Was .xxx’s launch disappointing?

The weekend box office numbers are in, and .xxx didn’t put as many bums on seats as might have been expected.
ICM Registry sold 55,367 new .xxx domain names in its first 24 hours of general availability, giving it a total of almost 159,351 registrations, according to the company.
That’s pretty good going for a TLD which, despite the spin in ICM’s recent TV commercials, is intended for a limited customer base, and which is selling for $80 to $100 a year.
Given its $60 registry fee, ICM will have taken over $3.3 million in revenue yesterday, over $550,000 of which will be given to its sponsoring organization, IFFOR.
However, the 159,351 total includes non-resolving domains, ICM has confirmed.
Due to the unique trademark protection mechanisms put in place for non-porn companies, it’s possible to pay for a .xxx domain that will only ever resolve to a standard registry placeholder.
ICM has previously said that it took almost 80,000 sunrise applications, and that the landrush phase put its total “comfortably over 100,000”.
It did not, however, break out the mix of Sunrise A (resolving) and Sunrise B (non-resolving) domains.
That’s an important distinction, both for ICM’s ongoing revenue and for gauging demand for .xxx among registrants.
Each Sunrise B domain gave ICM a $161 windfall but, unlike every other TLD launched to date, has the sale had no recurring revenue component.
I think it’s possible that 50,000 to 60,000 sunrise domains were non-resolvers, which would give .xxx a total of roughly 100,000 active domains under management after one day of GA.
(My assumptions are that all 80,000 sunrise applications were unique and approved, and that roughly two thirds were for Sunrise B non-resolving domains).
Assuming all the active domains are renewed, it’s a $6 million a year business (or $5 million, if you exclude the mandatory IFFOR donation) for ICM already.
The .xxx zone is already bigger than .travel, .pro, .jobs, .aero, .coop, .museum and .cat. It will likely be bigger than .name, .tel and .asia by the end of the month.
So why suggest that it’s a disappointing result?
Pre-reservations
First, for a few years ICM was accepting no-cost .xxx “pre-reservations” through its web site, while its gTLD application was in ICANN limbo.
It racked up over 900,000 such reservations for roughly 650,000 unique .xxx domain names before shutting the offer down in July this year.
One might expect that most people interested enough in .xxx to pre-register a domain months or years in advance might also be interested in grabbing that domain during landrush, sunrise or at the moment of GA. That apparently didn’t happen.
.CO
Let’s also compare .xxx to the launch of .co by .CO Internet last year.
While .CO did not have anything like the long-term media exposure as .xxx, it did of course have the advantage of offering a completely generic string priced at a third of .xxx.
Within its first 24 hours of general availability, .CO said that it had 233,000 domains under management, about 39,000 of which were landrush or sunrise registrations.
Even at the cheaper registry fee (about $20 a year) .CO still made more money in day one than ICM (although ICM wins hands-down in terms of premium domain sales).
.CO, incidentally, also only had 10 accredited registrars at launch (not counting resellers) compared to ICM’s over 70.
Go Daddy
Go Daddy is responsible for roughly half of all new .com registrations, with similar numbers in other TLDs including .co, but it does not appear to be promoting .xxx very heavily.
For the last few days, its homepage has contained only one small below-the-fold reference to .xxx domains. Its TLD drop-down menu has .xxx in tenth place, between .biz and .ca.
Conversely, ICM has been promoting Go Daddy (and DomainMonster) more heavily in its own marketing – notably on gavin.xxx, the site “owned” by its TV commercial character.
Expectations
So is .xxx on track to meet expectations at this early stage?
ICM CEO Stuart Lawley has previously predicted 300,000 to 500,000 registrations in the first few months, and that’s still an achievable goal given its day-one performance.
.CO Internet, for example, more than doubled its 233,000 first-day take within two months of going into general availability.
The new Russian ccTLD .рф registered 200,000 domains in its first six hours when it launched in November 2010, and hit 800,000 by April this year.
While .xxx clearly hasn’t yet smashed estimates in the same way as its sunrise did, I think early indications are that it’s looking pretty healthy.

Blah blah ICM blah .xxx blah blah…

Today blah blah ICM Registry blah blah .xxx blah live blah.
Blah blah 10 years blah blah porn blah blah generally available blah. Blah delay blah 5pm blah Lawley blah.
ICANN blah blah Governmental Advisory Committee blah blah blah San Francisco blah blah blah.
Blah blah Free Speech Coalition blah blah controversy blah Manwin blah blah blah lawsuit blah antitrust blah blah blah leg to stand on.
Blah speculators blah domainers blah cybersquatters blah. Blah blah shirt off your back blah.
Blah blah contract blah blah policies blah blah UDRP blah toothless blah blah blah WIPO blah blah blah donkey porn.
Blah reporting blah damned blah story blah 10 years blah blah bored blah blah blah blah finally over.
Blah blah blah.

.xxx to tackle piracy, child abuse and censorship

The International Foundation For Online Responsibility, the policy oversight group for .xxx domains, says it wants to help fight piracy, child abuse material and internet censorship.
Those are the three priorities to emerge from IFFOR’s inaugural two-day meeting last month, according to the organization. It has set up three working groups to look at the issues.
On filtering, a pretty hot topic given the various pieces of copyright-related legislation currently under consideration in the US and elsewhere, IFFOR said:

The filtering working group will review the state of global filtering laws, regulations and plans with a view to educating legislators and others about the advantages and effectiveness of user-defined filtering as opposed to mandated filtering or blocking at the ISP or router-level.

While there’s yet to be a proven case of an entire nation blocking .xxx domains, some countries have said they are considering it and I’ve heard several anecdotal cases of companies blocking the TLD.
IFFOR also said wants to find a way to help combat piracy “that can work across the entire dot-xxx registry” and is looking at both technical and legal measures.
The child abuse imagery working group, headed by veteran cyber-cop Sharon Girling, plans to work with existing third-party organizations on reporting and policy-making.
All three goals are self-evidently noble. Whether IFFOR will be able to make a noticeable impact on any will of course depend on what policies its working groups come up with.
IFFOR’s Policy Council comprises nine members: five from the porn industry, a free speech advocate, a child protection advocate, a security expert and an ICM Registry representative.

YouPorn imposes embargo on .xxx sites

Manwin, the company behind YouPorn, has stepped up its fight against ICM Registry by saying it will not do business with any .xxx web site.
Reported in the adult press this weekend, the ban seems to extend to webmasters hoping to promote their sites on Manwin’s “tube” sites, including YouPorn.
It also won’t allow its content to be used on .xxx sites, according to Xbiz.
Manwin is of course already suing ICM and ICANN under US monopoly laws, and has demanded an ICANN independent review, claiming the .xxx launch amounted to “extortion”.
The domain YouPorn.xxx is currently on ICM’s Registry Reserved list, meaning it was not acquired during sunrise and will not become available when .xxx opens its doors on Tuesday.
YouPorn is one of the web’s top 100 sites, according to Alexa.

ICM sells $700,000 of .xxx domains to Clips4Sale

ICM Registry has just announced the sale of $700,000 worth of .xxx domain names to Clips4Sale, which operates a network of clip-oriented porn sites.
The cash deal comprises 30 domains including one $300,000 name and two others at over $80,000 each, according to the company.
The domains themselves have not been disclosed.
The $300,000 sale would be the 16th most-expensive domain of the year, according to DNJournal’s chart. Gay.xxx sold last month for $500,000.
ICM is taking .xxx into general availability next Tuesday.

Paul Raymond rebrands under .xxx

Paul Raymond, a well-known porn publisher in the UK, plans to rebrand its portfolio around the .xxx top-level domain, according to ICM Registry.
It’s the “largest single migration of an adult brand to the .xxx top-level domain to date”, ICM said.
Raymond could be described as an old-school pornographer, with a history stretching back to the 1960s, better known for its clubs and top-shelf titles than its online presence.
The deal includes the domains paulraymond.xxx, prpvod.xxx, razzledating.xxx, mensworlddating.xxx, menonlydating.xxx, escortdating.xxx, adultsportdating.xxx, clubdating.xxx, fantasydating.xxx, mayfairdating.xxx, and paulraymonddating.xxx, ICM said.
Domains such as mayfair.xxx and razzle.xxx, Raymond’s best-known titles, may also be included, but they’re not mentioned in ICM’s press release. The domain escort.xxx is owned by somebody else.
The migration is expected to be complete by February next year.
The two companies have a relationship going back at least several months, with ICM regularly sponsoring events at Raymond-owned clubs.

YouPorn challenges new gTLDs with review demand

YouPorn operator Manwin is demanding a review of .xxx, and ICANN’s top-level domains program by association, in a new Independent Review Panel request.
It becomes only the second company ever, after .xxx manager ICM Registry, to file an IRP request with ICANN. The filing came at the same time as Manwin sued ICANN and ICM in California.
The IRP demand ostensibly focuses on .xxx, but it also suggests that the forthcoming new gTLD program has many of the same flaws as the process that led to .xxx’s approval.
IRP is the final, and most expensive, appeals process available within ICANN for companies that believe they’ve been wronged by the organization’s decisions.
It was first used by ICM in 2008-2009 to have the rejection of its .xxx application overturned.
To win an IRP, complainants have to convince an International Centre for Dispute Resolution panel (probably three retired judges) that ICANN violated its own bylaws when it made a harmful decision.
The only reason .xxx is in the root today is that an IRP decided by majority that ICANN broke the bylaws when it approved and then rejected the .xxx bid filed in the 2004 new gTLD round.
Manwin’s IRP claims that ICANN failed to “adequately address issues including competition, consumer protection, malicious abuse and rights protection prior to approving the .xxx TLD”.
It also claims that ICANN failed to enforce ICM’s compliance with its registry contract, allowing it to engage in “anticompetitive conduct” and help violate IP rights.
The company is basically miffed that it felt it was being forced to spend money in ICM’s sunrise period, and that it was not allowed to block its trademarks and variations of its trademarks.
One of its oddest claims, which is in the IRP as well as the lawsuit, is that ICM was selected in a “closed process” that did not consider alternative .xxx operators.
The 2004 gTLD round was of course open to any applicant, so there was nothing stopping anybody else from applying for .xxx. One gTLD, .tel, did in fact have multiple bidders.
Essentially, the IRP demand cuts to the heart of the domain name industry and the new gTLD concept in general, challenging many practices that have become norms.
Sunrise
Sunrise is “extortion”, according to Manwin.
As well as being opposed to the idea of paying for defensive registrations in general, Manwin also thinks that typos and brand+keyword domains should be eligible for blocking, presumably for free.
It also believes that porn companies should have been able to defensively block some .xxx domains (which ICM called “Sunrise B”) and register others for active use (“Sunrise A”).
Speculation
Manwin’s IRP says that ICM did not act in the best interests of its sponsored community (ostensibly the porn industry) when it sold premium .xxx domains to “known domain name speculators”.
Well-known domainers Frank Schilling and Mike Berkens have invested millions in .xxx, but Manwin says their profit motives show ICM broke its commitment to serve the adult industry only.
Schilling, who signed up to buy domains 33 domains including amateur.xxx before ICM’s registry contract had even been approved, is reportedly already leasing out some of his .xxx names to porn companies for five figures a month.
New gTLDs
Manwin seems to support what you might call a ‘string first, registry later’ model for delegating gTLDs.
It states in its lawsuit and IRP that ICANN should have opened up .xxx for competitive bidding, apparently ignoring the fact that the .xxx string was proposed by ICM, not ICANN.
In the IRP demand, it suggests that allowing gTLD applicants to select their own strings is in violation of ICANN’s bylaws. The complaint states:

[ICANN] gave ICM a permanent monopoly over the .XXX TLD without considering other candidates for registry operator and without making provision for considering other potential registry operators at the end of the initial term of the .xxx Registry Agreement.

If Manwin wins, ICANN could be forced into a situation where it must ask for string proposals from new gTLD applicants and then open up each proposed string to competitive bidding.
That’s not necessarily a bad idea, but it’s pretty much exactly the opposite of how the ICANN-approved new gTLD program is going to work.
The IRP and the lawsuit are also notable in that they target the alleged lack of economic studies that support .xxx and new gTLDs in general.
It states that ICANN “failed to conduct proper economic studies of the impact of the introduction of new TLDs, including the .xxx TLD”.
This is a frequent criticism leveled at ICANN by opponents such as the Association of National Advertisers and the newly formed Coalition for Responsible Internet Domain Oversight.
Manwin is being represented in the suit and IRP by the law firm Mitchell Silberberg & Knupp, the employer of Steve Metalitz, a well-known figure in ICANN’s intellectual property constituency.

YouPorn sues ICANN and ICM over .xxx

One of the biggest porn companies in the world has filed an antitrust lawsuit against ICANN and ICM Registry over the introduction of the .xxx top-level domain.
Luxembourg-based Manwin Licensing and California-based Digital Playground allege “monopolistic conduct, price gouging, and anti-competitive and unfair practices”.
Manwin runs YouPorn, Brazzers and, under license, several Playboy-branded web sites, while Digital Playground is among the largest porn production companies in the world.
Together they are demanding an injunction on .xxx altogether, for ICANN to be forced to impose price constraints on ICM, and to open up the .xxx contract for competitive rebidding.
The complaint, apparently filed in California today, essentially alleges that everything ICM has done to date, from its application with ICANN to its sunrise period policies, is wrong and bad.
It claims ICM’s sunrise period amounted to extortion and that ICANN willfully created a monopoly by agreeing to a registry contract with presumptive renewal but no price caps.
ICM, the complaint says, reacted to the approval of .xxx earlier this year “with the anti-competitive behavior expected of a monopolist”.

It has, for example, improperly exploited the newly created market for .XXX defensive registrations by making such registrations unreasonably expensive and difficult, and by placing onerous burdens on parties seeking to protect their intellectual property rights.

Manwin claims that the recently ended sunrise period, which saw over 80,000 defensive registrations, was priced too high given that ICM handed out free domain blocks to thousands of celebrities.
It also claims that ICM should have enabled companies to defensively block typos of their trademarks, and that porn companies without trademarks should have been able to block their brands.
It takes ICANN to task for not operating a competitive bidding process for .xxx, and claims ICM used “misleading predatory conduct and aggressive litigation tactics” to push through its approval.
I’m not a lawyer, but often antitrust cases swing on the way the court decides to define the relevant “market”.
Manwin claims .xxx is the market, whereas it could be argued that because porn sites are free to use .com or almost any other TLD, that the domain industry as a whole is the market.
The complaint states:

The market for blocking services or defensive registrations in the .XXX TLD is a distinct and separate market in part because there is no reasonable substitute for such registrations. For example, blocking or preventing others’ use of names in a non-.XXX TLD is not such a substitute. Blocking use of a name in a non-.XXX TLD does not prevent use of the name in the .XXX TLD.
…
ICM has a complete monopoly in the market for the sale of .XXX TLD blocking or defensive registration services through registrars.

I’m not sure if my legal thinking holds water, but this sounds rather like arguing that BMW has a monopoly on making BMWs or Coca-Cola has a monopoly on Cherry Coke.
But Manwin says that .xxx is the only porn gTLD and ICANN has basically ruled out the creation of any future porn-centric TLDs with clauses in ICM’s registry contract.
It also notes that .sex and .porn would be unlikely to be approved in the next round of new gTLDs due to the restrictions on controversial strings imposed by the Governmental Advisory Committee.
ICM president Stuart Lawley said in a statement:

The claims are baseless and without merit and will be defended vigorously. They also show an apparent lack of understanding of the ICANN process and the rigorous battle we went through with ICANN over eight years in full public scrutiny to gain approval.

The .xxx story really is the gift that keeps on giving.

Lawley quits as .xxx sponsor chairman

ICM Registry president Stuart Lawley has stepped down as chairman of IFFOR, the sponsoring organization for .xxx, after ongoing criticism over potential conflicts of interest.
He will be replaced by Clyde Beattie, a former chair of .ca manager CIRA, who was already on IFFOR’s governing board of directors.
IFFOR, the International Foundation For Online Responsibility, was set up by ICM to act as the “sponsoring organization” required by ICANN’s 2004 new gTLD process.
The organization is supposed to be independent, consisting of a policy-creation committee overseen by a three-person board of directors.
However, it has come in for frequent criticism from the porn industry, notably the Free Speech Coalition, over the perception that it is basically an ICM puppet.
While the Policy Council has five out of nine members drawn from the porn industry, the FSC has often accused Lawley of having a “veto” on IFFOR’s decisions, which he has denied.
“Even though the bylaws ensured separation, the optics weren’t ideal,” said Lawley.
However, while Beattie takes over his role, Lawley’s empty seat on the IFFOR board will be filled by ICM general counsel Sheri Falco.
ICM still has a vote, in other words, but not the chair.
The third board member is Sebastien Bachollet, CEO of BBS Consulting. Bachollet also sits on ICANN’s board of directors as a representative of At-Large community.

.xxx faces big test as landrush kicks off

The landrush phase for ICM Registry’s .xxx domain is scheduled to begin today, following the oversubscribed sunrise period that closed last week.
Given the inherently defensive nature of sunrise periods – most of the almost 80,000 applications were for non-resolving domains – landrush is the first big test of public demand for working .xxx names.
I expect healthy interest from domainers, despite the relatively high price of landrush registrations.
High-profile investors including Frank Schilling and Mike Berkens have already invested seven figures in .xxx via its Founders Program, which may set the tone for the rest of the community.
The landrush period runs until November 25. Contested domains will go to auction in December. General availability is currently scheduled to begin December 7.
Domain Name Wire has compiled a handy guide to the best-priced landrush registrars.