Two ICANN directors update their conflicts profile after .africa complaint

ICANN directors Mike Silber and Chris Disspain have updated their official statements of interest — used to identify potential conflicts on the board — after a complaint from a .africa applicant.
The new SOI statement more clearly specifies the relationship between South African ccTLD policymaker ZADNA — for which Silber acts as treasurer — and Uniforum, which has applied for the .africa gTLD.
(December 28 Update: Silber, in the comments below, states that the update to his SOI was in no way a response to the DCA complaint.)
It also gives a bit more information about Disspain’s employer, .au policymaker AuDA, and ARI Registry Services, which is providing the back-end registry services for dozens of new gTLD applicants.
Here’s Silber’s new SOI summary, with the relevant new text highlighted:

Member of the Management Committee and Treasurer of the Internet Service Providers’ Association (ISPA) South Africa. He is also, a Director and Treasurer of the .za Domain Name Authority, the ccTLD administrator for .za. The .za Domain Name Authority has concluded an arms-length operating agreement with Uniforum t/a the .za Central Registry for Uniforum to operate the .za registry. Under the agreement, Uniforum will collect and pay transaction fees to .za Domain Name Authority. Uniforum is acting as the registry service provider for various new gTLD applicants.

Here’s Disspain’s, again with my emphasis:

Director and CEO of .au Domain Administration Limited, the .au ccTLD manager; .au has sponsorship agreement with ICANN under which .au pays ICANN a yearly amount based on the amount of names under management. Former Officer of ICANN, Paul Levins, is a Director of .au Domain Administration Limited. .au Domain Administration Limited licenses AusRegistry Pty Ltd to run the registry for the second level names in .au. Under the Registry License agreement, AusRegistry pays fees to auDA; companies affiliated with AusRegistry are affiliated with new gTLD applications.

AusRegistry is technically ARI’s parent, but they share many of the same senior executives.
The updated statement comes shortly after a complaint filed with ICANN’s Ombudsman by .africa applicant DotConnectAfrica about Silber and Disspain’s alleged conflicts of interest over the gTLD.
While the indirect connection between Silber and DCA’s rival .africa applicant Uniforum is clear, it was not obvious to Ombudsman Chris LaHatte what Disspain’s conflict was supposed to be.
LaHatte found no actions that constituted conflicts of interest from either director, but he appeared to nudge the board to providing fuller disclosure, which is what seems to have happened here.

ICANN drops .jobs shut-down threat

ICANN has withdrawn its breach notice against .jobs registry Employ Media, opening the floodgates for third-party job listings services in the gTLD.
In a letter sent to the company earlier this week, ICANN seems to imply that it was wrong when it threatened in February 2011 to shut down .jobs for breaking the terms of its registry agreement:

ICANN has concluded that Employ Media is not currently in breach, but is instead in good standing under the Registry Agreement, with respect to the issues raised in the 27 February 2011 Notice of Breach letter.
…
ICANN will not seek to impose restrictions on new or existing policy initiatives within .JOBS as long as such conduct is consistent with the .JOBS Charter and the terms of the Registry Agreement.

The surprising move presumably means that Employ Media will be dropping its Independent Review Panel proceeding against ICANN, which was due to start in-person hearings next month.
The original breach notice alleged that the registry had gone too far when it sold thousands of generic domain names to the DirectEmployers Association to use for jobs listings sites.
This .Jobs Universe project saw DirectEmployers launch sites such as newyork.jobs and nursing.jobs.
The project was criticized harshly by the .JOBS Charter Compliance Coalition, an ad hoc group of jobs sites including Monster.com, which lobbied ICANN to enforce the .jobs contract.
The .jobs gTLD was originally supposed to be for companies to advertise only their own job openings.
The reasoning behind ICANN’s change of heart now is a little fuzzy.
Ostensibly, it’s because it received a letter December 3 from the Society for Human Resources Management, Employ Media’s policy-setting “sponsoring organization”.
The letter states that all of DirectEmployers’ domain names are perfectly okay registrations — “being used consistently with the terms of the .JOBS Charter” — and have been since the .Jobs Universe project started.
The domain names were all registered by DirectEmployers executive William Warren, who is a SHRM member as required by .jobs policy, the letter states.
Nothing seems to have changed here — it’s been Employ Media and SHRM’s position all along that the registrations were legit.
So did ICANN merely sense defeat in the IRP case and get cold feet?
Read the letters here.

ICM seizes on Google’s porn algorithm change

Grasping the opportunity for a bit of easy publicity, ICM Registry has seized upon a recent Google algorithm change to promote its .xxx gTLD’s brand.
It was reported earlier this week that Google has made it harder to accidentally stumble across sexually explicit imagery in Google Images by making its Safe Search filtering mandatory in the US.
The company defended itself from cries of censorship by pointing out that porn could still be found, as long as you are a bit more “explicit” about what it is you’re looking for, telling CNet:

If you’re looking for adult content, you can find it without having to change the default setting — you just may need to be more explicit in your query if your search terms are potentially ambiguous.

Now ICM is plugging .xxx as a “workaround” to this problem, saying in a press release today:

one can simply type a description of whatever porn one wants into any search bar followed by the letters “XXX.” Results are instant and on target. For example, if one is looking for adult content that includes a mainstream generic word like “Toys,” simply enter the search term “Toys XXX” and problem solved.

ZDNet gave similar advice in an article this week, and ICM says that traffic to its own search engine, search.xxx, saw a 50% spike in the last 24 hours as a result.
Could this be a portent for changes in user search behavior in the age of niche new gTLDs?

Seven new gTLD applications withdrawn, two after GAC Early Warnings

Seven more new gTLD applications have been officially withdrawn from the ICANN evaluation process, two of which were recently hit with governmental warnings, bringing the total to 13.
The applications yanked since DI’s last update are:

.ansons (CBM Creative Brands Marken GmbH)
.caremore (WellPoint, Inc)
.glean (Lifestyle Domain Holdings, Inc)
.gmbh (GMBH Registry, LLC)
.hilton (HLT Stakis IP Limited)
.skolkovo (Fund for Development of the Center for Elaboration and Commercialization of New Technologies)
.swiss (Swiss International Air Lines Ltd)

The withdrawal of .swiss means that a contention set is now no longer a contention set.
The other .swiss applicant is the Swiss government itself, which filed a Governmental Advisory Committee Early Warning against its rival last month and is now pretty much guaranteed a win.
The latest withdrawals also thin the field for .gmbh, reducing the number of applicants from six to five.
All of the .gmbh applications received GAC Early Warnings from Germany. The country is concerned that only legal GmbH entities — equivalent to “Ltd” or “LLC” companies — should be able to own these domains.
The .hilton, .glean, .ansons, and .caremore applications were all dot-brands.
So, to an extent, was .skolkovo. Skolkovo is an emerging high-technology campus outside of Moscow with big intentions to become the Russian Silicon Valley. It’s not known why its bid was pulled.

New gTLD lottery tickets now on sale

ICANN has started selling its $100-a-pop New gTLD Prioritization Draw raffle tickets in Los Angeles, with a little less than a week to go until the make-or-break drawing.
The organization is understandably eager not to balls it up this time — the Draw replaces Digital Archery, which was killed off largely due to how silly it was — so there are strict rules in place.
Due to the Californian lottery laws the Draw will operate under, applicants have to show up in person to buy their tickets, or ask a designated proxy to do it for them.
To avoid any funny business, each buyer has to show up with a government ID with details matching those on the special Designation Form, which in turn must be signed by a named individual from the gTLD application itself.
It’s strictly one ticket per application, of course.
Some applicants have got in early. Here’s photographic evidence that some applicants have successfully bought theirs, courtesy of Uniregistry counsel Bret Fausett.

The draw itself will take place on December 17, starting at about 1pm local time, at the LA airport Hilton. Anyone who shows up to buy tickets after 11am that day will be turned away.
With over 1,900 applications, we could be looking at eight hours or more of pulling pieces of paper out of a bucket.
The whole thing will be webcast for people who, like me, have nothing better to do with their time.
Opting out of the process is as simple as not buying a ticket, but there’ll be a secondary draw to determine the prioritization of opted-out applications.
Applications for internationalized domain names will be drawn first, followed by non-IDNs, followed by opted-out IDNs, followed by opted-out non-IDNs.
Why is this lottery so important?
For many applicants it’s going to determine their time to market, which could mean the difference between launching into a market eager for new real estate and launching into one jaded by flops.
In some cases a good draw number could be worth millions. But unfortunately for applicants, they won’t be able to trade their tickets or prioritization slots.

YouPorn owner arrested in tax evasion probe

YouPorn owner and regular ICM Registry antagonist Fabian Thylmann has reportedly been arrested in Belgium in connection with a German tax evasion investigation.
He was taken into custody at Brussels airport today under a warrant from the Cologne District Court, according to German daily Die Welt.
Thylmann is the owner — some say nominally so — of Manwin Licensing, the online porn empire behind brands such as YouPorn, Brazzers and, under license, Playboy.
Manwin sued ICANN and ICM late last year over the .xxx gTLD, saying it violates US antitrust laws, charges which are denied.
The company is also engaged in an ICANN Independent Review Panel procedure over the same issues.
ICM says that the lawsuit, and a related boycott, are merely attempts to disrupt its business. Thylmann, the company claims, offered to invest in ICM but was rebuffed.
According to Die Welt, Manwin’s German headquarters was raided last Tuesday as part of an ongoing tax evasion probe, which was spurred in part by the newspaper’s own investigation into the company.

Russian iTunes Store infiltrated by .xxx banners after snafu [NSFW]

Russian iTunes users reportedly got a shock today when they discovered masses of sexually explicit content from the .xxx gTLD in their iTunes Store.
According to local reports, attempts to visit a part of the store dedicated to foreign movies displayed a bunch of banner ads for .xxx web sites instead of the expected content.

@arcoolov @markgurman @9to5mac This is NOT a joke. How do you explain replies in the comments? A legitimate issue twitter.com/iphones_ru/sta…

— iphones.ru (@iphones_ru) December 5, 2012

Digging a little deeper, it appears that the images were being drawn directly from xxx.xxx, a promotional directory site owned and managed by ICM Registry, the .xxx registry.
Speculation in the Apple blogs is that an iTunes Store developer inadvertently typed “xxx.xxx” somewhere as a placeholder URL, not realizing that .xxx is actually a live TLD.
There’s a lesson here for new gTLD registries somewhere, I’m sure.

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.