MMX probing accounting of mystery contract

New gTLD registry MMX says it’s looking into whether it incorrectly accounted for about $1 million of revenue last year.

The company told investors Friday that $938,000 of revenue from a single contract was recognized in 2019, but there’s a possibility it should have been classified as “a refundable deposit against future sales or deferred revenue”.

The same goes for $25,000 recognized in the first half of this year.

The contract generated cash of $1.125 million in 2019.

Regular domain sales are usually recognized over the course of the registration and show up on the balance sheet as deferred revenue.

It’s not known which contract MMX is referring to in its notice. I’m tempted to wonder whether it relates to AdultBlock, the defensive registration service available across the company’s four porn-themed gTLDs.

The company had previously reported $1.1 million in revenue (rather than cash) from the sale of 2,000 AdultBlock regs for 2019, which puts it in the right ball-park, but it seems unlikely that so many domains would be blocked under a single contract.

MMX said the worst that could happen is that it would be on the hook for $1 million if it turned out the cash was refundable, adding that it had $7.3 million in the bank at the end of June.

Its share price took a battering anyway, losing almost a fifth of its value on Friday.

MMX revenue down even as sales rise during pandemic

New gTLD registry MMX saw its revenue dip in the first half of the year, even as the number of domain names it sold increased.

The company today reported a net profit after tax of $1.2 million, down from $1.7 million a year ago, on revenue that was down 5% at $8.5 million.

But billings were up in the quarter were up 7%, with channel billings (ie, domains sold via third-party registrars) up 20%.

Billings is the measure of how much the company sold, which is largely deferred and recognized as revenue over the period of the registration.

Domains under management across the registry’s portfolio of 31 gTLDs increased 31% to 2.38 million.

The company blamed a lack of brokered premium sales for the top-line decline, saying that segment contributed $0.1 million in the half, compared to $0.8 million a year ago.

MMX said registrar partner sales were “unimpacted by COVID”, up 4% to $8.3 million, but two of its brand-protection partners had to delay the launch of its pricey AdultBlock porn domain blocks until Q4, so there was no revenue to be found in defensives in the half.

This ICANN comment period is a Kafkaesque nightmare

With the deadline for commenting on draft new gTLD program rules rapidly approaching, you may be tempted to visit the ICANN web site to peruse the comments that have already been submitted by others. Good bloody luck.

The way ICANN has chosen to present the comments is so bafflingly opaque, confusing and confounding that I can’t help but conclude it must have been deliberately designed to be as soul-crushing as possible.

Regular comment periods are pretty straightforward: you email your comments as prose to ICANN, ICANN publishes the email and any attachments for others to read. Everyone knows where everyone stands. Job done.

But recently there’s been a worrying trend towards a questionnaire and spreadsheet model based around Google Docs, and that’s the model being used for comments on the final draft report of the new gTLD program working group, known as SubPro.

You can check out the spreadsheet here.

The first thing you’ll notice is that the spreadsheet is 215 columns wide, with each respondent given one row for their responses.

You’ll also notice that the spreadsheet doesn’t seem to understand line breaks. Where the respondent has provided some textual commentary, it’s spread across multiple columns in some cases and not in others.

And then there’s the column headings.

While stumbling randomly through the spreadsheet, I discovered an interesting nugget of information — it seems the new gTLD registry MMX wants the next application round delayed until all of the 2012 round have been launched, which I found a bit surprising.

This nugget can be found under the column heading “Enter your response here”, a heading that is helpfully shared by 90 (ninety) other columns on the same damn page.

The heading “Do you want to save your progress and quit for now? You will be able to return to the form to complete it at a later time” appears 10 times in the document.

No information in adjacent columns sheds any light on what triggered MMX to make its comment.

In order to figure out the question for pretty much any response, the only option appears to be to cross-reference the spreadsheet with the original form questionnaire, which can be found as a PDF here.

But the questionnaire has 234 questions and there’s no straightforward correlation between the question number and the columns on the spreadsheet, which are addressed as AA through IG.

So when you see that European industry group CENTR went to the trouble to “Support Output(s) as written” in column DI, under the heading “If you choose one of the following responses, there is no need to submit comments”, it’s virtually impossible to figure out what it actually supports.

If you are able to figure out which question it was answering, that probably won’t help you much either.

The form merely contains brief summaries of changes the working group has made. To see the “Output(s) as written” you’d have to cross-reference with the 363-page draft final report (pdf).

A lot of you are probably thinking that I should just export the spreadsheet into Excel or OpenOffice and clean it up a bit. But, no, you can’t. ICANN has disabled exporting, downloading, and even copy-pasting.

It’s enough to make one feel like going out and licking the floor on public transport.

Way to go on the transparency, ICANN!

I have to believe that the ICANN staffer responsible for compiling all these comments into the official ICANN summary has some tools at his or her disposal to render this mess decipherable, because otherwise they’ve got a huge, hair-ripping job on their hands.

Of course, since there doesn’t appear to be a way for the rest of us to verify the summary report’s accuracy, they can probably just write whatever they want.

Verisign measures the industry’s lockdown bump

The domain name industry added a net 400,000 extra domain registrations in the second quarter, when compared to the same quarter a year ago.

That’s according to Verisign’s latest Domain Name Industry Brief, which is arguably the most comprehensive data on how domain names fared while much of the developed world was subject to coronavirus lockdown.

The second quarter of 2020 ended with 370.1 million regs across all TLDs, up by 3.3 million sequentially and 15.3 million year over year, Verisign said.

That compares to a Q2 2019 increase of 2.9 million domains.

ccTLDs appear — at least at first glance — to have performed particularly strongly, adding a net 2.6 million regs to end June at 160 million. That compared to Q2 2019 net adds of 1.9 million.

Unfortunately, those numbers include the free ccTLD .tk, which never deletes a domain, and that space saw 2.4 million adds in the quarter, dramatically damaging the optics for ccTLDs as a whole.

New gTLDs as a whole fared poorly, losing a net 600,000 names during the period, to end Q2 at 31.6 million.

Most of that dip is attributable to the fast-selling new gTLD .icu, which lost 400,000 domains during the quarter due to the effects of its first junk drop.

Verisign’s own .com was up by at 1.4 million names to 148.7 million at the end of June; .net was flat at 13.4 million.

The company sold 1.1 million more domains in Q2 2020 than it did in Q2 2019.

You can read the Q2 DNIB here (pdf).

Fight over closed generics ends in stalemate

Closed generic gTLDs could be a thing in the next application round. Or they might not. Even after four years, ICANN’s greatest policy-making minds can’t agree.

The New gTLDs Subsequent Procedures working group (SubPro) delivered its draft final policy recommendations last week, and the most glaring lack of consensus concerned closed generics.

A closed generic is a dictionary-word gTLD, not matching the applicant’s trademark, that is nevertheless treated as if it were a dot-brand, where the registry is the only eligible registrant.

It’s basically a way for companies to vacuum up the strings most relevant to their businesses, keeping them out of the hands of competitors.

There were 186 attempts to apply for closed generics in 2012 — L’Oreal applied for TLDs such as .beauty, .makeup and .hair with the clear expectation of registry-exclusive registrations, for example

But ICANN moved the goalposts in 2013 following advice from its Governmental Advisory Committee, asking these applicants to either withdraw or amend their applications. It finally banned the concept in 2015, and punted the policy question to SubPro.

But SubPro, made up of a diverse spectrum of volunteers, was unable to reach a consensus on whether closed generics should be allowed and under what circumstances. It’s the one glaring hole in its final report.

The working group does appear to have taken on board the same GAC advice as ICANN did seven years ago, however, which presents its own set of problems. Back in 2013, GAC advice was often written in such a way as to be deliberately vague and borderline unimplementable.

In this case, the GAC had told ICANN to ban closed generics unless there was a “a public interest goal”. What to make of this advice appears to have been a stumbling block for SubPro. What the hell is the “public interest” anyway?

Working group members were split into three camps: those that believed closed generics should be banned outright, those who believed that should be permitted without limitation, and those who said they should be allowed but tightly regulated.

Three different groups from SubPro submitted proposals for how closed generics should be handled.

The most straightforward, penned by consultant Kurt Pritz and industry lawyers Marc Trachtenberg and Mike Rodenbaugh, and entitled The Case for Delegating Closed Generics (pdf) basically says that closed generics encourage innovation and should be permitted without limitation.

This trio argues that there are no adequate, workable definitions of either “generic” or “public interest”, and that closed generics are likely to cause more good than harm.

They raise the example of .book, which was applied for by Amazon as a closed generic and eventually contracted as an open gTLD.

Many of us were thrilled when Amazon applied for .book. Participation by Amazon validated the whole program and the world’s largest book seller was well disposed to use the platform for innovation. Yet, we decided to get in the way of that. What harm was avoided by cancelling the incalculable benefit staring us right in the face?

Coincidentally, Amazon signed its .book registry agreement exactly five years ago today and has done precisely nothing with it. There’s not even a launch plan. It looks, to all intents and purposes, warehoused.

It goes without saying that if closed generics are allowed by ICANN, it will substantially increase the number of potential new gTLD applicants in the next round and therefore the amount of work available for consultants and lawyers.

The second proposal (pdf), submitted by recently independent policy consultant Jeff Neuman of JJN Solutions, envisages allowing closed generics, but with only with heavy end-user (not registrant) involvement.

This idea would see a few layers of oversight, including a “governance council” of end users for each closed generic, and seems to be designed to avoid big companies harming competition in their industries.

The third proposal (pdf), written by Alan Greenberg, Kathy Kleiman, George Sadowsky and Greg Shatan, would create a new class of gTLDs called “Public Interest Closed Generic gTLDs” or “PICGS”.

This is basically the non-profit option.

PICGS would be very similar to the “Community” gTLDs present since the 2012 round. In this case, the applicant would have to be a non-profit entity and it would have to have a “critical mass” of support from others in the area of interest represented by the string.

The model would basically rule out the likes of L’Oreal’s .makeup and Amazon’s .book, but would allow, off the top of my head, something like .relief being run by the likes of the Red Cross, Oxfam and UNICEF.

Because the working group could not coalesce behind any of these proposals, it’s perhaps an area where public comment could have the most impact.

The SubPro draft final report is out for public comment now until September 30.

After it’s given final approval, it will go to the GNSO Council and then the ICANN board before finally becoming policy.

Domain industry had best April ever under lockdown

The domain industry had its best April ever in terms of new domains sold in gTLDs, according to my tally, despite much of the Western world spending the month in coronavirus lockdown.

There were a total of 5,291,077 domain adds in April, across all 1,253 gTLDs currently filing transaction reports with ICANN.

That’s up almost 100,000 on the 5,191,880 adds in April 2019 and the best April since the first new gTLDs started coming into circulation in 2013.

[table id=60 /]

While a measly 100k jump may be less impressive than expected based on the enthusiastic descriptions of the lockdown bump coming from registries and registrars over the last few months, it makes a bit more sense when you factor out Chinese volume success story .icu.

.icu, currently the largest of the new gTLDs, was having a bit of a growth spurt at the start of 2019, and added 267,287 domains in April last year. That was down to 56,714 this April. The TLD has been declining for the last few months.

Looking at the TLDs that seem most obviously related to lockdown, the standout is .bar, which added 26,175 names this April, compared to just 151 a year ago.

It’s been well-reported that many restaurants and bars affected by coronavirus switched to online ordering and home delivery, and .bar appears to be a strong beneficiary of this trend.

.bar currently has more than 100,000 names in its zone file, roughly double its pre-lockdown level.

.com fared well, adding 3,382,029 domains this April, compared to 3,360,238 in the year-ago period.

But .xyz did better, relatively, adding 256,271 names, compared to 200,003 a year earlier.

Also noteworthy was .buzz, which has been performing very strongly over the last 12 months. It added 60,808 names this April, compared to just a few hundred.

This table shows the 20 gTLDs with the most adds in April 2020, with their April 2019 numbers for comparison.

[table id=61 /]

ICANN close to becoming $200 million gift-giver

Remember how ICANN raised hundreds of millions of dollars auctioning off new gTLD contracts, with only the vaguest of ideas how to spend the cash? Well, it’s coming pretty close to figuring out where the money goes.

The GNSO Council approved a plan last Thursday that will turn ICANN into a giver of grants, with some $211 million at its initial disposal.

And the plan so far does not exclude ICANN itself for applying to use the funds.

The plan calls for the creation of a new Independent Project Applications Evaluation Panel, which would be charged with deciding whether to approve applications for this auction cash.

Each project would have to fit these criteria:

• Benefit the development, distribution, evolution and structures/projects that support the Internet’s unique identifier systems;
• Benefit capacity building and underserved populations, or;
• Benefit the open and interoperable Internet

Examples given include improving language services, providing PhD scholarships, and supporting TLD registries and registrars in the developing world.

The evaluation panel would be selected “based on their grant-making expertise, ability to demonstrate independence over time, and relevant knowledge.” Diversity would also be considered.

While existing ICANN community members would not be banned from being on the panel, it’s being strongly discouraged. The plan over and over again stresses how there must be rigorous conflict-of-interest rules in place.

What’s less clear right now is what role ICANN will play in the distribution of funds.

The Cross-Community Working Group that came up with the proposal offers three possible mechanisms, but there was no strong consensus on any of them.

The one being pushed, “Mechanism A”, would see ICANN org create a new department — potentially employing as many as 20 new staff — to oversee applications and the evaluation panel.

Mechanism B would see the same department created, but it would work with an existing independent non-profit third party.

Mechanism C would see the function offloaded to a newly created “ICANN Foundation”, but ICANN’s lawyers are not keen on this idea.

The Intellectual Property Constituency was the lone dissenting voice at Thursday’s GNSO Council vote. The IPC says that support for Mechanism A actually came from a minority of CCWG participants, depending on how you count the votes.

It thinks that ICANN should divorce itself as far as possible from the administration of funds, and that not to do so creates the “unreasonable risk” of ICANN being perceived as “self-dealing”.

But as the plan stands, ICANN is free too plunder the auction funds at will anyway. ICANN’s board of directors said as long ago as 2018:

ICANN maintains legal and fiduciary responsibility over the funds, and the directors and officers have an obligation to protect the organization through the use of available resources. In such a case, while ICANN would not be required to apply for the proceeds, the directors and officers would have a fiduciary obligation to use the funds to meet the organization’s obligations.

It already took $36 million from the auction proceeds to rebuild its reserve fund, which had been diminished by ICANN swelling its ranks and failing to predict the success of the new gTLD market.

The CCWG also failed to come to a consensus on whether ICANN or its constituent parts should be banned from formally applying for funds through the program.

Because the plan is a cross-community effort, it needs to be approved by all of ICANN’s supporting organizations and advisory committees before heading to the ICANN board for final approval.

There also looks to be huge amount of decision-making and implementation work to be done before ICANN puts its hand in its pocket for anyone.

.com renewals lowest in years, but Verisign sees lockdown bump anyway

.com and .net saw decent growth in the lockdown-dominated second quarter, despite Verisign reporting the lowest renewal rate since 2017.

The company last night reported that it sold more new domains in Q2 than it did in the same period last year — 11.1 million versus 10.3 million a year ago.

It added a net 1.41 million names across both TLDs in the quarter, compared to growth of 1.34 in Q2 2019.

CEO Jim Bidzos did not directly credit coronavirus for the bump, but he told analysts that the growth was driven primarily by small businesses in North America getting online. The US went into lockdown in the last week of March.

Verisign has now upped its guidance for the year. It now expects growth in domains of between 2.75% and 4%. That’s higher than the guidance it was giving out at the start of the year, pre-coronavirus.

The company had lowered this guidance to between 2% and 3.75% in April due to coronavirus uncertainties, which with hindsight clearly seems overly cautious.

On the flipside, Verisign’s estimated renewal rate for the quarter was down to only 72.8%, down from 74.2% a year ago, the worst it’s been since Q1 2017, when renewals were suffering through the tail-end of a massive Chinese junk drop.

But Bidzos said that the low rate was “primarily related to the lower overall first-time renewal rate”, suggesting that it might be more due to registrar promotions or heightened speculation a year ago than any coronavirus-related drag factor.

For Q2, Verisign reported revenue up 2.6% year over year at $314 million, with net income up from $148 million to $152 million.

The company also announced yesterday that it is freezing its prices across all of its TLDs until March 31, 2021.

You’ll recall that it gets the right to increase prices 7% starting on October 26 this year, under its new deal with ICANN and the US government, and Verisign confirmed yesterday that there will definitely be a price increase next year.

Because there’s a six-month notice period requirement in the contract, news of the timing of this increase could come as soon as September this year.

Over 660,000 “coronavirus” domains registered

There have been hundreds of thousands of domains that appear to refer to coronavirus registered since the start of the outbreak, but the domain industry reckons only a tiny portion of them have been used maliciously.

Speaking on a recent webinar, ICANN security specialist Sion Lloyd said that up until the end of May, ICANN had found 662,111 domains that at first glance appeared to be related to the pandemic.

ICANN had cast a wide net, parsing the zone files for all of the gTLDs and a handful of ccTLDs for strings such as “covid”, “corona”, “mask”, “quarantine” and “lockdown” in multiple languages.

But it also searched for homoglyph variants, such as replacing the O in Covid with a 0, and this brought in hundreds of thousands of false positives.

The actual number of domains that appear to refer to the virus and its impact is more like 170,000, Lloyd said.

The word “mask” was more commonly found than “corona”, but less frequently than “covid”.

The research was done as part of ICANN’s attempt to provide registries and registrars with data they could use to mitigate abuse, such as the sale of fake vaccines, fraud or phishing attacks.

But ICANN said that after it ran thousands of daily registrations through various public threat lists, it found a few hundred per day were potentially suspicious. At the peak, roughly 10 per day were considered serious enough to refer to registrars. That’s now down to three or four a day, Lloyd said.

His research was backed up by similar studies, albeit using slightly different methodologies and different-sized nets, by registries and registrars.

Tucows’ Graeme Bunton showed data reflecting that the registrar was seeing about 300 coronavirus-related regs per day at its peak in March.

The company had its compliance team manually check each domain, and found that only 0.5% were being used for clearly malicious purposes. The large majority — around 70% — were parked or not resolving, he said.

Jim Galvin from Afilias said that at the March peak the registry was seeing almost 900 coronavirus domains across its 25 gTLDs every week. That had dropped to under 100 by the end of March.

Brian Cimbolic of Public Interest Registry said that there had been 14,700 total registrations by the end of May, with the early April peak seeing over 500 in a single day.

While all this work is an example of ICANN and the industry getting involved to some extent in content regulation, Tucows’ Bunton said that it was an “exceptional” circumstance that was unsustainable and of limited use.

More data and the webinar recording can be found here.

.black gTLD has seen boost since George Floyd killing

Afilias’ little-known new gTLD .black has seen a noticeable increase in registrations in the last few weeks, as Black Lives Matter protests span the globe.

Between January 1 and May 25 this year, the day on which George Floyd was killed by Minneapolis police over a trivial offence, the gTLD’s zone file grew by 227 domains.

But in the 22 days since the killing, as BLM protests have spread across the US and elsewhere, it’s grown by 292 domains, currently standing at a modest 4,490.

Basically, it’s grown in three weeks by more than the previous five months combined.

The domain georgefloyd.black was registered May 27, after video of the incident shared on social media had attracted mainstream media attention, and is currently parked at GoDaddy.

Other .black domains registered since his death include accountable.black, lives.black, understanding.black, listen.black and itshardbeing.black.