TLDH hires ICANN’s former new gTLDs head

Top Level Domain Holdings has hired Michael Salazar, former head of the new gTLD program at ICANN, as its chief financial officer.
The hire, which is still subject to some regulatory checks, will also see Salazar become an executive director of the company, which has applied for dozens of new gTLDs.
Salazar was at ICANN for three years, before leaving this June in the wake of the TLD Application System and Digital Archery messes.
Before ICANN, he was with KPMG for 16 years, according to TLDH.
It’s the second time TLDH has brought a former ICANNer on board to fill a senior role.
Former chair Peter Dengate Thrush controversially joined the company as executive chairman in July 2011, but recently announced that he will be leaving the company in January.
Salazer replaces David Weill, CFO as well as a founding director of the company, who is leaving. He’s the second original director, after Clark Landry, to quit in as many months.

Winners and losers in the new .com pricing regime

Today’s shock news that Verisign will be subject to a .com price freeze for the next six years will have broad implications.
The US Department of Commerce has told the company it will have to continue to sell .coms at $7.85 wholesale until 2018, barring exceptional circumstances.
Here’s my initial take on the winners and losers of this new arrangement.
Domain investors
Volume .com registrants are of course the big winners here. A couple of dollars a year for a single .com is pretty insignificant, but when you own tens or hundreds of thousands of names…
Mike Berkens of Most Wanted Domains calculated that he’s saved $170,000 $400,000 over the lifetime of the new .com deal, and he reckons fellow domainer Mike Mann will have saved closer to $800,000 $2 million.
Brand owners
The other big constituency of volume registrants are the brand owners who spend tens or hundreds of thousands of dollars a year maintaining defensive registrations — mostly in .com — that they don’t need.
Microsoft, for example, owns over 91,000 domain names, according to DomainTools. I’d hazard a guess that most of those are defensive and that most are in .com.
Registries
There’s potentially trouble on the horizon for new gTLD applicants and existing registry operators. Verisign is looking for new ways to grow, and it’s identified its patent portfolio as an under-exploited revenue stream.
The company says it has over 200 patents either granted or pending, so its pool of potential licensees could be quite large.
Its US portfolio includes patents such as 7,774,432, “Registering and using multilingual domain names”, which appear to be quite broad.
Verisign also owns a bunch of patents related to its security business, so companies in that field may also be targeted.
Registrars
Verisign’s registrars will no longer have to pass their cost increases on to consumers every year.
While this may help with renewal rates, it also means registrars won’t be able to sneak in their own margin increases whenever Verisign ups its annual fees.
IDN buyers
Another area Verisign plans to grow is in internationalized domain names, where it’s applied to ICANN for about a dozen non-Latin variants of .com and .net.
Those registry deals, assuming they’re approved by ICANN, will not be governed by the .com pricing restrictions. Now that Verisign’s growth is getting squeezed, we might expect higher prices for IDN .com variants.
ICANN
ICANN may have suffered a small reputational hit today, with Commerce demonstrating it has the balls to do what ICANN failed to do six years ago, but money-wise it’s doing okay.
The new .com contract changes the way Verisign pays ICANN fees, and Commerce does not appear to have made any changes to that structure. ICANN still stands to get about $8 million a year more from the deal.
The Department of Commerce
Unless you’re a Verisign shareholder, Commerce comes out of this deal looking pretty good. It played hard-ball and seems to have won a lot of credibility points as a result.

Verisign loses right to increase .com prices

Verisign has sensationally lost the right to increase .com prices under a new deal struck with the US Department of Commerce.
In a statement to the markets just now, the company announced that the .com contract approved by ICANN earlier this year has now also been approved by Commerce, but with no more price increases:

Verisign’s current pricing of $7.85 per domain name registration will continue for the six-year term of the Agreement. Second, Verisign no longer has the right to four price increases of up to seven percent over the six-year term.

The company will only be able to increase prices with prior Commerce approval in response to “extraordinary” circumstances such as a security problem, or when the competitive landscape changes.
For example, if .com loses its “market power”, pricing restrictions could be lifted entirely, subject to Commerce approval.
Similarly, if ICANN approves a Consensus Policy that changes Verisign’s cost structure, the company could apply for price-increasing powers.
The deal is a huge blow for Verisign’s shareholders, wiping tens — potentially hundreds — of millions of dollars from the company’s top line over the coming six years.
Its share price is sure to nose-dive today. It’s already trading down 15% before the New York markets open.
It’s also an embarrassment to ICANN, which seems to have demonstrated that it’s less capable of looking after the interests of registrants than the US government.
That said, the new contract appears to have kept ICANN’s new fee structure, meaning the organization will be about $8 million a year richer than before.
In a Securities and Exchange Commission filing, Verisign said the new pricing provisions came in Amendment 32 to its Cooperative Agreement with Commerce:

Amendment 32 provides that the Maximum Price (as defined in the 2012 .com Registry Agreement) of a .com domain name shall not exceed $7.85 for the term of the 2012 .com Registry Agreement, except that the Company is entitled to increase the Maximum Price of a .com domain name due to the imposition of any new Consensus Policy or documented extraordinary expense resulting from an attack or threat of attack on the Security or Stability of the DNS as described in the 2012 .com Registry Agreement, provided that the Company may not exercise such right unless the DOC provides prior written approval that the exercise of such right will serve the public interest, such approval not to be unreasonably withheld. Amendment 32 further provides that the Company shall be entitled at any time during the term of the 2012 . com Registry Agreement to seek to remove the pricing restrictions contained in the 2012 .com Registry Agreement if the Company demonstrates to the DOC that market conditions no longer warrant pricing restrictions in the 2012 .com Registry Agreement, as determined by the DOC. Amendment 32 also provides that the DOC’s approval of the 2012 .com Registry Agreement is not intended to confer federal antitrust immunity on the Company with respect to the 2012 .com Registry Agreement and extends the term of the Cooperative Agreement through November 30, 2018.

On a conference call with analysts, Verisign CEO Jim Bidzos said that the deal was in the best interests of the company. It still gives the company the presumptive right for renewal, he said.
Growth, he said, will come in future from an expansion of its .com installed base, new IDN gTLD variants, and providing back-end registry services to other new gTLDs.
“We’re still a growth company,” he said.
“We have a patent portfolio we haven’t really exploited,” he said, referring to about 200 patents granted and pending. “We think there’s a revenue opportunity there.”
Larry Strickling, assistant secretary at Commerce, said in a statement:

Consumers will benefit from Verisign’s removal of the automatic price increases. At the same time, the agreement protects the security and stability of the Internet by allowing Verisign to take cost-based price increases where justified.

The full Amendment 32 is posted here.

Australia leads the charge as governments file 242 new gTLD warnings

Governments of the world have filed 242 warnings on new gTLD applications, more than half of which came from Australia.
Warnings were filed against 145 strings in total, and in most cases governments issued the same warnings against all competing applications in a given contention set.
Australia was responsible for 129 warnings, accounting for most of the 49 warnings received by Donuts.
There are some surprises in there.
Notably, there were no warnings on any of the strings related to sex, sexuality or porn.
Given the amount of effort the GAC put into advising against .xxx, this is a big shock. Either governments have relaxed their attitudes, or none were willing to single themselves out as the anti-porn country.
No government warned on .gay.
The largest single recipient of warnings, with 49, was Donuts, the largest portfolio applicant.
The most-warned application, with 17 warnings, was DotConnectAfrica’s .africa. The company is contesting the gTLD without government support, and African nations objected accordingly.
Nigeria also warned Delta Airlines about its proposed .delta dot-brand,
The string “delta” is a protected ISO 3166 sub-national place name, as Delta is likely to discover when the Geographic Names Panel delivers the results of its evaluation.
Australia objected to .capital on the same grounds.
Top Level Domain Holdings was hit with warnings from Italy and South Africa based on a lack of government support for its geographic applications .roma and .zulu.
Remarkably, Samoa warned the three applications for .website on the grounds that they would be “confusingly similar” to its own ccTLD, .ws, which is marketed as an abbreviation for “website”.
The US warned on all 31 of Radix Registry’s applications, saying that the Directi company inappropriately included an email from the FBI in its bids, suggested an endorsement when none exists.
Australia, among its 129 warnings, appears to have won itself a lot of friends in the intellectual property community.
It’s objected to .fail, .sucks, .gripe and .wtf on the grounds that they have “overly negative connotations” and a lack of “sufficient mechanisms to address the potential for a high level of defensive registrations.”
It also issued warnings to applicants planning gTLDs covering “regulated sectors”, including .accountant, .architect and .attorney, without sufficient safeguards to protect consumers.
Generic strings with single-registrant business models — such as Google’s .app and .blog bids — are also targeted by Australia on competition grounds.
Australia more than any other governments appears to be trying to use its warnings as a way to enter into talks with applicants, with a view to remedial action.
Whether this will be permitted — applicants are essentially banned from making big changes to their applications — is another matter entirely.
The full list of warnings can be found here.

Pritz’s conflict of interest was with ARI

Former ICANN chief strategy officer Kurt Pritz had a conflict of interest related to back-end registry provider ARI Registry Services, DI can reveal.
Pritz resigned last week after disclosing the potential conflict to CEO Fadi Chehade, leading to a great deal of industry speculation about the specific nature of the problem.
Chehade revealed to attendees at an unrelated community meeting at ICANN headquarters in Los Angeles last Thursday that the conflict was of a “personal” nature.
Since then, I’ve managed to uncover the basic facts of the story – more than enough to confirm that it’s a personal issue and to establish that there do not appear to be any financial conflicts.
So I’ve decided not to report the full details, other than to say the conflict relates to ARI Registry Services, a major provider of back-end registry services for new gTLD applicants.
Pritz, as senior vice president for stakeholder relations and then chief strategy officer, was for a long time the key ICANN executive overseeing the new gTLD program.
I understand that the conflict was voluntarily disclosed by Pritz.
He also appears to have been held to at least as high a standard of ethics as ICANN’s own board of directors.
While ICANN clearly determined that there was a risk of a perception of a conflict of interest, I’ve discovered no reason to believe there was any actual wrongdoing by ICANN, ARI or Pritz.
The recent public record does not appear to reveal any instances of Pritz giving any special treatment to ARI. If anything, I believe the evidence would most likely lead to the opposite conclusion.
For example, during recent Trademark Clearinghouse implementation talks, Pritz was staunchly opposed to key aspects of a community solution co-developed by ARI.
As reported last month, these talks were notable for Pritz’s attempts to block some important parts of the community proposal, despite aggressive lobbying by ARI executives.
In short, I don’t think there’s a conspiracy here.
It’s my belief that Pritz’s resignation is the result of an unfortunate set of circumstances occurring at an organization that is – understandably – hyper-sensitive to negative perceptions about its integrity.

“Sexy” .sx hits general availability today

The newest ccTLD to go live, .sx for Sint Maarten, starts its general availability phase today at 1500 UTC.
The registry’s web site currently lists 47 registrars that are carrying the TLD, though none of the top five registrars in the gTLD space appear to be participating.
And .sx domains will not be cheap, judging by registrar list prices, averaging out at about $50 per year.
SX Registry, which won the right to run .sx from last year, has been marketing the TLD with sex, as you may be able to tell from the lovely lady in DI’s sidebar, and some registrars are following suit.
GA is of course the final phase of the launch. The usual sunrise and landrush periods were also preceded by special priority periods for companies and individuals based in Sint Maarten.
But the ccTLD will be open to registrants from anywhere in the world.
Sint Maarten was created in 2010 by the break-up of the Netherlands Antilles. The old .an ccTLD is expected to be gracefully decommissioned over the next few years.

Six more new gTLD applications yanked

A further six new gTLD applications have been withdrawn from evaluation, bringing the total to 13, according to ICANN.
The identities of the newly yanked bids is not known as they’ve not yet been fully processed. Of the 13, only .and, .are, .est, .chatr, .ksb and .cialis have been named so far.
The news emerged in a presentation ICANN is set to use in its monthly webinar for applicants shortly.
The presentation also confirms that there have been no official objections filed against any applications yet.
The String Similarity Review — which will create the initial contention sets among similar strings — has been completed, ICANN also revealed, but results will not be published until a secondary review has ended.
All applications have passed the DNS Stability Review, which checks whether the string itself could cause any DNS problems, ICANN said.
This is pretty big news for the .home applicants, to name just one string. It had been suggested that .home would cause problems because it also receives a substantial amount of traffic in the root servers.
At least one major ISP I’m aware of, Britain’s BT, uses .home as a local TLD in its residential hubs.
ICANN has also revealed that some applicants have not yet cleared background screening, saying:

Initial background screening review has been completed. The background screening service provider has identified some applications where additional information is required in order to continue with the review. Applicants for these applications will be contacted soon through the CSC [Customer Service Center] to provide the additional information.

The date of the Draw for application prioritization has been confirmed as December 17.
The webinar kicks off here at 2000 UTC today.

ICANN expecting to approve most new gTLDs?

Good news for new gTLD applicants?
ICANN appears to be assuming that the vast majority of applications will pass their evaluations and make it at least as far as pre-delegation testing, judging from recent comments.
Of the 1,400-odd unique strings being applied for, ICANN reckons that “close to the maximum” will need to be tested before being added to the DNS root.
The hint came in a Q&A with respondents to ICANN’s pre-delegation testing provider RFP published yesterday.
With added emphasis, here’s what ICANN just said:

Question 7: Can ICANN provide a definitive statement of the anticipated minimum number of pre-delegation tests?
The total number of applied-for strings that will be approved is unknown at this point. Therefore, we cannot assert the minimum number of registries to be tested but only the maximum: 1,400. We expect that the actual numbers of registries tested should be close to the maximum.

It’s a positive sign for applicants, but there are obviously some big unknowns in the process, most notably Governmental Advisory Committee interventions, which are a little under a week away.
On the negative side, ICANN seems to be digging its heels in on the number of pre-delegation tests that will be required, despite recent requests from applicants to streamline the process:

Question 17: Is it possible to execute a single test per Back-End Registry Service Provider (as this would limit the requirement to about 80 such tests)?
The AGB [Applicant Guidebook] specifies one Pre-Delegation Test per Registry Operator (contracted party to ICANN).

This appears to mean that multiple applications using Verisign or Afilias, for example, as their back-ends will have to be individually tested, despite possible duplicative work.

IEDR admits blame for hack that brought down Google and Yahoo

IEDR, the Irish ccTLD registry, has admitted that an attack on its own web servers was responsible for google.ie and yahoo.ie being hijacked last month.
In a detailed statement, the registry said that hackers spent 25 days probing for weaknesses in its systems, before eventually breaking in through a vulnerability in the Joomla content management software.
This enabled the attackers to upload malicious PHP scripts and access the back-end database, according to the statement. They then redirected yahoo.ie and google.ie to an Indonesian web site.
It’s a reverse of position for IEDR, which had appeared to blame one of its registrars (believed to be Mark Monitor) for the lapse in security when the hack was discovered last month.
IEDR told ZDNet October 11: “an unauthorised change was made to two .ie domains on an independent registrar’s account which resulted in a change of DNS nameservers”.
But today it said instead: “The IEDR investigation also confirmed that neither the Registrar of the affected domains nor its systems had any responsibility for this incident.”
The registry has filed a complaint with the Irish police over the incident, and apologized to its customers for the disruption.
It also said it plans to roll out a Domain Lock service to help prevent hijacking in future, though I doubt such a service would have prevented this specific incident.

Roussos sells his .home new gTLD application

In what I believe is the first instance of a new gTLD bid changing hands, CGR E-Commerce has sold off its .home application to another applicant.
CGR is the Cyprus-based company controlled by prominent .music applicant Constantine Roussos.
Among 29 changes to new gTLD applications approved by ICANN and published late last week were substantial alterations to CGR’s application for .home, which is contested by 10 other applicants.
All references to Roussos, his colleague Tina Dam, and CGR itself were removed, replaced by the names of executives from Defender Direct.
The applicant name is now “Dothome Ltd”, whereas originally it was “DotHome/CGR E-Commerce Ltd”.
“We just sold that company,” Roussos confirmed to DI. “All our assets and intellectual property pertaining to .HOME were transferred to Defender Direct, a company that also applied for .SECURITY.”
“They are the second largest home security company in the U.S and have a lot of resources to provide to create value in both the home and security arenas,” he added.
Back in April, while the new gTLD application period was still open, Roussos was known to be shopping around some spare TLD Application System slots.
The .home gTLD is one of the most-contested strings in the current round, but all 11 applicants face the risk that the string itself may be rejected on security and stability grounds.