Vertical integration – bad news for domainers?

ICANN’s decision to allow domain name registrars to operate registries is a game changer on many fronts, but what impact could it have on domain investors?
For the first time, registrars will be able apply for and run new top-level domains, giving them unprecedented insight into registry-level data.
If they also act as registries, registrars will, for example, be able to see what non-existent domains in their TLD get the most type-in traffic.
They will also be able to see how much traffic expiring domains get, even if the registrant does not use the registrar’s own name servers.
As claimed by some participants in ICANN’s vertical integration working group, this data could be used to “harm” registrants; harms that could be especially noticeable to domainers.
There was a concern from some in the WG that combined registry-registrar entities (we’re going to need a name for these) could use registry data to, for example, identify and withhold high-value names, increasing prices to potential registrants.
The possibility of an increase in “domain tasting” and “front-running” – practices generally frowned upon nowadays – was also raised.
However, some registrars are already owned by companies that register large numbers of traffic domains for themselves, even without access to registry data.
Demand Media subsidiary eNom, the second-largest gTLD registrar, is a good example.
As DomainNameWire reported in August, the company already uses domain name lookups to decide what names to register for itself (though it told DNW it does not “front-run”), saying in SEC filings:

These queries and look-ups provide insight into what consumers may be seeking online and represent a proprietary and valuable source of relevant information for our platform’s title generation algorithms and the algorithms we use to acquire undeveloped websites for our portfolio.

Demand also said that it acquires eNom customers’ expiring domains if they are attractive enough:

Domain names not renewed by their prior registrants that meet certain of our criteria are acquired by us to augment our portfolio of undeveloped owned and operated websites.

Access to registry data could prove invaluable in refining this model, and eNom has, unsurprisingly. long indicated its desire to apply for and operate new TLDs.
But will registries be allowed to exploit this data to line their own pockets?
ICANN indicated today that it plans to introduce a code of conduct for registries, to prevent “misuse of data”, and will likely step up its compliance activities as a result.
What this code of conduct will look like remains to be seen, but I expect we’re looking at “Chinese wall” provisions similar to those self-imposed by VeriSign when it still owned Network Solutions.
It should be pointed out, of course, that standalone registries already have the ability to register domains to themselves, based on their own registry data, and I’m not aware of a great many incidents where this has been abused to the harm of registrants.

7 Comments Tagged: compliance, demand media, domain tasting, enom, front-running, ICANN, new TLDs, vertical integration

Is the new TLD program already delayed?

ICANN has missed the first target date on its recently approved new top-level domains launch timetable.
The organization was due to publish its proposed final Applicant Guidebook for public comment yesterday, but has failed to do so.
Rumor has it that it could be tomorrow or Friday before the AGB is published.
Could there be a knock-on effect? Does this mean that the process as a whole, scheduled to see the first round of new TLD applications open May 30, 2011, is already delayed?
Be warned, I’m just thinking aloud here. This is pure, idle speculation.
Two thoughts occur to me.
First, does this delay mean that ICANN will not be able to vote on the AGB at its December 10 meeting, as planned?
Second, does this delay create a scenario in which the program’s opponents will be able to lobby for further delays?
The original, quite tight timetable called for a November 9 AGB publication date and the immediate launch of a 30-day public comment period.
Doors would have closed to feedback on December 9, the day before the next ICANN board meeting.
With the AGB publication deadline now missed, and if ICANN otherwise sticks to its plan, a 30-day comment window would still be open when the board convenes in Cartagena.
Since ICANN is not in the habit of voting on issues that are still subject to open comment periods, my guess is that its best bet now will be to tighten the schedule.
While the board has seemingly okayed 30 days for community input, I’m not sure how binding that is, and my reading of ICANN’s bylaws suggests that it could be quite easily be reduced to anything as short as 21 days.
A comment period that lasted beyond December 10 would enable an organization opposed to the new TLD program to submit comments after the vote has been cast, allowing no time for the board to consider them.
This seemingly counter-intuitive move would however create grounds for a subsequent Reconsideration Request if the AGB is approved in Colombia, potentially delaying the process.
Would this be a clever strategy? I doubt it. Reconsideration Requests rarely work, and are hardly the most effective way to have your views heard within ICANN.
Still, these are strange times, and anything seems possible.
One thing is certain, given the enthusiastic reception the recent publication of the timetable received, it will be dispiriting to many today to see that ICANN has already missed its first deliverable date.

2 Comments Tagged: cartagena, ICANN, new TLDs

ICANN drops the bomb – registries can buy registrars

ICANN has just authorized the biggest shake-up of the domain name industry in a decade, lifting all the major cross-ownership restrictions on registrars and registries.
A surprise resolution passed on Friday at the ICANN board’s retreat could enable registries such as VeriSign to acquire registrars such as Go Daddy, and vice-versa.
The new rules will also allow registrars to apply for and run new top-level domains and, subject to additional conditions, may enable existing registries to eventually start selling direct to end users, potentially bypassing the registrar channel.
The implications of these changes could be enormous, and I expect they could be challenged by affected parties.
The board resolved that ICANN “will not restrict cross-ownership between registries and registrars”, subject to certain yet-to-be written Code of Conduct for preventing abuse.
These looser ownership restrictions will be included in the new TLD Applicant Guidebook. Existing registries will be able to transition to the new rules over time through contract changes.
ICANN will develop mechanisms for enforcing anti-abuse rules through contractual compliance programs, and will have the ability to refer cross-ownership deals to competition authorities.

These provisions may be enhanced by additional enforcement mechanisms such as the use of self-auditing requirements, and the use of graduated sanctions up to and including contractual termination and punitive damages.

The decision appears to have been made partly on the grounds that while almost all existing registry contracts include strict cross-ownership restrictions, it has never been a matter of formal policy.
A vertical integration working group which set out to create a bottom-up consensus policy earlier this year managed to find only deadlock.
ICANN chairman Peter Dengate Thrush said:

In the absence of existing policy or new bottom-up policy recommendations, the Board saw no rationale for placing restrictions on cross-ownership. Any possible abuses can be better addressed by properly targeted mechanisms. Co-ownership rules are not an optimal technique in this area.

Most members of the VI working group broadly favored some level of cross-ownership restriction, such as a 15% cap, while a smaller number favored the “free trade” position that ICANN seems to have gone for.
The companies campaigning hardest against cross-ownership being permitted were arguably Afilias and Go Daddy, though the likes of NeuStar and VeriSign also favored some restrictions.
Opponents of integrating registry and registrar functions argued that giving registrars access to registry data would harm consumers; others countered that this was best addressed through compliance programs rather than ownership caps.
The big winners from this announcement are the start-up new TLD registries, which will not be forced to work exclusively within the existing registrar channel in order to sell their domains.

24 Comments Tagged: afilias, go daddy, ICANN, neustar, new TLDs, verisign, vertical integration

Trademark clearinghouse signs up 40 registrars

The ClearingHouse for Intellectual Property, CHIP, is signing up one or two domain name registrars to its system every day, according to its chief architect, attorney Bart Lieben.
Lieben tells me that 40 registrars have signed up since the IP protection service officially launched two weeks ago, and that there is strong interest among corporate-focussed registrars.
CHIP is a registry for companies’ trademark rights, designed to ease trademark protection in domain names. It’s backed by Deloitte and Lieben’s employer, the law firm Crowell & Moring.
For registrars, there’s an opportunity to offer value-added services to their corporate customers.
The company plans to offer its services to new top-level domain registries during their sunrise periods, and to existing registries and registrars on an ongoing basis.
It’s currently in use at .SO Registry, the recently relaunched Somalian registry, as well as .co.no, a third-level domain provider from Norway.

1 Comment Tagged: .co.no, .so registry, bart lieben, chip, clearinghouse for intellectual property, crowell & moring, deloitte

Van Couvering takes over M+M parent

Antony Van Couvering, chief executive of new top-level domains hopeful Minds + Machines, has taken over as CEO of its parent company, Top Level Domain Holdings.
He replaces Fred Krueger, who remains as chairman, according to StockMarketWire.com.
Casper von Veltheim, head of the German operation, will also become director of European operations.
The changes are related to the recent announcement of a timetable for the introduction of new TLDs, according to Krueger.
M+M plans to apply for a number of TLDs, including .gay, and provides consulting and back-end services to other TLD applicants.

1 Comment Tagged: ICANN, Minds + Machines, new TLDs, top level domain holdings

Correction: Arab League calls for ICANN recognition

Back in September, I reported that the League of Arab States had asked ICANN to officially recognize the Arab region, in a letter from its secretary-general, Amre Moussa.
A significant part of the article relied upon the assumption that the League was asking for such recognition to be reflected in ICANN’s bylaws, which would grant the region more power in ICANN.
That assumption was incorrect.
I’ve learned recently that the letter in fact referred purely to a request for recognition of the region in ICANN’s new top-level domain Applicant Guidebook, and not the bylaws.
The League, in fact, was only seeking protection for geographic terms from the Arab region, largely due to a local plan to apply for “.arab” as a TLD. I have confirmed this with ICANN.
Recently, ICANN chief executive Rod Beckstrom wrote to Moussa in reply (pdf) to report that ICANN’s board has voted to expand the geographical regions list in the Guidebook such that it will now include the Arab region, as requested.
While I have not received any complaints, it’s very clear to me that the original article was shoddy reporting, and worthy of a correction.
It seemed easier to delete the original post rather than do a messy edit job on it, but I’m sure you’ll be able to find a copy in a cache somewhere if you’re particularly interested.

Comment

Serbia’s Cyrillic domain approved

Serbia has moved one step closed to having a localized version of its country-code top-level domain added to the DNS root, after ICANN approved its choice of string.
According to the Serbian National Register of Internet Domain Names (RNIDS), which manages .rs, ICANN has told it the Cyrillic string .срб has been approved (Serbian PDF).
The ccTLD would become the second Cyrillic namespace to be approved, after the Russian Federation, under ICANN’s internationalized domain name fast-track process.
Wikipedia tells me that Serbian is the only European language to use both Latin and Cyrillic characters, but that nowadays Cyrillic is the only official script.
I believe the Latin transliteration of the approved string is .”srb”.
RNIDS said it expects to start accepting registrations in the second half of 2011, following public consultations.

Comment Tagged: .rs, .срб, ICANN, idns, rnids

New TLD firms to ICANN: “Get on with it”

A number of prospective domain name registries have called on ICANN to shorten the window for its first round of new top-level domain applications.
While we now know that ICANN is working towards a May 30, 2011 opening date for applications, its recently published timeline does not specify how long the application period will last.
However, last month’s draft document “Delegation Rate Scenarios For New gTLDs” (pdf) states that the window of opportunity for TLD applicants will last 90 days.
Now, many of the companies and organizations that have been waiting the longest to apply have asked ICANN to narrow that period to 30 days.
Jon Nevett, president of Domain Dimensions, in a comment on the delegation rate report, wrote:

In prior presentations and discussions with ICANN staff, a 30-day application window had been discussed. I’m not sure how the 30 days turned into a 90-day window in this report. Tacking a 90-day window on after a four-month communications period does not make sense and is extremely unfair to applicants.

After the publication of the final Applicant Guidebook (AGB), ICANN plans to conduct a four-month outreach and marketing effort before accepting applications. The current draft AGB predicts an eight-month processing period for the very simplest applications.
Nevett, and others that subsequently echoed his views, believe that the longer window punishes companies that have invested resources in new TLD applications over the last few years.
There have already been a number of delays to the program’s launch, which was originally scheduled to kick off in 2009, and then mid-2010.
Nevett wrote:

Let’s stop punishing applicants by sucking them dry of all of their working capital by creating a seven-month communications/application period followed by a minimum eight-month review period piled on the years that they already have been waiting. We could do better.

His views were supported in separate comments by commercial operators including of Minds + Machines and .MUSIC, along with geo-TLD efforts including dotBERLIN and dotAfrica.
While the comment period has seen no opposing views, one criticism previously offered by opponents of the new TLD program is that it will unfairly benefit “insiders” – those people who participate regularly in ICANN for their own business purposes.

1 Comment Tagged: .berlin, .music, africa, agb, applicant guidebook, domain dimensions, ICANN, Minds + Machines, new TLDs

Will the new TLD guidebook provide answers?

ICANN is due to publish an Applicant Guidebook for new top-level domain registries tomorrow, and there are still big question marks over its contents.
Judging from a preliminary report from the ICANN board’s most-recent official meeting, some key decisions may not have yet been taken.
Perhaps the biggest unresolved issue is whether to permit the “vertical integration” of registry and registrar functions.
Which way ICANN swings on this problem will determine which companies are eligible to apply for new TLDs, how their business models will be structured, and how realistic “.brand” TLDs will be.
The ICANN community failed to reach consensus on this issue, largely due to differing business interests and a few consumer protection concerns.
But it looks like the ICANN board did not even discuss the matter at its October 28 meeting. The preliminary report has this to say:

2. Vertical Integration
In the interests of time, the Chair adjourned this item of discussion to a later date.

That “later date” may have been last Thursday and Friday, when the board held its rescheduled “retreat”, which is not designated as an official meeting.
On “Rec6”, previously known as the “morality and public order” objections process, the board passed no resolution October 28, but seems to have endorsed further discussions with the community.
The preliminary report states:

The Board discussed staff presentation and, in conformance with staff recommendation, directed staff to provide a briefing paper to the working group and to coordinate a call with the working group to further discuss the issues.

If the Rec6 working group mailing list and the GNSO calendar are any guides, that meeting has not yet been called (at least not publically).
The report also addresses geographic domains and issues that need to be taken into account given what ICANN’s Affirmation of Commitments with the US government says about new TLDs.

The Board agreed that staff provide a paper on geographic names to the GAC, the Chair of the GAC would check on the scope of issues still requiring discussion, and then the Chairs of the GAC and the Board would discuss the process for resolution to move this issue forward prior to Cartagena.
…
The Board discussed a paper regarding the adherence to the conditions set out in the Affirmation of Commitments in launching New gTLDs, and the need for identifying objective metrics to measure ICANN’s performance. The Board asked staff to consider what known performance indicators for the New gTLD program may be, what the adequacy scale is for measuring, and try to set that out for future conversation.

With all this in mind, it seems to me that while we may have a timeline for the launch of the new TLD program, there’s still much more to do than merely cross t’s and dot i’s.
Can we expect more placeholder text in tomorrow’s Applicant Guidebook?

Comment Tagged: gac, governmental advisory committee, ICANN, mopo, new TLDs, rec6, vertical integration

What does the Overstock commercial mean for .co?

Judging by the number of exclamation marks being deployed over on the .CO Internet blog today, it’s a fairly safe bet that the company is rather happy with Overstock.com’s latest TV commercial.
It’s the first high-profile commercial to feature a .co domain, in this case o.co, which could go some way to raise the newly relaunched TLD’s profile in the US.
While it’s a nice first step for .CO, I wouldn’t say its TLD has necessarily “arrived” yet, on the basis of this ad, for a few reasons.
First, what’s this “shortcut” business?

Should this be troubling?
The biggest marketing coups .CO has inked to date have been for x.co and t.co, URL shorteners offered by Go Daddy and Twitter respectively. Now, Overstock is using its o.co as a “shortcut”, which bounces visitors to overstock.com.
True, Overstock’s .com domain is its brand, and that’s not about to change, but its use of o.co as a “shortcut” may perpetuate the short-term perception that .co’s primary purpose is short URLs.
On the upside, the company is actively encouraging customers to type a .co domain into their browsers.
Getting this “type-in awareness” is something I know that .CO Internet is looking to foster, something that the Twitter deal does not necessarily bring to the table.
It’s also encouraging that Overstock feels comfortable using a .co domain where it does not own the equivalent .com. That said, nobody does. Most single-letter .com domains are still reserved.
While this may be a branding risk for Overstock, could it actually be helpful for .CO, training fat-fingered users the difference between .com and .co domains? It seems possible.
It’s interesting to note that Overstock is using “www.” for its .co, but not for its .com, presumably in order to train viewers that “this is a URL”, much the same as .com domains were once uniformly advertised with the www prefix.
A reliable sign that .co has “arrived” would be when an advertiser feels happy to drop the www.

14 Comments Tagged: .co, .co internet, o.co, overstock.com