Crunch day for new TLDs

The ICANN board has kicked off a two-day retreat during which it will attempt to finalize the rules for applying for new top-level domains.
The big question for many is this: are more delays or the cards, or will ICANN finally put a firm timeline on the first new TLD application round?
One constituency that seems bent on more delays is the intellectual property community.
Dozens of organizations, including Microsoft, AT&T, Time Warner, Adobe and Coca-Cola, told ICANN in late July that the current IP protections in version 4 of the Draft Applicant Guidebook are not good enough.
The proposed Uniform Rapid Suspension process has become bloated and burdensome and the Trademark Clearinghouse does not go far enough to proactively protect trademarks, they say.
Just this week, it emerged that the International Trademark Association has called for further studies into the potential economic harms of new TLDs, which could easily add a couple of quarters of delay.
But there are good reasons to believe ICANN is done with being pushed around by IP interests.
As I reported earlier this week, chairman Peter Dengate Thrush has recently publicly stated that the current state of intellectual property protection in the DAG is a compromise position reflecting the views of all stakeholders and that IP lawyers “have had their chance”.
It’s not just IP interests that will be affected by the ICANN board’s discussions this weekend. The board’s decisions on “vertical integration” will make or break business models.
The VI issue, which governs whether registrars can apply for new TLDs and whether registrars can act as registrars, is perhaps the most difficult problem in the DAG. The working group tasked with sorting it out failed to reach consensus after six months of debate.
The DAGv4 currently says, as an explicit placeholder, that there can be no more than 2% cross-ownership of a registry by a registrar and vice versa.
This would mean that registrars that want to get into the TLD game, such as Demand Media’s eNom, would not be allowed to apply.
It may also cause problems for publicly listed registries such as VeriSign and Neustar, or registries that already have registrar shareholders, such as Afilias.
The proposals on the table include raising the ownership cap to 15% to eliminating it altogether.
A move by ICANN to restrict ownership will certainly attract allegations of anti-competitive behavior by those companies excluded, while a move too far in the opposite direction could lead to accusations that the rules do not go far enough to protect registrants.
There are no correct answers to this problem. ICANN needs to find a balance that does the least harm.
Also up for debate will be the rules on how governments and others can object to new TLD applications on “morality and public order” grounds.
Following the report of a working group, which I blogged about here, it seems likely that the term “morality and public order” will be replaced entirely, probably by “Objections Based on General Principles of International Law”.
If the board adopts the recommendations of this “Rec6” working group, there will be no special provision in the Guidebook for governments to make objections based on their own national laws.
There’s also the suggestion that ICANN’s board should have to vote with a two-thirds super-majority in order to deny a TLD application based on Rec6 objections.
It’s another almost impossible problem. Some say the Rec6 recommendations as they currently stand are unlikely to appease members of the Governmental Advisory Committee.
In summary, ICANN’s board has just two days to define the competitive parameters of a market that could be worth billions, figure out how to politely tell some of the world’s largest IP rights holders to back off, and write the rule-book on international governmental influence in the new TLD process.
I predict a small boom in sales of coffee and pizza in the Trondheim region.

ICANN urged to kill new TLD morality veto

ICANN has been asked to eliminate references to “morality and public order” objections from its new top-level domain application process.
A cross-constituency working group has advised ICANN’s board of directors to scrap the term and to ensure that whatever replaces it does not enable individual governments to veto new TLDs based on their own local laws.
The so-called “MOPO” or “MAPO” part of the Draft Applicant Guidebook attracted criticism because ICANN’s Governmental Advisory Committee seemed to want to use it to grant themselves the right to block any TLD application they deemed too controversial.
The fear from the GAC was that if nations started blocking whole TLDs at their borders, it could ultimately lead to the fragmentation of the DNS root.
The fear elsewhere was that some edgy TLD applications, such as .gay or .sex, could be rejected due to the unilateral objections of backward regimes, harming freedom of speech.
But if ICANN incorporates the working group’s new recommendations into the next version of the DAG, that probably won’t be allowed to happen.
The group this week forwarded an interim report to the ICANN board for its consideration. While incomplete, it already carries a few recommendations that managed to find consensus.
Notably, the report recommends that, “National law not based on international principles should not be a valid ground for an objection”, which would seem to scupper any chances of Uganda or the Holy See blocking .gay, for example.
The working group has so far failed to reach consensus on how governmental objections should be registered and processed, but one option is:

The Applicant Guidebook should allow individual governments to file a notification (not an objection) that a proposed TLD string is contrary to their national law. The intention is that an “objection” indicates an intent to block, but a “notification” is not an attempt to block, but a notification to the applicant and the public that the proposed string is contrary to the government’s perceived national interest. However, a national law objection by itself should not provide sufficient basis for a decision to deny a TLD application.

The working group, which counted a few GAC members among its number, has managed to unanimously agree that the awkward term “morality and public order” should be dumped.
One possible contender to replace it is “Objections Based on General Principles of International Law”.
The group has also discussed the idea that a supermajority vote could be required if the board decides to reject a TLD application based on a MOPO objection.
The report is a work in progress. The working group expects to send an updated document to the ICANN board shortly before its retreat later this month.
Whether any of this will be acceptable to the GAC as a whole is up for debate.

Domainers get there before the dictionary

The new third edition of the Oxford Dictionary of English contains more than 2,000 new words, according to reports today, but it looks like domainers will find slim pickings.
For every neologism the dictionary now defines, you’ll find a .com equivalent that was registered years ago, in some cases over a decade ago.
Here are some newly official generic dictionary words, along with the earliest date I could find for their original .com registration.

SoftSkills – May 1996
Turducken – June 1997
ExitStrategy – August 1998
ChillPill – December 1999
CarbonCapture – May 2000
Cheeseball – August 2000
Vuvuzela – May 2004
PayWall – June 2004
Frenemy – February 2005
Defriend – June 2005
Staycation – November 2005
Bromance– April 2006
Microblogging – April 2007
Deleveraging – April 2007
TweetUp – June 2007
Overleveraged – July 2007
ToxicDebt – September 2007
QuantitativeEasing – November 2008
Catastrophizing – April 2009

Not all of these were registered by domainers, of course. Some are in use, though plenty are currently parked or marked for sale.
The Oxford dictionaries cover primarily UK English. Some of these words, like “cheeseball” or “turducken” are Americanisms that clearly saw some lag crossing the Atlantic.

New TLD ownership rules punted to ICANN board

The ICANN board will be asked to untangle the policy mess that currently bans domain name registrars from applying for new top-level domains, after a GNSO working group failed to reach consensus.
The Vertical Integration WG was tasked with figuring out whether registrars should be allowed to own new TLD registries and vice versa, but only managed to reach deadlock.
The GNSO Council is now likely to punt the issue to the ICANN’s September 24-25 retreat, asking the board to consider the issues raised by the WG’s non-committal interim report.
It’s a dismaying case of pass-the-parcel that highlights both the trickiness of the VI problem and the limits of ICANN’s bottom-up policy-making process.
ICANN’s Draft Applicant Guidebook currently says that cross ownership between registrars and new TLD registries should be limited to 2% and that all new TLDs need to be offered to all accredited registrars.
This was in response to fears from some quarters that if a registrar also owned a new TLD registry, it would have an unfair advantage over other registrars, ultimately harming registrants.
The DAGv4 text was an overt, deliberately Draconian placeholder – it would ban all registrars and some registries, as well as making “.brand” TLDs unworkable – designed to force the GNSO find a better solution to the perceived problem.
The WG, which is ongoing, has so far failed to do so, and now seems set to pass the hot potato back from whence it came.
What all this means is that the ICANN board (and, let’s face it, staff) will be forced to assemble a workable VI policy for the first round of new TLD applications from the piecemeal suggestions of the WG; to do over two days or less what the WG failed to do over six months.
What the board will decide remains to be seen, but it could wind up governing the first round of new TLD applications, potentially making it a considerably smaller round.

Stalemate reached on new TLD ownership rules

An ICANN working group tasked with deciding whether domain name registrars should be able to apply to run new top-level domains has failed to reach a consensus.
For the last several months, the Vertical Integration working group has been debating, in essence, the competitive ground rules of the new TLD market, addressing questions such as:

• Should existing ICANN registrars be allowed to run new TLD registries?
• Should new TLD registries be allowed to own and control ICANN registrars?
• Should new TLD registries be allowed to sell domains directly to end users?
• What if an approved registry can’t find a decent registrar willing to sell domains in its TLD?
• Should “.brand” TLDs be forced to sell via ICANN accredited registrars?
• Should “registry service providers” be subject to the same restrictions as “registries”?
• Where’s the harm in allowing cross-ownership and vertical integration?

It’s an extraordinarily complex set of questions, so it’s perhaps not surprising that the working group, which comprised a whopping 75 people, has managed to reach agreement on very few answers.
Its initial report, described as a “snapshot” and subject to change, states:

It is impossible to know or completely understand all potential business models that may be represented by new gTLD applicants. That fact has been an obstacle to finding consensus on policy that defines clear, bright line rules for allowing vertical integration and a compliance framework to support it

Having lurked on the WG’s interactions for a few months, I should note that this is possibly the understatement of the year. However, the WG does draw four conclusions.

1. Certain new gTLDs likely to be applied for in the first round will be unnecessarily impacted by restrictions on cross-ownership or control between registrar and registry.

I believe the WG is referring here primarily to, for example, certain “cultural” TLDs that expect to operate in linguistic niches not currently catered for by registrars.
The operators of the .zulu and .kurd TLDs would certainly find themselves without a paddle if the rules obliged them to find an ICANN-accredited registrar that supports either of their languages.
There are other would-be registries, such as .music, that call themselves “community” TLDs and want to be able to sell directly to users, but my feeling is that many in the WG are less sympathetic to those causes.

2. The need for a process that would allow applicants to request exceptions and be considered on a case-by-case basis. The reasons for exceptions, and the conditions under which exceptions would be allowed, vary widely in the group.

There’s not a great deal to add to that: the WG spent much of the last couple of weeks arguing about “exceptions” (that they could not agree on) to a baseline rule (that they could not define).

3. The concept of Single Registrant Single User should be explored further.

An “SRSU” is a subset of what a lot of us have been calling a “.brand”. The proposed .canon TLD, under which Canon alone owns .canon domains, would likely fall into this category.
The WG’s report suggests that SRSU namespaces, should they be permitted, should not be subject to the same restrictions as a more open and generic TLD that sells to the average man on the street.
The alternative would be pretty crazy – imagine Canon owning the registry but being forced to pay Go Daddy or eNom every time it wanted to add a record to its own database.
I do not believe that a hypothetical .facebook, in which Facebook is the registry and its users are the registrants, falls into the SRSU category. Which is also pretty nuts, if you’re Facebook, forced to hand your brand over to the world’s domain name registrars.

4. The need for enhanced compliance efforts and the need for a detailed compliance plan in relation to the new gTLD program in general.

One principle that has come through quite clearly whilst lurking on the WG mailing list is that the degree of distrust between participants in this industry is matched only by the lack of confidence in ICANN’s ability to police bad actors effectively.
Domain name companies are masters of the loophole, and ICANN’s enforcement mechanisms have historically been slow enough that yesterday’s scandal often becomes today’s standard practice.
This sums it up pretty well:

Some members feel that loosening vertical integration/ownership controls may let the proverbial “genie out of the bottle that can’t be put back” should competitive harms result in the marketplace. Others believe that adopting restrictions on vertical integration or cross ownership is the wrong approach altogether, and that the focus should be on protecting against harms, and providing sanctions where harms take place.

The WG currently has six policy proposals on the table, which vary from the “no VI allowed” of the current Draft Applicant Guidebook to “some VI allowed” to “full VI allowed”.
There was a poll of WG members a few weeks back, to see which proposal had most support. It was inconclusive, but it left three proposals clearly in the lead.
The so-called Free Trade proposal, which advocates no limits on cross ownership, was originally authored by Sivasubramanian Muthusamy of ISOC India Chennai.
The proposal as it currently stands puts the focus on ICANN troubleshooting undesirable activities through compliance programs rather than ownership restrictions.
Opposed, a proposal known as RACK+, offered up primarily by Afilias, some of its partners, and Go Daddy, favours a much more restrictive policy that is more aligned with business models established under the last ten years of gTLDs dominated by .com.
RACK+ would impose a 15% ownership limit between registries, registrars and registry service operators, ostensibly in order to prevent registrars abusing privileged registry data.
But under RACK+, all TLDs, including .brands and obscure community TLDs, would be obliged to accept registrations only through ICANN registrars, on a non-discriminatory basis.
This would probably render the .brand TLD market stillborn, if adopted by ICANN, I reckon.
A third proposal, called JN2+, originally authored by representatives of NeuStar and Domain Dimensions, occupies a spot somewhere in the middle ground.
It also proposes 15% ownership caps between registrars, registries and registry service providers, but it contains explicit carve-outs for SRSU-style .brands and “community” TLDs.
Because I’m a wimp, and I have no desire to be drawn into the kinds of arguments I’ve been reading and listening to recently, I’m going to quote Milton Mueller here, saying JN2 “had the highest acceptability ranking of all the proposals” when the WG was polled.
(Sorry.)
I find it rather surprising that the WG seems to be calling for more policy work to be done on ICANN’s compliance programs before the issue of vertical integration can be fully resolved.
If anything, this seems to me to be yet another way to risk adding more delay to the new TLD program.
There’s a public comment period now open, here. And here’s the report itself (pdf)

UNICEF looking for a .brand TLD partner

The UN-backed charity UNICEF has become the second organization, after Canon, to confirm publicly it is planning to apply for a .brand top-level domain.
The organization has put its feelers out for a registry operator to apply for and manage .unicef, publishing a Request For Information on its web site this week.
The RFI says:

Taking the long view, as time goes on a name such as www.donations.unicef and www.cards.unicef will become more intuitive in a more crowded Internet, and thus more valuable because the name reflects exactly that of an organization and declares what it does.

With unscrupulous individuals frequently seeking to capitalize on global tragedies to bilk money out of people through bogus web sites, charities could very well see some anti-phishing benefits from having their own sufficiently publicized TLD.
As I noted yesterday, it looks like the Red Cross may be thinking about a similar initiative.
UNICEF appears to want an operator that will be able to both manage the ICANN application process and then, for at least two years, the operation of the registry.
The deadline is July 30, so vendors have just a week to fill out and submit a questionnaire outlining their capabilities.
The questions appear, to me, to betray a degree of unfamiliarity with the DNS business and the new TLD process in particular.

What are the timeframes for developing and provisioning the application including all necessary activities (i.e. obtaining ICANN’ registration, facilitating the transition of current domains to the top level domain etc) from the moment a contract is signed with the selected vendor?

Good luck answering that one.
(Hat tip: newTLDs.tv)

Brand owners drop hints about .brand TLD plans

The flood of negative comments to ICANN yesterday almost obscured the fact that a few companies have hinted that they will apply for their own “.brand” top-level domains.
As Antony Van Couvering first noted on the Minds + Machines blog, IBM’s comment on version four of the Draft Applicant Guidebook makes it pretty clear the idea of a .ibm is under consideration.
IBM’s filing raises concerns about the issues of sunrise periods and vertical integration, with particular reference as to whether .brand owners would be exempt from such things.
This suggests IBM is thinking about its own .brand.
If we make the (admittedly cheeky but probably realistic) assumption that the large majority of comments filed with ICANN are self-serving, we can infer that anyone taking in an interest in the nuts and bolts of running a new TLD has probably considered applying for one.
Other than IBM, I’ve notice two others so far: Microsoft and the American Red Cross.
Microsoft, while generally opposed to a large-scale new TLD launch, is very concerned about parts of the DAG that would allow ICANN to transfer a .brand delegation to a third party if the original registry were to shut down for whatever reason.
In other words, if Microsoft one day decided that running “.windows” was a waste of time and decided to shut it down, could ICANN appoint Apple to take it over?
I suggest that this is something that you only really worry about if you’re thinking about applying for a .brand TLD.
The American Red Cross comment contains references to a hypothetical scenario where it applies for its own TLD throughout.
It’s especially concerned that its administrative overheads would increase due to the high ICANN application fees, eating into the money it can spend on worthier causes.
To date, Canon is the only company I’m aware of to publicly state it will apply for a .brand.

Loss-making M+M predicts December new TLD announcement

Top Level Domain Holdings, the parent company of Minds + Machines, has reported another six months of steep losses as it patiently waits for ICANN to launch its new TLD round.
The company, which is listed in London, reported revenue for the period to the end of April of £32,000 ($49,000), with a loss of £462,000 ($708,000).
TLDH still has almost £4m in cash and equivalents, so it’s not likely to go out of business before the new TLD round commences. Unless the round is delayed by litigation, of course.
M+M has apparently been tightening its belt a little since April. I’m aware of at least one key employee who is no longer working there.
TLDH says in its interim report that it expects ICANN to finalize its Applicant Guidebook in November and announce the application window for the first round in Cartegena in December.
While that’s definitely compatible with noises ICANN’s chairman was making in Brussels, I know I’m not the only person who believes this is a somewhat optimistic estimate.
The report also makes reference to the issue of registry-registrar integration, noting that the ICANN Nairobi resolution to prohibit cross ownership benefits M+M, which is not a registrar.
TLDH’s share price closed up 2% today.

ICANN Brussels – .xxx approved but not approved

The controversy over the .xxx top-level domain has for the last few years, at least from one point of view, centered on opposing views of whether it was already “approved”.
ICM Registry has long claimed that ICANN “approved” it in 2005, and believes the Independent Review Panel agreed with that position. ICANN said the opposite.
Regardless of what happened in Brussels yesterday, when the board grudgingly voted to reopen talks on .xxx (to a surprisingly muted audience response), the question of whether .xxx is “approved” is definitely not over yet.
ICM tweeted shortly after the ICANN’s board’s decision:

@ICMRegistry: We are delighted to announce that the #ICANN Board has approved the .xxx top-level domain.

But a couple of hours later, ICANN chair Peter Dengate Thrush told us at a press conference that it categorically was not “approved”.
In terms of getting its point across to the media, ICM’s message trumped ICANN’s, judging by the headlines currently scrolling past me on Google News.
I guess this boils down to a question of definitions.
From the ICANN perspective, a TLD is presumably not “approved” until a contract has been signed and the board has resolved to add it to the root.
The board’s decision yesterday merely sets out the track towards that eventuality, with a few hurdles scattered along the way. In conversation with ICM people, I get the impression they believe the hurdles are low and easily surmountable.
Crucially for ICM, the issue of community support, the stick with which ICANN nearly killed .xxx back in 2007, is now off the table. There will be a quick review of ICM’s books and technical capabilities, but the views of the porn industry now seem pretty much irrelevant.
The only real way I can see .xxx being derailed again now is if the Governmental Advisory Committee issues future advice that unequivocally opposes the TLD.
As Kieren McCarthy noted in some detail over on CircleID, the GAC has never had a hell of a lot of substantial advice to impart about .xxx in its official communiques, so it’s difficult to see where a clash could arise based on its previous missives.
But with the GAC currently using bogus “morality and public order” arguments to jerk everybody around with regards the next new TLD round, it’s not entirely impossible that it could lob one final grenade in ICM’s direction.
This story ain’t over yet.

Register.com sold at a $65 million loss

Register.com has been acquired by web hosting company Web.com for $135 million, substantially less than the $200 million Vector Capital paid for it five years ago.
Web.com said the acquisition will help it access new small business customers for lead generation, to cross-sell its existing products.
The company’s customer base will increase by over 400% to more than one million customers, Web.com said. The combined firm will have annual revenue of $180 million.
Register.com was one of the first five ICANN-accredited registrars. It failed as a public company, and after years of financial wrangling was finally taken private by Vector in 2005.
Vector specializes in buying up troubled companies and turning them around, but it doesn’t appear to have increased the value of this particular asset over the last five years.