Afilias sues India to block $12 million Neustar back-end deal

Afilias has sued the Indian government to prevent it awarding the .in ccTLD back-end registry contract to fierce rival Neustar.
The news emerged in local reports over the weekend and appears to be corroborated by published court documents.
According to Moneycontrol, the National Internet Exchange of India plans to award the technical service provider contract to Neustar, after over a decade under Afilias, but Afilias wants the deal blocked.
The contract would also include some 15 current internationalized domain name ccTLDs, with another seven on the way, in addition to .in.
That’s something Afilias reckons Neustar is not technically capable of, according to reports.
Afilias’ lawsuit reportedly alleges that Neustar “has no experience or technical capability to manage and support IDNs in Indian languages and scripts and neither does it claim to have prior experience in Indian languages”.
Neustar runs plenty of IDN TLDs for its dot-brand customers, but none of them appear to be in Indian scripts.
NIXI’s February request for proposals (pdf) contains the requirement: “Support of IDN TLDs in all twenty two scheduled Indian languages and Indian scripts”.
I suppose it’s debatable what this means. Actual, hands-on, operational experience running Indian-script TLDs at scale would be a hell of a requirement to put in an RFP, essentially locking Afilias into the contract for years to come.
Only Verisign and Public Interest Registry currently run delegated gTLDs that use officially recognized Indian scripts, according to my database. And those TLDs — such as Verisign’s .कॉम (the Devanagari .com) — are basically unused.
Neither Neustar nor Afilias have responded to DI’s requests for comment today.
.in has over 2.2 million domains under management, according to NIXI.
Neustar’s Indian subsidiary undercut its rival with a $0.70 per-domain-year offer, $0.40 cheaper than Afilias’ $1.10, according to Moneycontrol.
That would make the deal worth north of $12 million over five years for Afilias and over $7.7 million for Neustar.
One can’t help but be reminded of the two companies’ battle over Australia’s .au, which Afilias sneaked out from under long-time incumbent Neustar late last year.
That handover, the largest in DNS history, was completed relatively smoothly a couple months ago.

.CLUB revenue not all that

.CLUB Domains may be one of the 5000 fastest-growing companies in the US, according to Inc magazine, but it’s returning the majority of its revenue back to its registrars.
CEO Colin Campbell revealed this week that the company returns almost 70% of its gross revenue in the form of rebates.
The revelation came in an interview with Domain Name Wire on its latest podcast.
Campbell told Andrew Allemann that in 2017 .CLUB had $9.3 million in what he called “cash flow” or “gross revenue”.
But “net cash” or “net revenue”, after rebates was just $2.8 million, meaning $6.5 million was returned to registrars via promotions.
The interview came a few days after Inc named the company 1164th in its 2018 list of fastest-growing US companies.
Inc had .CLUB’s revenue at $7.2 million, but that appears to have been calculated using the usual accounting standards of deferring revenue into future periods over the lifetime of the domain subscription.
.club has something like 1.4 million names under management.
Campbell said that the company is “adding about a million dollars of net revenue per year” and he predicted 2018 gross cash to come in at $10.5 million and net to come in at $3.7 million.
That’s a net revenue figure, remember, not a profit or net income line. Campbell said he’s more interested in growing the business rather than paying taxes on profits.
The aggressive rebating seems to have a focus in China, where it has regular deals with the likes of Alibaba (which was .club’s biggest registrar with 20% of the market at the last count) and West.cn.
While .CLUB is private, Campbell has been frank about its performance in the past.
The DNW interview follows DI’s interview with Campbell on more or less the same topic last September, and DNW’s in 2016.
It’s a good podcast, you should have a listen.

New gTLDs rebound in Q2

New gTLD registration volumes reversed a long trend of decline in the second quarter, according to Verisign’s latest Domain Name Industry Brief.
The DNIB (pdf), published late last week, shows new gTLD domains up by 1.6 million sequentially to 21.8 million at the end of June, a 7.8% increase.
That’s the first time Verisign’s numbers have shown quarterly growth for new gTLDs since December 2016, five quarters of shrinkage ago.
[table id=51 /]
The best-performing new gTLD across Q2 was .top according to my zone file records, adding about 600,000 names.
.top plays almost exclusively into the sub-$1 Chinese market and is regularly singled out as a spam-friendly zone. SpamHaus currently ranks it as almost 45% “bad”.
Overall, the domain universe saw growth of six million names, or 1.8%, finishing the quarter at 339.8 million names, according to Verisign.
Verisign’s own .com ended Q2 with 135.6 million domains, up from 133.9 million at the end of March.
That’s a sequential increase of 1.7 millions, only 100,000 more than the total net increase from the new gTLD industry.
.net is still suffering, however, flat in the period with 14.1 million names.
ccTLDs saw an increase of 3.5 million names, up 2.4%, to end June at 149.7 million, the DNIB states.
But that’s mainly as a result of free TLD .tk, which never deletes names. Stripping its growth out (Verisign and partner ZookNic evidently have access to .tk data now) total ccTLD growth would only have been 1.9 million names.

.CLUB revenue reportedly $7.2 million

.CLUB Domains had $7.2 million of revenue in 2017.
That’s according to Inc magazine, which ranked the company at 1164th in its 2018 Inc 5000 list of the fastest-growing US-based companies.
Growth over three years for .CLUB, which is listed as having 17 employees, was 419%, according to the profile.
.club is one of the best-performing new gTLDs in terms of volume, with over 1.3 million domains under management, according to the company.
While it has generally steered away from deep discounting, it has in recent weeks benefited from a huge increase in sales — adding over 100,000 names to its zone file in just a few days earlier this month — as a result of a sale at the Chinese registrar Alibaba, which sold .club names for the RNB equivalent of $0.44.
That had the effect of diverting .club from a decline that looked like it would shortly have seen it dip below one million zone names for the first time in over a year.

38th dot-brand bows out after acquisition

Telecity Group, which used to be a major London-based internet collocation facilities operator, has told ICANN it no longer wishes to run its dot-brand gTLD.
.telecity will become the 38th dot-brand gTLD to terminate its registry agreement.
The company, which had close to £350 million ($445 million) revenue in 2014, was acquired by US-based rival Equinix for £2.35 billion ($3 billion) in early 2016.
Equinix has since started to transition away from the Telecity brand. Its old .com home page now instructs visitors to visit the Equinix site instead.
Like most of the other dead dot-brands, .telecity was never used.

Allstate dumps a dot-brand

American insurance giant Allstate has dumped one of its two dot-brand gTLDs.
The company, which had $38.5 billion revenue in 2017, has told ICANN it no longer wishes to run .goodhands, which is a partial match to its long-time “Are you in good hands?” advertising slogan.
Allstate still owns the contract to run .allstate, where it has a handful of domains that redirect to its primary .com site.
The company had also applied for the gTLDs .carinsurance and .autoinsurance, but withdrew both applications after the “closed generics” controversy in 2013.
.goodhands is the ninth dot-brand to self-terminate this year and the 37th since .doosan became the first back in September 2015.
Hundreds of other dot-brand gTLDs are still live, many of them in active use.

I was wrong, Famous Four bosses WERE kicked out

Famous Four Media’s portfolio of gTLDs is under new management after an investor rebellion, contrary to what I speculated earlier this week.
FFM’s former stable, which includes the likes of .men and .science, is now being managed by a company calling itself GRS Domains, but this new company has absolutely nothing to do with FFM’s former management.
That’s according to Robert Maroney, founder of Connecticut-based Engineers Gate Investments, which is a shareholder of ultimate portfolio owner Domain Venture Partners.
Maroney got in touch with DI yesterday to explain some of what has recently happened to the ownership and management of the 16 high-volume new gTLDs.
Back in June I speculated based on the quite limited available information that FFM might be bankrupt.
On Tuesday, after GRS Domains announced a relaunch and a rejection of its previous volume-heavy, spam-friendly business plan, I speculated based on slightly more information that management had repurchased the TLD assets after investors forced it into administration.
I was wrong on both counts, according to Maroney. What actually happened is more akin to an investor takeover.
Maroney said he “engineered” the ouster of FFM and its two shareholders/managers, Iain Roache and Geir Rasmussen, after Roache attempted to close down DVP.
DVP is basically a collection of private and institutional investors (brought in by Roache and others) from around the world which, based on the available evidence, have little or no connection to the domain name industry.
It’s a matter of public record that each gTLD contract is owned by a distinct Gibraltar-based shell company — dot Bid Limited owns the ICANN rights to run .bid for example — and that Domain Venture Partners owns these companies.
I’ve previously reported that Famous Four was also owned by DVP, but Maroney said that this was never the case. It was owned 80-20 by Roache and Rasmussen and contracted by DVP to manage the 16 gTLDs.
The affiliated registrar AlpNames, which has been responsible for a very large portion of registrations in the portfolio, had the same ownership structure as FFM and was never directly connected to DVP, Maroney said.
Following a court battle, GRS Domains has replaced FFM as the registry manager.
GRS is owned by PricewaterhouseCoopers, and is currently being managed by court-appointed administrator Edgar Lavarello, a Gibraltar-based accountant at PwC.
Maroney did not want to get into the detailed specifics about what caused the investor revolt, but did say that shareholders were unhappy with how FFM was managing the portfolio.
Its low-price, high-volume strategy had caused its TLDs to become the destinations of choice for spammers and other abusive registrants.
But the court case was brought after Roache attempted to break up DVP, restructure ownership of the 16 individual registries, and “escape the regulation of Gibraltar”, Maroney said.
“Roache wanted to shut down DVP in a way we considered to be unlawful,” he said.
He said DVP shareholders felt Roache’s moves were “inappropriate and unlawful”, which is what caused him to “engineer”, via fellow investor Christina Mattin, DVP being placed into administration.
I have seen no independent evidence that Roache acted or attempted to act unlawfully. The court document I’ve seen appointing Lavarello as administrator contains no finding of wrongdoing by anyone.
The upshot of all this is that the group of TLDs formerly known as Famous Four Media is now GRS Domains — Global Registry Services Ltd — and that Lavarello is currently in charge.
I imagine the company will want to find permanent management at some point, but Maroney did not want to talk about that.
In the meantime, GRS has already made moves to become more transparent and to engage more with the rest of the industry.
Maroney said, and I have independently confirmed, that he was at the ICANN meeting in Panama recently, meeting senior industry figures. Famous Four executives have not been known to attend ICANN meetings or industry events in the past.
GRS has told registrars it intends to have a formal presence at ICANN 63 in Barcelona also.
The company will shortly terminate all of its promotional pricing and introduce a flat $9.98 registry fee, which is very likely to affect its volumes and reduce spamming activity over the next year or so.
UPDATE July 30 2020: This article was edited to remove an erroneous link to the web site of Engineers Gate LP, which is not the same company as Engineer’s Gate Investments LLC.
UPDATE August 12 2020: This article was edited to correct GRS’s ownership status. It’s owned by PwC, not DVP. Roache’s job title at FFM was also corrected.
In addition, Roache recently wrote to DI, almost two years after the article was originally published, and made the following statements:

Famous Four Media (FFM) was placed in voluntary administration by myself and Mr Rasmussen as respective 80% and 20% shareholders, due to invoices that went unpad by PWC Gibraltar as administrator to DVP.
…
There was NO “court battle to replace FFM with GRS”. FFM withdrew services after promises to pay FFM its outstanding invoices by PWC turned out to be untruthful.
…
To say or repeat the allegation that it was “unlawful” to close the fund down is untrue… DVP was set up as a closed end fund with a maximum maturity of April 2018 on 12 April 2012 — i.e. a 5-year fund with a one-year extensions.
Against the recommendation of myself as Investment Director and largest creditor and investor, the support of the Board, the regulated Fund Administrator Juno, the Fund’s own regulated legal counsel Isolas and the approval of the Gibraltar Financial Services Commission — a number of investors pushed to place the Fund into administration. The actions of those few investors led by Ms Mattin, Mr Maroney and PWC have been hugely prejudcial to other investors in DVP and the seed investors, including myself. In April 2018 the valuation of the Fund’s assets was in excess of £30 million and of the total registry assets more than £100 million — today the value is close to zero if not insolvent under the disastrous management of PWC, Maroney and Mattin.
Mr Maroney’s statement that he “engineering the ousting of Mr Rasmussen and I” is also untrue — I made it clear to all investors in DVP in an emaill dated October 2017 that if the Fund was not redeemed in Specie with investors honouring their debts then the alternative choice would be a structured administration which ran the risk of losing their entire remaining assets in DVP.

Famous Four is DEAD! New registry promises spam crackdown

Famous Four Media’s portfolio of gTLD registries is now under the control of a new company, Global Registry Services Ltd, which has promised to abandon its failed penny-domain strategy and crack down on spam.
(August 9 update: This article contains some incorrect assumptions and speculation. Please read this follow-up piece for clarifications.)
The company, which goes by the name GRS Domains, told registrars yesterday that FFM’s 16 gTLDs are now “controlled by the same parties that control Domain Venture Partners PCC Limited, and are no longer under the management of FFM.”
DVP also owned FFM, so it’s not clear how big of a deal this restructuring is from a management point of view.
My sense is that there’s not really been a substantial change, but it’s certainly more than a simple rebranding exercise.
I’ve learned that DVP was placed into administration under the Insolvency Act back in April, with management of the TLDs handed to a PricewaterhouseCoopers administrator, more or less as I speculated in June.
The TLDs affected are: .loan, .win, .men, .bid, .stream, .review, .trade, .date, .party, .download, .science, .racing, .accountant, .faith, .webcam and .cricket.
GRS told registrars:

Moving forward there are several changes being made with regard to the overall strategy of the portfolio of gTLDs, the main one being a change to a “quality over quantity” ethos and focusing on working with our Registrar Partners to sharply reduce abuse and spam registrations.

As such, all of its current pricing promotions will end August 20 and a “much more transparent and sensible pricing strategy” will come into play.
That means a wholesale reg fee of $9.98 across the board, at least until February 2019.
GRS also plans to take a lot of its lower-priced reserved “premium” names out of the premium program altogether, and to reprice “a considerable portion” of the more expensive ones.
Finally, the company, not known to attend ICANN meetings in the past, said it plans to show up at the Barcelona meeting in October to formally relaunch itself.
Famous Four has become notorious over the last few years for its deep-discounted TLDs, which have become a haven for spammers who want to register large numbers of super-cheap, throwaway domains.
As such, its gTLDs’ volumes have been huge — many racking up hundreds of thousands of names — but their renewals poor and their reputation worse.
If GRS’ new strategy is effective, we’re almost certainly going to see the industry-wide overall number of active new gTLD domains tank over the next year or so, giving more ammunition to those who think the new gTLD program was a huge waste of effort.
It could also have an impact on ICANN’s budget — no matter how cheap FFM sold its names, it still had to pay its ICANN fees on a per-domain basis. Fewer domains equals less money in ICANN’s coffers. FFM’s registries paid over $1.6 million in ICANN fees in the organization’s fiscal 2017.
While GRS is now apparently “controlled by the same parties that control Domain Venture Partners PCC Limited”, it’s not abundantly clear to me whether that’s the same people who’ve been running FFM for the last eight years.
DVP has not immediately responded to a request for comment today.
The DVP web site has not resolved in months. The new grs.domains site doesn’t name anyone, and the NIC sites for the gTLDs in the portfolio only identify a PwC bankruptcy accountant as the primary contact.
All the companies in question are based in tax haven Gibraltar, which isn’t particularly forthcoming about identifying company directors, partners or owners.
DVP’s directors were originally Adrian Hogg, Charles Melvin, Iain Roache, Douglas Smith, Peter Young, Joseph Garcia and a company called Domain Management II (itself chaired by Roache), according to an investor presentation (pdf) DI obtained back in 2013.
I believe Melvin at least, after a legal dispute with the others, is no longer involved.
And it appears that DVP is or was in fact in administration.
I noted back in June that the 16 gTLDs were now all being administered by PwC accountant Edgar Lavarello, and wondered aloud whether this meant FFM was bankrupt.
Today I obtained (read: paid an extortionate sum for) a Gibraltar court order dated April 23 putting DVP into administration under the Insolvency Act and appointing PwC as the administrator.
The application had been made by an investor called Christina Mattin and fellow investor Braganza, a private vehicle owned by a wealthy Scandinavian family, which was (at least last year) a 10% owner.
Other named investors the court heard from were the mysterious Liechtenstein-based Rennes Foundation, something called Northern Assets Investments Limited and Dutch multimillionaire Francis Claessens.
Overall, it smells a bit to me like DVP’s principals, having seen their previous venture put out of business by disgruntled investors, have snapped up its assets and are going to try to make a second go of running the business.
As for FFM? Well, it looks rather like we won’t be hearing that name again.
UPDATE: This article was updated several hours after it was originally posted to clarify that DVP was/is “in administration”.

My brain explodes trying to understand MMX’s new blockchain deal for .luxe

Minds + Machines has abandoned plans to launch .luxe as a gTLD for luxury goods and instead made a deal to sell it as an address for cryptocurrency wallets.
If you thought it was a silly move marketing .ws as meaning “web site” or .pw as “professional web”, you’re probably not going to like the backronym MMX has in mind for .luxe:
“Lets U Xchange Easily”.
Really.
Tenuous though that marketing angle may be, the concept behind the newly repurposed TLD is actually quite interesting and probably rises to the level of “innovation”.
MMX has inked a deal with Ethereum Name Service, an offshoot of Ethereum, an open-source blockchain project.
Ethereum is largely used as a cryptocurrency, like BitCoin, enabling people to transfer monetary value to each other using “wallet” applications, though it has other uses.
I’m just going to come right out and say it: I don’t understand how any of this blockchain stuff works.
I’ve just spent an hour on the phone with MMX CEO Toby Hall and I’m still not 100% clear how it integrates with domains and whether the .luxe value proposition is really, really cool or really, really stupid.
I’ll just tell you what I do understand.
Currently, when two Ethereum users want to transfer currency between each other, the sender needs to know the recipient’s wallet address. This is a 40-character nonsense hash that makes an IPv6 address look memorable.
It obviously would be a lot better if each user had a human-readable, memorable address, a bit like a domain name.
Ethereum developers thought so, so they created the Ethereum Name Service. ENS allowed people to use “.eth” domains, like john.eth, as a shorthand address for their wallets. I don’t know how it works, but I know .eth isn’t an official TLD in the authoritative root.
About 300,000 people acquired .eth domains via some kind of cryptographic auction process that I also don’t understand. Let’s just call it magic.
Under the deal with MMX, some 26 million Ethereum wallet owners will be able use .luxe domains, dumping their .eth names if they have them.
The names will be sold through registrars as usual, at a price Hall said will be a little bit more than .com.
Registrants will then be able to associate their domains with their 40-character wallet addresses, so they can say “Send $50 to john.luxe” and other crypto-nerds will instantly know what to do. Ethereum wallets will apparently support this at launch.
Registrars will need to do a bit of implementation work, however. Hall said there’ll be an API that allows them to associate their customers’ domains with their wallets, and to disassociate the two should the domain be transferred to somebody else.
This is not available yet, but it will be before general availability this November, he said.
What this API does is beyond my comprehension.
What I do understand is that at no point is DNS used. I thought perhaps the 40-char hash was being stored in the TXT field of a DNS record, but no, that’s not it. It’s being stored cryptographically in the blockchain. Or something. Let’s just say it’s magic, again.
The value of having a memorable address for a wallet is very clear to me, but what’s not at all clear to me is why, if DNS is not being queried at any part of the Ethereum transaction, this memorable address has to be a domain name.
You don’t need a domain name to find somebody on Twitter, or Instagram, or Grindr. You just need a user name. Why that model couldn’t apply here is beyond me.
Hall offered that people are familiar with domain names, adding that merchants could use the same .luxe domain for their web site as they use for their Ethereum wallets, which makes sense from a branding perspective.
The drawback, of course, is that you’d have to have your web site on a .luxe domain.
The launch plan for .luxe sees sunrise begin August 9, running for 60 days. Then there’ll be two weeks for .eth name holders to claim their matching .luxe names. Then an early access period. GA starts November 6.
While it should be obvious by now I don’t fully “get” what’s going on here, it strikes me as a hell of a lot more interesting way to use .luxe than its originally intended purpose as a venue for luxury goods and services.
Let’s face it, depending on pricing it would have turned out either as a haven for spammers, a barely-breaking-even also-ran, or a profitable business propped up by a couple thousand trademark owners paying five grand a year on unused defensive regs.

Chaotic scenes as ‘Grumpies’ lose auDA board fight

Three directors of .au registry auDA managed to keep their seats on the board despite losing the “popular vote” of members late last week.
The vote happened at the conclusion of an occasionally chaotic three-hour meeting that saw former AusRegistry chief Adrian Kinderis kicked out of the room barely a minute into proceedings.
The results in each of the three votes to fire directors Suzanne Ewart, Sandra Hook and chair Chris Leptos were 57 or 58 in favor and 51 or 52 against, which would have been a narrow win for the so-called “Grumpies” who originally called for the sackings.
However, auDA rules require, Leptos said, a simple majority of both “Supply” and “Demand” classes of members, and the Supply class (ie, registrars) voted against the motions by 30 to 2 or 31 to 1.
Therefore, all three directors get to keep their jobs.
auDA noted in a statement that a greater proportion of Supply class members (the substantially smaller constituency) turned out to vote compared to Demand class, adding:

It is time now for all members to get behind the reform of auDA as demanded by the federal government.
auDA is not the plaything of a small group of self-interested parties.
It can no longer be run as a club type organisation with a small membership who wield undue influence.

A “club type organization” was pretty much what came across during the meeting, which was audio-only webcast Friday morning. ICANN, auDA ain’t.
I was left with the impression of something a bit like Nominet circa 2010 or my first ICANN meeting back in 1999. Not so much herding cats, as [RACIST JOKE ALERT] herding wallabies.
At times it felt like an ICANN Public Forum, with an infinite number of Paul Foodys lining up at the mic.
At the same time, the meeting was chaired by somebody who, despite never losing his cool, seemed set on limiting criticism from members to the greatest extent possible.
There was controversy from the very outset, with the former CEO of former .au back-end provider AusRegistry (now part of Neustar) getting kicked out in the opening minute.
Kinderis, who no longer works for Neustar and has vowed publicly to be a thorn in auDA’s side, said he was “unlawfully removed” from the meeting by venue security, at the instruction of Leptos.
Leptos disputed Kinderis’ claim that he was there as a proxy for a legit member and said he believed he had acted “entirely appropriately” in ordering his removal.
There was no suggestion of physical force being used. His exit was recorded by chief Grumpy Josh Rowe, who then posted a brief video to Twitter.

pic.twitter.com/zvfJhuqUm9

— Josh Rowe (@joshrowe) July 27, 2018

Leptos then threatened to throw out fellow Grumpy Jim Stewart, who was protesting Kinderis’ removal, before warning non-member attendees that they would not be permitted to ask questions.
Forty-five minutes later, he repeatedly threatened to kick out Stewart for live-streaming video of the meeting from his phone, having apparently received complaints from other members.
Fifteen minutes later, the threats returned after Stewart and another member attempted to engage Leptos in an argument about auDA’s member recruitment policy.
The words “take a seat Mr…” were a recurring meme throughout the meeting.
The original reasons for the call for the directors to be fired were myriad, ranging from lack of transparency to projects such as the Neustar-Afilias registry transition and auDA’s desire to start selling direct second-level .au domains.
But the bulk of the meeting was taken up with discussions, and attempted discussions, about auDA’s recent membership spike.
The Grumpies have audited the new member list — which has grown from 300-odd to 1,345 in just a few weeks — and found that the vast majority of new members are employees of just three registrars and one registry (Afilias, the new back-end).
They reckon these new members, many of whom do not live in Australia, represent an attempt by auDA leadership to capture the voting community, and that foreigners are not technically members of the “Australian internet community” that auDA is supposed to represent.
Leptos responded to such criticisms by saying that employees of Australia-focused registrars are indeed members of the Australian internet community, regardless of their country of residence.
He added that auDA is under the instruction of the Australian government to diversify its membership — he said that registrars have no board representation currently — and that the recently added members are a first step on that path.
The Grumpies had shortly before the meeting started making accusations that the membership influx amounts to “potential cartel behaviour”.
Leptos addressed this directly during the meeting, saying they had “accused the CEO of criminal conduct” and categorically denying any wrongdoing.
auDA later issued a statement saying:

This is a very serious allegation to have been made and auDA strongly disagrees that by encouraging others to join the auDA membership, or by approving membership applications which satisfy its constitutional requirements, auDA or its officers have engaged in cartel behaviour or otherwise acted improperly.