More change at the top at Donuts as Tindal steps down

Donuts has lost co-founder and COO Richard Tindal, who has announced his retirement.
Tindal was one of the four domain industry executives who founded Donuts in order to take advantage of ICANN’s new gTLD program about seven years ago.
No reason was given for his departure, which was announced in a blog post, beyond “retirement”.
Co-founders Paul Stahura, Jon Nevett and Dan Schindler are all still with the company, but founding CEO Stahura recently stepped into the chairman’s role to give venture capitalist Bruce Jaffe the corner office.
Tindal had previously worked in senior roles for Verisign, Neustar and Demand Media (now Rightside).

Second emergency registry tested with dead dot-brand

ICANN is running its second test of the Emergency Back-End Registry Operator system, designed as a failover for bankrupt gTLDs.
This time, the EBERO under the microscope is CORE Association, one of the three approved providers.
It this week took over operation of .mtpc, a dot-brand gTLD that Mitsubishi applied for, was delegated, never used, and then decided it didn’t want to run any more.
ICANN said:

ICANN is conducting a test of the Emergency Back-End Registry Operator program. Simulating an emergency registry operator transition will provide valuable insight into the effectiveness of procedures for addressing potential gTLD service interruptions. Lessons learned will be used to support ICANN’s efforts to ensure the security, stability and resiliency of the Internet and the Domain Name System.

The first test was conducted by ICANN and EBERO provider Nominet earlier this year, using the similarly unloved dot-brand .doosan.
I expect we’ll see a third test before long, using CNNIC, the third EBERO provider.
It would have plenty of dead dot-brands to choose from.

MMX stung for $7.7 million by crappy .london contract?

Did MMX take a $7.7 million accounting hit to renegotiate a crappy .london gTLD contract? It looks a bit like that to me.
Found in the company’s full-year 2016 financial results yesterday is the disclosure that it had to pay off an undisclosed gTLD partner after originally making “overly ambitious” predictions about its likely popularity.
The deal apparently had MMX — then under previous management as Minds + Machines — making guaranteed payments to its partner on the assumption that it would sell a lot more domains than it eventually did.
.london currently has about 56,000 names in its zone file, down from a post-launch peak of about 65,000.
According to its statement to the markets, MMX recorded a 2016 one-time contract restructuring expense of $3.8 million and has added a $3.9 million intangible asset to its balance sheet in relation to the contract.
That’s a total of $7.7 million, but CEO Toby Hall told DI that the cash payment was nowhere near that amount. He said:

in reality we have paid no where near that amount and much of this is the accounting treatment of a new contract that we believe has the potential to deliver future economic value to the business and will be covered from future revenues.

The gTLD in question is not named in the statement, and Hall also declined to name it in response to a DI inquiry, but MMX says of the contract:

In very early 2012, at the time when ICANN was still accepting new generic Top Level Domain applications, the then Executive Team entered into an overly ambitious agreement that it believed would provide value to the overall profile of the Group. The agreement had very significant financial commitments over the life of the contract and did not include any clauses that could allow the Group to renegotiate those commitments should the specific top-level domain not perform to the agreed financial projections. The growth of this top-level domain has not come close to meeting those expectations and the agreement has proven – and would have continued proving – to be a significant drag on the Group’s ability to generate positive cashflow from the given TLD.
In late Q4 of 2016 the current Executive team was able to successfully conclude renegotiations of certain components of the agreement by either restructuring or buying out certain financial commitments thus making it more economically viable going forward. As a result of the renegotiation effort, the Group has revised its modeling and believes that it can derive future economic benefit from the renegotiated contract. Accordingly, based on Management’s review, a portion of the buy out ($3.8million) has been expensed as a one-off restructuring cost while the remaining portion ($3.9million) will be capitalized as an intangible asset with future economic benefit.

All the evidence points to .london being the gTLD in question.
First, MMX says that the deal was entered into in “very early 2012”, which ties up with the timing of the request for proposals by the Mayor’s marketing office, London & Partners.
Second, MMX doesn’t have any other partner-based gTLDs that would plausibly have such ambitious commitments.
Third, MMX has previously stated that it was renegotiating some “burdensome” contracts. Last year, without relating it to a renegotiation, it said in a trading update that it was “encouraging to see an increasingly commercial and flexible approach from London & Partners, our Dot London partners”.
Fourth, word on the street back in 2012 was that L&P (which remember is affiliated with the London Mayor, an elected political office) had gone with tax-haven-based MMX rather than UK-based non-profit Nominet because MMX (then Minds + Machines) had offered the best financial incentives.
The scrapping of the old deal is perhaps another indicator of the hubris that accompanied the opening of the new gTLD program five years ago.
While L&P is the “owner” of .london, for want of a better word, in practice I gather that MMX runs it pretty much as if the gTLD was part of its regular portfolio.
The news of the contract changes were made in MMX’s audited 2016 results, which showed its billings doubling to $15.8 million during the year.
Revenue was $15 million, up from $6.3 million in 2015. Less partner payments, revenue was $13.5 million versus $5.5 million a year earlier.
The statement has half a dozen or more bottom lines, depending on what costs you exclude, but the one MMX wants us to look at is “Billings Operating EBITDA before one off restructuring costs”, which was $4.2 million compared to a loss of $6.6 million in 2015.
That, in other words, means that an unprofitable company has become a profitable one.
A lot of that has to do with the revenue from hundreds of thousands of .vip domain sales in China and a swingeing restructuring that led to headcount being slashed from 43 people to 20 people.
The company also sold off its registrar business to Uniregistry and started outsourcing its back-end functions to Nominet.
For 2017, the company has already disclosed two huge sales that will boost domains under management considerably, but at the risk of concentrating a larger part of MMX’s business outlook in just a few hands.
UPDATE: This article was updated a few hours after publication to clarify what MMX has said in relation to .london in previous trading statements.

Afnic CEO quits, heads to new mystery job

Afnic CEO Mathieu Weill has abruptly quit the French domain registry and is heading to a new job elsewhere.
The .fr registry said Weill will be replaced on an interim basis by his deputy, Pierre Bonis, from May 1.
A formal search for a permanent replacement will begin “in the coming weeks”, Afnic said.
Weill has been with the company, which also manages the ccTLDs for French overseas territories, since 2005.
He oversaw the growth of .fr from 300,000 names to 3 million in that time, according to his LinkedIn profile.
He told DI that he has a new job lined up with a different company, but that he’s unable to disclose his new role yet.

Verisign to keep price increase power under new .net contract

The wholesale price of a .net domain is likely to top $15 by 2023, under a proposed renewal of its ICANN contract revealed today.
ICANN-imposed price caps are staying in the new Registry Agreement, but Verisign retains the right to increase its fees by 10% in each of the six years of the deal’s lifespan.
But domain investors do have at least one reason to be cheerful — while the contract adds many features of the standard new gTLD registry agreement, it does not include a commitment to implement the Uniform Rapid Suspension anti-cybersquatting procedure.
The current .net annual fee charged to registrars is $8.95 — $8.20 for Verisign, $0.75 for ICANN — but Verisign will continue to be allowed to increase its portion by up to 10% a year.
That means the cost of a .net could hit $15.27 wholesale (including the $0.75 ICANN fee) by the time the proposed contract expires in 2023.
Verisign has form when it comes to utilizing its price-raising powers. It exercised all six options under its current contract, raising its share of the fee from $4.65 in 2011.
On the bright side for volume .net holders, the prices increases continue to be predictable. ICANN has not removed the price caps.
Also likely to cheer up domainers is the fact that there are no new intellectual property protection mechanisms in the proposed contract.
Several post-2000 legacy gTLDs have agreed to incorporate the URS into their new contracts, leading to outrage from domainer organization the Internet Commerce Association.
ICA is worried that URS will one day wind up in .com without a proper ICANN community consensus, opening its members up to more risk of losing valuable domains.
The fact that URS is not being slipped into the .net contract makes it much less likely to be forced on .com too.
But Verisign has agreed to several mostly technical provisions that bring it more into line with the standard 2012-round new gTLD RA.
For example, it appears that daily .net zone files will become accessible via ICANN’s Centralized Zone Data Service before the end of the year.
Verisign has also agreed to standardize the format of its data escrow, Whois and monthly transaction reports.
The company has also agreed to start discussions about handing .net over to an emergency back-end operator in the event it files for bankruptcy.
The current contract is due to expire at the end of June and the proposed new deal would kick in July 1.
It’s now open for public comment until June 13.

Mystery buyer pumps $500,000 into MMX gTLDs

MMX has inked a deal to sell 90,000 domain names to a mystery buyer.
The company formerly known as Minds + Machines today disclosed to the markets that the deal is worth $500,000 in the first year, and that the names will be registered at some point over the coming 12 months.
CEO Toby Hall declined to identify the buyer or the gTLDs concerned, but told DI that it’s an end-user buyer rather than a domain investor, and that the buyer is not Chinese.
It’s unrelated to the $1.3 million a Chinese domain investor paid for 200,000 .vip domains a couple weeks ago.
In both cases, the sales were disclosed to the market because they were financially material.
In this case, the 90,000 domains will cause a 37% uptick in MMX’s total registration base, if you exclude .vip from the portfolio.
The names are not registry-reserved, and are not premium-priced.
It works out to about $5.55 per domain, which is a first-year discount MMX agreed to with the undisclosed registrar that brought in the business. If they renew, they will renew at whatever the standard renewal price is at the time.
Hall said he did not know exactly when the domains will be registered, but MMX’s statement to the market said that it would be within the next 12 months.
Quite how the buyer can commit to buying 90,000 names without even knowing whether the names it wants will be available when it comes to register them, I’m not sure.
It’s all a bit mysterious, but my gut feeling is that we’re probably looking at one of those networks of low-quality, machine-aggregated, niche-content portals that spring up from time to time.
Previous efforts linked to the gTLD industry, such as Zip.pro and Socium Networks, haven’t exactly set the world alight.
But it this case it appears to buy a genuine third-party buyer, not a registry front.
Hall said that he was unaware of whether the buyer has also made large-scale purchases from other registries that do not have the same disclosure requirements, but said it was certainly possible.

Uniregistry and Neustar have TLDs approved in China

China’s April batch of approved TLDs has been released, featuring three domains from Neustar and Uniregistry.
Neustar had its longstanding, 2000-round .biz pass regulatory scrutiny, while Uniregistry’s .link and .auto have also been approved.
While .auto is managed by Cars Registry, a joint venture with XYZ.com, its stablemates .car and .cars do not appear to have yet been approved.
The rubberstamping was made by China’s Ministry of Industry and Information Technology, which administers the country’s stringent regulatory framework.
Clearance means that customers of Chinese registrars will actually be able to deploy and use the names they buy.
The registries have also agreed to strict takedown policies for Chinese registrants.
While MIIT appears to be announcing newly approved TLDs on a monthly basis, it’s a slow drip-feed. I believe there are still fewer than 20 Latin-script gTLDs currently cleared for use in China.

.club premium sales approaching $5 million

.CLUB Domains sold half a million dollars worth of reserved premium names in the first quarter, bringing its cumulative to-date total to almost $5 million, the registry reported at the weekend.
Q1 sales were $505,139, the company said, bringing its total since launch to $4,844,428.
There were 475 premium sales in total, sold via auctions, registrars and aftermarket platforms, it said.
Headline sales in the period included seniors.club and pet.club for $18,000 apiece, and photo.club for $10,000.
The numbers may indicate that its broker program and financing options, introduced in January, may be taking off.
The registry’s Q1 sales amount to more than half of what it sold in the whole of 2016.
More sales figures are available in the .CLUB Domains blog post.

Chinese to invade .africa? CEO thinks so

While .africa finally went on sale last week after years of legal fights, it seems Africans may find themselves in the minority of registrants.
A combination of awareness, pricing and anticipated interest from Chinese domain investors, means that Africans could account for as few as 1 in 10 .africa registrations, according to Lucky Masilela, CEO of .africa registry ZA Central Registry.
The domain went into its sunrise period last week, and has a multi-phased launch planned out that will last until July 1, 2018.
After the trademark owners have had their crack at the domain — Masilela tells us that South Africa brands such as Nando’s are among the first to grab theirs — there will be five phases in which domains will be open to all but priced at a premium.
Starting June 5 there will be five landrush periods of five day, each a kind of hybrid between the traditional landrush period and the kind of Early Access Period offered by Donuts and others.
Each landrush will see all names priced at a certain amount, with the amount going down at the start of each period — $5,000 to $2,000 to $1,000 to $500 (all USD).
In the event that any name is claimed by more than one registrant, there will be an auction for that name at the end of the period.
Then on July 4 comes the first period of “general availability”, from which point all domains will be first-come, first-served.
But for the first 28 days of GA, domains will be priced at $150, other than domains categorized by the registry as premium.
Domains then come down to a more affordable $18 wholesale.
But that’s not the end. ZACR has baked in a price reduction to $12.50 wholesale, due to kick in July 1 2018. From then on out, it’s business as usual.
Unlike similar TLDs such as .eu, there are to be no geographic restrictions on who can register .africa names, and Masilela said he expects registrants from Africa to be in a minority.
“I think were are looking at about 10% from the continent, growing gradually over the years,” Masilela said. “The next wave is going to be international registrars.”
“We have a big suspicion that we will probably see a huge uptake coming from the east, which is the China market,” he said. “They’ll probably come in and grab a large number of domain names.”
He said that Chinese investment in Africa offline is likely to be mirrored online.
Pricing is also likely to be a factor. While .africa will bottom out, ignoring periodic discounts, at $12.50, that’s still quite a lot more than you’d expect to pay for African ccTLDs. ZACR’s own .za costs about $4 per year.
The relatively high price of becoming ICANN accredited has also meant that while Africa has 50-something countries, there are currently only about half a dozen gTLD registrars based there.
ZACR proposes to counter this by offering a gateway service rather like the one it already offers in .joburg and .capetown, that would help bring its own .za registrars on board.

Companies losing $10 BILLION by ignoring new gTLDs — report

The world economy is “conservatively” losing out on almost $10 billion of annual revenue due to a lack of support for new gTLDs and internationalized domain names, according to an ICANN-commissioned research report.
The report, conducted by Analysys Mason for the semi-independent Universal Acceptance Steering Group, calculated that patchy new gTLD support means $3.6 billion of activity is lost, with lack of IDN support costing $6.2 billion.
Despite “new” gTLDs being around for a decade and a half, there are still plenty of web sites and apps that incorrectly assume that all TLDs are either two or three characters. Others don’t support non-Latin scripts.
This leads to internet users abandoning transactions, the report says, when their email addresses are rejected as invalid.
Mason calculated the $3.6 billion number by multiplying the estimated number of email addresses using new gTLD domains (152 million) by the estimated average annual revenue generated per email address ($360), then calculating what portion of these transactions cannot happen due to incomplete TLD support.
Earlier research by .CLUB Domains suggests that 13% of sites do not support new gTLDs, so that’s the number Mason used. The researchers then cut the number in half, to account for the 50% of people it reckons would simply switch to an email address in a legacy TLD name.
That gets you to $3.6 billion of potential revenue lost for want of gTLD support.
Another, more cynical way to spin this would be to say that new gTLDs are causing $3.6 billion of economic damage. After all, if everyone were to use legacy TLDs there would be no problem.
For the IDN number, Mason calculated how many users of five major language groups (Russian, Chinese, Arabic, Vietnamese and Indian languages) are not currently online, then estimated how much revenue would be generated if just 5% of these users (17 million people) were persuaded online by the existences of IDN TLDs.
The report was commissioned in order to raise awareness of the financial benefits of universal acceptance.
The UASG has spent most of its efforts so far focusing on UA as a “bug fix” to be communicated to engineers, so the report is intended to broaden its message to catch the attention of the money people too.
The report, which goes into much more detail about how the numbers were arrived at, can be downloaded here.