Donuts says Tucows deal “just another type of private auction”

Donuts has confirmed that it paid Tucows for the rights to the .media and .marketing new gTLDs, but says it was actually “just another type of private auction”.
The existence of a deal for the two strings emerged in a tongue-in-cheek Tucows video on Friday.
I blogged over the weekend that it was the first example I was aware of of Donuts settling a contention set outside of the private auction process it helped kick-start with Innovative Auctions.
But in a statement sent to DI today, Donuts characterized the Tucows deal as auction-like, saying:

Contention was resolved privately between the two applicants by a “cut and choose” method, whereby Tucows named a price at which it would withdraw its applications, and Donuts would decide either to “buy” or “sell” the position as sole remaining applicant.
Donuts elected to pay Tucows its stated price, and Donuts will continue as the sole applicant and exclusive operator for both TLDs, with no joint venture or revenue sharing agreement with any party.
Donuts remains strongly committed to private auctions as the preferred method of resolving contention for its applications and this was just another type of private auction.

Spoof video reveals Donuts paid Tucows for two gTLDs

This has to be the strangest way to announce a new gTLD partnership to date.
Judging by a spoof video uploaded to YouTube yesterday, Tucows withdrew its applications for the .media and .marketing new gTLDs after receiving a pay-off from rival applicant Donuts.
Presented as “the hotly contested .media and .marketing gTLD bout” between Tucows CEO Elliot Noss and Donuts co-founder Jon Nevett, the video humorously documents the negotiation process.

If you don’t have four minutes to spare, or if awkward office-based spoof videos make you want to beat yourself to death with a bright red stapler, here’s the money shot:

While I’ve not yet received confirmation that the video is based on true events (it’s Saturday), the facts all fit.
Tucows withdrew both its .media and .marketing applications around July 26, according to the DI PRO new gTLD timeline, giving Donuts a clear run at delegation.
Uniregistry was the only other applicant in both contention sets, but withdrew its applications for .media and .marketing July 19 and June 21 respectively.
There’s nothing in the video to suggest that Uniregistry made a similar deal, but it seems likely.
It’s the first example I’m aware of of Donuts settling a contention set outside of the private auction process.

Clean sweep for gTLD applicants as 91 pass

Ninety-one new gTLD applications passed Initial Evaluation this week, as ICANN enters the final month of results.
There were no failures to report. The following strings, with links to the relevant applicant on DI PRO, achieved passing scores:

.staples .gmo .hot .organic .degree .quebec .ricoh .guardian .hiphop .llp .ram .ieee .kpmg .obi .game .style .blackfriday .vlaanderen .tennis .baseball .afl .android .restaurant .sca .llc .rich .porn .gay .data .ink .nec .mzansimagic .moto .map .gap .zero .aarp .football .loans .schwarz .flsmidth .box .cloud .expert .stream .store .tunes .shopping .gmx .scot .tmall .dentist .live .app .tools .hair .ggee .bing .loans .video .golf .free .exposed .world .kerrylogisitics .llc .broker .coupons .eco .news .video .store .flights .comsec .inc .app .tours .abarth .edeka .locker .star .events .page .rent .financialaid .family .services .studio .honda .buy .click

There are now 1,377, passing applications and just 14 that are headed to Extended Evaluation.
With just 438 remaining in IE, ICANN remains on track to clean up the bulk of the process by the end of August as promised.
I expect there will be stragglers that do not receive their results until after the initial timeline is over, however, due to delays answering clarifying questions and such.

Tucows and TLDH buddy up on three gTLD auctions

Top Level Domain Holdings and Tucows have made a complex deal on new gTLD applications for .store, .tech and .group.
The partnership will see TLDH take a majority stake in .group, which it hasn’t also applied for, while Tucows will take minority interests in .tech and .store, which it in turn has not also applied for.
All three strings are heading to auction, with four applicants for .group, five for .tech, and six for .store.
How much each company owns of each registry will depend on how much they contribute to a winning auction bid.
TLDH CEO Antony Van Couvering said in a press release:

By combining our financial resources on these three domains not only are our chances of success improved in the auction round, but TLDH has the opportunity to acquire an interest in an additional top-level domain, .GROUP.

Tucows already plans to use TLDH subsidiary Minds + Machines as the registry back-end for the five new gTLDs it has applied for.

New gTLD revenue projections revealed in leaked Famous Four presentation

Famous Four Media expects to make an average of almost $30 million revenue in year one from each of the new gTLDs it secures.
That’s according to a PowerPoint presentation (pdf), written for potential investors, that was provided by an anonymous source (I suspect not a fan of the company) to DI this week.
According to the presentation, “potential year 1 revenues for an average Registry” could amount to $28.4 million, the vast majority of which would come from sunrise, landrush and premium domain sales.
The presentation, dated June 2013, was prepared by Domain Venture Partners, the immediate parent of the 60 shell companies that Famous Four is using to apply for its 60 gTLDs.
The company was unable to provide an executive to discuss this story until August 14.
But according to the PowerPoint, the Domain Venture Partners II fund is an investment vehicle set up to “bridge the gap” in Famous Four’s funding requirements:

Domain Venture Partners II shall provide a unique structured regulated investment opportunity to participate in the new gTLD programme to provide secured fixed annual returns along with additional venture type returns at a time in the process where most of the major risks have been removed.

DVP is looking to raise up to $400 million, having raised £48.3 million ($73.2 million) in 2011 via the Domain Venture Partners I fund, it says. The current round opened in March and is expected to close in November.
Famous Four has applied for 60 gTLDs — mostly highly sought-after strings such as .poker, .music, .shop, .search and .buy — 10 of which were initially uncontested.
According to the presentation, landrush period auctions would account for about a third of year-one revenue in each gTLD: $9.7 million. That’s based on selling 45,697 domains for an average price of $213.34.
Revenue from trademark owners is the second-largest chunk. An average sunrise period could raise $6.9 million, assuming 39,679 domains at an average of $173.5 each, according to the PowerPoint.
Sales of regular domains during the first first year of general availability could raise $4.1 million, based on 225,759 registrations at $18.47 apiece, the presentation says.
Here’s the full slide, one of 33 in the deck:

The presentation says that the projections are “based on historical data points established by the existing operational gTLD Registries”, adding:

The figures are averages and therefore would represent projections for a standard gTLD Registry. Potential year 1 revenues for specific Registries may be below or above this average.

Some of the numbers strike me as optimistic. While the likes of .asia and .mobi may have seen these registration volumes due to the novelty and scarcity of new gTLD namespaces, my feeling is that those days are over.
The new gTLD program is likely to see scores of overlapping sunrise and landrush periods; it’s difficult to see registries benefiting from the same focus and excitement as their predecessors.
There’s a limited amount of domainer capital to spread around landrush sales and trademark owners are likely to be much more selective about where they defensively register their brands in a world of 1,300 gTLDs.
That said, Famous Four has applied for some of the nicest strings in the round so I may be wrong.
An appendix to the presentation discussing the first DVP funding round says that while Famous Four hopes to sign contracts for 30 new gTLDs, it has only secured 32% of the money it is looking for.
Securing investment appears to have been tough due in part to the complexity of the ICANN process and investors’ lack of familiarity with it, which looks like risk. It also says:

The costs associated with applications in the new gTLD have increased, the financial strength of most applicants has been reduced and the knowledge barrier to entry is too high to interest large standard venture investors.

Famous Four’s business model is based around consolidation and keeping costs down, according to the pitch. For the most part, this is due to the economies of scale of running a large number of TLDs.
With Neustar as its back-end provider, Famous Four says it has found the “lowest fees in the industry”.
But the model also involves keeping tax to a minimum. Famous Four is based in Gibraltar, where it says it will pay no tax on domain sales:

FFM is operating in a fiscal environment that has multiple advantages over others in the industry. Domain names sales are treated as royalty income which is currently zero rated in Gibraltar. This would result in an instant bottom line gain.

There’s a strong suggestion in the presentation that DVPII is not limiting its ambitions to the new gTLDs it has applied for.
It also seems to discuss acquiring other applicants and ccTLD rights, then bringing them into the Famous Four fold, but the plan was not completely clear to me and executives were unavailable for clarification.

Afilias wants registrar ownership ban lifted on .mobi and .pro

Afilias has applied to ICANN to have its ban on owning registrars in two of its own gTLDs, .mobi and .pro, lifted.
With requests to ICANN a few days ago (here and here), the company said it wants to be able to own more than 15% of an ICANN-accredited registrar that sells both TLDs, which is currently forbidden by the two Registry Agreements in question.
Afilias’ proposed new .info contract, which was renegotiated this year (because it expired) and closed for public comment last week, would also enable the company to vertically integrate with a .info registrar.
A process for relaxing the cross-ownership rules on a per-TLD basis was approved by ICANN’s board of directors last October.
The only registry so far to have its contractual ban lifted is puntCat, the .cat registry operator.
When an ICANN working group was discussing the vertical integration issue a couple of years ago, Afilias was one of the participants that held fast against any relaxation of the 15% ownership cap, eventually driving the working group into stalemate and forcing the ICANN board’s hand.

L’Oreal takes the red pill, withdraws .matrix bid

L’Oreal has withdrawn another of its dot-brand new gTLD applications.
This time it’s .matrix, for one of its hair-care product brands.
It’s the eighth of L’Oreal’s 14 original new gTLD applications to be withdrawn, after .欧莱雅, .kiehls, .loreal, .garnier, .maybelline, .kerastase, and .redken.
Only .lancome remains of its dot-brand applications. It has already passed Initial Evaluation, unlike the others which tend to get dropped shortly before results are posted, to secure a bigger refund.
Its “closed generic” bids for .skin, .beauty, .hair, .makeup and .salon are all still active and have all passed IE.

Is social media the answer to the dot-brand problem?

With many dot-brand gTLD applicants still unsure about how they will use their new namespaces, the maker of the Kred reputation service is proposing social media as the answer.
Speaking to DI today, Kred CEO Andrew Grill said that one dot-brand applicant — a bank — has already committed to use parent company PeopleBrowsr’s new Social OS platform for its gTLD.
Social OS is being marketed as a way for companies to quickly launch their own social media networks along the lines of Facebook or LinkedIn.
Dot-brands would be able to own the customer relationship and get access to much more data about their users than they get with the limited “Like”-oriented Facebook platform, Grill said.
End users would be able to use these vertical networks using their existing social media log-in credentials, he said.
The company plans to use the platform in its own gTLD, .ceo, which it has applied for uncontested.
Grill said he talked to about 100 people at the recent ICANN meeting in Durban and expects to come away with five to 10 additional customers for the Social OS platform.
While the value proposition for new gTLD owners seems fairly reasonable, in general I’m quite skeptical about the internet’s need for more social media sites.
Any such service operated by a dot-brand would have to have a fairly compelling value proposition for end users.
Grill said that a car maker, for example, could use its own gTLD social media network to keep in touch with its customers — giving them a second-level domain when they buy one of its vehicles.
A bank, meanwhile, could offer services such as customer-to-customer transaction apps for users who have second-level domains in its gTLD. If registrations were limited to existing banking customers, a greater level of security would be baked in from the start, he said.

Google beats USPS in LRO, Defender loses another

The United States Postal Service and Defender Security have both lost Legal Rights Objections over the new gTLDs .mail and .home, respectively.
In both cases it’s not the first LRO the objector has lost. USPS, losing here against Google, lost a similar objection against Amazon, while Defender has previously racked up six losses over .home.
The Defender case (pdf) this time was against .Home Registry Inc. The objection was rejected by the World Intellectual Property Organization panelist on pretty much the same grounds as the others — Defender acquired its trademark rights purely in order to be able to file LROs against its .home rivals.
In the USPS v Amazon case (pdf) the WIPO panelist also decided along the same lines as the previous case.
The decision turned on whether USPS, which owns trademarks on “U.S. Mail” but not “mail”, could be said to have rights in “mail” by virtue of the fact that it is the monopoly postal service in the US.
USPS argued that .mail is like .gov — internet users know a .gov domain is owned by the US government, so they’re likely to think .mail belongs to the official US mail service.
The panelist decided that users are more likely to associate the gTLD with email:

A consumer viewing the string <.mail> in the context of a domain name registration or an email address is presumably even more likely to think of the electronic (“email”) meaning, rather than the postal meaning, of the term “mail,”

WIPO has now decided 20 LRO cases. All have been rejected. Several more were terminated after the objector withdrew its objection.

dotShabaka wants to be the first new gTLD to launch, but big problems remain

Having been the first to sign a contract with ICANN two weeks ago, new gTLD registry dotShabaka is also desperate to be the first to launch, but faces big obstacles.
The company, International Domain Registry, is a spin-off of AusRegistry, with many of the same directors and staff, but executives insist it is an entirely separate entity and will become more so with time.
It was awarded, uncontested and unobjected, the Arabic TLD شبكة., which means “.web” and transliterates to “.shabaka”. It will do business under the trading name dotShabaka Registry.
According to the Registry Agreement published by ICANN last week, it was signed on July 13, one day before the other three registries to so far get contracts.
“It was a lot of work to make sure we were the first to sign, and we intend to be the first to delegation,” general manager Yasmin Omer told DI last week.
“The best-estimate timeline published by ICANN in Durban is our timeline, that’s our target,” she added.
The timeline she’s referring to (pdf) is the one that says the first new gTLD could hit the root as early as September 5, with the first Sunrise period kicking off a month later.
Omer is slightly less optimistic about the timing, however, saying that “mid-September” is looking more likely, due to the requirements of the Pre-Delegation Testing period that dotShabaka is currently in.
The company is doing preliminary PDT work right now and expects to start testing properly in the first week of August.
But PDT is not the only thing standing in dotShabaka’s — and other new gTLD applicants’ — path to delegation.
Right now, the Trademark Clearinghouse and the 2013 Registrar Accreditation Agreement are the big barriers, Omer said.
TMCH requirements not ready
The TMCH is a problem because ICANN has still not finalized the TMCH’s RPM Requirements document, a set of rules that each new gTLD registry must adhere to in their Sunrise and Trademark Claims phases.
“A group within NTAG and the Registries Stakeholder Group has been negotiating this document with ICANN for some time now, going back and forth,” Omer said. “It’s all fine for those who intend on launching later on, but this document has yet to be finalized and that really harms us.”
A draft of the Requirements document (pdf) was published in April, and Omer said she expects ICANN to take a more up-to-date draft to public comment.
A standard 42-day comment period, starting today, would end mid-September.
As we reported in April, the Requirements raises questions about whether registries would, for example, be able to create lists of reserved premium domains or whether trademark owners would always get priority.
dotShabaka faces an additional problem with the TMCH because its gTLD is an Arabic string and there are been very little buy-in so far from companies in the Arabic-speaking world.
A couple of weeks ago, TMCH execs admitted that of the over 5,000 trademarks currently registered in the TMCH, only 13 are in Arabic.
In Durban, they said that the TMCH guidelines were not yet available in Arabic.
Part of the problem appears to be that a rumor was spread that the TMCH does not support non-Latin scripts, which executives said is not remotely true.
With so little participation from the Arabic trademark community, an early شبكة. launch could mean a woefully under-subscribed Sunrise period — 30 days to protect just a handful of companies.
“There’s no knowledge of the TMCH in the region,” Omer said.
“We’re currently putting our heads together to think of mechanisms to overcome this,” she said. “We don’t just want to be first to delegate and have it sit there idly, we want to be first to market as well.”
dotShabaka has been doing its own press in the region and claims to have taken thousands of expressions of interest in the gTLD, indicating that there is a market if awareness can be raised.
Registrars are a problem
Signing the 2013 Registrar Accreditation Agreement is a requirement for any registrar that want to sell new gTLDs, and that includes IDNs. Only seven registrars have publicly signed it to date.
According to Omer, the 2013 RAA’s stricter requirements are “not helping us in the region”.
Its provisions related to insurance can be “prohibitive to those located to those located in North Africa and the Middle East”, she said by way of an example.
In addition, there are only about seven accredited registrars in the region, all on older RAA versions, she said.
dotShabaka has already signed up Go Daddy and others to carry شبكة., so getting the TLD into the channel is not a problem.
But while Go Daddy will have an Arabic landing page for the TLD it will not have a full Arabic-language registration process and shopping cart ready in time for شبكة.’s planned launch window launch.
This makes me wonder whether there’s a risk that domain savvy Westerners are more likely to get a crack at the best شبكة. names before the Arab world is fully aware of the launch.
But Omer said that dotShabaka is doing its own outreach and that it’s committed to improving the “horrible” online experience for Arabic speakers that exists today.
“It’s not just about the TLD, it’s about the cause, it’s about an Arabic internet,” she said. “Yes there are issues and yes there are barriers, but we want to build more robust Arabic domain name market.”