TLDH raises $5 million from gTLD auctions

Top Level Domain Holdings made almost $5 million by losing auctions for the .lawyer and .website gTLDs this week, according to the company.
The London-listed company told the markets today that it has added £2.97 million ($4.81 million) to its coffers as a result of the auctions, in which Radix won .website and Donuts won .lawyer.
The number is net of the 4% cut taken by Innovative, which conducted the auctions, and the two $65,000 refunds TLDH will receive from ICANN when it withdraws the applications.
Some portion of the $4.8 million TLDH will have received from Donuts, where .lawyer was a two-horse race.
Radix’s winning bid for .website will have been split evenly between TLDH and Donuts.
At least one of these TLDs seems to have sold for significantly more than the average private auction selling price, which was $1.33 million after the first 14 Innovative auctions.
Innovative has managed auctions for 18 strings, but we don’t know the total price of the latest four.
The .website and .lawyer deals means TLDH now has £10.1 million ($16.3 million) in cash reserves, according to a company press release.
It still has 43 contested applications, however. On a $16 million budget — quite a lot less than some of its portfolio rivals — the company is going to have to make some smart tactical moves to maximize its gTLD portfolio.
“Our strategy remains to best monetise those applications where we see least value so that we can maximise our ability to acquire those names in which we see greatest value,” chairman Fred Krueger said in the press release.
It still has stakes in 25 uncontested gTLDs.
NOTE: An earlier version of this story contained inaccurate statements — failing to take into account that .website was a three-way contest — about the average selling price of new gTLDs at auction.

Directi’s Radix wins .website gTLD auction

Directi-affiliated TLD registry Radix, has won the private auction for the .website gTLD, according to Radix.
The company beat rival portfolio applicants Donuts and Top Level Domain Holdings to the string, in an auction that was managed by Innovative Auctions, likely one of several going on this week.
There’s no outstanding Governmental Advisory Committee advice or objections to the Radix application, so its path to contracting and eventual delegation should be relatively uncontroversial now.
The price was undisclosed, Innovative’s standard terms.
Directi is in the process of being acquired by Endurance International, owner of Domain.com, which promised Radix up to $62 million to help with its gTLD auctions.

TLDH has the end in sight, but no revenue

Top Level Domain Holdings made less than $12,000 in the first half of the year, but says its new gTLD business may start generating revenue in the fourth quarter.
In its interim financial results, published this morning, the company also revealed that it plans to launch its own domain name registrar and, via a partnership, web site building tools.
Revenue for the six months to June 30, which was almost all due to monetization of its second-level domains portfolio, was £7,000 ($11,295), compared to £346,000 ($558,000) a year earlier.
TLDH’s loss for the period grew to £1.8 million ($2.9 million) from £1.5 million ($2.4 million).
But in a lengthy statement chairman Fred Krueger assured investors that he is “confident” that the long process of getting TLDH’s applied-for gTLDs to market is drawing to a close.

Looking forward, I am confident that ICANN will broadly continue to sign contracts in line with the timelines we announced in July 2013, allowing .LONDON potentially to begin its launch and initial marketing as early as the first half of 2014. Given the recent signing of contract between .KIWI and ICANN, we may see our first revenues as a back-end registry operator as early as Q4 2013, and revenue from the sale of domain names from our first wholly-owned new gTLD by Q1 2014.

The company currently has interests in 25 uncontested gTLDs and has applied for 48 more, according to Krueger.
With more private and ICANN new gTLD auctions coming soon, TLDH has cash on hand of £7.4 million ($12 million).
Given the average selling price of a new gTLD is currently $1.3 million, there’s seems to be little chance of TLDH securing its entire portfolio of applied-for strings without additional funding.
Losing private auctions could be a way to generate cash to win more than the nine auctions that its $12 million implies, however.
Krueger also revealed TLDH’s revenue plans beyond its Minds + Machines registry services business.

As we enter into this final phase, we are pursuing other potential revenue-producing ventures by developing our own registrar, and, in cooperation with the website-building company Needly, providing a clean path for users to get a complete online solution – a web presence and email, as well as a domain name.

Krueger is also CEO of Needly, which makes a web content management platform.

Innovative Auctions hires storied new employee

Innovative Auctions, which is running private new gTLD auctions, has hired a poker-playing former Google engineer and grandson of Nobel-winning economist Milton Friedman.
Patri Friedman becomes the company’s 11th employee, according to an Innovative blog post.
According to his Wikipedia page, Friedman has had some success playing high stakes poker and was once a software engineer for Google, but his most recent gig was with the Seasteading Institute, where he’s still listed as chairman.
Seasteading is an ambitious project to create a floating libertarian nation state off the coast of Northern California, like something out of Neal Stephenson’s Snow Crash. Really.
At Innovative, he’ll be in charge of user experience and documentation, which seems quite dull in comparison.
Innovative has so far carried out just six new gTLD auctions. Presumably, it’s expecting to manage many more.

Watch .club win its new gTLD for $[censored]

As we reported earlier in the week, .CLUB Domains was one of the first companies to win its new gTLD auction and now the company has published a short video of the moment the auction closed.

The first reaction of CEO Colin Campbell is to put out a press release announcing the win, followed by calling the lawyers, which I think we can all agree is the Natural Order for all things.
Sadly, because winning bids are supposed to be confidential, the company has bleeped out references to the amount it paid and blurred a laptop screen in shot, lest CSI:Miami’s cyberpunks are watching.

Six private new gTLD auctions raise $9m

We now know (roughly) how much a new gTLD is worth.
The new gTLD contention sets for .club, .college, .luxury, .photography, .red, and .vote have been settled in a series of auctions this week that raised over $9 million.
That’s an average price of $1.5 million per string.
Writing on CircleID, Innovative Auctions project director Sheel Mohnot confirmed that the withdrawal of Donuts’ application for .vote was a result of losing the auction.
We also already know that .CLUB Domains won its auction.
But Mohnot did not reveal the winners of the other four auctions, each of which was a two-way fight between Donuts and one rival. ICANN’s web site does not yet reflect any other withdrawals.
His article does, however, quote Top Level Design and Luxury Holdings, which applied for .photography and .luxury respectively, as saying they were happy with the outcome.
Assuming they won too (which is of course not certain) that would mean Donuts lost at least four of the six auctions.
Donuts had originally submitted 63 strings to auction, but they could of course only go ahead if all of its competitors agreed to participate.
One wonders if the company submitted its lowest-value strings first in order to build up its war chest for future auctions. A good chunk of the $9 million raised will have flowed straight into its coffers.

Private auction settles .club fight

.CLUB Domains has won the right to launch the .club gTLD at a private auction against two other applicants, according to an announcement from the company.
The company, chiefed by Tucows and Hostopia founder Colin Campbell, also said it has raised $7 million to bring the TLD to market.
Its two rivals for the string were portfolio applicants Donuts and Merchant Law Group. The auction was designed by Cramton Associates and managed by Innovative Auctions of Hong Kong.
Neither competing applicant has had their withdrawals, assuming they’ve been submitted, processed by ICANN yet.
None of the applications were subject to formal objections or Governmental Advisory Committee meddling, giving the successful bidder a relatively clear run at delegation and launch.
.CLUB Domains said in a press release:

Domains like www.golf.club, www.poker.club, and www.book.club should hit the market in late 2013 or early 2014. In addition to acting as the worldwide .CLUB registry, the company has plans to offer .CLUB domain name registrants a web and mobile social platform designed specifically for member engagement and management, making it easy for clubs of any kind to establish themselves on the internet.

According to its application, the registry plans to target:

1. Social Clubs, 2. Sporting Clubs 3. Special Interest/Hobby Clubs, 4. Country Clubs 5. Buying Clubs, 6. Fraternities and Sororities, 7. Personal Clubs, 8. Professional Clubs, 9.School Clubs, 10. Service Clubs, and 11. Night Clubs.

That said, .CLUB does not plan to implement any registration restrictions; .club will be completely open.
The applicant has chosen Neustar to provide its back-end registry.

Private gTLD auctions really will be private

The first new gTLD auctions to be held by Innovative Auctions is set to take place on Monday, but we won’t know which applicants took part until after the fact.
Innovative, which is managing the auction process designed by Cramton Associates, told DI it might announce the participants next week, after the auctions are over.
Failing that, we’ll have to infer the winners from which applications are subsequently formally withdrawn from contention with ICANN.
The only companies to publicly announce their participation so far are Donuts and Demand Media — which as partners are obviously not in any contention sets with each other — and .Club Domains.
Donuts has previously announced that it would submit 63 applications to auction, but 17 of those probably won’t go ahead because Uniregistry, which doesn’t like the private auction idea, has declined to take part.
Demand Media’s applicant, United TLD Holdco has committed its bids for .fishing, .green, .mom, .rip and .wow to the auction. Unless Uniregistry has changed its mind, the .mom one won’t be happening.
It also seems unlikely many winning bids will be disclosed.
Under the terms designed by Cramton, if only one applicant in an auction decides it wants to keep the outcome private, the other applicants will be contractually bound to keep schtum.
Private auctions will see money flow to losing applicants, some of which will also face ICANN-managed auctions at a later date. They may not want to reveal their wedge by having their pay-off public knowledge.

Donuts puts 63 new gTLDs to private auction, but at least 17 are dead on arrival

Donuts has committed 63 of its 307 new gTLD applications to a private auction next month, but at least 17 of them are doomed already because rival Uniregistry won’t take part.
Donuts, which does not want to enter into joint ventures with competing gTLD applicants, has decided to use a private auction managed by Cramton Associates instead of an ICANN auction.
The first round of auctions are due to kick off June 3, but Cramton has set a deadline of next week for applicants to commit the strings they want to bid on.
Donuts has put forward these ones (note that they’re different to those reported elsewhere earlier due to a couple of typos in the original press release):

.apartments, .auction, .audio, .baseball, .boats, .cafe, .church, .college, .construction, .direct, .discount, .fish, .football, .forsale, .furniture, .fyi, .global, .gratis, .guide, .juegos, .jewelry, .legal, .living, .luxury, .phone, .photography, .plus, .red, .run, .storage, .theater, .trading, .vote, .beauty, .broadway, .city, .club, .forum, .garden, .help, .hosting, .hot, .marketing, .media, .memorial, .wedding, .chat, .online, .pizza, .sale, .salon, .school, .search, .show, .soccer, .team, .group, .site, .style, .law, .store, .blog, and .art.

Running the list through the DI PRO database, we quickly discover that 33 of these strings are in two-horse races, 13 have three applicants, nine have four and three have five.
The remaining four contention sets have six, seven, nine and 10 applicants respectively.
Uniregistry, the portfolio applicant run by domainer Frank Schilling, is involved in 17 of the contention sets, and Schilling confirmed to DI today that the company does not intend to participate.
As we’ve previously reported, Uniregistry says it has concerns that private auctions may be illegal under US antitrust law, though substantial doubt has been cast over that assertion since.
Because all applicants in a contention set need to commit for the auction to be meaningful, we can assume that at least 17 of Donuts’ proposed auctions will not go ahead, unless Uniregistry changes its mind.
Top Level Domain Holdings has applied for 13 of the strings Donuts wants to take to auction. TLDH has also expressed concern in the past about the private auction concept.
Directi, Famous Four Media and Google are each involved in eight of the contention sets, while Amazon is involved in five.
According to Cramton, each auction will take place in bidding rounds, with the first round having a maximum bid of $50,000 multiplied by the number of applicants and subsequent rounds increasing that by 10% multiplied by the number of bidders.
If any applicant in a given auction requests privacy, then the winning amount will not be disclosed.

Unrest remains despite new new gTLD contract

ICANN has proposed big changes to how it will handle premium domain names, dot-brands, mergers and acquisitions and mandatory fees in new gTLDs.
It published a new version of the proposed Registry Agreement for new gTLD operators this morning, saying that it is the product of months of “negotiations” with applicants and registries.
But some applicants and back-end providers disagree with this characterization, saying that while some registries helped ICANN with the text they have no authority to speak for all applicants.
The agreement was posted for 42 days of public comment this morning. Before it is approved by the ICANN board of directors, no new gTLD applicants will be able to sign contracts and begin to go live.
There are several major changes compared to the version in the Applicant Guidebook.
Premium domains not dead after all
In what could prove to be the most significant and controversial changes, ICANN has given registries the ability to run Founders Programs and premium name schemes without interference from trademark owners.
New text in the contract will let them self-register up to 100 names “necessary for the operation or the promotion of the TLD” and release those names to third parties if they want.
This appears to be a way around the fear that mandatory Sunrise periods could thwart registries’ plans to sign up anchor tenants to the gTLDs, a crucial launch marketing tactic for many.
The new RA also appears to give broad powers to the registry to allocate premium domain names at will.

Registry Operator may withhold from registration or allocate to Registry Operator names (including their IDN variants, where applicable) at All Levels in accordance with Section 2.6 of the Agreement. Such names may not be activated in the DNS, but may be released for registration to another person or entity at Registry Operator’s discretion.

There does not appear to be a numerical limit on how many domains can be reserved in this way.
Hypothetically, this might allow a registry to reserve the entire dictionary (or dictionaries) at launch, preventing holders of trademarks on generic terms grabbing the matching names during Sunrise.
The still-draft Trademark Clearinghouse rules will also play a part here, but from the RA it looks like registries have just been handed a massively flexible reservation tool.
If my initial interpretation is correct, I expect the trademark lobby will have strong view here.
Concessions for dot-brands
New text in the agreement makes it clearer that ICANN has no plans to redelegate dot-brand gTLDs to third parties after the Registry Agreement expires or is terminated.
This means, for example, that if L’Oreal decides to stop using .loreal at some point in future, ICANN very probably won’t give .loreal to a competitor. The new text is:

(i) ICANN will take into consideration any intellectual property rights of Registry Operator (as communicated to ICANN by Registry Operator) in determining whether to transition operation of the TLD to a successor registry operator

It’s probably not rigid enough language to satisfy some lawyers’ wishes, but I think it does enough to convey the spirit of ICANN’s intentions.
ICANN is of course mainly concerned that dead gTLDs don’t leave registrants with dead domain names, but if there are no registrants I can’t imagine why it would want to redelegate.
Lower fees for registries
Newly added text in the RA specifies that registries must pay ICANN a $5,000 one-off fee (per TLD) to use the new Trademark Clearinghouse, plus with $0.25 per domain that uses its services.
Domains registered under Sunrise periods or which trigger Trademark Claims alerts would incur this one-time fee, which appears to have been reduced from the $0.30 previously discussed.
These fees will actually be passed on to the Trademark Clearinghouse operators (Deloitte and IBM), for which ICANN has agreed to manage billing in order to keep costs down.
In addition, the RA now clarifies that the registry operator’s regular fixed fees to ICANN of $6,250 a quarter only kick in from the date that the gTLD hits the DNS root, not the date of contract signing. That could save registries up to a year’s worth of fees, if they’re late to delegation.
M&A approvals
There are also changes to the way ICANN plans to approve of mergers and acquisitions among registries.
First, it will be much easier for the contract to be passed around within a corporate holding group. The RA now states:

Registry Operator may assign this Agreement without the consent of ICANN directly to a wholly-owned subsidiary of Registry Operator, or, if Registry Operator is a wholly-owned subsidiary, to its direct parent or to another wholly-owned subsidiary of its direct parent, upon such subsidiary’s or parent’s, as applicable, express assumption of the terms and conditions of this Agreement

This change would seem to enable portfolio applicants that have applied for many gTLDs each under separate shell company names (Donuts, for example) to consolidate their contracts under a single parent.
What I don’t think it does is allow for contention set resolution based on joint ventures (which are obviously not “wholly owned”), such as what Uniregistry and Top Level Domain Holdings announced they had agreed to yesterday.
The new RA also states that ICANN must approve subcontracting deals the registry inks for any of the five “critical functions” (EPP, DNS, DNSSEC, Whois and escrow).
Unilateral amendments are gone
The controversial “unilateral right to amend” that ICANN wanted to grant itself — essentially an emergency power to change the contract almost at whim and over the objections of registries — is gone.
It’s been replaced with a convoluted series of procures almost identical to those found in the proposed final version of the 2013 Registrar Accreditation Agreement currently open for comment.
Registries would get the ability to punt the changes to a GNSO Policy Development Process, submit alternative amendments, take ICANN to arbitration or request exemptions, under the new rules.
While the new provisions still give ICANN the ability to force through unpopular changes under certain circumstances, a lot more engagement by registries is envisaged so “unilateral” is probably not a good word to use any more.
So is the deal final or not?
ICANN said in a blog post: “The proposed agreement is the result of several months of negotiations, formal community feedback, and meetings with various stakeholders and communities.”
It added:

We have come a long way since February 2013 when we posted a proposed Revised New gTLD Registry Agreement for public comment. A new and highly spirited sense of mutual trust has catapulted us into a fresh atmosphere of collaboration, which in turn has led to a consistently more productive environment. The spirit of teamwork, productive dialogue and partnership that has underpinned this negotiation process is tremendously heartwarming, as it has allowed us to bring to fruition a robust contractual framework for the New gTLD Program.

But some are worried that ICANN seems to be portraying the RA as equivalent to the Registrar Accreditation Agreement, which was subject to 18 months of talks with a negotiating team representing registrars.
The registries’ Registry Agreement Negotiating Team (RA-NT), on the other hand, was formed less than three weeks ago during ICANN’s meeting in Beijing, and did not have the authority to speak for all applicants.
The RA-NT said in a statement published by ICANN:

The RA-NT agreed to review the new gTLD Registry Agreement with ICANN staff in an effort to minimize some of the more controversial aspects of the Agreement for applicants as a whole. While participants reflected a variety of perspectives, the team did not “represent” or have any authority to “speak for” new gTLD applicants generally, or any group of applicants.

ARI Registry Services CEO Adrian Kinderis told DI:

My fears (and frustrations) come from the fact that ICANN staff have made it sound like they have reached the same point in the process. “It is done”. It most certainly isn’t “done”. They need to understand that the negotiation is actually still very much active and all of the community should feel like their opinions and feedback will be considered in the development of the “final draft”.

The draft RA is now open for public comment until June 11.
That would give ICANN about a month to synthesize all the comments, make any changes, and put the deal to its board of directors for approval during the meeting in Durban, South Africa, this July.