’m just glad I didn’t offer to eat my underwear.

Uniform Rapid Suspension comes to .us

Neustar is to impose the Uniform Rapid Suspension policy on the .us ccTLD.
This means trademark owners are going to get a faster, cheaper way to get infringing .us domains taken down.
From July 1, all existing and new .us names will be subject to the policy.
Neustar’s calling it the usRS or .us Rapid Suspension service, but a blog post from the company confirms that it’s basically URS with a different name.
It will be administered by the National Arbitration Forum and cost mark owners from $375 per complaint, just like URS.
Neustar becomes the second ccTLD operator to support URS after PW Registry’s .pw, which implemented it from launch.
URS and usRS only permit domains to be suspended, not transferred to the mark owner, so there’s less chance of it being abused to reverse-hijack domains.
The burden of proof is also higher than UDRP — “clear and convincing evidence”.