.CO quiet on Super Bowl sales

Judging from its CEO’s latest blog post, .CO Internet doesn’t want to talk about how many new .co domain names were registered following its Super Bowl commercial with Go Daddy.
I take this as a sign that the event did not have an earth-shattering impact on its registration numbers.
Making some basic assumptions, reading between the lines, and using some back-of-the-envelope math, I estimate that the number of new .co domains registered was likely less than 50,000.
That’s not terrible, but I think it could take quite some time for the company to see a return on its investment, given that its margins on the promotional pricing would have been pretty thin and that at least a quarter of those registrations will likely disappear a year from now.
I doubt it made enough cash on the day to pay for Joan Rivers’ boob job.
But in Juan Calle’s post, he makes it clear that .CO is playing the long game. He wrote:

The most common success metric that many registries use is the total number of domain names registered. Although we are certainly enjoying our incredible growth – the number of .CO domains registered is simply not a metric we believe is robust enough to measure the kind of impact we fully plan and expect to have in the world over the long term.

You can be fairly sure that if .CO had doubled the size of its customer base last week, or broke through the million-domain milestone, Calle would not be talking in these terms.
He’s not keen on using secondary market prices to define success either, saying he expects it will be four or five years before the .co aftermarket matures.
Sedo’s .co auction, which ended yesterday, saw the majority of domains fail to meet their lofty reserves. But that’s not necessarily a slight on .co – auction activity in general has been sluggish recently.
Calle has some fetal ideas about how to measure the success of a TLD. He wrote:

To gauge the impact of the .CO extension, I think we will need to consider a combination of factors. Imagine, if you will, a sort of “Gross Domain Product” or “GDP,” measuring not only the total number of .CO registrations, but the number of websites developed, and the broader value of the economic activity happening within the .CO space.

It’s an interesting idea, but there’s a reason why most people judge TLDs based on their number of registrations. It goes something like: registrations = revenue = profit.
Selling domains is generally a registry’s only revenue stream. A registry with few registrations won’t turn a profit, and stands less of a chance of staying in business.
And for the aftermarket, a TLD retaining a large number of registered and renewing domains over the long term means there’s demand, which leads to higher prices.
Fortunately for .co, it is off to a great start, with probably something approaching 700,000 domains under its belt in just seven months, if my envelope-back is reliable.
Calle’s post gives every indication that the company plans to keep up its aggressive marketing spend, so the TLD stands, I think, a pretty good chance of breaking through the one million domains mark this year.

ICANN confirms TLD delays after sponsorship closes

ICANN has officially confirmed that it does not intend to launch the new top-level domains program at its meeting in San Francisco next month.
The news came just one day after the organization stopped accepting sponsorship deals, at the new controversially higher rate, for the meeting.
In a blog post, ICANN’s Jamie Hedlund said that a vote on the new TLD program would not be possible due to the upcoming consultation with the Government Advisory Committee in Brussels.
He wrote:

In addition to the Brussels consultation, the bylaws-defined consultation will take place on 17 March, the day before the Silicon Valley–San Francisco Board Meeting. Because of the timing of the bylaws consultation, the Board will not approve or announce the new gTLD program at that Board Meeting.

Now, the timing of this announcement could just be a coincidence, it could be related to ICANN’s fast-approaching deadline for publishing meeting documents, but the fact that it came the day after the sponsorship deadline for SF passed raised an eyebrow chez DI.
ICANN has known about the timing of the GAC consultation since at least January 25, when its board of directors approved the March 17 schedule.
Chairman Peter Dengate Thrush was quoted as saying new TLDs were likely off the menu for SF as early as February 3, and senior vice president Kurt Pritz echoed that view a week ago.
With March 18 no longer a possibility for the Applicant Guidebook getting approved, what does that mean for the new TLDs timetable?
Some observers believe that we’ll have to wait for the ICANN meeting in Amman, Jordan, in June, which could see the first-round application window open in October.
I’m not convinced we’ll have to wait that long. It seems possible that ICANN will eschew the fanfare of a public meeting and approve the final draft of the Guidebook over the phone whenever it’s ready.
The first new TLDs are expected to go live on the internet approximately 15 months after the Guidebook gets the nod.

VeriSign’s upcoming battle for the Chinese .com

Could VeriSign be about to face off against China for control of the Chinese version of .com? That’s an intriguing possibility that was raised during the .nxt conference last week.
Almost as an aside, auDA chief Chris Disspain mentioned during a session that he believes there are moves afoot in China to apply to ICANN for “company”, “network” and “organization” in Chinese characters. In other words, .com, .net and .org.
I’ve been unable to find an official announcement of any such Chinese application, but I’m reliably informed that Noises Have Been Made.
VeriSign has for several quarters been open about its plans to apply for IDN equivalents of its two flagship TLDs, and PIR’s new CEO Brian Cute recently told me he wants to do the same for .org.
While neither company has specified which scripts they’re looking at, Chinese is a no-brainer. As of this week, the nation is the world’s second-largest economy, and easily its most populous.
Since we’re already speculating, let’s speculate some more: who would win the Chinese .com under ICANN’s application rules, VeriSign or China?
If the two strings were close enough to wind up in a contention set, could VeriSign claim intellectual property rights, on the basis of its .com business? It seems like a stretch.
Could China leapfrog to the end of the process with a community application and a demand for a Community Priority Evaluation?
That also seems like a stretch. It’s not impossible – there’s arguably a “community” of companies registered with the Chinese government – but such a move would likely stink of gaming.
Is there a technical stability argument to be made? Is 公司. (which Google tells me means “company” in Chinese) confusingly similar to .com?
If these TLDs went to auction, one thing is certain: there are few potential applicants with deeper pockets than VeriSign, but China is one of them.
UPDATE: VeriSign’s Pat Kane was good enough to post a lengthy explanation of the company’s IDN strategy in the comments.

VeriSign scores big win in .com pricing lawsuit

VeriSign has successfully had an antitrust lawsuit, which claims the company has been raising .com domain name prices anti-competitively, dismissed by a California court.
While it’s encouraging news if you’re a VeriSign shareholder, the Coalition for ICANN Transparency, which filed the suit, will be allowed to amend and re-file its complaint.
The basis for the dismissal (pdf) goes to the central irony of CFIT – the fact that, despite its noble name, it’s not itself a particularly transparent organization.
CFIT was set up in 2005 in order to sue ICANN and VeriSign over their deal that gave VeriSign the right to raise the price of .com and .net domains, and to keep its registry contracts on favorable terms.
While it was cagey about who was backing the organization, those of us who attended the ICANN meeting in Vancouver that year knew from the off it was primarily a front for Momentous.ca, owner of Pool.com and other domainer services.
In dismissing the case last Friday, Judge Ronald Whyte decided that CFIT’s membership is vague enough to raise a question over its standing to sue on antitrust grounds. He wrote:

By failing to identify its purported members, CFIT has made it impossible to determine whether the members are participants in the alleged relevant markets, or whether they have suffered antitrust injury. Because the [Third Amended Complaint] identifies no members of CFIT, it must be dismissed.

While CFIT had disclosed some time ago Pool.com’s involvement, it recently tried to add uber-domainer Frank Schilling’s Name Administration Inc and iRegistry Corp to the list of its financial supporters.
But Whyte was not convinced that the two companies were CFIT “members” with standing to sue.
Whyte decided that CFIT’s complaint, “fatally fails to allege facts showing that iRegistry or Name Administration were financial supporters or members at the time the complaint was filed”.
He also denied CFIT’s demand for a jury trial.
CFIT wants VeriSign to return all the excess profits it has made on .com registrations since it started raising its prices above $6.
If CFIT were to win, it would severely curtail VeriSign’s ability to grow its registry business, and could lead to billions being wiped off its accounts.
The organization has been given leave to file a fourth amended complaint, so it’s not over yet.

Dot Africa needs a registry

DotConnectAfrica, one of the organizations planning to apply to ICANN to run .africa as a new top-level domain, has put out its feelers for a technical back-end partner.
In a press release, DCA today solicited expressions of interest from registry services providers. “Presence and/or experience in developing markets” is said to be “preferred but not a must”.
I expect there will be quite a few EOIs winging their way to the company in the next few days.
The whole of Africa only has about 110 million internet users currently. But with only 11% penetration, there’s pretty good growth potential. And chances are there’s not a great deal of ccTLD lock-in yet.
The nearest equivalent existing TLD is .asia, which has about 185,000 active registrations.
That’s less than half as many as .asia had post-landrush, but still represents a nice chunk of change for a back-end provider that does not have to pony up the cash for marketing.
DCA is one of two organizations known to be pursuing a .africa bid, and easily the highest-profile of the two. The other is called Dot Africa.
As a geographical name protected by ICANN’s new TLDs Applicant Guidebook, .africa will only be awarded to an applicant with proven governmental support.
That likely means that it will be the African Union, not ICANN, that ultimately decides the winner. In this slide deck, DCA says it has support from the AU and from 20% of African governments.

Why ICANN dropped registrar ownership rules

ICANN has quietly published a list of 10 reasons explaining why it decided to start allowing domain name registrars and registries to buy each other.
Last November, ICANN’s board of directors voted to drop so-called “vertical integration” rules that previously prevented registries owning more than a small percentage of registrars.
Now, under the forthcoming new top-level domains program, the likes of eNom and Go Daddy will be able to apply to become gTLD registries, and registries like VeriSign and Neustar will be able to apply to run their own registrar businesses.
The decision was unexpected, appeared to be a U-turn, and ICANN’s explanation was not articulated sufficiently to sate critics such as the US Department of Commerce.
So now ICANN has published a “Draft Rationale” (pdf), a 17-page document that outlines some of the thinking that went into the decision.
In a nutshell, ICANN dropped the VI rules to increase competition, to avoid antitrust lawsuits, and because the harms that could arise due to cross-ownership are best addressed by other means.
Here are the rationale’s 10 major bullet points in full:

• None of the proposals submitted by the GNSO reflect a consensus opinion; as a result, the Board supported a model based on its own factual investigation, expert analysis, and concerns expressed by stakeholders and the community.
• ICANN’s position and mission must be focused on creating more competition as opposed to having rules that restrict competition and innovation.
• Rules permitting cross-ownership foster greater diversity in business models and enhance opportunities offered by new TLDs.
• Rules prohibiting cross-ownership require more enforcement and can easily be circumvented.
• Rules permitting cross-ownership enhance efficiencies and almost certainly will result in benefits to consumers in the form of lower prices and enhanced services.
• Preventing cross-ownership would create more exposure to ICANN of lawsuits, including antitrust lawsuits, which are costly to defend even if ICANN believes (as it does) that it has no proper exposure in such litigation.
• The new Code of Conduct, which is to be part of the base agreement for all new gTLDs, includes adequate protections designed to address behavior the Board wants to discourage, including abuses of data and market power. Data protection is best accomplished by data protection tools, including audits, contractual penalties such as contract termination, punitive damages, and costs of enforcement, as well as strong enforcement of rules. By contrast, market construction rules can be circumvented and cause other harms.
• Case-by-case re-negotiation of existing contracts to reflect the new crossownership rules will permit ICANN to address the risk of abuse of market power contractually.
• In the event ICANN has competition concerns, ICANN will have the ability to refer those concerns to relevant antitrust authorities.
• ICANN can amend contracts to address harms that may arise as a direct or indirect result of the new cross-ownership rules.

The document still needs to be approved by the ICANN board of directors before it can be considered official.
It appeared without fanfare on the ICANN web site a little over a week ago.

Afilias lawyers up for TLD applicants

Registry services provider Afilias has expanded its relationship with the law firm Crowell & Moring to support prospective new top-level domain applicants.
The two companies said this morning that they have entered into a memorandum of understanding under which Crowell will provide legal and business consultation to Afilias’s new TLD clients.
Afilias, along with VeriSign and Neustar, is expected to one of the major beneficiaries of the introduction of new TLDs, due to its experience managing the technical back-end for several existing TLDs.
Here at the .nxt conference in San Francisco this week, one oft-repeated message is that applicants can smooth their TLD application with ICANN by signing up an incumbent to provide the back-end.
Crowell is one of a small number of law firms with a specialist domain name consulting arm. It is affiliated with the IP Clearinghouse, which wants to play a key role in new TLD launches.

Neustar wins .gay contract

Neustrar has signed a deal to provide back-end registry services to DotGay LLC, one of the companies hoping to apply for .gay as a new top-level domain.
There are currently two companies planning to apply for .gay that I’m aware of. The other, the Dot Gay Alliance, has chosen Minds + Machines as its back-end partner.
The positioning is quite interesting. Scott Seitz, CEO of DotGay, played up the need for more security and stability in a TLD that may find itself the target of homophobic cyber-attacks.
In a press release due out tomorrow, Seitz says:

While security is always a concern for any gTLD, the GLBT community is at a higher risk of discrimination, making system integrity a critical component in the selection of a registry partner.

Neustar, which runs .biz and several other TLDs, has more experience running high-traffic registries than M+M. However, this fact will likely not be relevant to which company wins .gay.
Under the ICANN new TLDs program, applicants have to prove themselves capable of running a registry, but contested TLD applicants are not compared against each other based on technical prowess.
It’s much more likely that the two (or more) .gay applications will live or die based on community support or, failing that, how much money they are prepared to pay at auction.
The .gay TLD is likely to also be a flashpoint for controversy due to ongoing debates about governments’ ability to block TLDs based on “morality and public order” objections.
Recent mainstream media coverage has focused on .gay as a likely test case for governmental veto powers.

New TLD rulebook unlikely to get March nod

ICANN’s new top-level domains Applicant Guidebook is unlikely to get its final approval at ICANN’s March meeting, according to the senior staffer responsible for the program.
Senior vice president of stakeholder relations Kurt Pritz, who gave the keynote at today’s .nxt conference, later told me the Guidebook “probably won’t be approved in San Francisco”.
But impatient new TLD applicants may not have to wait too long afterward for the Guidebook to get the nod and the program to launch.
Pritz said that the Guidebook, currently in a “Proposed Final” version, will likely be revised following ICANN’s upcoming talks with its Governmental Advisory Committee.
But whatever emerges from the GAC consultation will not necessarily be opened for public comment, which would add a month or two of delay to the process. That will be for the board to decide.
Pritz indicated that the community needs to understand that one day ICANN will produce a version of the Guidebook that will be for voting, not commenting.
That’s likely to come sooner rather than later.
It seems to me to be quite likely that a version of the Guidebook emerging in the weeks following San Francisco will be submitted straight to the ICANN board of directors for approval.
During his keynote, which he gave following ICANN CEO Rod Beckstrom’s unexpected eleventh-hour cancellation, Pritz said he wanted “to reset expectations and what I think our job is going forward”.
“Public discussion needs to turn to: should we launch the new gTLD process or should we not?” he said during his remarks.
The keynote was upbeat, talking about the Guidebook being a “road map”, not a series of “road blocks”.
Referring to the recently relaunched .me and .co country-code TLDs, which have been successfully marketed as generic TLDs, Pritz said:

To a certain extent new TLDs are already off and running. There’s a first mover advantage there, so the rest of us need to catch up.

ICANN chief cancels .nxt keynote

With the first-ever .nxt conference on new top-level domains just hours away from opening its doors, it looks like star speaker Rod Beckstrom has canceled his appearance.
ICANN’s president and CEO, who was featured prominently on the web site of the San Francisco conference as recently as Sunday, no longer appears on the agenda.
His keynote slot, scheduled for 10am local tomorrow, has been filled by Kurt Pritz, ICANN’s senior vice president of stakeholder relations and point man for the new TLD program.
While Pritz perhaps lacks the name recognition and stage presence of Beckstrom, it could be argued that his more granular insight into the program may actually make him a better-value speaker.
Juan Diego Calle, CEO of .CO Internet, is still scheduled for the second keynote, on Wednesday. Here’s hoping he can provide an update on .co’s post-Super Bowl performance.
UPDATE: Conference organizer Kieren McCarthy has confirmed that Beckstrom was unable to make it to San Francisco in time for the keynote, but said he may still attend later.