Domain regs dip for second quarter in a row and it’s all China’s fault

There were 363.5 million domain name registrations across all top-level domains at the end of March, down by 2.8 million names compared to the end of 2020, Verisign’s latest Domain Name Industry Brief shows.

But the losses can be attributed mostly to China, which saw plummeting .cn regs in the ccTLD world and big declines across gTLDs popular with Chinese speculators.

In .cn, regs were down a whopping four million at 20.7 million in the quarter. China has historically been subject to steep fluctuations due to local government regulations.

Overall, ccTLD registrations were down 2.4 million at 156.5 million, but that seems to be all down to China.

All the other ccTLDs in the DNIB top 10 were either flat or up slightly on Q4. The frequent wild-card .tk did not have an impact on this quarter’s numbers, staying flat.

Verisign does not break down new gTLD registrations, but zone file and transaction report data shows that the likes of .icu and .wang, which typically sell first-year regs very cheaply, were hit by material junk drops in Q1.

ShortDot’s .icu zone file shrank by 2.5 million names between January 1 and March 30. It’s still in decline in Q2, but the trajectory isn’t nearly as steep. It had 814,000 zone file names at the end of Q1.

Zodiac’s .wang was at 525,000 at the end of 2020 but had dropped to 86,000 by March 30.

.top also lost around half a million names in the first quarter.

The vast majority of regs in .icu, .top and .wang come through Chinese registrars, which often sell for under a dollar for the first year.

The DNIB reports that .com performed well as usual, up from 151.8 million reported in the Q4 report to 154.6 million, but Verisign bedfellow .net was once again flat at 13.4 million.

MMX’s year marked by terrible renewals

MMX saw its revenue dip in 2020, and it reported shocking renewal rates at two of its highest-volume gTLDs, according to the company’s annual financial results, published this morning.

The portfolio registry, which is in the process of selling off essentially its entire operating business to GoDaddy, reported revenue of $16.8 million for the year, down from $17.2 million in 2019.

Profit was up very slighty, to $2.9 million from $2.8 million.

The 2019 results included a few one-off gains, including $588,000 from losing a new gTLD auction, which accounted for most of the 2020 revenue decline.

But the company also reported a 19% decline in domains under management, from 2.46 million to 1.99 million, based on some terrible renewal rates in its .vip and .work gTLDs.

The DUM decline can be attributed mostly to .vip, a popular TLD among Chinese speculators, which started 2020 with around 1.4 million domains but finished the year with just over a million.

.work actually ended the year up on where it started, with around 709,000 names under management.

But MMX today disclosed that the renewal rates for .vip and .work were 36% and 18% respectively. In a business where 70%+ is considered healthy, these are some poor numbers indeed.

However, the company discontinued first-year promotions on these TLDs in 2020, focusing instead on selling domains likely to lead to recurring renewal revenue, which lead to 14% (.vip) and 19% (.work) increases in revenue.

Fewer domains. More money.

MMX said that it is seeing these trends continuing into 2021. Public transaction reports show both these TLDs losing 40-50,0000 names in January. The company expects revenue to fall 4% in the first quarter compared to Q1 2020.

One bright spot appears to be “The Great Relese”, the company’s move last month to mark down hundreds of thousands of premium-priced domains. That’s brought in $170,000 since its April 23 launch.

One basket where the company is placing a lot of its eggs is AdultBlock, the trademark protection service it inherited when it acquired ICM Registry a few years back. It enables customers to block their brands in .xxx, .porn, .adult and .sex without actually having to register the names.

The 10-year period ICM allowed brands to block when it launched in 2011 is coming to an end, so MMX is banking on renewals (which retail at $349 to $799 per year before multi-year discounts) to boost revenue.

“While it is early in the AdultBlock Sunrise B renewal period, we are encouraged by Registrar interest and some early sales of this product,” CEO Tony Farrow said in a statement.

This reliance on AdultBlock for short-term organic growth was one of the reasons MMX is selling up to GoDaddy.

The market-leading registrar and fast-emerging registry consolidator agreed to pay $120 million for MMX’s portfolio, which will leave MMX as a shell company only long enough to distribute the cash to investors before fading away quietly.

That deal has an August deadline to close and is dependent on approvals from business partners, ICANN and the Chinese government.

China could block GoDaddy’s $120 million MMX swoop

GoDaddy’s proposed $120 million acquisition of essentially all the meaningful assets of portfolio gTLD player MMX will be subject to Chinese government approval, it emerged this morning.

Following GoDaddy’s bare-bones press release announcing the deal last night, this morning MMX added a whole bunch of flesh, including a list of closing conditions, in its statement to shareholders.

GoDaddy is proposing to buy essentially MMX’s entire operating business — the 28 gTLD registry agreements with ICANN, including the four porn-related strings belonging to subsidiary ICM Registry.

Not only do MMX shareholders have to approve the deal — and holders of 64% of the shares have already promised they will — but ICANN approval will be required for the registry contracts to be reassigned.

This may prove a hurdle or delay if third parties raise competition concerns, but ICANN’s pretty opaque approval process generally doesn’t frown too much on industry consolidation.

Another known unknown is China.

MMX told shareholders that it needs: “Approval of Chinese authorities for the change of control of MMX China (including change of control in respect of relevant licenses held by MMX China permitting it to distribute TLDs in China).”

The reason for this is quite straightforward: in volume terms, quite a lot of MMX’s business has been in China in recent years. Popular sellers such as .vip, with over 800,000 names today, have been driven primarily by Chinese investors.

A local presence (in this case MMX China) and approval from the Ministry of Industry and Information Technology is required to legally sell a TLD to Chinese registrants via Chinese registrars.

I’ve no particular reason to believe MIIT will withhold its approval for MMX China to move into GoDaddy’s ownership, but a failure to get the nod from China appears to be a deal-breaker.

MMX’s statement to the markets this morning also provided some clarity on what exactly it is that GoDaddy is proposing to buy.

The gTLDs to be acquired are: .vip,.nrw, .casa, .vodka, .xxx, .fit, .miami, .fishing, .porn, .beer, .surf, .boston, .adult, .yoga, .garden, .abogado, .work, .fashion, .horse, .rodeo, .sex, .wedding, .luxe, .dds, .law, .bayern, .cooking, and .country.

It seems that when Tony Farrow took over as MMX CEO last year, after his predecessor left due to an accounting snafu, he had the portfolio audited and came to the conclusion that it could expect only pretty crappy growth over the coming years.

It had banked on selling expensive defensive trademark blocks in its four porn-themed gTLDs to big brands to make up the shortfall, but then GoDaddy approached in December brandishing its rather large checkbook.

MMX reckons the deal values the company at a 92% premium over its closing share price Tuesday, and 87% and 78% premiums over its 20-day and 90-day average selling price.

.bayern, .nrw and the four porn gTLDs belong to subsidiaries that GoDaddy will acquire outright, but GoDaddy is not proposing to buy MMX itself.

Rather, MMX will likely stay alive and publicly traded long enough to redistribute its cash windfall to investors and sell or wind down about a dozen non-operating subsidiaries.

It has a transition services agreement to manage certain business functions of the registry until January next year, which sounds a bit like what fellow GoDaddy acquisition .CLUB Domains explained to me last night.

After that, London’s Alternative Investment Market rules will treat MMX as a “cash shell”, and it will either have to acquire an operating business from somewhere or make itself the subject of a reverse takeover by a company looking for a quick way to the public markets.

Domain industry shrank in Q4, but as usual there’s a big BUT

The worldwide domain name count shrank in the fourth quarter, according to newly released Verisign data, but as usual the numbers were hugely impacted by big swings in just a few TLDs.

The latest Domain Name Industry Brief (pdf), which is mainly compiled from zone file counts, shows that 2020 ended with 366.3 million names, down by 4.4 million or 1.2% compared to the end of the third quarter.

It’s the free and almost-free TLDs that swung the math.

Remarkably, industry wild-card .tk actually shrank during the quarter. This is highly unusual, as the registry’s business model is based on giving out names for free, never deleting domains, and monetizing the traffic to expired or suspended names.

It saw domains down by 2.8 million names over the quarter, from 27.5 million to 24.7 million.

Another big dipper was .icu, which sells cheap (usually under $1) and appeals to speculators largely in China.

While it slipped out of the top 10 TLDs, meaning the DNIB no longer breaks out its numbers, DI’s own zone file counts show its zone decline from 5.3 million to 3.4 million during Q4, a 1.9 million decline.

Notably spammy new gTLD .top, which also costs next to nothing and is popular in China, also had a role to play. Its zone count was down by about 900,000 between September 30 and December 31.

Those three TLDs alone account for a loss of 5.6 million names, far more than the 4.4 million industry-wide quarterly drop calculated by Verisign.

The impact of .icu’s continued spiral downwards is likely to be felt in Q1 2021 also. It’s lost another 2.4 million zone file names since the start of the year.

Verisign said the the universe of ccTLD domains contracted by 1.7 million of 1% during the quarter, ending the year with 158.9 million names.

The .tk shrinkage of course more than accounts for this dip. Without it, ccTLDs would be up by 1.1 million names or 1.1%. The major, top-10 ccTLDs mostly showed six-figure growth, the DNIB reflects.

New gTLDs were down 4.2 million names or 13.8% sequentially, ending the quarter with 26 million.

In addition to the aforementioned .top and .icu, this figure appears to have been affected by six-figure losses in some of the highest-volume, lowest-priced new gTLDs, including .club, .site .work and .vip.

In the main legacy gTLDs, Verisign’s own .com grew by 1.5 million names, from 151.8 million to 150.3 million, during the quarter. Its .net was again flat at 13.4 million. Public Interest Registry’s .org gained a (rounded) 100,000 names, ending the year at 10.3 million.

The annual numbers across the industry for 2020 have better optics. The DNIB shows that domain volume was up by 4.0 million or 1.1% year over year.

That breaks down into a 6.3 million increase in .com, a 1.3 million increase across the ccTLDs, and a 3.3 million decrease in new gTLDs, not all of which can be explained away by factoring out .icu and .top.

ShortDot adds fourth gTLD to its stable, plans March launch

Another unused new gTLD has changed hands, ending up at ShortDot, the registry best-known for high-volume .icu.

ShortDot confirmed to DI today that it has acquired .cfd from its former owner, DotCFD.

The original plan for .cfd, one of the Boston Ivy collection of investment-related new gTLD applications, was for it to represent CFDs, or “contracts for difference”, a risky type of financial instrument that has proved sufficiently controversial that they’re not even legal in the US.

Since 2012, when the string was first applied for, CFDs have come in for serious criticism from market regulators and others due to the risk of significant losses they present to retail investors.

No .cfd domains have ever been sold, and it doesn’t appear to have ever properly launched, even though it’s been in the DNS root for five years.

But ShortDot COO Kevin Kopas tells me the plan is to repurpose the domain for an entirely different market.

“When we were contemplating the purchase and subsequent marketing angle we found that the traditional meaning of a CFD in the finance world doesn’t have the most positive connotation to it,” he said.

“We’re branding .cfd for the Clothing & Fashion Design industry and will be marketing it to entrepreneurs, bloggers, vloggers and others that are on the cutting edge of the fashion industry,” he said.

If that sounds like a stretch, you’re probably right — as far as I can tell, the fashion industry has never used that acronym and creating demand there will be a tall order. We’re in “professional web” territory here.

But Kopas said that ShortDot is already working with some influencers in the space “to create some pioneer cases that will go live at launch”. It’s also planning to attend fashion industry events after pandemic travel restrictions are over.

The company is planning to launch the domain with a first-come, first-served sunrise period beginning March 10 and ending April 12. General availability is slated for April 13 with a seven day early access period.

It’s the fourth unwanted gTLD ShortDot has acquired, repurposed and relaunched.

Its biggest success to date is .icu, a low-cost domain that proved popular almost exclusively in China and currently has 2.5 million domains in its zone file (down from a peak of 6.3 million less than a year ago).

ShortDot has shifted, then lost, so many .icu domains over the last two years that you’ve really got to factor out its influence if you want to get any sensible picture of what the new gTLD industry’s growth looks like.

It also runs .bond (2,500 names in its zone today) and .cyou (with 65,000).

CSC becomes first foreign registrar to get the China nod

It’s probably not the best time, politically, to be bragging about doing business in China, but CSC has nevertheless just announced that it’s been given the nod to act as a registrar in China.

The company claims to be the first non-Chinese registrar to be given an official government license to operate in the country, though many registries have obtained one over the last few years since harsh new regulations came into power.

Under the Chinese rules, web site owners need a license to operate, and they can only register domains from approved registrars in approved TLDs.

It’s basically a great big censorship tool, but it doesn’t seem to have stopped every Chinese citizen from registering domains via foreign-owed registrars.

CSC has a corporate client base, so it’s got more incentive than most to follow the rules to the letter.

“CSC’s success in becoming licensed as a foreign-owned registrar positions the company as a go-to resource for global organizations doing business in China,” the company said in a press release.

No ICANN tax relief for Chinese registrars

ICANN has declined a request from dozens Chinese registrars for a fee waiver due to the impact of coronavirus.

In February, almost 50 China-based accredited registries and registrars said they were suffering financially as a result of the outbreak and asked ICANN for an “immediate fee waiver” to “greatly help stabilize our business in the difficult time”.

ICANN has denied this request. In a letter (pdf), senior director of gTLD accounts and services Russ Weinstein wrote:

While we sympathize with the potential financial impact this unprecedented event may have on contracted parties, we are not prepared to provide a waiver at this time. We are closely monitoring the situation and its impact on the domain industry. We are interested in hearing more from representatives from the contracted parties to better understand the problems both the contracted parties and the registrants are facing and ideas for potential solutions.

As I said back in February, what was then largely a Chinese problem looked likely to quickly become a global problem, which unfortunately seems to be the course we’re on. Just six weeks later, China isn’t even the worst-affected country any more.

Even without fee waivers, ICANN has noted that it expects a “significant” impact on it is 2020-21 budget due to the pandemic.

Ethos clarifies .org price rises, promises to reveal number of censored domains

Public Interest Registry and would-be owner Ethos Capital have slightly revised the set of promises they hope to keep if ICANN approves the $1.13 billion acquisition.

Notably, in updating their proposed Public Interest Commitments (pdf), they’ve set out in plain dollar terms for the first time the maximum annual price PIR would charge for a .org domain over the coming seven years.

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Previous versions of the PICs just included a formula and invited the reader to do the math(s).

The two companies are proposing to scrap price caps altogether after June 2027.

If ICANN rejects the deal, under its current contract PIR would be free to raise its prices willy-nilly from day one, though some believe it would be less likely to do so under its current ownership by the non-profit Internet Society.

The new PICs also include a nod to those who believe that PIR would become less sensitive to issues like free speech and censorship — perhaps because China may lean on Ethos’ shadowy billionaire backers. The document now states:

Registry Operator will produce and publish annually a report… This report will also include a transparency report setting forth the number of .ORG domain name registrations that have been suspended or terminated by Registry Operator during the preceding year under Registry Operator’s Anti-Abuse Policy or pursuant to court order.

A few other tweaks clarify the launch date and composition of its proposed Stewardship Council, a body made up of expert outsiders that would offer policy guidance and have a veto on issues such as changes to .org censorship and privacy policy.

The PICs now ban family members of people working for PIR from sitting on the council, and clarify that it would have to be up and running six months after the acquisition closes.

Because .org is not a gTLD applied for in 2012, the PICs do not appear to be open for public comment, but post-acquisition changes to the document would be.

ICANN currently plans to approve or deny the acquisition request by April 20, just 11 days from now.

Delay .org deal because of… coronavirus? Gimme a break

Opponents of Public Interest Registry’s proposed acquisition by Ethos Capital are now claiming that ICANN should delay approval of the deal due to coronavirus.
A statement, released yesterday by digital rights group Access Now with the apparent approval of several other like-minded groups, outlines a few reasons why coronavirus means ICANN should reject, or at least delay its consideration of, the deal.
ICANN is currently working towards a March 20 deadline to deliver its verdict.
Peter Micek, general counsel for Access Now, said in the statement:

Far from routine, this transfer would further imperil crucial channels of trusted information in a precarious time. From Médecins Sans Frontières to Wikipedia to many of the world’s hospitals, organizations that disseminate accurate health information and connect affected communities with public resources depend on the .ORG domain. Now is not the time to shift the ground beneath their online activities.

Could a $0.97 increase in the cost of wikipedia.org this year see Wikipedia’s hive mind crumble and turn into the digital equivalent of Jenny McCarthy’s brain? Will it prompt MSF volunteers to retreat, screaming, from the front lines? I don’t think so.
The statement goes on to suggest that China would be able to use its substantial financial and political clout to lean on Ethos’ secretive backers to something something something coronavirus. Kenneth Roth, executive director of Human Rights Watch said:

The Chinese government routinely uses economic pressure to censor critics or inconvenient information, such as about its disastrous early cover-up of the coronavirus outbreak. Investors in the private equity firm that wants to buy the .ORG domain inevitably will have economic interests that Beijing could threaten.

While there may well be a nugget of truth in there, I fail to see how it applies to the current pandemic. Is the argument that China will pressure Ethos’ billionaire money men to close down domains belonging to organizations disseminating accurate Covid-19 information? It seems a stretch.
China already has substantial powers to shut down domains within its own borders, and requires registries operating in the country to comply with Draconian censorship rules. I’m not aware of any cases of these existing powers being exercised against domains globally.
A third argument is that ICANN is using coronavirus as a convenient smokescreen to quietly approve the acquisition while everyone else is busy ram-raiding corner stores for toilet paper.
Daniel Eriksson, head of technology at Transparency International, said in the statement:

If this transfer goes ahead during the current crisis as planned, we’ll look back on it as an example of vested interests taking advantage of the extraordinary situation created by the COVID-19 pandemic to further their own concerns at the expense of the broader good of society. We need to be vigilant against any such actions, and this is precisely the role of many civil society organizations that have a watchdog function. We need maximum transparency and integrity around the sale of .ORG, and that is simply not possible if the sale is rushed through at a moment when peoples’ attention is elsewhere.

Again, this seems like a stretch. The announcement of the acquisition predates the discovery of Covid-19 by weeks, and it has been subject to intense scrutiny, engagement, comment and unprecedented — albeit imperfect — levels of transparency ever since. This is an acquisition being negotiated to a large extent in the public square.
I’ll be generous and suggest a fourth explanation: this is probably just a poor-taste (but, let’s face it, successful) attempt to grab headlines by linking the #SaveDotOrg campaign, however thinly, to the pandemic currently occupying the world’s collective conscious.
There are plenty of good arguments that could be — and are being — made in favor of further delay and scrutiny of the deal, but I don’t think coronavirus is one of them.

Roundup: domain industry starts to respond to coronavirus pandemic

With much of the world already laboring under coronavirus-related movement and assembly restrictions, many domain industry companies have started to publicly outline their business continuity plans.
Some companies have already implemented blanket home-working rules, while others are ready to pull the trigger on such regimes just as soon as local government policy or other circumstances require it.
Here’s a roundup of what some of these companies have said over the last few days.
It’s not an exhaustive list — I’m sure many companies have unannounced contingencies in place — and it should be noted that some of these announcements may well be out of date already, due to the speed at which the virus risk, and government responses to it, are changing.

• In Italy, the nation hardest-hit by the virus outside of China, local ccTLD registry Registro.it said: “Due to the current health emergency, there may be delays in the processing of legal and administrative procedures in the coming days. Activities related to the registration and maintenance of domains will be carried out as usual”.
• NIC Chile, the .cl registry, has imposed a ban on outsiders attending its offices, effective today, “in order to safeguard the health of its clients and officials”.
• Portugal’s Associação DNS.PT, the .pt registry, has gone a step further, saying Friday that it has already adopted remote working. It added that it was not aware of any confirmed cases and that it expected business to continue as normal.
• An undated notice on DNS Belgium’s web site states: “To guarantee maximum business continuity, we temporarily close our office and all work from home.”
• Dutch ccTLD registry SIDN said Friday that “most” of its employees are working from home, and it will minimize in-person contacts to “strictly necessary” meetings. It does not expect disruption to services.
• Austrian Nic.at said that employees “who are not tied to the Vienna or Salzburg office locations due to their work can work from home by telework”, adding “strict hygiene measures apply in the offices”.
• In Denmark, DK-Hostmaster said that customer support will now be conducted purely via email, with phone support suspended until March 27.
• It’s the same story in Poland for .pl domains, according to a notice on the NASK web site.
• Afilias said Thursday that it has contingency plans in place to keep its registry business ticking over even if staff fall ill or office closures are mandated. It’s also stepped up office cleaning and made hand sanitizer available to staff. Employees will be able to home-work should the need arise, the company said.
• Corporate registrar family Com Laude said that it’s updated its business continuity and disaster recovery plans to account for the pandemic threat, including providing remote-working solutions for its staff.
• Network Solutions, part of Web.com, told customers Friday that its workforce is geared up to work from home too, and that customer service should be unaffected during the crisis.
• British registrar Astutium said it won’t book any in-person meetings with clients for the next 90 days, and that if anyone shows up for an already-booked meeting they will be required wash thoroughly before they’re let through the door.

I’ve not heard any reports yet of members of the industry with confirmed infections. So that’s good.