CentralNic promises $30 million .sk will only ever mean “Slovakia”

CentralNic has committed that it will not repurpose Slovakian ccTLD .sk to mean anything other than “Slovakia”, following its purchase of SK-NIC this week.
The acquisition of the Bratislava-based registry, which will cost between €21 million and €26 million ($25 million to $31 million) depending on performance, has been controversial in Slovakia, with many leading registrars campaigning against the sale.
One of the charges leveled against CentralNic was that its modus operandi has been to market ccTLDs as if they have other meanings. It markets Laos’ .la as a TLD for Los Angeles, and acts as the back-end for Palau’s .pw, which is marketed as an acronym for “Professional Web”.
“From a technical point of view, it’s definitely a good acquisition. CentralNic has a good system that is stable and working well, but we don’t agree with their sales and marketing policies,” Ondrej Jombik of Slovak registrar Platon told DI today.
Jombik is the person who organized a petition against the sale that attracted almost 10,000 signatures.
“We don’t agree with how they manage national TLD registries,” he said. “What they do in Palau is not acceptable. What they do in Laos is not acceptable. We’re kind of scared what they plan to do with our domain, how they plan to market it.”
But CentralNic CEO Ben Crawford said in an email interview that these concerns are misplaced. He said:

CentralNic has never had plans to repurpose .sk, and CentralNic commits not to market it with any other meaning than as the Slovak country code. Moreover, while some of the ccTLDs we work with welcome the export revenues from repurposing their TLDs, such practices are specifically restricted under recent contractual requirements put in place by the Slovak Government in response to this concern being raised by SK-NIC’s policy committee.

Jombik’s petition, which claimed to be supported by 13 of the top 15 .sk registrars covering 73% of .sk’s 360,000 domains, called for the ccTLD to be handed over to a “new independent non-profit organization” that more fairly represented the Slovak internet community.
But Crawford said that .sk already has strong community representation, which is guaranteed by the registry’s contract with the Slovak government.
“I am honestly unaware of any ccTLD where the Government, the internet community in general and the registrars all have such a defined and important role,” he said, adding:

There will be changes under our management: The Government contract has recently been beefed up placing further stability and disclosure responsibilities on SK-NIC, including escrowing the registry data to the Government cloud, a formalised Service Level Agreement, giving the Government the right to audit SK-NIC’s performance, etc., all of which we will abide by. We have other ideas too on contributing to the Slovak internet, and we are planning to hold discussions with not for profits, industry associations, Universities and other such entities in Slovakia, to seek their guidance on the best ways to do this.

Whether these promises and actions will be enough to assuage critics of the deal, who are also motivated by a sense of national pride and aggrieved that what is arguably a national resource is falling into foreign hands, remains to be seen.
Having a ccTLD manager acquired outright by a foreign entity without a redelegation by ICANN/IANA is an unusual occurrence. Only the $109 million acquisition of .CO Internet by US-based Neustar back in 2014 springs to mind.

CentralNic brings back old CFO

CentralNic has swapped its currently chief financial officer for his immediate predecessor.
Glenn Hayward has left the company after three and a half years “to pursue other opportunities”, the company said in a statement to the markets today.
He has been replaced by Don Baladasan, who was CFO of the company between 2010 and 2014.
During his previous stint in the role, he oversaw CentralNic’s flotation on London’s Alternative Investment Market.

Junk drop cuts .xyz in half, .top claims volume crown

The .xyz gTLD has seen its zone file halve in size, as millions of free and cheap domains were not renewed.
The former volume leader among new gTLDs started this month with a tad over 5.2 million domains in its zone.
But its July 17 zone contained 2.5 million, much less than half as many, DI analysis shows.
The precipitous decline means that Chinese-run gTLD .top, increasingly notorious as a go-to TLD for spammers, is now literally at the top of the league table, when you measure new gTLDs by zone file volume, with 2.6 million names.
The primary reason for .xyz losing so many names is of course the expiration of most of the domains that were sold for just $0.01 — or given away for free — in the first few days of June 2016, and the aggressive promotional pricing on offer for the remainder of that month.
On May 30, 2016, there were just under 2.8 million names in the .xyz zone. By July 1, 2016, that number had topped 6.2 million, an increase of 3.4 million over a single month.
That was .xyz’s peak. The zone has been in gradual decline ever since.
Domains generally take 45 days to drop, so it’s entirely possible XYZ.com will see further losses over the next month or so.
There’s nothing unusual about seeing a so-called “junk drop” a year after a TLD launches or runs a free-domains promotion. It’s been well-understood for over a decade and has been anticipated for .xyz for over a year.
But compounding its problems, the .xyz registry appears to still be banned in China, where a substantial portion of its former customer base is located.
The company disclosed over two months ago that it had a “temporary” problem that had seen its license to sell domains via Chinese registrars suspended.
The ban was related to XYZ falling out with its original “real name verification” provider, ZDNS, which was tasked with verifying the identities of Chinese registrants per local government regulations.
I’ve never been able to confirm with either party the cause of this split, but everyone else involved in the Chinese market I’ve asked has told me it related to a dispute over money.
Regardless, two months later the major Chinese registrars I checked today still appear to not be carrying .xyz names.
XYZ has meanwhile signed up with alternative Chinese RNV provider Tele-info, and just three days ago submitted the necessary paperwork (pdf) with ICANN to have the move approved as a registry service under its contract.
In that request, XYZ said the new RNV service “will allow XYZ to reenter certain domain name markets”, suggesting that it has not yet regained Chinese government approval to operate there.

CentralNic says revenue more than doubled in 2016

CentralNic’s revenue was up 110% in 2016, according to the company.
The registry today released its unaudited results for last year, showing EBITDA up 65% at £5.5 million ($6.7 million) on revenue of £22.1 million ($26.9 million)
The company, which has expanded into registrar services via acquisition in the last few years, said its recurring revenue — mainly domain registrations — now account for about 80% of revenue.
CentralNic has about a third of the new gTLD back-end market, primarily because it’s the provider for .xyz’s millions of cheapo registrations.
In its statement, it said it hopes to focus on growing more in China, where clients including .xyz were recently licensed.
It also intends to make more acquisitions, where the deals “meet clear strategic criteria including being earnings accretive in the short term with a strong recurring revenues base”.

Hires and promotions at Donuts, MMX and CentralNic

A few gTLD registries have announced changes to senior management positions and new hires over the last several days, so I thought I’d lump them all together into one post.
Donuts has appointed a new CEO. Venture capitalist Bruce Jaffe, who’s been on the board as an independent director for about a year, has taken over from founding CEO Paul Stahura.
Stahura is sticking around as executive chair.
The company also appointed outsider John Pollard, a veteran of Micrsoft, Expedia and various other companies, to the new role of chief revenue officer.
The company has cast the moves as a case of Donuts growing out of its startup phase.
Across the pond, Minds + Machines — which now insists on being called MMX — today announced that it has poached former Sedo chief sales officer Solomon Amoako to head up channel management as a VP.
Amoako has also held positions with Rightside and Tucows.
He’s tasked with broadening MMX’s distribution channel in the Americas and Europe.
Finally, CentralNic announced last week that it’s shipping London-based director of marketing Lexi Lavranos to Los Angeles to head up its registry business there.
As well as its stable of new gTLDs, CentralNic of course also sells the Laos ccTLD, .la, “repurposed” for the LA market.

Famous Four exec moves to CentralNic

Famous Four Media has lost its chief marketing officer to CentralNic.
Andy Churley joined the London-based registry services provider as group marketing manager this month, according to press release.
He’s been with FFM for the first few years of its entry into the gTLD game, overseeing the launches of cheap TLDs such as .science, .download and .bid.
Previously, he was with the registrar Group NBT.
CentralNic now of course is also in the registrar business, having acquired Internet.bs and Instra over the last few years.

Verisign loses .art contract to CentralNic

CentralNic has been awarded the back-end contract for the forthcoming .art gTLD, usurping Verisign from the role.
UK Creative Ideas, which bought .art at a private auction for an undisclosed sum a year ago, appointed the company its “exclusive registry service provider”, CentralNic said.
UKCI’s original .art application named Verisign as its back-end, and this is not the first time CentralNic has sneaked away a Verisign client.
When XYZ.com acquired .theatre, and .security and .protection from Symantec, it moved them from Verisign to its .xyz provider CentralNic.
That earned XYZ and CentralNic a contract interference lawsuit, which XYZ settled in May.
Clearly litigation has not managed to chill competition in this instance.
.art is set to launch in stages over the next 12 months, CentralNic said.
UKCI estimated in its ICANN application that it would get between 25,000 and 80,000 registrations in its first year.
That may prove to be optimistic, at least at the high end.
UKCI’s vision for .art is for a restricted gTLD, which don’t tend to do huge volumes. I believe the largest restricted new gTLD is .nyc, with about 75,000 names in its zone.
All .art registrants will have to show some kind of connection to the art world, according to UKCI’s application.

This includes artists, owners and keepers of works of art, commercial art organisations (such as galleries and auction and trading houses), not-for-profit organisations (such as museums, foundations, and professional associations), supporting businesses (such as insurance, appraisal, transport) and customers and members of the general public interested in art.

Goodness knows how this will be implemented in practice, given that basically everyone is an artist to some extent.
UKCI is based in the Isle of Man, the UK dependency presumably selected for tax reasons rather than any connection to the art world, and is backed by Russian venture capitalists.

CentralNic doing okay out of new gTLDs

Local former rival Minds + Machines may be struggling to turn a profit, but CentralNic seems to be doing quite well out of this new gTLD malarkey.
But not as well as you might expect. Large growth at its clients does not appear to have translated to a whole lot more revenue for CentralNic itself.
The company yesterday reported 2015 profit before tax of £1.45 million ($2.13 million), compared to £520,000 in 2014, on revenue up 71% at £10.39 million ($15.28 million).
While it may be best known nowadays as a back-end registry provider, its revenue is now fairly evenly split over its three reporting segments.
CentralNic runs the back-end registry for volume gTLDs including .xyz and Radix’s .site, .online, .website, and .space.
The company calls this “wholesale domain sales”, and it brought in £3.12 million last year, compared to £2.82 million in 2014.
You might think that the volume success of .xyz, which added about a million names in 2015, might have translated into a bigger boost, but it didn’t.
Its registrar business, which it got into through the acquisitions of Internet.bs and Instra, brought in £3.4 million, compared to £1.55 million in 2014.
Its third segment, “Enterprise including Premium Domain Name Sales” saw revenue of £3.85 million, compared to $1.69 million.
The enterprise business, which also included two software licenses and revenue from dot-brand clients, is easily the most profitable segment, with a 67% EBITDA margin. For wholesale, it’s 44%.
The £3.8 million of enterprise revenue included £3.22 million premium name sales, of which over £3 million came from a single buyer.
It’s not clear whether this was a single domain deal or a package of premiums, but it represents the most volatile element of CentralNic’s revenue.
Update (May 30) — This article originally misidentified “Company A” and “Company B” in CentralNic’s accounts as registry clients. In fact, according to CEO Ben Crawford, they’re registrar channel partners.

XYZ settles Verisign’s back-end switcheroo lawsuit

XYZ.com has settled a lawsuit filed against it against Verisign stemming from XYZ’s acquisition of .theatre, .security and .protection.
Verisign sued the new gTLD registry operator for “interfering” with its back-end contracts with the previous owners last August, as part of its campaign to compete against new gTLDs in the courtroom.
XYZ had acquired the .security and .protection ICANN contracts from security Symantec, and .theatre from a company called KBE Holdings.
As part of the transitions, all three applications were modified with ICANN to name CentralNic as the back-end registry services provider, replacing Verisign.
Verisign sued on the basis of tortious interference and business conspiracy. It was thrown out of court in November then amended and re-filed.
But the case appears to have now been settled.
Negari issued a grovelling not-quite-apology statement on his blog:

I am pleased to report that the recent case filed by Verisign against CentralNic, Ltd., XYZ and myself has been settled. After looking at the claims in dispute, we regret that as a result of our acquisition of the .theatre, .security and .protection extensions and our arrangement for CentralNic to serve as the backend service provider for these extensions, that Verisign was prevented from the opportunity to pursue monetization of those relationships. As ICANN’s new gTLD program continues to evolve, we would caution others who find themselves in similar situations to be mindful of the existing contracts extension owners may have with third parties.

Registries changing their minds about their back-end provider is not unheard of.
In this case, large portions of Verisign’s final amended complaint were redacted, suggesting some peculiarities to this particular switch.
If there was a monetary component to the settlement, it was not disclosed. The original Verisign complaint had demanded damages of over $2 million.

CentralNic to swell with $24m Instra buy

CentralNic is set to grow revenue by almost three quarters by acquiring Australian registrar Instra for $23.7 million.
The acquisition is for AUD 33 million, AUD 30 million of which will be in cash.
CentralNic plans to raise £10 million ($15 million) with a share placement to help fund the deal.
“This acquisition will grow our current revenues by 70% and extend our retail capabilities to serve customers in the fast growing emerging markets, globally,” CEO Ben Crawford said in a statement to the markets.
Instra had revenue of AUD 14.8 million ($10.7 million) in its fiscal 2015, and was profitable.
CentralNic’s revenue for the first half of this year was £4.4 million ($6.8 million).
The deal makes CentralNic, which started life as a registry, a much larger player in the registrar market.
It acquired Internet.bs for $7.5 million a couple of years ago, which brought in $2.8 million of revenue in the first half of this year.
Instra offers 150 ccTLDs and all the gTLDs, according to CentralNic.