Nothing but losses ahead for MMX

Former new gTLD registry MMX has delivered its latest set of financial results and warned that, without any operating business, it will be loss-making for the foreseeable future.

The company today reported a first-half loss of $783,000, compared to a loss of $1.25 million in the year-ago period.

That’s calculated from its ongoing operations, which since the $120 million sale of its registry business to GoDaddy comprises no revenue-generating activities but substantial costs keeping the company running and maintaining its listing on the AIM stock market.

Profit from discontinued operations was $3.38 million, compared to $2.68 million.

It still has small “RSP” business, providing non-technical back-office management services to a few former gTLD partners, but this will be wound down or sold off.

CEO Tony Farrow said in a statement:

We are now in the process of delivering the transition services agreed with GoDaddy Registry and disposing of, or otherwise winding down, our RSP Business. Whilst the transition services are being provided on a cost recovery basis, the Company’s ongoing administrative and other public company costs will result in operating losses for the Group going forward.

When the winding down of existing businesses is done, MMX will look for acquisition opportunities or act as a vessel for a reverse takeover.

It’s currently returning $80 million of its GoDaddy cash to investors with a buyback, but this is not enough to clear all of its shares.

Afilias appeals .web ruling, Verisign responds with “rigging” claims

Afilias has filed an unusual and unprecedented appeal against the May ruling that found ICANN broke its bylaws by awarding the .web gTLD to a Verisign affiliate.

The company is arguing that the Independent Review Process panel that decided the .web case shirked its duties, by not actually resolving the major disputes placed before it.

Verisign, in response, has accused Afilias of asking for a “do-over”, which it said is against the rules, and published information it said showed the company had tried to “rig” the .web auction.

The IRP followed the 2015 ICANN last-resort auction, which saw Verisign secretly fund a shell applicant called Nu Dot Co to win with a $135 million bid, on the basis .web would later be transferred to its custody.

Afilias was the runner-up, and argued that ICANN should have voided the NDC bid because Verisign’s involvement was not disclosed.

But the IRP panel merely found that ICANN had breached its bylaws by failing to have the courage to actually rule on the legitimacy of Verisign’s tactics, and threw it back to ICANN to make a decision.

ICANN has yet to make that decision. Instead, Afilias has filed an appeal (pdf) with the in the form of an “application for an additional decision and interpretation”.

IRP cases are handled by the International Center for Dispute Resolution, and Afilias is invoking the ICDR Arbitration Rules that allow a claimant to request an “interpretation” or “additional award” from the original decision:

By failing to resolve all of the claims and issues Afilias presented to the Panel for decision, the Panel has not only failed to satisfy its mandate; it has also undermined the very Purposes of the IRP (as set out in Section 4.3(a) of the Bylaws)—especially, but not exclusively, by its decision to refer Afilias# claim arising from Nu Dot Co’s (“NDC”) violation of the New gTLD Program Rules back to the ICANN Board and Staff to “pronounce” upon “in the first instance.”

The lengthy request is, I believe, an unprecedented attempt at an appeal of an IRP ruling. It’s also heavy on the legal arguments and does not really shed much light on the facts of the case.

The gist of it is that Afilias wants the panel to rule that ICANN breached its bylaws, new gTLD program rules and international law by failing to disqualify NDC and awarding .web to Afilias instead.

Verisign, in response, said in a blog post that Afilas’ application is “not permitted by the arbitration rules – which expressly prohibit such requests for ‘do overs.'”

It also published a letter (pdf) from NDC to ICANN in which it argues that Afilias tried to engage in a “collusive scheme” to “rig” the .web auction.

The letter contains many pages of private correspondence — emails and phone text messages — in which rival .web applicants, before Verisign’s involvement had been confirmed, fruitlessly attempted to persuade NDC to join them in a private auction in which the winning bid would have been shared among the losers rather than all going to ICANN.

While this kind of private settlement was envisaged, and indeed encouraged, by new gTLD program rules, Verisign reckons its smoking gun is messages sent by Afilias during the so-called “blackout period” before the last-resort auction, during which communications between applicants were forbidden.

As far as I can tell, all or almost all of the documents provided by NDC to ICANN had already been submitted to the public record during the IRP.

Note — the “Afilias” referred to throughout this post is the portion of the company, now known as Altanovo Domains, left behind after most of its operating businesses were acquired by Donuts late last year.

Dead dot-brands top 100. Here’s the list and breakdown

The list of dot-brand gTLDs that have had their ICANN registry contracts torn up has now topped 100.

SC Johnson, the big American cleaning products company, has informed the Org it no longer wishes to run .afamilycompany, .duck, .glade, .off, .raid, and .scjohnson.

Regular readers will know that I’ve been keeping a running tally of dot-brand terminations for the last several years, and according to that tally that number is now 101.

But it’s a bit more complex than that, so I thought I’d use the occasion of this milestone to provide a more substantial breakdown.

ICANN has records for 104 dot-brands either being terminated by ICANN or asking to be terminated of their own accord.

The number of registry-initiated termination requests is 90. These are typically gTLDs that were never used, or were experimented with and then abandoned. A smaller number relate to brands that were discontinued following mergers or product end-of-life, rendering the dot-brand pointless.

ICANN initiated the other 14 terminations, mostly because the registry operator got cold feet during the pre-delegation testing phase, before going live, but also in one instance for non-payment of fees and in two cases whatever the hell this is.

Six of the registry-initiated transfer requests were withdrawn before being fully processed. Of those, three (.boots, .mobily, and its Arabic translation) went on to be terminated anyway.

Two registries filed for self-termination then changed their minds and committed auto-genericide by selling their contracts — for .bond and .sbs — to discounting portfolio registry ShortDot instead.

One dot-brand, .case, withdrew its December 2020 termination request and appears to still be active.

Thirteen termination requests are currently in the system but have not yet been fully processed.

Five dot-brand gTLD contracts — .observer, .quest, .monster, .select, .compare — were sold to other registries to be repurposed as open generics. You could add .cyou to that list, depending on how you define a dot-brand.

One gTLD that was originally a generic — .moto — made the move in the other direction to become a dot-brand.

Here’s the list of dot-brands that have either requested a termination, or been terminated.

[table id=67 /]

Volkswagen drives IDN dot-brand off a cliff

Volkwagen has decided it no longer wishes to run its Chinese-script dot-brand gTLD.

The car-maker’s Chinese arm has asked ICANN to terminate its contract for .大众汽车 (.xn--3oq18vl8pn36a), which has been in the root for five years.

It’s the standard terminating dot-brand story — the gTLD was never used and VW evidently decided it wasn’t needed.

The company also runs .volkswagen, and that’s not used either, but ICANN has yet to publish termination papers for that particular string.

Fellow German car-maker Audi is one of the most prolific users of dot-brands. Its .audi gTLD has over 1,800 registered domains, most of which appear to be used by its licensed dealerships.

.volkwagen is the 95th terminated dot-brand and the seventh terminated internationalized domain name gTLD.

France gets more domain takedown powers

Afnic, the French ccTLD registry, has updated its policies to make it easier for the government to take down .fr domain names, and has banned names that could be used for government-related phishing.

The company has incorporated provisions of a 2020 national law that allows the General Directorate for Competition Policy, Consumer Affairs and Fraud Control to instruct the registry to suspend domains believed to be used in fraud.

It sounds similar to the set-up in the neighboring UK, where consumer protection agencies have a deal with Nominet to take down domains used for things like counterfeiting and piracy.

Afnic has also banned all domains where the second-level string ends in “-gouv”.

In France, official government domains end in .gouv.fr, but fraudsters could register the similar-looking -gouv.fr to trick citizens into thinking they were visiting a legit government web site. Not any more.

MMX to return GoDaddy cash to investors

Former new gTLD portfolio registry Minds + Machines (MMX) said Friday that it has started returning most of its recent GoDaddy windfall to shareholders.

It has launched a tender offer to buy back £58 million ($80 million) worth of shares, after selling off its wedge of 20-odd ICANN contracts to the registrar giant.

The offer price is 9.6p ($0.13) per share. MMX said that’s a premium of 12.9% on its September 8 closing price and 13.1% over the average between August 11 and September 8.

It’s roughly the same price shares were trading for at the start of 2012, when ICANN opened the last new gTLD application window, but substantially lower than its peak when it started making new gTLD money a couple years later.

The proposal does not cover all of its shares; over 31% will remain in shareholder hands after the tender offer expires October 1.

The company has about $110 million in cash right now, and expects to spend $24 million of that on the GoDaddy transition, taxes, employee payments, professional services and the like, as it winds down over the fourth quarter.

MMX will retain its listing on AIM in London after the wind-down of operations, making it a vessel for a potential reverse-takeover, in which another company (not necessarily in the domains business) could back into it for an easier way into the public markets.

The company sold its registry portfolio to GoDaddy for about $120 million, and has wound down its registrars.

Domain industry SHRINKS again… except of course it doesn’t

Verisign has published its latest Domain Name Industry Brief, once again showing growth numbers thrown off wildly by a single factor.

The second quarter closed with 367.3 million registrations across all TLDs, down by 2.8 million over the same point last year, the DNIB states.

But the entirety of that decline can be attributed to a single TLD. It’s Tokelau again!

.tk was down by 2.8 million domains compared to the year-ago quarter also. This decline was first recorded by Verisign in the fourth quarter last year, where it had a similarly depressing effect on the overall picture.

The ccTLD is operated by Dutch company Freenom, which gives away most of its domains for free, often on a monthly basis, and monetizes residual traffic whenever a name expires or is suspended for abuse.

It’s quite possible that most of its names are registry-owned, so it’s in Freenom’s discretion to keep hold of its entire inventory or periodically purge its database, which may be what happened in Q4.

It’s debatable, in other words, whether .tk’s numbers is really any reflection or guide on the rest of the domain name industry. To it’s credit, Verisign breaks out the non-.tk numbers separately.

The DNIB reports a rosier quarterly growth comparison — total internet-wide regs were up by 3.8 million names, or 1.0%.

The company’s own .com did well, growing by 2.4 million names to end June at 157 million. Even .net did better than usual, adding a net of a couple hundred thousand names, to 13.6 million.

All the top 10 ccTLDs were flat sequentially after rounding, with the exception of Brazil’s .br, which was up by 200,000 names.

Total ccTLD regs were 157.7 million, up 1.2 million sequentially but down 2.4 million year-over year. Factoring out .tk, the increases were 1.2 million and 400,000 respectively.

The second quarter of last year was a bit of a boom time for many registries due largely to the lockdown bump, which saw businesses in many countries rush to get online to survive pandemic restrictions.

Tokelau can not be blamed for the whopping 8.8 million decline in new gTLD registrations between the Junes, of course.

About six million of the plummet can be blamed on heavily discounted .icu, which saw its first junk drop begin about a year ago, and another two million seem to be attributable to .top.

Quarterly, the picture was a little brighter — Verisign says new gTLDs were up by under 100,000 compared to Q1 at 22.9 million.

Latest geo-gTLD goes to sunrise

After a protracted limited registration process, the latest geographic gTLD is due to shortly go live.

.zuerich, representing the canton and city of Zürich in Switzerland, went into sunrise yesterday. Registrations come with residency restrictions.

The sunrise runs the whole month of September, to be followed by a month-long limited registration period. General availability comes November 22.

In DNS terms, Zürich has the misfortune of having a diacritic in its name. While it could have applied for an internationalized domain name variant, it chose to deumlautize the string with the addition of a “E” instead.

The gTLD has been in the root for almost seven years, believe it or not, but it only now getting around to its formal launch phases.

ICANN records show its first restricted registration phase started in 2017.

Zone files show 25 live domains, but a web search reveals only one active non-registry web site — an addiction treatment center.

.zuerich is government-run, using CentralNic for registry services.

The canton has around 1.5 million inhabitants, around 440,000 of whom live in the city.

DotKids signs very weird new gTLD contract

New gTLD registry hopeful DotKids Foundation has become the latest to sign its ICANN Registry Agreement, and it’s a bit odd.

The signing means that DotKids only needs to have its registry back-end, managed by Donuts/Afilias, pass the formality of its pre-delegation testing before .kids finds its way into the DNS root.

It’s going to be a regulated TLD, with strict rules about what kind of content can be posted there. It’s designed for under-18s, so there’ll be no permitted violence, sex, drugs, gambling etc.

DotKids plans to enforce this with a complaint-response mechanism. There won’t be any pre-vetting of registrants or content.

There are a few notable things about .kids worth bringing up.

First, the contract was signed August 13 by DotKids director Edmon Chung, best known as CEO of DotAsia. A few days later, he was selected for the ICANN board of directors by the Nominating Committee.

Second, it’s the first and only new gTLD to have been acquired on the cheap — DotKids got over $130,000 of support from ICANN as the only outfit to successfully apply under the Applicant Support program.

Third, DotKids’ Public Interest Commitments are mental.

PICs are the voluntary, but binding, rules that new gTLD registries opt to abide by, but the DotKids PICs read more like the opening salvo in a future lawsuit than clauses in a registry contract.

Three PICs in particular caught my eye, such as this one that seems to suggest DotKids wants to restrict its channel to only a subset of accredited registrars, and then doesn’t:

Notwithstanding Section 1 above, the Registry Operator makes a commitment to support ICANN’s overarching goals of the new gTLD program to enhance competition and consumer choice, and enabling the benefits of innovation via the introduction of new gTLDs. The Registry Operator further acknowledges that at the time of this writing, it is uncertain whether or not the limiting of distribution of new gTLDs to only a subset of ICANN Accredited Registrars would undermine ICANN’s own public interest commitments to enhance competition and consumer choice. In the absence of the confirmation from ICANN and the ICANN community that such undertaking would not run counter to ICANN’s overarching goals of the new gTLD program, or in the case that ICANN and/or the ICANN community confirms that indeed such arrangement (as described in 1. above) runs counter to ICANN’s public interest commitments and overarching goals, the Registry Operator shall refrain from limiting to such subset as described in 1. above.

I’ve read this half a dozen times and I’m still not sure I know what DotKids is getting at. Does it want to have a restricted registrar base, or not?

This paragraph is immediately followed by the equally baffling commitment to establish the PICs Dispute Resolution Procedure as a formal Consensus Policy:

Notwithstanding Section 2 and 4 above, the Registry Operator makes a commitment to support, participate in and uphold, as a stakeholder, the multi-stakeholder, bottom-up policy development process at ICANN, including but not limited to the development of Consensus Policies. For the avoidance of doubt, the Registry Operator anticipates that the PICDRP be developed as a Consensus Policy, or through comparably open, transparent and accountable processes, and commits to participating in the development of the PICDRP as a Consensus Policy in accordance to Specification 1 of this Agreement for Consensus Policies and Temporary Policies. Furthermore, that any remedies ICANN imposes shall adhere to the remedies specified in the PICDRP as a Consensus Policy.

The problem with this is that PICDRP is not a Consensus Policy, it’s just something ICANN came up with in 2013 to address Governmental Advisory Committee concerns about “sensitive” TLDs.

It was subject to public comments, and new gTLD registries are contractually obliged to abide by it, but it didn’t go through the years-long process needed to create a Consensus Policy.

So what the heck is this PIC doing in a contract signed in 2021?

The next paragraph is even more of a head-scratcher, invoking a long-dead ICANN agreement and seemingly mounting a preemptive legal defense against future complaints.

Notwithstanding Section 2 above, the Registry Operator makes a commitment to support ICANN in its fulfillment of the Affirmation of Commitments, including to promote competition, consumer trust, and consumer choice in the DNS marketplace. The Registry Operator further makes an observation that the premise of this Specification 11 is predicated on addressing the GAC advice that “statements of commitment and objectives to be transformed into binding contractual commitments, subject to compliance oversight by ICANN”, which is focused on statements of commitment and objectives and not business plans. As such, and as reasonably understood that business plans for any prudent operation which preserves security, stability and resiliency of the DNS must evolve over time, the Registry Operator will operate the registry for the TLD in compliance with all commitments and statements of intent while specific business plans evolve. For the avoidance of doubt, where such business plan evolution involves changes that are consistent with the said commitments and objectives of Registry Operator’s application to ICANN for the TLD, such changes shall not be a breach by the Registry Operator in its obligations pursuant to 2. above.

If you’re struggling to recall what the Affirmation of Commitments is, that’s because it was scrapped four years ago following ICANN’s transition out from under US government oversight. It literally has no force or meaning any more.

So, again, why is it showing up in a 2021 Registry Agreement?

The answer seems to be that the PICs were written in March 2013, when references to the AoC and the PICDRP as a potential Consensus Policy made a whole lot more sense.

While a lot of this looks like the kind of labyrinthine legalese that could only have been written by an ICANN lawyer, nope — these PICs are all DotKids’ handiwork.

ICANN seems to have been quite happy to dump a bunch of irrelevant nonsense into DotKids’s legally binding contract, and sign off on it.

But given that ICANN doesn’t seem convinced it even has the power to enforce PICs in contracts signed after 2016, does it even matter?

Dropping domains might get more expensive at Donuts

Donuts is planning to change the way its registry handles dropping domains and may charge additional fees for access.

According to a service request filed with ICANN, Donuts wants to migrate its hundreds of gTLDs to the “Dropzone” system originally deployed by Afilias, which the company acquired at the end of 2020.

Instead of domains separately dropping according to their expiry time, Dropzone sees them pooled together into daily batches for a more orderly release.

Registrars are still awarded dropping domains on a first-come, first-served basis, according to when they submit their EPP create requests to the Dropzone environment, according to Donuts.

Donuts reckons this system will allow it to better manage traffic load on its registry. Presumably, registrars won’t need to send so many creates, as the drop time is synchronized for all deleting domains.

It also thinks the process will help level the playing field for registrars trying to register expired domains.

But the ICANN request (pdf) also suggests that, unlike Afilias, it might add additional fees for registrars to access Dropzone:

In addition to the standard or premium registration prices of a given domain name, The Dropzone service can support additional application fees to be configured on a per TLD basis. Applications fees where applicable will be charged in addition to the standard registration price of a domain name.

Such charges would presumably be passed on to registrants.

Afilias’ original request for Dropzone approval stated that the fee to catch a drop would be the same as a standard registration fee.

Registrars will have to reconfigure their systems to use Dropzone, which exists on a separate host.

Afilias’ 21 gTLDs have been using Dropzone since ICANN approved the service last year.