Ted Cruz slams Chehade over Chinese “conflict”

US presidential hopeful Ted Cruz has taken time out of his busy primaries schedule to lay into ICANN CEO Fadi Chehade over his new job on a Chinese policy panel.
Cruz said in a letter to Chehade that China is known for its terrible track record on freedom of speech, and wondered aloud whether Chehade’s involvement in the panel constituted a conflict of interest.
Chehade said in December that he’d joined, as co-chair, an advisory committee of the World Internet Conference.
Also known as the Wuzhen Summit, the WIC is an annual conference organized by the Chinese government in order to push its agenda of national sovereignty over the internet.
The conference, apparently regarded as a bit of a joke even in China, actually has little international participation from government leaders.
It’s also been criticized by Reporters Without Borders, which called for a boycott of the 2015 conference after some Western news outlets were barred from attending.
While Chehade stressed that his involvement is in a personal capacity, that his panel is not due to meet until mid-2016 (after he will have left ICANN), and that he remains committed to ICANN’s “one internet” mantra, Cruz doesn’t believe him.
Cruz said in his letter (pdf) that he was “surprised and dismayed” to learn of Chehade’s involvement in Wuzhen, writing:

your participation as a co-chair of the committee raised concerns about a personal conflict of interest while you serve as the Chief Executive Officer of ICANN under contract with the United States Government.

Cruz poses nine key questions that appear to be designed to get Chehade to admit that his conduct in some way represents a conflict of interest, or that he’s a loose cannon operating without the approval of his board of directors.
He wants to know whether, for example, Wuzhen has already discussed the IANA transition, which will see the US government sever formal oversight of the DNS root zone later this year.
It’s a view common to US Republican politicians, of which Cruz is one, that the transition will open the door to China, Russia and other boogeymen to initiate a crackdown on free speech, which has always seemed a little far-fetched.
Cruz is currently considered one of the front-runners for the Republican nomination in the presidential race, following his victory over Donald Trump in Iowa this week.
His letter, which demands answers before February 19, was also signed by fellow Republican senators James Lankford and Michael Lee.
Chehade is due to leave ICANN at the end of March.

Windfalls still biggest money-spinner for M+M

Minds + Machines is still pulling in most of its cash from one-time new gTLD auction defeats, according to its latest trading update.
The company yesterday reported billings for 2015 of $7.92 million, up from $5.03 million in 2013.
But the company brought in $9.15 million by pulling out of private new gTLD auctions, where the winning bid is shared among the losers. That’s down from $37.5 million in 2014.
“Billings” is the money make at the point of sale, rather than audited revenue which is recognized over the life of the registration. Revenue numbers will come in April.
For the fourth quarter, sales of both premium and standard-fee names were up.
Premium names were up 215% at $1.52 million, which standard name billings were up 184% at $2.66 million.
The company said its registry business ended the year with 278,523 names under management, a 158% increase on year-ago numbers.
M+M met or beat its “key performance indicator” targets in terms of average revenue per name (both standard and premium) and sales growth.
However, the Chinese market boom caused it to miss its market share KPI.
It blamed missing the low end of its 3% to 5% new gTLD market share target by half a percentage point on the rapid growth of China.
The money being pumped into domain names from China in the second half of last year tends to favor the budget end of the new gTLD market, where names can be picked up for cents, whereas M+M’s TLD mix is skewed a little higher.
M+M said last week that it plans to open an office in China soon.

Two new gTLD registries open offices in China

Portfolio gTLD registries Famous Four Media and Minds + Machines have both announced that they’re formally entering the Chinese market.
Both companies are establishing “wholly foreign-owned enterprises” (WFOEs), a form of company that does not require local investment, on the mainland.
The moves are aimed at getting the registries’ respective gTLDs accredited by the Chinese government, something that is required before local registrants are allowed to use them.
In a press release, FFM senior legal counsel Oliver Smith said:

It was clear to us soon after launching our first domain registry that domain registrations from China comprised a strong proportion of the total. It was a natural progression of our strategy to build a physical presence in China. The accreditation process is complicated but well-structured and, thanks to the help of advice from the Chinese government, should be completed relatively quickly.

In some of Famous Four’s gTLDs, Chinese registrars are the overwhelming majority of the sales channel.
In .win, the registry’s biggest-seller, China was responsible for about 85% of registrations at the last count, for example.
Meanwhile, M+M is taking a slightly different route into the country.
It said today that while it also shortly plans to open a WFOE, it has also partnered with ZDNS, a local provider of proxy services for registries.
ZDNS was the company XYZ.com partnered with for its controversial launch into China. According to M+M, it’s also working with .CLUB Domains and some Chinese gTLD registries.
M+M is also using the specialist consultancy Allegravita for its marketing there.
Its local entity will be called Beijing Ming Zhi Mo Si Technology Company Limited (which may or may not translate to something like “Wise Mediation”).
M+M’s first Chinese launches will be .beer, .fashion, .fit, .law, .wedding, .work and .yoga, with .vip and .购物 (“.shopping”) coming later in the year.

Chehade to join World Economic Forum

Outgoing ICANN CEO Fadi Chehade is to join the World Economic Forum as a senior advisor, WEF announced today.
The person he will advise is Klaus Schwab, WEF’s founder and executive chairman, according to a press release.
WEF is the Switzerland-based non-profit think tank famous for its annual summits in Davos, where world leaders and super-rich businesspeople congregate in order to shed their skin-suits and plot world domination whilst in their true reptilian form.
Chehade, it seems, will be primarily involved in the “Global Challenge Initiative on the Future of the Internet”, a WEF project (pdf) focusing on internet governance, access, cybercrime and so on.
This year’s Davos meeting has been taking place this week. Much of the attention has been focused on pressing humanitarian and economic issues such as the Syrian refugee crisis and European Union immigration policy.
Chehade announced he was leaving ICANN in May last year.
He’s suspected of suffering from ICANN burnout after just a few short, albeit transformational, years on the job.
He said in August he’s taking on a role with Boston-based private equity firm ABRY Partners.
Last month, he became a joint founder of the “Wuzhen Initiative”, a China-led internet governance talking shop along the same lines as the NetMundial Initiative.
His successor has yet to be named, but given Chehade is leaving in March the announcement cannot be too many weeks away.
He starts at WEF April 1.

Instagram paid Chinese cyberquatter $100,000 for instagram.com, Facebook lawsuit reveals

Facebook has sued a Chinese cybersquatter for trying to renege on a five-year-old deal that saw it buy the domain instagram.com for $100,000.
The lawsuit, filed in California last week, claims that a family of known cybersquatters, based in Guangdong, is trying to have the purchase invalidated by a Chinese court.
The company, which acquired Instagram for $1 billion in 2012, wants the court to rule that the domain deal was legal, preventing the cybersquatters retaking control of the domain.
Photo-sharing app Instagram launched in October 2010 using the domain instagr.am.
At that time, instagram.com was owned by a US-based domain investor, but it was bought by Zhou Weiming about a month later.
Zhou, Facebook says, was the now-dead father of three of the people it is suing, and the husband of the fourth.
When Zhou purchased the domain, Instagram had become wildly popular, well on the way to hitting the million-user mark in December 2010.
Instagram had applied for the US trademark on its name in September 2010, less than a month before its launch.
The company made the decision to pay $100,000 for the domain in January 2011.
The Whois information for instagram.com changed from Zhou Weiming to Zhou Murong, apparently his daughter, around about the same time, though the registrant email address did not change.
The purchase was processed by Sedo, according to a copy of the deal filed as evidence (pdf).
Now, Murong’s mother and sisters are suing her and Instagram in China, claiming she did not have the authority to sell the domain, according to Facebook’s complaint.
Facebook claims the Chinese suit is a “sham” and that the whole Zhou family is acting in concert.
The company wants the California court to declare that the sale was valid, and that registrar MarkMonitor should not be forced to transfer the domain back to the Zhous.
Facebook in 2014 won a 22-domain UDRP case against Murong Zhou, related to typos of its Instagram trademark.
Read the full California complaint as a PDF here.

.top gTLD tops a million as China goes domain nuts

China-based new gTLD .top has become only the second new gTLD to pass the one-million-domain milestone.
The gTLD, managed by Jiangsu Bangning Science & Technology Co, had 1,000,469 domains in its zone file on Saturday, an increase of 5,808 on the day.
The zone has grown by 453,833 domains in the last 90 days, according to DI PRO stats.
It’s growing just slightly faster, in percentage terms, than new gTLD volume leader XYZ.com’s .xyz.
The rapid growth can no doubt be attributed largely to price, feeding the current Chinese appetite for domain investment.
Its most successful registrar, West.cn (Chengdu West Dimension Digital Technology Co), is currently selling .top names prominently for CNY 4 for the first year. That’s just $0.60.
The registry says that registrants come from 231 countries and regions. On its web site, it highlights France’s Gandi.net and Gibraltar’s budget registrar AlpNames as key international partners.
However, the latest registry reports show that over 90% of its sales are coming from China-based registrars.
Despite .top being a Latin-script TLD, European and North America registrars seem to account for a very small number of registrations.
It’s not even carried by the likes of GoDaddy and eNom.
The third-place 2012-round new gTLD is currently .wang, another Chinese registry, which yesterday had 628,125 names in its zone file.
Number four is .win, which despite being run by Gilbraltar-based Famous Four Media is utterly dominated by sales via Chinese registrars.
At number five is .club, with 552,065 names and a much more international distribution of registrars.

Kinderis calls on industry to cut the bullshit

Domain Name Association chair Adrian Kinderis has called for the industry to “grow up”.
The former ARI CEO, now Neustar veep, said Monday it’s time for the industry to kick out the handful of bad actors that ruin its reputation, and to quit the “bullshit bickering” about which TLDs are best.
“For far too long this industry has turned a blind eye to the less than scrupulous activities,” he said, “and these activities have plagued this industry. Bad actors have tarnished the perception of this industry.”
“This may have been acceptable when it was a few insiders first grasping at a fledgling product in the early nineties but… we are now front and center of the internet,” he said.
“These practices of a few bad actors have led to the frustration of consumers. We have not served the best interests of our consumers at all times,” he said. “This has to change.”
He was speaking to an audience of registries, registrars and investors at the opening session of the NamesCon conference in Las Vegas on Monday.
It was a fairly standard DNA sales pitch, the kind Kinderis has given before, but few could deny the truth of his remarks.
He called upon the industry to more effectively self-regulate, working with ICANN, to keep the boogeymen of government legislators and law enforcement agencies at bay.
“It’s time to grow up and show that we can regulates ourselves and build a strong sustainable industry with integrity,” he said.
He also called for unity among industry participants, pointing out that the threats to their businesses are external to the domain industry.
“The domain name war must be over,” he said. “The infighting and bullshit bickering has to stop. The .coms, the not-.coms, the IDNs, the g’s versus the cc’s… this must stop.”
“As an industry we have been very lucky. We’ve stumbled through 20 years without a collective strategy nor cohesion,” he said. “Outside forces have not had a massive impact on us, yet. QR codes have tried. Apps are trying.”
He pointed to the recent positive “bump” that many domain companies have experienced as a result of investment from China, but attributed to “dumb luck” rather than the result of any smart marketing or outreach.
The 10-minute speech can be viewed below or on the NamePros YouTube channel.

Priced to sell: $46m of two-letter .xxx names

ICM Registry has added over 1,200 two-character .xxx names to its catalog of priced premiums.
With prices ranging from $100,000 to $37,500, the newly offered domains carry a total ticket price of over $46 million.
The only six-figure name on the list is vr.xxx. ICM said in a press release today it has already sold vr.porn and vr.sex for $100,000 apiece.
There are seven names with adult connotations (such as 69.xxx and bj.xxx) priced at $75,000, eight more at $50,000 and two at $40,000.
The rest of the list of 1,227 names are being offered at $37,500, which is roughly 10 times the prices on the equivalent .porn, .sex and .adult domains.
While ICM noted the interest in domain investing from China recently, it does not appear to have valued its numeric-only domains (such as 88.xxx) any more highly than less attractive-looking combinations (such as 0o.xxx).
Judging by the list published on ICM’s web site, it has already sold well over 300 two-character domains in its newest three gTLDs.
Had those sold at the buy-now prices it would have raised over $1.1 million in revenue.
But ICM since September has been offering an option to register premium names for premium annual fees that are lower than the one-off price. A $37,500 domain costs $3,000 a year to register, under this model.
The total value of ICM’s premium list, including all the longer domains, is roughly $115 million.

Baidu, China’s Google, gets its dot-brand gTLD

Chinese web giant Baidu had its dot-brand gTLD, .baidu, go live in the DNS root zone today.
With the extraordinary amount of focus on China in the domain industry currently, this could be one of the dot-brands to watch in 2016.
There are no active domain names in .baidu just yet, but we will likely see nic.baidu put to some use or another over the coming days.
Unusually for a dot-brand gTLD, Baidu’s contract with ICANN does not contain specifications 9 or 13, which allow dot-brands to operate differently to regular gTLDs.
This suggests an open registration policy under which any registrar can sell .baidu domains to any registrant.
However, Baidu’s original gTLD application spells out quite a different plan, focused primarily on trademark protection. It says:

All available second-level strings of .BAIDU (e.g. example .BAIDU) will be initially allocated only to limited number of eligible registrants and for internal corporate business purposes. BAIDU plans to adopt this approach and expects to maintain it for 3 years from the launch of the “.BAIDU” registry service. Such approach will be regularly evaluated and adjusted if appropriate and necessary. Depending a various internal and external factors, including market demand and user expectation, BAIDU may consider a phased roll-out approach for a broader commercial marketplace but will do so after the conclusion of the initial 3-year period.

I wouldn’t expect .baidu to launch properly any time soon.
Not only is the company probably going to want to get its dot-brand contractual protections in place, it’s also showed no huge enthusiasm for making its way through the new gTLD delegation process so far.
It signed its ICANN contract January 8 last year, meaning this week was pretty much the latest date it could permissibly go into the root.
Like most dot-brands, it’s been dragging its feet, in other words.
Baidu is the leading web property in China, dwarfing even Google in terms of search market share locally.

Verisign warns about Chinese .com boom

Verisign has warned investors that the current boom in .com sales is largely coming from Chinese domainers and may not be sustainable.
The company has added an unprecedented 4.1 million domain in .com and .net so far during the fourth quarter.
“While there continues to be demand for domain names globally, the recent increased volume for Verisign’s top level domains, as well as top level domains of other registries, during the fourth quarter is coming largely through registrars in China,” the company said in a Securities and Exchange Commission filing.
It listed several factors that are likely responsible for the sudden uptick, but warned that renewal rates are typically not great.

In the past, Verisign has discussed many factors that affect the demand for domain names, including, but not limited to economic, social, and regulatory conditions, Internet adoption, Internet penetration, and increasing e-commerce. In addition to these factors affecting demand, Verisign is also evaluating additional potential factors unique to China that may also be responsible for the recent increased volume of new registrations in China.
In no particular order, these potential factors, or combination of factors, could include, but may not be limited to, government initiatives in China to develop their online economy such as ‘Internet Plus;’ registry and registrar regulatory requirements; cultural influences such as the popularity of numeric domain names; increasing competition amongst Chinese registrars; potential increases in domain name investment activity; and recent capital markets volatility and access to capital in China.
Verisign cannot predict if or how long this increased pace of gross additions will continue and we cannot at this time predict what the renewal rate for these domain names will be. Verisign has noted in the past that renewal rates for domain names registered in emerging markets, such as China, have historically been lower than those registered in more developed markets.

It’s difficult to imagine that Chinese investors have managed to find four million unregistered domains worth keeping.
There are currently 123,497,852 domains in the .com zone file, according to Verisign’s web site.
Verisign is not the only registry that appears to be benefiting from a deluge of registrations from China.
XYZ.com has seen over 440,000 domains added to its .xyz zone file in the last three weeks, bringing its total to over 1.5 million, which appear to be largely coming through Chinese registrars.