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.

.hotel battle lands ICANN in court over accountability dodges

ICANN’s accountability mechanisms, or lack thereof, have landed the Org in court.

Three applicants for the .hotel new gTLD have sued in California’s Superior Court in LA, claiming ICANN has consistently failed to provide true accountability, refusing for over seven years to implement fundamental mechanisms required by its bylaws.

They want the court to force ICANN to stick to its bylaws and to also temporarily freeze an Independent Review Process case related to .hotel.

The registries in question are Fegistry, Domain Venture Partners and Radix. They filed their complaint at the end of October, but ICANN did not publish it until the end of January, after its terse reply, and an administrative ruling, had also been filed with the court.

While the endgame is presumably to get the .hotel contention set pushed to auction, the lawsuit barely mentions the gTLD at all. Rather, it’s a broad-ranging challenge to ICANN’s reluctance to submit to any kind of accountability at all.

The main beef is that ICANN has not created a so-called “Standing Panel” of judges to preside over IRP cases, something that its bylaws have required since 2013.

The Standing Panel is meant to comprise seven legal experts, trained up in all things ICANN, from which the three panelists presiding over each IRP would be selected.

It would also operate as a final appeals court for IRP rulings, with all seven panelists involved in such “en banc” challenges.

The idea is to have knowledgeable panelists on a retainer to expedite IRPs and ensure some degree of consistency in decision-making, something that has often been lacking in IRP decisions to date.

Despite this requirement being in the bylaws since 2013, ICANN has consistently dragged its feet on implementation and today there still is no Standing Panel.

The .hotel plaintiffs reckon ICANN has dodged $2.7 million in fees by refusing to pick a panel, all the while offloading certain fees onto complainants.

It didn’t get the ball rolling until January 2018, but the originally anticipated, rather streamlined, selection process quickly devolved into the usual mess of ICANN bureaucracy, red tape and circular community consultation.

The latest development was in November 2020, when ICANN announced that it was looking for volunteers for a cross-community “IRP Community Representatives Group”, a team similar to the Nominating Committee. which would be responsible for picking the Standing Panel members.

The deadline to apply was December 4, and we’ve not heard anything else about the process since.

The .hotel litigants also have beef with the “sham” Request for Reconsideration process, which is notorious for enabling the board to merely reinforce its original position, which was drafted by ICANN staff lawyers, based on advice provided by those same ICANN staff lawyers.

They also take aim at the fact that ICANN’s independent Ombudsman has recused himself from any involvement in Reconsideration related to the new gTLD program, for unclear reasons.

The lawsuit (pdf) reads:

ICANN promised to implement these Accountability Mechanisms as a condition of the United States government terminating its formal oversight of ICANN in 2016 — yet still has wholly failed to do so.

Unless this Court forces ICANN to comply with its bylaws in these critical respects, ICANN will continue to force Plaintiffs and any other complaining party into the current, sham “Reconsideration” and Independent Review processes that fall far short of the Accountability Mechanisms required in its bylaws.

The plaintiffs say that ICANN reckons it will take another six to 12 months to get the Standing Panel up and running. The plaintiffs say they’re prepared to wait, but that ICANN is refusing and forcing the IRP to continue in its absence.

They also claim that ICANN was last year preparing to delegate .hotel to HTLD, the successful applicant now owned by Donuts, which forced them to pay out for an emergency IRP panelist to get the equivalent of an injunction, which cost $18,000.

That panelist declined to force ICANN to immediately appoint a Standing Panel or independent Ombudsman, however.

The .hotel plaintiffs allege breach of contract, fraud, deceit, negligence and such among the eight counts listed in the complaint, and demand an injunction forcing ICANN to implement the accountability mechanisms enshrined in the bylaws.

They also want an unspecified amount of money in punitive damages.

ICANN’s response to the complaint (pdf) relies a lot on the fact that all new gTLD applicants, including the plaintiffs in this case, signed a covenant not to sue as part of their applications. ICANN says this means they lack standing, but courts have differed of whether the covenant is fully enforceable.

ICANN also claims that the .hotel applicants have failed to state a factual case for any of their eight counts.

It further says that the complaint is just an effort to relitigate what the plaintiffs failed to win in their emergency hearing in their IRP last year.

It wants the complaint dismissed.

The court said (pdf) at the end of January that it will hold a hearing on this motion on DECEMBER 9 this year.

Whether this ludicrous delay is related to the facts of the case or the coronavirus pandemic is unclear, but it certainly gives ICANN and the .hotel applicants plenty of time for their IRP to play out to conclusion, presumably without a Standing Panel in place.

So, a win-by-default for ICANN?

Coronavirus has made ICANN $11 million richer than predicted so far this year

ICANN made a lot more money and spent a lot less money in the second half of 2020, compared to the predictions made in its current budget.

Funding for the six months from July 1 to December 31 (the first half of ICANN’s fiscal 2021) came in $6 million higher than expected, at $69 million, according to data released by ICANN tonight.

Over the same period, its outgoings came in at $55 million, which was $5 million less than its approved budget had anticipated, leading to a net gain of $11 million.

The reason for the variance appear to be mostly related to the unanticipated positive impacts of the coronavirus pandemic.

Last April, when the FY21 budget was being drafted, ICANN thought the economic impact of the disease would prove a serious blow to the industry that funds it.

But the opposite turned out to be true. ICANN failed to predict that the government-enforced lockdown of large parts of the high street in many countries would see a rush by small bricks-and-mortar businesses to the interwebs.

This boosted domain growth for many companies and led to an increase in ICANN transaction taxes fees, which are paid whenever a domain is registered, renewed or transferred.

ICANN’s revenue was up across all three main segments in H1 FY21, when compared to its budget expectations.

Registry transaction fees were $2 million over budget at $27 million, and registrar transaction fees were also over by $2 million at $18 million. Registry and registrar fixed fees were also up by $1 million each, suggesting fewer companies terminated their contracts than expected.

“Funding higher than Budget driven by higher than planned transaction fees”, an ICANN slide deck (pdf) states.

On the expenses side, ICANN of course spent less cash on its meetings because it wasn’t subsidizing international flights and expensive hotels for 500-odd staff and community members.

“Lower Travel & Meetings due to travel restrictions from the COVID-19 pandemic”, the slide deck states.

Travel expenses, rounded, accounted for 0% or $0 of its H1 expenditure.

When the budget was passed in June last year, ICANN still thought it was possible that the October meeting would go ahead in-person in Hamburg, so it put aside $4.2 million to pay for it.

As it turned out, the Org ended up spending $100,000 on Zoom and other audiovisual services and another $400,000 on translation and interpretation services. And that was all.

The $2.2 million it expected to pay sending staff and community members to Hamburg came in at $0.

ICANN’s adopted budget for FY21 also anticipated the March 2021 meeting would go ahead in Cancun, Mexico, but that’s already been rescheduled for Zoom, which will save it a few million more bucks this year.

The Org hasn’t yet officially relocated its planned June 2021 in-person meeting from The Hague to Zoom, but I’m fairly confident it’s going to have to.

Its $12.2 million travel budget for FY21 is probably going to come in much closer to $2 million.

Registrar giant created as Web.com merged with Endurance

Clearlake Capital Group, which has taken Endurance International private and recently took a big stake in Web.com, has merged the two registrar stables to create a new company it’s calling Newfold Digital.

By my reckoning, Newfold has probably become the second-largest registrar group by domains under management, with around 16.5 million gTLD names across just its best-known half-dozen brands, leapfrogging Namecheap and Tucows in the registrar league table.

That number’s probably a big understatement. It doesn’t capture ccTLDs and does not take into account that the company now has hundreds of active ICANN accredited registrars, largely due to Web.com’s drop-catching business.

Its best-known registrar brands are Register.com, Network Solutions, Domain.com, BuyDomains, BigRock, PublicDomainRegistry and CrazyDomains. Its BlueHost and HostGator brands are both pretty big deals in web hosting.

Clearlake says Newfold has 6.7 million customers worldwide.

The privatization of Endurance, which sees it delisted from the Nasdaq stock exchange, was announced in November and cost Clearlake $3 billion. The value of its Web.com stake, which it acquired last month, was not disclosed.

Siris Capital, which bought Web.com in 2018, continues to have a stake.

Newfold will be led by two Web.com execs — CEO Sharon Rowlands and CFO Christina Clohecy.

The deal follows Web.com’s unsuccessful attempt to buy Webcentral last year.

There’s no word on (presumably inevitable) layoffs as the two companies come together.

MMX vows to refocus under new boss after crappy 2020

MMX says it plans to refocus its business on higher-margin products after a 2020 marred by plummeting registrations, product delays and financial irregularities that led to senior management being oustered.

The new gTLD registry also revealed that it laid off 20% of its staff in a “right-sizing” exercise last year. Due to its modest size, this means about four or five people lost their jobs.

The company said today that acting CEO Tony Farrow has been confirmed for the job full-time, and that he will join the board of directors after regulatory checks.

Farrow took over last October, when CEO Toby Hall and CFO Michael Salazar were both ejected after admitting to over-stating MMX’s revenue and profit in 2019.

Now, Farrow says MMX will spend 2021 focusing on “quality” regs — those with a higher chance of renewing or with higher-margin reg fees — and on its AdultBlock services, which block trademarks and typos across its four porn-themed gTLDs.

Overall domains under management declined 19% in 2020, which appears to be almost entirely down to .vip, a cheap gTLD that initially performed strongly with Chinese speculators, losing about half a million names.

AdultBlock, which covers the old ICM Registry portfolio, launched at the end of 2019 with a high price tag and a couple bulk sales, but stalled during 2020. MMX blames this for a 3% decline in overall billings last year.

The company also hinted that it may try to offload some of its crappier gTLDs, saying:

The new executive team is also reviewing the contribution received from each of its TLDs and the growth prospects for each from new sales initiatives to ensure the carrying values associated with each TLD is appropriate going forward.

Farrow said in a news release:

Our FY 2021 plan will focus on AdultBlock sales, extensive release of inventory to the market, quality registrations with the view of future renewal revenue and standardized promotions for our channel partners. It is a straightforward business where focus must remain on the quality of our domain registrations and promotions with our channel partners. We lost some of the momentum after the initial launch of AdultBlock in FY 2019. However, FY 2021 was always the target year for the full rollout of this new product, and I am encouraged by the dialogue with our channel partners to really move AdultBlock in FY 2021.

AdultBlock, which sets trademark-match domains aside as non-resolving reserved names, launched with a price tag of between $349 and $799 per trademark per year.

MMX separately announced today that it is paying ICM Registry’s investors, primarily founder Stuart Lawley, over alleged (and denied) breaches of unspecified warranties made at the time of the acquisition in May 2018.

Farrow was COO of ICM from the 2011 launch of .xxx until the MMX acquisition.

It’s pandemic continuity versus gender diversity in ICANN’s board wish-list

ICANN’s Nominating Committee will be asked to pit two fundamentally opposed principles against each other when they pick three members of the organization’s board of directors this year.

Board chair Maarten Botterman has asked NomCom to prioritize continuity — keeping experienced directors in place — while also increasing gender diversity in the male-heavy current line-up.

Botterman this week sent a letter (pdf) to NomCom chair Ole Jacobsen, offering guidance virtually identical to that found in a December 2019 letter (pdf) to his predecessor.

The two most significant changes concern the impact on the board’s work of the coronavirus pandemic.

Noting that it typically takes a year or two for new directors to learn the ropes, and that it’s useful to have a staggered mix of tenures among the board, Botterman goes on to say:

Continuity is particularly important this year given the recent departure of the Board’s longest-serving, term- limited member and the ongoing challenges arising from the pandemic, including uncertainties about when the full Board may be next able to move from its current remote schedule to in-person meetings.

The long-serving member who left was presumably Chris Disspain, certainly one of the most active directors in recent years.

Later, Botterman’s letter contains an entirely new paragraph explaining what a time vampire ICANN directorship can be:

We underscore the significant time commitment required of Board members. Applicants must be able to devote weeks and long hours throughout the year to Board service, and even more because of the challenges caused by the pandemic. Among many other key initiatives, one focus in the upcoming year will be understanding and evaluating the expected recommendations from the policy development process on Subsequent Procedures regarding the next round of new gTLDs (as well as implementation of several Board-approved recommendations from community groups).

That, at least, should provide some comfort to those champing at the bit to get the next round of new gTLDs up and running — ICANN clearly expects it to happen at some point in the next four years.

So there’s a definite, newly emphasized focus on continuity at ICANN.

That’s good news for Lito Ibarra, Danko Jevtović and Tripti Sinha, the three NomCom appointees whose current terms end this coming October. Ibarra is on his second three-year term, the other two on their first. All are eligible for reselection.

The Botterman letter is less encouraging for Ibarra and Jevtović, who are men. ICANN is still seeking to increase gender diversity on its board, which only currently has five female voting members of 16 total directors.

While the wording is slightly different to the 2020 guidance, the essence is the same:

The ICANN community has also expressed strong support for efforts to increase diversity along several axes, especially including gender diversity, across the ICANN eco-system. Without compromising the fundamental requirement to have Board members with the necessary integrity, skills, experience, the Board would find it helpful to have greater gender diversity on the Board.

NomCom may find this pressure is relieved slightly by the fact that current ccNSO representative to the board, Nigel Roberts, is being replaced by Katrina Sataki of the Latvian ccTLD registry this October, following an election last month.

The Address Supporting Organization’s rep, Ron Da Silva, is also ending his current term this year. He’s up for reselection against nine other candidates, three of whom are female.

Here’s why two ICANN directors opposed extending Marby’s CEO contract

ICANN CEO Göran Marby’s personality came into question when the organization’s board of directors voted to prematurely extend his contract last year, it emerged this evening.

Back in October, the board voted to add two years to Marby’s current contract, which had been due to expire May 23, 2022, saying it would help with continuity and provide a “sense of calm” at the org.

But one director voted against the extension, and another abstained. Today, with the publications of the October 7 meeting’s minutes, we found out the whos and and whys.

Ihab Osman was the director who voted against the deal, telling the rest of the board that there should have been a formal review and plan to address Marby’s “communications style”, which has apparently come in for criticism.

He added that there should have been a global search for a CEO after Marby’s first six years (that is, in 2022). The minutes read:

Ihab stated that the decision to extend the President and CEO’s contract was taken without, in his view, a formalized professional performance review process reflecting on the past four years of the CEO’s service. He stated that he believed that not doing so was inconsistent with best practices for an organization of the size and importance as ICANN. Ihab noted that comments had been expressed about the CEO’s communication style and did not believe there was a formal plan to work on this issue. Ihab stated his belief that extending a contract that has two years before it is completed is premature, noting that organizations generally benefit from a global search for a CEO after a six-year tenure.

Osman is a Sudanese businessman who currently lists his employers as Saudi agricultural company NADEC and the US-Sudan Business Council.

The director who abstained from the vote was Mandla Msimang. She had procedural concerns, saying that the decision should have been subject to more input from other stakeholders. The minutes read:

Mandla explained that her abstention is not a reflection on the President and CEO. Mandla indicated that she abstained from voting because she did not agree with the process that has been followed to arrive at the decision. Mandla noted that she believes the process lacked a performance-based approach and lacked a more extensive input from key stakeholders, namely the org staff and the community.

South African Msimang is CEO of Nozala Investments, an investment vehicle focused on female-owned businesses.

Both she and Osman are Nominating Committee appointees whose first three-year terms on the ICANN board end in 2022.

While the minutes do not elaborate on the apparent criticisms of Marby’s “communications style”, it’s probably fair to say he’s a bit more confrontational and abrasive when compared to his predecessors.

Fadi Chehadé sometimes came across like a used-car salesman hiding behind a dubious veil of servile humility; Rod Beckstrom had baffling New Age hippy tendencies and often appeared out of his depth when it came to the minutiae of ICANN’s function.

As for Marby’s style… what do you think? Answers in the comments or privately to the usual address.

Rules for the next new gTLD round near the final straight

The ICANN working group tasked with creating policies for the next round of new gTLDs is wrapping up its work this week, setting up the battle lines for the next phase of the program’s development.

Members of the cross-constituency Subsequent Procedures for new gTLDs group, known as SubPro, have until a minute before midnight UTC Friday night to declare whether they’re not happy with any parts of the 373-page document (pdf).

It’s expected that some groups and individuals will have beef with some of the SubPro recommendations, which will be included in the Final Report as dissenting minority statements before it is sent off to the GNSO Council later this month.

The report, the product of five years of discussions, will largely affirm that the next new gTLD round will proceed along roughly the same lines as the 2012 round, with some of ICANN staff’s historical ad-libs being codified and a few new big concepts introduced.

New additions include the idea of a pre-evaluation process for registry service providers, enabling applicants to pick from a menu of pre-approved back-ends and avoid the cost of having their technical prowess evaluated for every string they apply for.

The price of applying could be kept artificially high, however, to discourage gTLD stockpiling, and the report will also recommend banning the coexistence of single/plural variants of the same word.

One area where there was definitely no consensus was the issue of “closed generics” — a non-brand string reserved for the sole use of the registry — it’s going to be up to the GNSO Council and ICANN to muddle through this one.

While the consensus call marks the end of the working group phase of new gTLD policy development, there are still many substantial hurdles to leap before the next application round opens.

In the last round, the policy was approved by the GNSO Council in 2007, and ICANN didn’t start accepting applications until the start of 2012.

it may not take five years between policy and launch this time, if only because many of the new recommendations are merely affirmations of the status quo, but there are new mechanisms ICANN will have to implement before the next round opens, and we should probably expect more than one comment period on iterations of the next Applicant Guidebook.

The road between now and the next round is still likely measured in years.

GoDaddy’s female geeks make a bit more than men

Women working at GoDaddy in technology roles on average make a penny more on the dollar than their male counterparts, but their bosses don’t fare nearly as well, according to the company’s latest published diversity data.

The market-leading registrar said last week that on average across the company globally, women make the same amount as men in like roles, but the female techies make $1.01 for every $1.00 the men make.

But women in leadership roles make $0.95 for every dollar made by than their male counterparts, the company said.

Comparable data for 2019 was not available.

However, in its native US, GoDaddy is paying women a penny more on average across all roles, up one cent on the 2019 data.

The reverse trend was true of female employees in leadership roles in the US, where they made $0.95 on the dollar in 2020, compared to $1.02 in the previous year.

In tech, the ratio approached parity, with women getting $1.01 on the dollar, compared to $1.03 in 2019.

Women make up 30% of GoDaddy employees, 33% of leadership, but only 19% of techies, the report says. Those are all slight improvements on 2019.

There’s one obvious pick for next year’s ICANN Community Excellence Award

ICANN has opened up nominations for its 2021 ICANN Community Excellence Award, and I don’t think it would be inappropriate of me to suggest that one likely nomination seems like a shoo-in: the late Marilyn Cade.

The award, now in its eighth year, is given to a community member who “deeply invested in consensus-based solutions and contributed substantively to the ICANN multistakeholder model”.

It’s judged by a cross-constituency panel of community leaders and awarded in June each year, using three criteria:

• Demonstrated ability to work across community lines with both familiar and unfamiliar ICANN stakeholders with the aim of building consensus.
• Facilitator of dialogue and open discussion in a fair and collegial manner, through the spirit of collaboration as shown through empathy, and demonstrating a sincere desire to engage with people from other backgrounds, cultures, and interests.
• Demonstrated additional support for the ICANN multistakeholder model and its overall effectiveness through volunteer service via working groups or committees.

I believe Cade, who died last month at 73, fits easily into each of these.

She participated in ICANN’s formation in the late 1990s and participated in almost every public meeting since. She was a long-time member, and three-year chair, of the Business Constituency, and participated in several key volunteer working groups.

There’s a rather fascinating and lengthy audio interview with Cade, conducted by Ayden Férdeline shortly before her death, in which she discusses her involvement with the creation of ICANN, over here.

At the time of her death, ICANN CEO Göran Marby said: “Marilyn had strong views and opinions on many matters but always supported the multistakeholder model. She wanted people to be involved in ICANN and to maximize the potential of the Internet.”

While her views and positions may not have been universally loved, the hundreds of public tributes paid since her death reveal a consensus view that, regardless of competing affiliations, Cade was strongly active in community-building and mentoring new community members, particularly from underrepresented demographics.

It would not be the first time ICANN has given this award posthumously. In 2018, it was awarded to former GNSO Council chair Stéphane Van Gelder after his untimely death earlier that year.

It is of course easier to evaluate an individual’s contribution when their entire body of work is known.

From its inaugural 2014 round, the prize was known as the ICANN Ethos Award. The name was changed earlier this year, most probably to avoid alluding to the private equity firm Ethos Capital, which at the time was involved in a high-profile dispute with the org.

The winner will be announced at the ICANN 71 meeting, wherever that may be, next June.