ICANN slashes new gTLD income forecast AGAIN

ICANN has yet again been forced to lower its funding expectations from new gTLDs, as the industry continues to face growth challenges.
In its latest draft fiscal year 2019 budget, likely to be approved at the end of the month, it’s cut $1.7 million from the amount it expects to receive in new gTLD transaction fees.
That’s even after cutting its estimates for fiscal 2018 in half just a few months back.
New gTLD registry transaction fees — the $0.25 collected whenever a new gTLD domain is registered, renewed or transferred, provided that the gTLD has over 50,000 domains under management — are now estimated at $5.1 million for FY19
That’s up just $500,000 from where it expects FY18, which ends June 30 this year, to finish off.
But it’s down $900,000 or 15% from the $6 million in transaction fees it was forecasting just four months ago.
It’s also still a huge way off the $8.7 million ICANN had predicted for FY18 in March 2017.
Registrar new gTLD transaction fees for FY19, paid by registrars regardless of the size of the TLD, are now estimated to come in at $4.3 million, up $400,000 from the expect FY18 year-end sum.
But, again, that number is down $800,000 from the $5.1 million in registrar fees that ICANN was forecasting in its first-draft FY19 budget.
In short, even when it was slashing its FY18 expectations in half, it was still over-confident on FY19.
On the bright side, at least ICANN is predicting some growth in new gTLD transactions.
And the story is almost exactly reversed when it comes to pre-2012 gTLDs.
For legacy gTLD registry transaction fees — the majority of which are paid by Verisign for .com and .net — ICANN has upped its expectations for FY19 to $49.6 million, compared to its January estimate of $48.7 million (another $900,000 difference, but in the opposite direction).
That growth will be offset by lower growth at the registrar level, where transaction fees for legacy gTLDs are now expected to be $30.2 million for FY19, compared to its January estimate of $30.4 million, a $200,000 deficit.
None of ICANN’s estimates for FY18 transaction fees have changed since the previous budget draft.
But ICANN has also slashed its expectation in terms of fixed fees from new gTLD registries — the $25,000 a year they all must pay regardless of volume.
The org now expects to end FY18 with 1,218 registries paying fees and for that to creep up slightly to 1,221 by the end of FY19.
Back in January, it was hoping to have 1,228 and 1,231 at those milestones respectively.
Basically, it’s decided that 10 TLDs it expected to start paying fees this year actually won’t, and that they won’t next year either. These fixed fees kick in when TLDs are delegated and stop when the contract is terminated.
It now expects registry fixed fees (legacy and new) of $30.5 million for FY19, down from expected $30.6 million for FY18 and and down from its January prediction of $31.1 million.
ICANN’s budget documents can be downloaded here.

ICANNWiki fans protest funding cut

ICANN should continue to fund the independent ICANNWiki project, according to high-profile industry supporters.
As I first reported back in December, ICANN plans to stop giving a $100,000 annual grant to ICANNWiki, a repository of about 6,000 community-sourced articles on the people and organizations involved in the ICANN community.
While ICANNWiki does not merit an explicit mention in ICANN’s latest proposed budget, both organizations have confirmed to DI that the funding is for the chop, as ICANN attempts to rein in spending in the face of depressed revenue.
About a quarter of the 41 comments filed on the budget express support for the wiki.
Consultant Kurt Pritz, a 10-year veteran of ICANN and one of the key architects of its new gTLD program, wrote that the wiki “has been an essential part of the ICANN culture for many years… often saving ICANN meetings from terminal ennui.”
Roland LaPlante, chief marketing officer of Afilias (one of about 15 sponsors listed on ICANNWiki’s front page), wrote:

The complete withdrawal of funding from ICANN so abruptly not only threatens the viability of the project, but rather disrespectfully junks the valuable time and resources that the community has invested over the years. Ultimately the loss of ICANNWiki would be a loss to our overall sense of community.
ICANN should continue to support ICANNWiki at a reasonable level in the next fiscal year. At a minimum, please consider giving the team time to find other sources of funding.

Sandeep Ramchandani, CEO of Radix, concurred, writing:

ICANNNWiki benefits the entire ICANN community. Cutting the funding entirely would effectively halt its operations and be a disservice to the community it serves. It is in ICANN and the community’s best interest to continue funding it in an amount that works for ICANN long-term, and provide ICANNWiki sufficient time to develop a more sustainable business plan.

Simon Cousins, CEO of Chinese market localization specialist Allegravita, said:

Before ICANNWiki, there was precious little information on industry fundamentals in China, and since Allegravita has supported the pro-bono translation of ICANNWiki content into Chinese, the vital platform that is ICANNWiki has been acknowledged hundreds of times.
We do not support the immediate and full withdrawal of funding for ICANNWiki. We guardedly support incremental, annual decreases to give ICANNWiki the time necessary to generate new sponsorship income to cover their costs.

Pablo Rodriguez of .pr ccTLD operator PRTLD, host of ICANN 61 and an ICANNWiki sponsor, wrote:

We believe that they should not be cut out from the ICANN’s Budget, instead, they should be supported and embraced to continue their engaging approach and work with ICANN’s Community and as well newcomers, veterans, special programming for beginners and others in order to deliver what is ICANN and what does the organization do and so forth.

Several other commentators on ICANN’s budget asked ICANN to maintain the funding and I was unable to find any comments supporting its withdrawal.
It’s worth noting that ICANN’s $100,000 is not ICANNWiki’s only financial support. It says it receives an additional $61,000 a year from corporate sponsorship, and as a wiki much of its output is produced by volunteers.
It has been in existence for a decade, but ICANN has only been giving it money for three years.
The costs associated with running it appear to be mostly centered not on maintaining the web site but on its outreach and promotional activities, such as attending meetings and the popular caricatures and card decks it distributes.
It could be argued that ICANNWiki is pretty good value for money when compared to cost of a dedicated outreach professional (the average cost of an ICANN staffer has been estimated at $175,000+ in the latest budget).
ICANNWiki will host an “Edit-A-Thon” during the current ICANN 61 public meeting in San Juan, Puerto Rico on Tuesday at 0900 local time.

Is ICANN still over-estimating revenue from “stagnating” gTLD industry?

ICANN may have slashed millions from its revenue estimate for next year, but it has not slashed deeply enough, according to registrars and others.
Industry growth is flat, and below even ICANN’s “worst case” expectations for the fiscal year starting July 1, registrars told the organization in comments filed on its FY19 budget last week.
The Registrars Stakeholder Group said that “the FY 2019 budget fails to recognize that overall industry growth is flat.”
ICANN’s budget foresees FY19 revenue of $138 million, up $3.5 million on the projected result for FY18.
“These revenue projections presume growth in the domain market that is not aligned with industry expectations,” the RrSG said, pointing to sources such as Verisign’s Domain Name Industry Brief, which calculated 1% industry growth last year.
ICANN’s predictions are based on previous performance and fail to take into account historical “one-time events”, such as the Chinese domain speculation boom of a couple years ago, that probably won’t be repeated, RrSG said.
RrSG also expects the number of accredited registrars to decrease due to industry consolidation and drop-catching registrars reducing their stables of shell accreditations.
(I’ll note here that Web.com has added half a dozen drop-catchers to its portfolio in just the last few weeks, but this goes against the grain of recent trends and may be an aberration.)
RrSG said ICANN’s budget should account for reduced or flat accreditation fee revenue (which as far as I can tell it already does).
The comment, which can be read in full here, concludes:

Taken together, these concerns represent a disconnect between ICANN funding projections, and the revenue expectations of Registrars (and presumably, gTLD Registries) from which these funds are derived. In our view, ICANN’s assessment of budgetary “risks” are too optimistic , and actual performance for FY19 will be significant lower.

For what it’s worth, the Registries Stakeholder Group had this to say about ICANN’s revenue estimates:

Reliable forecasts, characterised by their scrutiny and realism, are fundamental to put together a realistic budget and to avoid unpleasant surprises, such as the shortage ICANN is experiencing in the current fiscal year. The RySG advises ICANN to continue to conduct checks on its forecasts and to re-evaluate the methodology used to predict its income in order to prevent another funding shortfall such as that which the organization experienced in FY18.

Community calls on ICANN to cut staff spending

ICANN should look internally to cut costs before swinging the scythe at the volunteer community.
That’s a key theme to emerge from many comments filed by the community last week on ICANN’s fiscal 2019 budget, which sees spending on staff increase even as revenue stagnates and cuts are made in other key areas.
ICANN said in January that it would have to cut $5 million from its budget for the year beginning July 1, 2018, largely due to a massive downwards revision in how many new gTLD domains it expects the industry to process.
At the same time, the organization said it will increase its payroll by $7.3 million, up to $76.8 million, with headcount swelling to 425 by the end of the fiscal year and staff receiving on average a 2% pay rise.
In comments filed on the budget, many community members questioned whether this growth can be justified.
Among the most diplomatic objections came from the GNSO Council, which said:

In principle, the GNSO Council believes that growth of staff numbers should only occur under explicit justification and replacements due to staff attrition should always occur with tight scrutiny; especially in times of stagnate funding levels.

The Council added that it is not convinced that the proposed budget funds the policy work it needs to do over the coming year.
The Registrars Stakeholder Group noted the increased headcount with concern and said:

Given the overall industry environment where organizations are being asked to do more with less, we are not convinced these additional positions are needed… The RrSG is not yet calling for cuts to ICANN Staff, we believe the organization should strive to maintain headcount at FY17 Actual year-end levels.

The RrSG shared the GNSO Council’s concern that policy work, ICANN’s raison d’etre, may suffer under the proposed budget.
The At-Large Advisory Committee said it “does not support the direction taken in this budget”, adding:

Specifically we see an increase in staff headcount and personnel costs while services to the community have been brutally cut. ICANN’s credibility rests upon the multistakeholder model, and cuts that jeopardize that model should not be made unless there are no alternatives and without due recognition of the impact.
…
Staff increases may well be justified, but we must do so we a real regard to costs and benefits, and these must be effectively communicated to the community

ALAC is concerned that the budget appears to cut funding to many projects that see ICANN reach out to, and fund participation by, non-industry potential community members.
Calling for “fiscal prudence”, the Intellectual Property Constituency said it “encourages ICANN to take a hard look at personnel costs and the use of outside professional services consultants.”
The IPC is also worried that ICANN may have underestimated the costs of its contractual compliance programs.
The Non-Commercial Stakeholders Group had some strong words:

The organisation’s headcount, and personnel costs, cannot continue to grow. We feel strongly that the proposal to grow headcount by 25 [Full-Time Employees] to 425 FTE in a year where revenue has stagnated cannot be justified.
…
With 73% of the overall budget now being spent on staff and professional services, there is an urgent need to see this spend decrease over time… there is a need to stop the growth in the size of the staff, and to review staff salaries, bonuses, and fringe benefits.

NCSG added that ICANN could perhaps reduce costs by relocating some positions from its high-cost Los Angeles headquarters to the “global south”, where the cost of living is more modest.
The ccNSO Strategic and Operational Planning Standing Committee was the only commentator, that I could find, to straight-up call for a freeze in staff pay rises. While also suggesting moving staff to less costly parts of the globe, it said:

The SOPC – as well as many other community stakeholders – seem to agree that ICANN staff are paid well enough, and sometimes even above market average. Considering the current DNS industry trends and forecasts, tougher action to further limit or even abolish the annual rise in compensation would send a strong positive signal to the community.

It’s been suggested that, when asked to find areas to cut, ICANN department heads prioritized retaining their own staff, which is why we’re seeing mainly cuts to community funding.
I’ve only summarized the comments filed by formal ICANN structures here. Other individuals and organizations filing comments in their own capacity expressed similar views.
I was unable to find a comment explicitly supporting increased staffing costs. Some groups, such as the Registries Stakeholder Group, did not address the issue directly.
While each commentator has their own reasons for wanting to protect the corner of the budget they tap into most often, it’s a rare moment when every segment of the community (commercial and non-commercial, domain industry and IP interests) seem to be on pretty much the same page on an issue.

ICANN mulls $68 million raid on auction war chest

ICANN wants to put away another $68 million for a rainy day and it’s considering raiding its new gTLD auction war chest in order to do so.
It’s also thinking about dipping into the pool of cash still left over from new gTLD application fees in order to bolster is “reserve fund” from its current level of $70 million to its target of $138 million.
But, as a relief to registrants, it appears to have ruled out steep fee increases, which had been floated as an option.
The reserve fund is basically a safety net that ICANN could use to keep the lights on in the event that revenue should suddenly plummet dramatically and unexpectedly.
If, for example, Verisign returned to its old antagonistic ways and refused to pay its .com fees for some reason, ICANN would lose about a third of its annual revenue but would be able to tap its reserve until the legal fisticuffs were resolved.
ICANN said in a discussion document (pdf) this week that it took $36 million from the reserve since 2014 in order to complete the IANA transition. Over the same period, its annual budget has swelled from about $85 million to $138 million and contributions back into the reserve have been minimal.
That’s left it with a meager $70 million squirreled away, $68 million shy of its longstanding target level of one year’s budget.
ICANN is now saying that it wants to replenish the fund in less than five years.
About $15 million of its target would come from cost-cutting its operations budget over the period.
It also wants to take at least $36 million from the new gTLD auction proceeds fund, which currently stands at $104 million (with another $132 million incoming should Verisign successfully obtain .web over the objections of rival bidders).
The remaining $17 million could come from “leftover” new gTLD application fees — that fund is currently about $80 million — or from more cost-cutting or more auction proceeds, or from a combination of the three.
A fourth option — increasing the per-transaction fees registrants are charged via their registries and registrars — appears to have been ruled out.
My back-of-the-envelope maths suggests that an annual per-transaction increase of about $0.07 would have been needed to raise $68 million over five years.
The proposal is open for public comment until April 25.

Should ICANN cut free travel, or its own staff?

Is ICANN’s suddenly limited budget best spent on its staff wages or on flights and hotels for certain volunteers?
That’s the debate that’s been emerging in the ICANN community in the last few weeks since ICANN revealed it would have to make some “tough choices” in the face of lower than expected revenue from a stagnant domain industry.
Members of the ICANN Fellowship program have started a petition calling for the organization to look at its own staffing needs before cutting the number of Fellows it supports in half.
The petition is not signed (though I have a pretty good idea who started it) and at time of publication, it has 194 signatures.
The Fellowship program sees ICANN pay for the travel and lodging, along with a per diem allowance, of up to 60 community members at each of its three annual major meetings.
They’re usually ICANN newbies and generally from less-developed regions of the world.
But because ICANN is trying to cut $5 million from its fiscal 2019 budget it wants to reduce the number of supported Fellows down to 30 per meeting.
ICANN says (pdf) that the average cost to send a Fellow to a meeting is $3,348, which would work out at or $200,880 per meeting or $602,640 per year.
Cutting the program in half would presumably therefore save a tad over $300,000 a year.
It’s not nothing, but it’s chickenfeed in a budget penciled in at $138 million for FY19.
While Fellows are not the only people seeing budget cutbacks, the only one of five broad areas that will actually see growth in ICANN’s FY19 budget is staffing costs.
The organization said personnel spend will go up from $69.5 million to $76.8 million in its next fiscal year.
That’s based on the staff growing by 34 people in the fiscal year to June 30. Those people will then earn a full year’s wages in FY19, rather than the partial year they earned in FY18.
It also plans to increase headcount by four people in FY19, and to give employees an average of 2% pay rises (cut from 4%).
The end-of-year headcount would be 425. That means headcount will have doubled since about September 2013. It was at under 150 when the new gTLD program kicked off in 2012.
Does ICANN really need so many staff? It’s a question people have been asking since before headcount even broke into three digits (over 10 years ago).
The petition organizers wrote that ICANN could not only maintain but increase funding for Fellows by just lowering staffing levels by one or two people, adding:

Given that most of the fellows are from developing countries, the Fellowship Program is not only a learning platform for capacity building to empower volunteers with the skills needed to create a positive impact both within ICANN and in their home countries, but also it is practically the only way to overcome the insurmountable financial burden faced by individuals coming from world regions where even access to drinking water is problematic, not to mention access to computers and quality IT infrastructure that is taken for granted in developed countries.

There’s no denying that attending ICANN meetings can be a pricey undertaking. I come from the developed world and I’ve skipped a few for cost reasons.
But there’s no point ICANN splashing out its cash (which is after all a quasi-tax gathered ultimately from domain registrants) on a Fellowship program unless it knows what the ROI is.
Are the Fellows worth the money?
There’s a kind of running joke — that, disclosure alert, I participate in regularly — that Fellows are mainly good for being strong-armed into singing ICANN’s praises at the open-mic Public Forum sessions held at two of the three meetings each year.
But that’s probably not entirely fair. The program has supported some committed community members who are certainly not slackers.
There are two former Fellows — Léon Felipe Sanchez Ambia and Rafael Lito Ibarra — currently sitting on the ICANN board of directors, and at least one I know of on the GNSO Council.
There are also about 10 members of ICANN staff who were former fellows and ICANN has documented several more participants who are still active in formal roles in ICANN.
Would these people have gotten so involved with ICANN if that financial support had not been there for them originally? I don’t know.
ICANN has attempted in the past to put some hard numbers on the value of the program, and the results are perhaps not as encouraging as when one cherry-picks the success stories.
It conducted a survey last year (pdf) of all 602 former Fellows and managed to get a hold of 597 of them. It wanted to know whether they were still engaged in the ICANN community.
But only 53%, 317 people, even bothered to respond to the survey. Of those who did respond, 198 said they were still involved in the ICANN community.
Basically, of the 600 Fellows ICANN has subsidized to attend ICANN meetings over the last 10 years, just one third say they are still participating.
Is that a good hit rate?
Would it be worth firing a couple of ICANN staffers — or at least allowing a position or two to fall to attrition — in order to keep the Fellowship program funded at current levels?
I honestly have no strong opinion either way on this one, but I’d be interested to hear what you have to say.
No doubt ICANN is too. Its public comment period on the FY19 budget is still open.

New gTLD revenue cut by HALF in ICANN budget

The new gTLD industry is performing terribly when compared to ICANN’s predictions just six months ago.
ICANN budget documents published over the weekend show that by one measure new gTLDs are doing just 51% of the business ICANN thought they would.
The new budget (pdf) shows that for the fiscal year 2018, which ends June 30, ICANN currently expects to receive $4.6 million in registry transaction fees.
These are the fees registries must pay for each new registration, renewal or transfer, when the TLD has more than 50,000 domains under management.
In a draft budget (pdf) published March 2017, its “best estimate” for these fees in FY18 was $8.9 million, almost double its newest prediction.
That prediction lasted until the approved budget (pdf) published last August.
The budget published at the weekend expects this transaction revenue to increase 31.1% to $6 million by June 30, 2019, still a long way off last year’s estimate.
At the registrar level, where registrars pay a transaction fee regardless of the size of the customer’s chosen gTLD, ICANN expects new gTLD revenue to be $3.9 million in FY18.
That’s just 52% of its March/August 2017 estimate of $7.5 million.
Looking at all reportable transactions — including the non-billable ones — ICANN’s projection for FY18 is now 21.9 million, compared to its earlier estimate of 41.7 million.
ICANN even reckons the number of new, 2012-round gTLDs actually live on the internet is going to shrink.
Its latest budget assumes 1,228 delegated TLDs by the end of June this year, which appears to be a couple light on current levels (at least according to me) and down from the 1,240 it expected a year ago.
It expects there to be 1,231 by the end of June 2019, which is even lower than it expected have in June 2017.
I suspect this is related to dot-brands cancelling their contracts, rather than retail gTLDs going dark.
Revenue from fixed registry fees for FY18 is expected to be $30.6 million, $200,00 less than previous expectations. Those numbers are for all gTLDs, old and new.
Overall, the view of new gTLDs is not pretty, when judged by what ICANN expected.
It shows that ICANN is to an extent captive to the whims of a fickle market that has in recent years been driven by penny deals and Chinese speculation.
By contrast, legacy gTLDs (.com, .info, etc) are running slightly ahead of earlier projections.
ICANN now expects legacy registry transaction fees of $48.6 million for FY18, which is $200,000 more than predicted last year.
It expects registrar transaction fees of $29.5 million, compared to its earlier forecast of $29.4 million.
This is not enough to recoup the missing new gTLD money, of course, which is why ICANN is slashing $5 million from its budget.

ICANN slashes millions from its budget

ICANN has cut $5 million from its annual budget, warning the community that difficult decisions have to be made amid a slowing domain name market.
Staff and community members will all be affected by the cuts, whether in the form of less generous pay raises or fewer travel opportunities.
Cuts have also been proposed to international outreach, tech support, contractual compliance and translation services.
The organization at the weekend published for comment its proposed budget for fiscal 2019. That’s the year that begins July 1, 2018.
It would see ICANN spend $138 million, $5 million less than it expects to spend in fiscal 2018.
Four of the five top-line areas ICANN reports expenses will be cut for a total of $12 million in savings, while one of them — personnel — is going up by $7.3 million.
This rounds out to a $5 million cut to the total FY19 ICANN budget. Here’s the breakdown:

• Personnel costs going up from $69.5 million to $76.8 million, up $7.3 million.
• Travel and meetings costs are to go down from $17.8 million to $15.6 million, a $2.2 million saving.
• Professional services costs will go down from $27.7 million to $23.4 million, a $4.3 million saving.
• Administration and capital costs will go down from $22.5 million to $17.8 million, a $4.7 million saving.
• The contingency budget is going down from $5.3 million to $4.5 million, a $800,000 saving.

Personnel costs are going up due to a combination of new hires and pay rises, but the average annual pay rise will be halved from 4% to 2%, saving $1.3 million, ICANN documentation states.
Headcount is expected to level out at about 425, up from the current 400, by the end of FY19.
The travel budget is going down due to a combination of cuts to services provided at the three annual meetings and the number of people ICANN reimburses for going to them.
The Fellows program — sometimes criticized for giving people what look like free vacations for little measurable return — is seeing the biggest headcount cut here. ICANN will only pay for 30 Fellows to go its meetings in FY19, half the level of FY18. The Next Gen program, a similar outreach program for yoof participants, goes down to 15 people from 20.
The Governmental Advisory Committee will get its number of funded seats reduced by 10 to 40. The ALAC and the ccNSO also each lose a few seats. Other constituencies are unaffected.
At the meetings themselves, translation is to be scaled back to be provided on an as-requested basis, rather than automatically translating everything into all six UN languages. Key sessions will continue to have live interpretation.
Outside of the three main meetings, ICANN is pulling back on plans to expand its irregular “capacity building” workshops in “under-served” areas of the world.
It’s also slashing the “additional budget request” budget by 50%.
In terms of compliance, a proposed Technical Compliance Monitoring system that was going to be built this year — a way to make sure gTLD registries and registrars are stable and secure — appears to be at risk of being deprioritized.
ICANN said it “will develop an implementation plan in due time, depending on the RFP results and, if needed, work with the Board to identify necessary resources and funds to support implementation of the project.”
The documents published today are now open for public comment until March 8.
The cuts I’ve reported here can be found from page 19 of this document (pdf).
The reason for the cutbacks is that ICANN’s revenue isn’t growing as fast as it once did, due to the slower than expected growth of the domain name industry in general. I’ll get to that a later article.

ICANNWiki could be first victim of budget cutbacks

ICANN is mulling whether to cut funding to ICANNWiki, the independent community encyclopedia, as part of its efforts to rein in spending.
There’s $100,000 at stake, more than half of the Oregon-based non-profit’s annual budget.
Ray King, the gTLD registry CEO who founded ICANNWiki in 2005, told DI today that ICANN has been providing funding for the last three years.
“While no decision has been made yet, there is a possibility that ICANN will not continue it,” he said in an email.
“We’ve poured our hearts and minds into this project for many years so this would be disappointing to say the least,” he said. “We believe in our mission and that it is in the community’s interest for this support to continue”.
An ICANN spokesperson said: “At this time, while it is highly unlikely that ICANN will be renewing its contract with ICANNWiki, we have not come to a final determination.”
ICANNWiki currently carries about 6,000 volunteer-edited articles covering many aspects of the ICANN community and the domain name industry in general.
It’s perhaps most recognizable for the frequently shared caricatures of community members it produces, such as this handsome devil, and the playing card decks handed out as freebies at ICANN meetings.
According to a letter (pdf) sent to ICANN earlier this month, ICANNWiki receives cash contributions of $161,000 a year, $61,000 of which comes from 10 corporate sponsors.
ICANNWiki estimates the 2,200 hours per year of volunteer work it benefits from is worth about $66,500. It says it has in-kind contributions worth about $40,000 from other companies.
It puts the value of its “reference services” at $339,959 a year.
That’s based on estimated visits to its site of 182,774 in 2017 (not including visits from its editors and staff) and a value per visit of $1.86 (based on an unrelated ROI calculation Texas Public Libraries used to justify its own existence earlier this year).
The ICANN $100,000 contribution is at risk now due to the organization’s plan to cut back on spending in the face of revenues that are coming in lower than expected due to a weak domain name market.
CEO Goran Marby said yesterday that its fiscal 2018 is currently running a million dollars short. Coupled with a perceived need to add an extra $80 million to its reserve budget, ICANN is looking for areas to cut costs.
ICANNWiki funding may be the low-hanging fruit in this endeavor; while it’s no doubt valuable (I probably use it two or three times per week on average), it’s perhaps not straightforward to quantify that value.
Even if the funding is cut, I would not expect ICANNWiki the web site to disappear, given the level of corporate sponsorship and in-kind services it receives and the low overheads suggested by its modest traffic numbers, but perhaps its growth and outreach ambitions would be curtailed.
UPDATE: This post was updated at 2307 UTC with a quote from ICANN.

ICANN, with $143 million budget, running out of cash

ICANN is to tighten its belt over the coming year as lower than expected revenue from domain name registrations has caused a budget shortfall and dwindling reserves.
The organization is $1 million short so far in its fiscal 2018, which CEO Goran Marby says is forcing him to look at making cuts to staffing costs, travel expenses, and community-requested projects.
Meanwhile, chair Cherine Chalaby says the board of directors is worried that ICANN’s reserve fund is $80 million shy of where it ideally should be.
Both men outlined their priorities in separate end-of-year blog posts this week.
It does not yet appear that anyone’s job is on the line.
Marby indicated that headcount would be reduced through attrition — sometimes not replacing staff who leave — rather than lay-offs.
“The reality is, ICANN has a significant budget but not an infinite budget. We need to make some changes, and can’t do everything we are asked,” he wrote, before explaining some areas where “efficiencies” could be found.

For example, when someone leaves ICANN org, we are taking a close look at the vacancy, the team’s needs and other people’s availability and skills before deciding if we are going to fill the role. We are also looking at our staff travel practices for ICANN meetings and other ICANN org commitments, reviewing our language services support levels and offering, and trying to consolidate our collateral and the volume of reports. We are looking at what projects we could delay or stop

Some might say that this renewed focus on how ICANN manages its money is overdue. The organization has bloated fast over the last several years, as over 1,200 new gTLD registries became contracted parties and interest in ICANN’s work grew globally.
In its financial year ending June 2012, it budgeted for revenue of $69.7 million and expenses of $67 million.
For FY2017, which ended this June, it was up to revenue of $132.4 million and expenses of $126.5 million.
Over the same period, headcount swelled from 158 full-time equivalents to 365. That was anticipated to grow to 413 by next June.
For the financial year ending next June, ICANN had budgeted for $142.8 million revenue, growing from $135.9 million, but Marby said in his blog post today that it might actually be flat instead.
As much as 64% of ICANN’s revenue is driven by transaction volumes — registrations, renewals and transfers — in gTLDs. In the quarter to September, revenue was $1 million behind plan due to lower than expected transactions, Marby said.
The message is to expect cuts, possibly to projects you care about.
Adding complexity, the ICANN board has decided following public consultation at 12 months funding is the appropriate amount ICANN should be keeping in reserve — so it can continue to function for a year should its contracted parties all abruptly decide not to pay their dues.
Unfortunately, as Chalaby outlined in his post today, this reserve pool is currently at about $60 million — just five months’ worth — so the organization is going to have to figure out how to replenish it.
Building up reserves to the tune of an extra $80 million is likely to put more pressure on the regular annual budget, leeching cash from other projects.
Chalaby said that the board will discuss its options at its February 2018 workshop.
Marby, meanwhile, said that a new budget will be out for public comment in mid-January.