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ICANN spills beans on Marby’s million-dollar payday

Kevin Murphy, August 17, 2021, Domain Policy

ICANN appears to have increased its transparency when it comes to executive pay, at least when it comes to the CEO.

Göran Marby was revealed earlier this year to have banked more than $1 million in ICANN’s fiscal 2020, and he received another 5% boost at a board meeting this February.

Six months later, the board of directors has finally approved the minutes of that meeting, and for the first time it actually minutes the meeting, revealing the contents of the discussion and the names of the three dissenting directors.

In the past, minutes of decisions involving pay typically just restate the resolution and rationale with no additional context. They don’t usually even reveal the vote tally.

According to the minutes, there was some debate about the method used to determine how much Marby should be paid.

ICANN’s longstanding policy has to offer executive pay within the “50% and 75% percentile of comparable position salaries” in the general for-profit industries, high-tech industry, and non-profits.

What often bothers ICANN watchers, and bothered some directors in February, is how these three comparable industries are mixed and weighted when figuring out how much an ICANN employee is worth.

If high-tech is given more weight, that would pull in the direction of a higher salary. If non-profits were weighted more, that would pull in the opposite direction.

According to the minutes, Avri Doria raised this issue in February, suggesting that non-profit salaries should be more influential in the mix, when future CEOs are selected.

Chair Maarten Botterman said in the minutes that the blend of comparisons doesn’t really matter all that much because Marby’s compensation is “well below” the percentile threshold ICANN has set itself, regardless of the mix.

The discussion continued:

Nigel Roberts noted that looking at sectors other than non-profit is important because while ICANN might not be a big commercial company, it is certainly in competition with those companies for executive leadership candidates and that he believes ICANN needs to compensate well because of that. Becky Burr similarly noted that it is important to understand from where ICANN is drawing its leadership so that the compensation can be competitive, while also acknowledging that the compensation level under discussion is below the target range.

The problem with these arguments is that Marby was not hired from any of the three sectors ICANN uses for comparison.

While he has a background in tech, he was a telecoms regulator on a government salary in Sweden when he applied for the ICANN gig. He’s being paid more than his predecessors who did come directly from high-tech.

The minutes go on to note that director Ihab Osman pointed out that Marby gets paid more than the secretary-general of the United Nations and the CEO of the American Red Cross.

He wondered aloud whether the skill set of an ICANN CEO is the same as a high-tech CEO, while director Mandla Msimang questioned whether ICANN’s revenue should play a factor in setting compensation.

Osman also noted the potentially poor optics of giving Marby a big pay rise in the midst of a pandemic.

When it came to a vote, Doria, Osman and Msimang all voted against the 5% pay increase, but the remaining 11 directors voted in favor. Marby and Ron Da Silva were not present for the discussion.

Irish domain sales closely track pandemic restrictions

Kevin Murphy, August 4, 2021, Domain Registries

Sales of .ie domains saw their best-ever first half this year, with registration growth closely tracking pandemic-related restrictions.

Local registry IEDR reported this week that it added 33,815 new .ie domains in the six months to June 30, up 1.6% on last year. It ended the period with 324,074 .ie domains under management, up 9.6% on last year.

The registry is in no doubt that it benefited from the cross-industry lockdown bump associated with the coronavirus pandemic.

Comparing first quarter numbers show Q1 2021 regs up 34% on Q1 2020.

Ireland was in strict lockdown measures in the first months of this year, but did not enter lockdown until towards the end of the quarter in 2020.

Second quarter number reflected the same pattern in reverse — regs were down 22% this year, when lockdown had been eased, IEDR said.

The lockdown bump is a phenomenon whereby domain name sales spiked as traditional bricks-and-mortar small businesses rushed to establish an online presence in order to carry on business behind closed doors.

Domain keywords directly related to the pandemic were down in H1 compared to last year, while domains related to summertime, pools and barbecues spiked, the registry said.

Olympics: Australia preemptively blocking Brisbane 2032 regs

With the venue for the 2032 Olympic Games revealed as Brisbane, Australia last week, the .au registry this week asked people to stop trying to register Olympics-related domains, because they won’t work.

Local ccTLD registry overseer auDA said in a blog post that it’s seen a spike in attempts to register domains containing the string “olympics” and variants since the announcement was made a week ago.

But these strings are on auDA’s reserved list, which cannot be registered even as substrings without government permission. Only the Australian Olympic Committee is allowed to register such domains.

According to auDA, the protected strings are: olympic, olympics, olympicgames, olympiad and olympiads.

It’s a more comprehensive approach to protecting Olympic “trademarks” (for want of a better word) than that employed by ICANN in its gTLD registry contracts, where the various Olympic and Red Cross/Crescent organizations are among a privileged few to enjoy unique protections.

ICANN only requires registries to block the exact-match string from registration, while auDA will block substrings also.

auDA says the domain “BrissiOlympics.com.au” would be blocked. It would not in any ICANN gTLD.

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.

ShortDot plans domain blocking service for brands

Acquisitive new gTLD registry ShortDot is planning a trademark-blocking service along the same lines as those offered by some of its rivals.

The company has applied to ICANN for permission to start a new service called ShortBlock, which it compared to blocking offerings such as Donuts’ Domain Protected Marks List.

Such services block trademarked strings from being registered across a portfolio of gTLDs for a price lower than would be charged for individual defensive registrations.

ShortBlock would also permit typo-blocking, ShortDot’s request states.

Similar services are offered by MMX and .CLUB, both of which will shortly be part of GoDaddy.

ShortDot currently has five gTLDs in its portfolio: .cyou, .sbs, .icu, .bond and .cfd.

Its back-end provider is CentralNic. It says it plans to launch ShortBlock just as soon as ICANN approves its Registry Services Evaluation Process request.

Donuts offers name spinner to show potential attacks

Kevin Murphy, May 13, 2021, Domain Tech

Donuts has launched a tool to show off its TrueName offering, which blocks potential phishing attacks at the domain registry level.

It’s like a regular name spinner, but instead of showing you available domains it shows you visually confusingly similar domains — homographs — that it will block if you register said name in any of Donuts’ portfolio of 2xx (subs, please check) TLDs.

For example, spinning truename.domains returns results such as trʋenɑme.domains (xn--trenme-exc57b.domains) and trᵫname.domains (xn--trname-xk6b.domains), which could be used in phishing attacks.

How many strings get blocked depends largely on what characters are in your name. The letters I and O have a great many visually confusing variants in other non-Latin scripts, and each instance exponentially increases the potential attack vectors.

For example, if I were to register “domainincite” in one of Donuts’ TLDs, Donuts would block 767 homographs at the registry level, but if I were to register “kevinmurphy”, it would only need to block 119.

It only blocks the homographs in the same TLD as the original name. It’s not a replacement for brand protection in other TLDs.

Donuts doesn’t charge anything extra for this service. It’s included in the price of registration and offered as a unique perk for Donuts’ selection of gTLDs.

I gave TrueName a brief post when it launched last year, but I have to say I really like the idea. It’s a rare example of true innovation, rather than simple money-grubbing, that has come from the new gTLD program.

If Verisign were to roll out something similar in .com, it would eliminate a bunch of phishing and cut down on legal fees for big brands chasing phishers and typosquatters through UDRP or the courts.

It was born out of Donuts’ Domain Protected Marks List product, which allows trademark owners to block their brands and homographs across the whole Donuts stable for less money than defensively registering the names individually.

The downside of the spinner tool is of course that, if you’re a bad guy, it simplifies the process of generating samples of homograph Punycode (the ASCII “xn--” string) that can be used in any non-Donuts TLD that supports internationalized domain names.

The tool is limited to 10 domains per spin, however, which limits the potential harm.

Try it out here.

$40 million UNR auction brings fresh blood to domain industry

Six entities are entering the domain registry business for the first time following UNR’s auction last month, which saw over 20 new gTLDs sold off for a total of over $40 million, according to UNR.

While playing its cards close to its chest and revealing the auction results in rather general terms, UNR disclosed last week that there were 17 bidders at the three-day event, which ran in late April.

It said “between 10 and 20 bidders came away as winners”, which I assume we have to interpret as “between 10 and 17”.

Anyone predicting a bulk purchase by a rival portfolio registry was dead wrong, it appears.

UNR said that, while it will not disclose their identities, “established registries, investment firms, blockchain companies, and high net-worth individuals” were among the winners.

None of the ICANN Registry Agreements have yet changed hands, according to ICANN records.

While existing registries and investment firms (presumably the kind of private equity interests that have shown high levels of interest in the domain industry in recent years) will come as no surprise as buyers, blockchain companies and high net-worth individuals will perhaps raise more eyebrows.

ICANN won’t, to the best of my knowledge, sign an RA with an individual, so we’ll no doubt be seeing a corporate vehicle or two established to take over contracts on behalf of those buyers.

The idea of a blockchain company taking over a TLD in the internet’s official root zone is particularly interesting.

The closest we’ve had to that scenario to date is MMX’s experiments integrating .luxe into the Ethereum blockchain, which has been described as genuinely innovative.

But most forays by blockchain outfits into “domain names” have been strictly alt-root moves, such as Unstoppable Domains’ use of .crypto addresses, which do not use the ICANN root and instead require browser plug-ins to function.

These kinds of services usually have their ability to avoid centralized oversight and control as a USP, which makes an attempt from this sector to suck on the ICANN teat especially intriguing.

And which of UNR’s TLDs would be most suited to blockchain applications? .link? .click? .lol?

UNR has not broken down how much was paid for each TLD, and we’ll likely never know, but the $40 million top-line is far above the $11.65 million minimum opening bids it had established for the no-reserve auction.

But it still works out as under $2 million on average across each of the 23 gTLDs on offer, many of which had been on the market for six or seven years, begging the question of whether UNR CEO Frank Schilling’s big bet on new gTLDs back in 2012 was ultimately a success.

Schilling said in a press release: “All UNR shareholders should be exceptionally pleased with the final outcome of this first-of-its-kind event. We are deeply satisfied to have seen so much new interest and blood enter the arena.”

The TLDs auctioned were: .audio, .blackfriday, .christmas, .click, .country, .diet, .flowers, .game, ,guitars, .help, .hiphop, .hiv, .hosting, .juegos, .link, .llp, .lol, .mom, .photo, .pics, .property, .sexy and .tattoo.

DI will of course reveal the winners over time as their ICANN contracts are updated to reflect the new operators.

Kiwis finally making the switch to EPP with Canadian deal

Kevin Murphy, April 19, 2021, Domain Registries

InternetNZ has picked the winner in its registry replacement project RFP, which will see it switch the entire .nz back-end to the industry standard EPP protocol by the end of next year.

It’s selected the CIRA Registry Platform from Canadian .ca registry CIRA, but will continue to run its own back-end in-house in New Zealand.

InternetNZ had said last October that it planned to overhaul its outdated infrastructure, and put out its feelers for would-be vendors or service providers.

At that time, 65% of its over 720,000 .nz registrations and about 65% of its registrars were still using its old, proprietary Shared Registration System protocol.

Now, SRS is to be deprecated in favor of the CIRA platform and the Extensible Provisioning Protocol that has been industry standard across all gTLDs and many ccTLDs for the better part of two decades.

And they say New Zealand is progressive.

InternetNZ plans to make the switch fully by the end of next year. This is of course going to require some implementation work by registrars, which will have to code new hooks into the .nz registry.

UPDATE: This article was updated April 20 to correct “this year” to “next year”. InternetNZ plans to finish the switch before the end of 2022, not 2021.

Verisign says it needs .web because .com is running out of names

Kevin Murphy, April 14, 2021, Domain Registries

Verisign’s affinity for cognitive dissonance has emerged yet again — it’s now claiming that it needs to be awarded the .web gTLD because it’s running out of .com domains to sell.

In legal documents released by ICANN yesterday, Verisign’s lawyers say: “The undisputed evidence is that Verisign needs a TLD like .WEB for growth given the decreased name availability in .COM”.

The admission/claim/lie (delete according to preference) came in a joint post-hearing filing by Verisign and Nu Dot Co, the .web applicant to which Verisign loaned $135 million to bid for the gTLD on its behalf at a record-breaking ICANN auction in 2016.

Afilias, now owned by Donuts, was the second-highest bidder and since November 2018 has been trying to get the auction result cancelled via ICANN’s quasi-judicial Independent Review Process.

The IRP’s final hearing was held over seven days last June, and we’ve been waiting with baited breath for a ruling ever since.

At some point over the last 48 hours, ICANN published three sets of post-hearing arguments — one from itself, one from complainant Afilias and an amicus (non-party, friend of the court) filing from Verisign/NDC.

The Verisign filing (pdf) attempts to rubbish Afilias’ claims across the board, but its rebuttal of the argument that it only wants .web in order to bury it and protect .com’s dominance is particularly interesting:

Verisign Has Every Incentive To Grow .WEB Aggressively. Afilias’ Amended IRP Request asserts without evidence that Verisign seeks to acquire .WEB in order to eliminate a potential competitor for .COM and that Afilias would make a better operator of .WEB. Afilias presented no evidence to support this claim prior to the IRP, and none was presented at the hearing. In fact, the evidence before this Panel refutes Afilias’ claims. The undisputed evidence is that Verisign needs a TLD like .WEB for growth given the decreased name availability in .COM. Even Afilias’ own experts concede that the .COM TLD now has limited name availability. Moreover, the undisputed evidence establishes that Verisign is well-positioned to maximize .WEB’s potential, while Afilias’ recent track record suggests that it would be a less effective operator of .WEB.

In June last year, Verisign had submitted to the IRP panel:

Verisign needs a new TLD like .WEB for growth. Verisign’s growth rate has declined in recent years, largely due to many names in .COM already having been taken and increased competition from new gTLDs and ccTLDs that have superior name availability.

Even Afilias’ own experts concede that the .COM name space effectively is taken. Numerous other industry participants have noted that most of the “good” names in .COM already are taken.

While Verisign had a applied for a few non-English transliterations of .com in the 2012 new gTLD application round, it had avoided getting involved with potential competitors to .com.

But, according to its brief, in 2014 it had just sold off the remainder of its non-domain businesses and, realizing its growth now needed to come from a pure domains strategy, tasked VP Paul Livesay with figuring out how it could worm its way back into the new gTLD program.

Many of the details of Livesay’s research and decision making have been redacted by ICANN (purportedly at Verisign’s request), but it seems he came to the conclusion that the best way to benefit from the program long after the application window closed would be to secretly financially back NDC’s participation in the .web auction, with the provision that the .web contract would be transferred to Verisign should it win.

Quite apart from its regular postings touting .com availability over the last few years, the same year that Verisign was coming to the conclusion that .com was becoming saturated and it needed new growth opportunities in other TLDs, it sued XYZ.com for false advertising for having the gall to suggest that it was hard to find available .com domains. It lost.

Because Verisign apparently enjoys nothing more than holding two diametrically opposed positions simultaneously, its October amicus filing also claims that .web isn’t nearly as awesome as Afilias and others claim.

On the same page that it insists that .web is needed to drive growth, Verisign poo-poos the notion that .web could be a significant competitor to .com, relying on an “expert report” commissioned by Verisign and compiled by University of Chicago economist Kevin Murphy.

(Murphy’s report is redacted in its entirety (pdf) by ICANN, but his 1,119 pages of unredacted exhibits (pdf) prominently include screenshots from this blog, so I feel the need to point out that he’s a different Kevin Murphy — he’s not me, and I’d never even heard of the dude until this morning. On a personal level, the fact that I’m apparently not even the best Kevin Murphy when it comes to the .web story that I’ve been covering for the last two decades is, as you might imagine, as depressing to me as it is presumably amusing to you.)

While his report is redacted, reading around the edges it appears that Murphy reckons .web will not be an exceptional competitor to .com.

Verisign’s October filing states:

.WEB’s Valuation Shows It is Not Particularly Competitively Significant. The Murphy Report models multiple economic scenarios to assess Afilias’ claim that the $135 million price paid for .WEB at the public auction shows that .WEB will be a substantial competitor. None of these scenarios indicate that .WEB is likely to gain a significant market share. Instead, each scenario shows that .WEB is likely to have no more than a 2–3% market share.

Because of the redactions, it’s not clear what market Murphy was referring to, but a 3% market share of the current universe of domain names across all TLDs works out to over 10 million domains. In other words, .web could be a top-five gTLD, up alongside the likes of .org.

But elsewhere in its IRP filings, Verisign cites Murphy to support its argument that .web will have “registrations in the low single digit millions”. That would still be enough to make it one of the best-selling new gTLDs.

This relatively low expected turnout of course begs the question of why Verisign needs .web to grow. It added 4 million net new names across .com and .net last year alone, with .net pretty static, according to its financial filings.

I’m no Kevin Murphy, but here’s a table I’ve thrown together showing Verisign’s domain growth over the last decade.

[table “64” not found /]

Its revenue has consistently grown year over year, from $681 million in 2010 to $1.27 billion in 2020. It’s considered one of the most profitable companies in the world, and its share price has tripled since 2011.

And that was without .web.

EFF rages as Ethos closes Donuts buy

The Electronic Frontier Foundation thinks the acquisition of Donuts by “secretive” private equity group Ethos Capital represents a risk to free speech.

The deal, which sees Ethos buy a controlling stake from fellow PE firm Abry Partners, closed earlier this week, having apparently received no official objection from ICANN.

But the EFF now wants ICANN to force Donuts to change its gTLD registry contracts to make it harder for the company to engage in what it calls “censorship-for-profit”.

The group’s senior staff attorney, Mitch Stoltz, raised the issued at the Public Forum session of last week’s ICANN 70 virtual public meeting, and expanded upon his thinking in a blog post this week. He wrote:

Donuts already has questionable practices when it comes to safeguarding its users’ speech rights. Its contracts with ICANN contain unusual provisions that give Donuts an unreviewable and effectively unlimited right to suspend domain names—causing websites and other internet services to disappear.

He pointed to Donuts’ trusted notifier program with the Motion Picture Association, which streamlines the takedown of domains used for pirating movies, as an example of a registry’s power to censor.

Donuts runs gTLDs including ones with social benefit meanings that the EFF is particularly concerned about, such as .charity, .community, .fund, .healthcare, .news, and .university.

Stoltz also makes reference to the Domain Protected Marks List, a Donuts service that enables trademark owners to block their marks, and variants, across its entire portfolio of 240+ gTLDs.

In effect, this lets trademark holders “own” words and prevent others from using them as domain names, even in top-level domains that have nothing to do with the products or services for which a trademark is used. It’s a legal entitlement that isn’t part of any country’s trademark law, and it was considered and rejected by ICANN’s multistakeholder policy-making community.

The DPML is not unique to Donuts. Competitors such as UNR and MMX have similar services on the market for their gTLDs.

When Stoltz raised the EFF’s concerns at last week’s ICANN meeting, CEO Göran Marby basically shrugged them off, saying he didn’t understand why one PE firm buying an asset off another PE firm was such a big deal.

I have to say I agree with him.

Ethos came under a lot of scrutiny last year when it tried to buy .org manager Public Interest Registry, turning it into a for-profit entity, generating cash for Ethos’ still-undisclosed backers.

(This week, Ethos disclosed in a press release that its investors include massive hedge funds The Baupost Group and Neuberger Berman “among others”, which appears to be the first time these names have been mentioned in connection with the company).

But a pretty good case could be made that .org is a unique case, that has had a non-profit motive baked into its DNA for decades. That does not apply to Donuts, which was a profit-making venture from the outset.

It’s not entirely clear why the EFF is suddenly concerned that Donuts will start exercise its contractual right-to-suspend more frequently under Ethos than under Abry. Stoltz wrote:

As we learned last year during the fight for .ORG, Ethos expects to deliver high returns to its investors while preserving its ability to change the rules for domain name registrants, potentially in harmful ways. Ethos refused meaningful dialogue with domain name users, instead proposing an illusion of public oversight and promoting it with a slick public relations campaign. And private equity investors have a sordid record of buying up vital institutions like hospitals, burdening them with debt, and leaving them financially shaky or even insolvent.

Even with the acquisition passing through ICANN easily, the EFF wants Donuts to change its contracts to make it more difficult for the company to suspend domain names on a whim.

I believe the language causing the controversy comes from anti-abuse policies in the Public Interest Commitments found in almost all Donuts’ contracts with ICANN, which state in part:

Registry Operator reserves the right, at its sole discretion and at any time and without limitation, to deny, suspend, cancel, or transfer any registration or transaction, or place any domain name(s) on registry lock, hold, or similar status as it determines necessary for any of the following reasons:

a. to protect the integrity and stability of the registry;

b. to comply with any applicable laws, government rules or requirements, requests of law enforcement, or any dispute resolution process;

c. to comply with the terms of this Registry Agreement and the Registry Operator’s Anti-Abuse Policy;

d. registrant fails to keep Whois information accurate and up-to-date;

d. domain name use violates the Registry Operator’s acceptable use policies, or a third party’s rights or acceptable use policies, including but not limited to the infringement of any copyright or trademark; or

e. as needed during resolution of a dispute.

As a voluntary PIC, this language is unique to Donuts, though other registries have similar provisions in their registry agreements.