Activist investor slams Rightside over “garbage” new gTLDs, looking for blood

A hedge fund manager known for causing trouble at the companies he invests in has savaged Rightside, saying its focus on new gTLDs at the expense of its registrar business is ruining the company.
J Carlo Cannell of Cannell Capital is looking for some serious bloodletting.
He wants Rightside to cut 20% of its staff, close offices, unify its products under the eNom brand and replace two of its directors.
He’s threatening to wage a proxy war to replace the Rightside board if he doesn’t get what he wants.
He wrote a scathing letter to Rightside chair Dave Panos last month, which was published in a Securities and Exchange Commission filing today.

NAME’s registrar has become like a crazy aunt kept in the basement, one that you refuse to adequately clothe or feed, but who steadfastly spins straw into gold used to subsidize a stable of largely substandard new GTLDs such as .democrat, .dance, .army, .navy, and .airforce. Most of these new GTLDs are irrelevant and will never be sold in material volumes. NAME is holding back the growth potential of your registrar by pushing garbage extensions to a user base that quietly knows better.

NAME is Rightside’s Nasdaq ticker symbol.
Cannell revealed he owned a 7% share of Rightside last month — paying reportedly just shy of $11 million for 1,389,953 shares.
He wants Rightside to sell off “or even abandon” some of its weaker gTLDs, which “should not consume all the resources of our Company at the expense of the assets that are currently profitable”, while keeping “gems” such as .news.
His letter doesn’t pull any punches.
Cannell is perhaps best known for his widely publicized tussle with Jim Cramer, TV show host and co-founder of financial news site TheStreet.

14 Comments Tagged: activist, cannell, enom, new gTLDs, proxy battle, rightside

Registrars object to “unreasonable” .bank demands

Registrars are upset with fTLD Registry Services for trying to impose new rules on selling .bank domains that they say are “unreasonable”.
The Registrar Stakeholder Group formally relayed its concerns about a proposed revision of the .bank Registry-Registrar Agreement to ICANN at the weekend.
A key sticking point is fTLD’s demand that each registrar selling .bank domains have a dedicated .bank-branded web page.
Some registrars are not happy about this, saying it will “require extensive changes to the normal operation of the registrar.”
“Registrars should not be required to establish or maintain a “branded webpage” for any extension in order to offer said extension to its clients,” they told ICANN.
i gather that registrars without a full retail presence, such as corporate registrars that sell mainly offline, have a problem with this.
There’s also a slippery slope argument — if every gTLD required a branded web page, registrars would have hundreds of new storefronts to develop and maintain.
fTLD also wants registrars to more closely align their sales practices with its own, by submitting all registration requests from a single client in a single day via a bulk registration form, rather than live, or pay an extra $125 per-name fee.
This is to cut down on duplicate verification work at the registry, but registrars say it would put a “severe operational strain” on them.
There’s also a worry about a proposed change that would make registrars police the .bank namespace.
The new RRA says: “Registrar shall not enable, contribute to or willing aid any third party in violating Registry Operator’s standards, policies, procedures, or practices, and shall notify Registry Operator immediately upon becoming aware of any such violation.”
But registrars say this “will create a high liability risk for registrars” due to the possibility of accidentally overlooking abuse reports they receive.
The registrars’ complaints have been submitted to ICANN, which will have to decide whether fTLD is allowed to impose its new RRA or not.
The RrSG’s submission is not unanimously backed, however. One niche-specializing registrar, EnCirca, expressed strong support for the changes.
In a letter also sent to ICANN, it said that none of the proposed changes are “burdensome”, writing:

EnCirca fully supports the .BANK Registry’s efforts to ensure potential registrants are fully informed by Registrars of their obligations and limitations for .BANK.  This helps avoid confusion and mis‐use by registrants, which can cause a loss of trust in the Registry’s stated mission and commitments to the banking community.

fTLD says the proposed changes would bring the .bank RRA in line with the RRA for .insurance, which it also operates.
The .insurance contract has already been signed by several registrars, it told ICANN.

2 Comments Tagged: .bank, .insurance, ftld, ICANN, new gTLDs, rra, rrsg

First new gTLD deleted from the net

.doosan today became the first new gTLD to be removed from the domain name system.
It’s no longer showing up in the DNS root zone file, and IANA’s record lists it as “retired”.
.doosan was a dot-brand managed by Korean conglomerate Doosan Group. The company never did anything with it before deciding to kill the TLD off last September.
A month ago, ICANN used the pending deletion to test its Emergency Back-End Registry Operator safety net.
If memory serves, it’s the only gTLD to be ever be removed from the root zone, excluding test internationalized TLDs previously operated by ICANN.
ccTLDs are removed somewhat regularly, when international borders are redrawn.

6 Comments Tagged: doosan, iana, new gTLDs, retirement, revocation

Krueger sues M+M over five million “missing” shares

Former Minds + Machines chair Fred Krueger has taken the company to court, claiming he’s owed shares worth over half a million dollars.
In a lawsuit filed in Los Angeles this week, Krueger says the shares were promised to him in 2007 but have subsequently gone “missing”.
The suit also names as defendants M+M chief financial officer Michael Salazar and Antony Van Couvering, who until last week was CEO.
Krueger himself was asked to leave the company by its board of directors in May last year.
He was one of the company’s founders in 2007. According to his lawsuit, he was promised 25 million shares, which were to be delivered to his Goldman Sachs account in a batch of 20 million and a batch of five million.
Krueger now claims that Goldman has no record of the five-million batch arriving and that M+M has failed to figure out whether the shares were ever even issued.
His complaint says he paid $400,000 for the shares. Judging by M+M’s current share price, they’re now worth around £437,500 ($609,000).
Krueger says that he didn’t notice the shares were missing until forensic accountants picked over his net worth as part of his 2013 divorce.
The suit alleges breach of contract, negligence, and other claims related to the shares. In total, he’s looking for at least $1.5 million in damages.
It also sheds a bit of light on Krueger’s actions immediately following his May 2015 dismissal from the company.
When he “resigned”, he issued a statement via the company that said among other things “my goal is to keep the vast majority of my shares”.
But within a couple of weeks he had started selling and in a matter of months he had disposed of all of his 104 million shares.
Now, according to his lawsuit, his May 2015 “Exit Agreement” with M+M’s board actively incentivized him to sell all of his shares. It says:

In May 2015, Plaintiff Krueger left Minds + Machines Board of Directors under an agreement Plaintiffs Krueger and Needly made with Minds + Machines Group that if Plaintiff Krueger would sell all of his shares in Minds + Machines Group, Minds + Machines Group would return to Needly all of the stock it was holding in Needly.

Needly is (or possibly was, judging by its web site) Krueger’s side project, a web site content management software company.
Krueger says M+M agreed to pay $800,000 and take 1% of Needly’s shares under a consulting agreement. Now, he says the company is refusing to return those shares, as agreed, until he admits that he’s already sold the five million “missing” M+M shares.
Here’s his complaint in PDF format.
It’s a strange old case, and no doubt a distraction for new CEO Toby Hall, who took over from Van Couvering last week with a pledge to boost sales by focusing more on the registrar channel.

6 Comments Tagged: Minds + Machines, needly

Cruz says Chehade is in China’s pocket

Terrifying US presidential candidate Ted Cruz has told outgoing ICANN CEO Fadi Chehade to recuse himself from crucial decisions, claiming Chehade is conflicted.
Republican Cruz yesterday said that Chehade can’t be trusted to make decisions related to the IANA transition because he’s already signed up to a Chinese internet governance committee.
Chehade said in December that he’s become co-chair of an advisory committee of the World Internet Conference.
Also known as the Wuzhen Summit, it’s a China-led talking shop that has been criticized for pushing China’s agenda of limiting free speech and promoting governmental control over the internet.
Cruz quizzed Chehade about his involvement in a letter earlier this month, basically fishing for evidence that Chehade was in some way conflicted.
In response (pdf), Chehade said he wasn’t being paid for the committee role, but that his travel expenses would probably be picked up.
Aha! Cruz seized on that admission, writing yesterday:

Travel compensation from the Chinese government can be a form of personal conflict of interest, which could impair Chehade’s ability to act impartially and in the best interest of the [US] government when performing under the [IANA] contract. As such, Chehade should recuse himself from all ICANN decisions that could impact the Chinese government, which include all negotiations and discussions pertaining to the Internet Assigned Numbers Authority (IANA) transition.

Chehade, who says he only joined the committee in order to promote the notion of multi-stakeholder internet governance, makes $900,000 a year at ICANN in salary and bonuses.
With pay so criminally low, it’s easy to see how he could be tempted to subvert his principles for any foreign government who offered him a free business-class flight and a few nights in a swanky Beijing hotel.
He has kids to feed and clothe, after all.
Cruz, on the other hand, has raised a mere $54 million in campaign contributions over the last five years, and not a single dollar of that will influence his political positions in any way whatsoever.

3 Comments Tagged: iana, ICANN, ted cruz, transition

Van Couvering ousted from M+M, replaced by PR guy with channel focus

Antony Van Couvering has been fired as CEO of Minds + Machines and replaced by someone who was until very recently the company’s agency PR guy.
Neither Van Couvering, the company, nor incoming CEO Toby Hall, have disclosed the reason for his ouster.
But I suspect the “differences and disagreements” that Van Couvering alluded to in his CircleID piece this morning may refer to M+M’s go-to-market strategy.
Hall told DI this morning that his focus as the company’s new leader is going to be on the registrar channel.
“It’s all about engaging with the outside world and recognizing we’re a business-to-business play,” Hall said. “It’s a fundamental shift in perspective.”
The strategy “has to be stacked in a way that makes our business partners make revenue”, he said.
“We’re not a consumer registrar,” he said.
M+M is a vertically integrated domain name company, acting as both registry and registrar.
Registrar sources tell us that Van Couvering wasn’t keen on working with third-party retailers, preferring to focus on its in-house registrar.
It seems that’s going to change under Hall.
M+M said in a press release (jarringly, emailed to reporters this morning as usual by Hall himself):

Mr Van Couvering was removed from office with immediate effect by means of a unanimous resolution of directors passed at a meeting of directors held on 19 February 2016.
The Group is currently making the transition from asset gatherer to monetisation of its leading portfolio of top-level domains; the Board believes a change of leadership will assist in this process.

Hall was appointed chief marketing officer last month.
Since the early 1990s, he’s been head of the London-based PR slash investor relations outfit GTH Communications, which focuses on small-cap businesses. M+M was a GTH client almost since it was founded, Hall said.
He said he’s going to be stepping back from GTH to focus on M+M.
Van Couvering founded Minds + Machines in 2008. It was soon acquired by the company that would be known as Top Level Domain Holdings, which later changed its name to Minds + Machines.
TLDH founder Fred Krueger got canned by the M+M board last year too.
Today, Van Couvering wrote:

It’s a story told a thousand times: founder of a company ousted by investors. It’s a story so common you can find it any day of the week as a minor headline in a tech blog. Not much of a story at all really, until it happened to me…
It sucked.

6 Comments Tagged: m+m, Minds + Machines, new gTLDs

dotgay has a third crack at .gay appeal

dotgay LLC has filed another appeal with ICANN, hoping to get its community-based .gay application back in the race.
It submitted a third Request for Reconsideration (pdf) this week, arguing on a technicality that its bid should have another Community Priority Evaluation.
The company has already lost two CPEs based on the Economist Intelligence Unit CPE panel’s belief that its definition of “gay” is too broad because it includes straight people.
It’s also lost two RfRs, which are adjudicated by ICANN’s Board Governance Committee.
The newest RfR addresses not the core “not gay enough” issue, but a procedural error at the EIU it believes it has identified.
According to the filing, dotgay is in possession of emails from an EIU employee who was responsible for verifying some of the dozens of support letters it had received from dotgay’s backers (generally equal rights campaign groups).
The company argues, citing the BGC’s own words, that this employee was not one of the official CPE “evaluators”, which means the EIU broke its own rules of procedure:

considering the fact that the CPE Process Document – which is considered by the BGC to be “consistent with” and “strictly adheres to the Guidebook’s criteria and requirements”, it is clear that the verification of the letters should have been performed by an independent evaluator… and not by someone “responsible for communicating with the authors of support and opposition letters regarding verification in the ordinary course of his work for the EIU”.

It wants the CPE to be conducted again, saying “it is obvious that the outcome of a process is often, if not always, determined by the fact whether the correct process has been followed”.
It’s difficult to see how the outcome of a third CPE, should one be undertaken, could be any different to the first two. Who verifies the support letters doesn’t seem to speak to the reason dotgay hasn’t scored enough points on its other two attempts.
But the alternative for the company is an expensive auction with the other .gay applicants.
Another CPE would at least buy it time to pile more political pressure on ICANN and the EIU.

10 Comments Tagged: .gay, bgc, community, cpe, dotgay, ICANN, new gTLDs

Rape ban results in just one .uk takedown, but piracy suspensions soar

Nominet’s controversial policy of suspending domain names that appear to condone rape resulted in one .uk domain being taken down last year.
That’s according to a summary of take-downs published by Nominet yesterday.
The report (pdf) reveals that 3,889 .uk names were taken down in the 12 months to October 31, 2015.
That’s up on the the 948 domains suspended in the six months to October 31, 2014.
The vast majority — 3,610 — were as a result of complaints from the Police Intellectual Property Crime Unit. In the October 2014 period, that unit was responsible for 839 suspensions.
Unlike these types of suspensions, which deal with the allegedly illegal content of web sites, the “offensive names” ban deals purely with the words in the domain names.
Nominet’s systems automatically flagged 2,407 names as potentially in breach of the policy — most likely because they contained the string “rape” or similar — in the 12 months.
But only one of those was judged, upon human perusal, in breach.
In the previous 12 months period, 11 domains were suspended based on this policy, but nine of those had been registered prior to the implementation of the policy early in 2014.
The policy, which bans domains that “promote or incite serious sexual violence”, was put in place following an independent review by Lord Macdonald.
He was recruited for advice due to government pressure following a couple of lazy anti-porn articles, both based on questionable research by a single anti-porn campaigner, in the right-wing press.
Assuming it takes a Nominet employee five minutes to manually review a .uk domain for breach, it seems the company is paying for 200 person-hours per year, or 25 working days, to take down one or two domain names that probably wouldn’t have caused any actual harm anyway.
Great policy.

Comment Tagged: .uk, censorship, copyright, nominet, piracy, rape, suspension

DCA fails .africa evaluation

DotConnectAfrice application for the .africa gTLD has, as expected, failed its ICANN evaluation for want of government support.
The official decision (pdf) was handed down overnight.
According to the Extended Evaluation panel, DCA’s “required documentation of support or non-objection was either not provided or did not meet the criteria”.
In other words, DCA did not have a shred of support for its controversial application.
For gTLDs representing multinational regions, support or non-objection is required from 60% of the governments in that region.
In addition, there cannot be more than one objection from a government in that region.
Not only did DCA not have any support, it also had over a dozen governmental objections.
The company had relied on support letters from the African Union Commission and the UN Economic Commission for Africa, both of which have been retracted.
The AU and most African governments support rival, successful applicant ZACR.
ZACR signed its .africa registry contract with ICANN in March 2014, but its bid has been kept in limbo while DCA has exploited ICANN appeals processes to delay delegation.
Most recently, DCA sued ICANN, despite signing away its right to sue when it applied.
DCA was originally rejected due to Governmental Advisory Committee advice, before it had completed evaluation.
But the company won an Independent Review Process ruling stating that ICANN erred by accepting the advice with no explanation, compelling ICANN to put the DCA application back into evaluation.
After a six-month review, the Geographic Names Panel has now concluded that, duh, nobody supports DCA’s bid.
ICANN has now changed the status of DCA’s application from “Not Approved” to “Will Not Proceed”.
Oddly, and possibly incorrectly, this status cites the GAC advice as the reason for the failure, rather than the fact that DCA failed its evaluation.
Per ICANN practice, no application is truly dead until the applicant withdraws.

4 Comments Tagged: africa, dca, dotconnectafrica, evaluation, geographic, ICANN, new gTLDs

.cloud passes 20,000 names on day one

The newly launched gTLD .cloud passed 20,000 domains under management one day after entering general availability.
About 25 hours after the 1500 UTC launch yesterday, 20,347 domains had been registered, according to head of registry operations Francesco Cetraro.
He said 17,991 of those names were registered in GA.
The gTLD is priced around the $20 to $25 mark at the popular registrars I checked.
Over 20,000 names is a pretty decent start, putting the the Aruba-owned TLD within the top 100 new gTLDs by volume.
Volume-wise, it’s already in the same ball-park as the likes of .global, .sexy and .uno, which have each been around for well over a year.
Including dot-brands, there are now close to 900 new gTLDs, only about half of which have more than 100 names.

7 Comments Tagged: .cloud, aruba, ga, new gTLDs