Second-shot gTLD bid rules revealed

ICANN has published the first, early draft of rules for new gTLD applicants that want to change their applied-for strings at the thirteenth hour.

In a shock move last month, ICANN’s board of directors said that applicants would be able to nominate a second-choice gTLD, as a means to reduce the number of contention sets and potentially increase the number of approved TLDs.

The decision, which has yet to be formally approved by the board, arguably raised more questions than it answered, and has been criticized for being a top-down imposition and introducing much more complexity into the application process.

But the poor Org staffers tasked with turning the idea into reality have now published a first draft of the proposed rules, which could eventually make it into the final Applicant Guidebook, that may answer some of those questions.

But I’m not convinced the idea has been sufficiently thought through yet. Here’s my take.

There’s going to be two Reveal Days

In 2012, Reveal Day was the day ICANN published the applicant names and applied-for strings of all 1,930 new gTLD applications. It was a simple one-time info dump, letting all applicants know who they were competing against.

As host of a Reveal Day panel discussion, I’d been given a hard copy of the spreadsheet in advance and virtually had to fight off applicants wanting a sneak peek with a dirty stick, despite the reveal being mere minutes away.

This time around, giving applicants the option of a pre-selected back-up string complicates matters, so there would be two reveals: Preliminary Reveal Day and Final Reveal Day.

On Preliminary Reveal Day, ICANN would publish the list of applicants along with their primary and secondary desired strings. Applicants would instantly know whether they were in contention, and get a rough idea of of what their second-chance options were.

They would then have a Replacement Period, currently penciled in at [14 days] to decide whether to stick to their first choice or switch their entire application over to their back-up.

If you’re a tiny podcast aggregator who suddenly finds your .podcasts application facing a contention resolution auction against Amazon, Spotify and Joe Rogan, you might want to switch to .knittingpodcasts or something.

Pick a crappy string

I present the example of .knittingpodcasts only half jokingly — the way the rules are currently drafted appears to actively encourage the selection of crappy back-up strings.

ICANN staffers told community members at two implementation meetings this month that applicants should pick second-choice strings “unlikely to be picked up by somebody else as their alternate”.

The whole point of allowing replacement strings is to reduce the number of contention sets. Applicants will not be allowed to switch to a string that is another applicant’s primary or secondary string. The draft text reads:

Applicants must be aware that they will be prevented from using their replacement string in cases where a designated replacement string is identical to another replacement string or applied-for primary string, as this would increase the risk of new instances of contention being created or existing instances being increased.

So, unless you’re hoping to get very lucky indeed, you’d be mad to apply for .crypto and nominate .blockchain as your back-up, as you’d be prevented from switching to your second-choice, which is very likely to be already contested.

Your best chance of avoiding contention would be to pick a string just crappy enough that nobody else is likely to apply for it, but not crappy enough that it doesn’t make business sense to apply for.

Avoid plurals, dummy

It now seems incredibly likely that ICANN is going to ban single/plural equivalents from coexisting, so choosing the plural of your primary string as your back-up (or vice-versa) would probably be an exercise in futility.

If the ban is approved, plural/singular matches will be placed in the same contention set anyway, so picking .podcasts as your alternate for .podcast will in most cases not avoid contention. There are some edge cases here, which I’ll get to below.

There’s no going back

Once you’ve opted to switch to your secondary string, you can’t later change your mind and switch back, even if all your original competitors have dropped out of the race and you’d have a free run at your primary.

The draft rules currently state: “Applicants who opt for their replacement string will be unable to revert to their original primary string at any stage during the program.”

They later state: “Applicants should note that if all applicants for a given string opt for their respective replacement strings, it is possible that there may be no remaining active application for the primary applied-for string.”

War-gaming undesirable consequences

I think we can all agree that .podcast is a more desirable gTLD than .podcasts.

Spotify says there are something like six million podcasts in its library. Selling a .podcast domain to a fraction of those podcasters could be a very lucrative business and provide millions of registrants with cool domains.

But how many entities would feel a .podcasts domain is more appropriate for their businesses? A handful of podcast aggregators, maybe? Certainly a substantially smaller number. The .podcasts registry would have to sell at a huge premium price to make up for the loss of volume.

So, let’s say Company A and Company B both apply for .podcast as their primary string. Company A selects .knittingpodcast as its back-up, while Company B selects .fishingpodcast.

After Preliminary Reveal Day, both applicants become afraid that their rival is better-funded and more committed to their application, so to avoid an auction decide to switch to their secondary string.

Remember, ICANN is bent on banning private resolution of contention sets, and while language has yet to be published or finalized, the current thinking is that private resolution would also be banned during the Replacement Period. The rules might even go so far as to ban non-monetary resolution, or communication between competing applicants.

So Company A and Company B, both fearful of the other’s financial clout, switch to their back-ups and a year or two down the line the internet has a .fishingpodcast gTLD and a .knittingpodcast gTLD, but no .podcast gTLD.

Let’s say instead that Company B ignored ICANN advice and named the plural .podcasts as its back-up, and both applicants switched. Now, not only would the more desirable singular .podcast not get delegated, but the single/plural ban would mean it would never be delegated.

Is that a desirable outcome? Populating the DNS with second-choice gTLDs nobody wants? (.com fanboys feel free to leave a comment below).

I can’t help but feel that a lot of this stuff is going to need much more intensive war-gaming, possibly involving top psychologists and game theorists, before the rules are finalized and approved.

Big twist as ICANN bans new gTLD auctions

ICANN is to ban new gTLD applicants from paying each other off if they apply for the same strings, removing a business model that saw tens of millions of dollars change hands in the 2012 application round.

But, in a twist, applicants will be able to submit second-choice strings along with their main application, allowing them to switch if they find themselves in contention.

While ICANN’s board of directors has yet to pass a resolution on private resolution in forthcoming application rounds, chair Tripti Sinha said in a letter to the GNSO Council (pdf) and blog post that there’s agreement on three principles.

“Private resolution of contention sets will not be permitted during the Next Round,” Sinha told the Council. The idea of permitting joint-venture resolution was also ruled out as impractical and open to gaming.

This of course means that where contention sets do occur, they’ll be resolved with a “last resort” auction where ICANN gets all the cash from the winning bidder.

Funds raised this way in the last round, along with a decade’s worth of investment interest, have been used to replenish ICANN’s reserve fund, to fund the current Grant Program, and may be shortly used to subsidize the Applicant Support Program.

Second, applicants will be able to submit at least one alternate string with their applications, allowing them to avoid a contention set and last resort auction.

This potentially makes the cost of acquiring a gTLD cheaper for the applicant while increasing the number of gTLDs that go live. ICANN might also have to issue fewer refunds for withdrawn applications.

ICANN thinks this measure might make gTLDs more affordable for less well-resourced applicants from the Global South, where ICANN is keen to diversify the industry, although the applicants may not get their first-choice strings.

Applicants would only be able to switch to an alternate string, which they will have to have pre-selected, if doing so would not create a new contention set or make the applicant join a different existing contention set.

They’d also only be able avoid a contention set of exact-match strings, and not sets subsequently created by the String Similarity Review or String Confusion Objection results.

So, to take an example from 2012, any of the seven .hotels applicants would have been able to switch to a second-choice string immediately after Reveal Day, but not after the similarity review placed them in contention with .hoteis.

The third point of agreement from the board is that the last resort auctions should keep the ascending-clock second-price method used for the 2012 round, deciding against lotteries or the Vickrey auction method.

The ascending clock method sees bids filed in rounds until all bidders but one had dropped out. The last applicant standing then pays ICANN the last price offered by the runner-up.

A Vickrey auction would have seen applicants submit their maximum bids at the time of application, not knowing who they were bidding against. Lotteries are legally problematic under California gambling law.

Sinha said the board intends to pass a resolution embodying these three principles “in the coming weeks”.

This is going to create some extra work for the GNSO, as ruling out joint ventures as a means to private resolution goes against community policy recommendations (and the board’s adoption of those recommendations).

The GNSO Council is set to discuss Sinha’s letter at its regular monthly meeting this Thursday.

Governments call for new gTLD auctions ban

Governments have upped the stakes in their opposition to new gTLDs being auctioned off privately, now calling for an outright prohibition on the practice.

ICANN’s Governmental Advisory Committee today published its formal advice coming out of last week’s public meeting in Kigali, calling for ICANN to “prohibit the use of private auctions in resolving contention sets in the next round of New gTLDs”.

It’s a strengthening of previous language from last year’s Washington DC meeting which called for ICANN to “ban or strongly disincentivize private monetary means of resolution of contention sets, including private auctions”.

Private auctions were the most-common way that contests between new gTLD applicants with matching strings were resolved in the 2012 application round. Many tens of millions of dollars changed hands, with the losing bidders pocketing the winning bids.

But the practice came in for criticism from groups such as the GAC and the At-Large Advisory Committee, partly because it made it harder for non-commercial or less well-financed developing-world applicants to get a foothold in the gTLD space.

“The 2012 round was basically a game for millionaires,” ALAC chair Johnathon Zuck told the GAC at a meeting between the two groups last week. “There were many things that made the last round kind of a joke… but this was the very big thing that made the community look bad.”

Discussions with the ALAC, which wanted to issue joint advice with the GAC, seems to be at least partly responsible for the GAC aligning around advising a full-on ban on private auctions.

ICANN’s board of directors is broadly in favor of “discincentivizing” private auctions, but has stopped short of advocating for a full prohibition, according to directors’ public statements and board resolutions.

The Org commissioned a study from a New York company called NERA Economic Consulting, published shortly before the Kigali meeting, to look into ways to dissuade applicants from private auctions and encourage them towards ICANN’s “last resort” auctions — where ICANN gets all the money — or into joint ventures.

While it did not come up with any recommendations as such, the study did lay out some possible mechanisms — such as forcing applicants into last-resort auctions, or making them pay an extra fee if they want to resolve their contention sets privately.

Separately, ICANN has told the GAC it intends to reject another piece of its advice related to contention sets. The GAC had told ICANN last year:

To take steps to avoid the use of auctions of last resort in contentions between commercial and non-commercial applications; alternative means for the resolution of such contention sets, such as drawing lots, may be explored

But ICANN reckons a lottery might be illegal under California law. That’s pretty much what it said before it came up with “Digital Archery” during the last application round, and it turned out to not be completely correct.

It also disagrees with the GAC that non-commercial applicants in contention sets should be treated preferentially, with the board wary about having to pick winners and losers in the next round.

The board has therefore triggered the part of its bylaws that require it to hold formal negotiations with the GAC to see if they can come to a compromise before the advice is rejected.

Crackdown looms for new gTLD auction gaming

ICANN will be urged to consider taking a stronger position against companies who apply for new gTLDs simply to lose them at auction or immediately flip them to others.

A community working group, known as SubPro and tasked with developing rules for the next new gTLD round, delivered its final Final Report this week, and the one area that failed to gain a designation of “consensus” or stronger was private auctions.

In the 2012 application round, several companies applied for large portfolios of strings that look — in hindsight at least — like efforts to game the system by forcing rivals to auctions they planned to deliberately use.

Companies such as MMX made millions losing auctions during the round, some of which was reinvested in winning auctions for other TLDs.

Applicant Nu Dot Co was notable for losing every private auction it participated in, then quickly flipping its successful .web application when Verisign stepped up with a $135 million bankroll.

While it’s difficult to know the extent to which this was all planned in advance, it proved the business model — filing spurious applications for new gTLDs you have no intention of launching — could be lucrative in future rounds.

But SubPro has put forward a slew of recommendations that, should they pass the remaining hurdles of the policy development track, could bring in substantial sanctions for those applicants and registries found to be gaming the system.

The SubPro recommendations are heavily buttressed with square parentheses, indicating disputed text, and supplemented by some minority statements from members of the working group who think that private auctions should be banned outright in future application rounds.

But the headline recommendation, numbered 35.3, is this:

Applications must be submitted with a bona fide (“good faith”) intention to operate the gTLD. Applicants must affirmatively attest to a bona fide intention to operate the gTLD clause for all applications that they submit.

Far from merely providing a check-box assertion that they’re legit, which would itself be easily gamed, applicants would also find their applications scrutinized by ICANN and its external evaluators to check for signs of a lack of bona fides.

Factors used to determine shadiness could include how many applications for contested strings are applied for, how many private auctions are lost, whether the successful applicant has not launched its gTLD within two years, and whether contracts are flipped within the first year.

SubPro discussed penalties for gaming could include the loss of registry contracts, a ban from future rounds or straight-up monetary fines. But the group did not put forward any recommendations.

SubPro couldn’t seem to come to agreement on most of this. The recommendations were determined to have “strong support but significant opposition” during the group’s recent consensus call.

One strong objection came from a somewhat diverse group of SubPro participants comprising Alan Greenberg (At-Large), Christopher Wilkinson (At-Large), Elaine Pruis (Verisign), George Sadowsky (Afilias/ISOC), Jessica Hooper (Verisign), Jim Prendergast (consultant), Jorge Cancio (Swiss government, but signed in a personal capacity) and Kathryn Kleiman (non-commercial users). They said:

The recommendations in the final report are a mix of overly complex disclosures and attestations that needlessly complicate the program to allow for private auctions. And they will not work. The only way to prevent a repeat of the activity from the 2012 round is to ban private auctions

They also claimed that allowing private auctions would putter smaller, niche and community applicants at a disadvantage, and that ICANN’s reputation would be harmed if it was seen to be overseeing gaming.

The At-Large Advisory Committee also issued a strong objection to private auctions along the same lines:

We remain concerned about attempts to “game” the application process through use of private auction and share the ICANN Board’s concerns on the consequences of shuffling of funds between private auctions. The ability for a loser to apply proceeds from one private auction to fund their other private auctions only really benefits incumbent registry operators or multiple-string applicants and clearly disadvantages single-TLD/niche applicants. We believe there should be a ban on private auctions, and that by mandating ICANN only auctions, the proceeds of ICANN auction can be directed for uses in public interest

The assumption there of course is that an ICANN “last resort” auction, in which the winning bid is funneled into ICANN’s cash pile, would be spent on stuff genuinely in the public interest, rather than frittered away on secretly settling employee lawsuits or indulging in more expensive, self-important navel-gazing.

Perhaps unsurprisingly, the ICANN board of directors has indicated that it prefers the idea of last resort auctions to private auctions.

But SubPro has also made some recommendations that could potentially keep the price of last-resort bids down, completely redesigning the auction process compared to the 2012 round.

If the recommendations are implemented, applicants would have to submit bids towards the start of the application process, when they don’t even know who they’re bidding against.

After all the applications have been submitted, ICANN evaluators would group them all according to whether they’re identical or confusingly similar to each other, then inform each applicant in a contention set how many bidders — but not their identities — they’re up against.

Applicants would then have to submit a sealed bid stating the maximum price they’d be willing to pay for the gTLD in question. It would be only after “reveal day”, when ICANN publishes the applications themselves, that everyone would learn who they’re bidding against.

They’d then be able to engage in private resolutions (auctions could come into play at this point), but it would only be after contention resolution phases such as objections and Community Priority Evaluations were complete that applicants would find out who’d submitted the highest bid.

The winning bidder would pay the amount of the second-highest bid to ICANN.

The 400-page final report (pdf), along with the minority statements, will now be sent to the GNSO Council for approval, before it makes its way to the ICANN board.

Given how much work remains to be done on private auctions and other issues that I’ll get to in later coverage, it seems that a lot of the mechanics of how contention resolution will work will have to be devised by ICANN and the community during the Implementation Review Team and Operation Design Phase phases, along with at least one round of commentary on at least one edition of the next Applicant Guidebook.

The next round of new gTLDs has moved a step closer, but it’s still going to be well over a decade after the last application window before we see the next one.

Amazon and Google have been BEATEN by a non-profit in the fight for .kids

One of the longest-fought new gTLD contests has finally been resolved, with a not-for-profit bid beating out Google and Amazon.
Amazon last week withdrew its application for .kids, leaving Hong Kong-based DotKids Foundation the only remaining applicant.
DotKids now has a clear run at the gTLD, with only ICANN contracting and technical testing before .kids goes live in the DNS root. We could be looking at a commercial launch within a year.
It’s a surprising outcome, not only because Amazon has all the money in the world, but also because it actually has a product called the Echo Dot Kids Edition, a candy-striped, parentally-controlled version of its creepy corporate surveillance device.
The fight between the two applicants was settled privately.
While ICANN has scheduled them in for a “last resort” auction more than once, the contention set was “On Hold” due to DotKids’ repeated use of ICANN appeals processes to delay.
My understanding is that it was not an auction. I don’t know whether any money changed hands to settle the dispute. It may just be a case of DotKids beating Amazon in a war of attrition.
DotKids, much like ultimately successful .music applicant DotMusic, pulled every trick in the book to delay .kids going to auction.
It’s filed no fewer than four Requests for Reconsideration with ICANN over the last five years, challenging almost every decision the organization made about the contention set.
Last year, DotKids (which had a reduced application fee under ICANN’s applicant support program) even asked ICANN for money to help it fight Amazon and Google at auction, then filed an RfR when ICANN refused.
The company has been in a Cooperative Engagement Process — a precursor to more formal appeals — with ICANN since February.
DotKids until recently also faced competition from Google, which had applied for the singular .kid but withdrew its application last October.
DotKids Foundation is run by Edmon Chung, perhaps best-known as the founder and CEO of 2003-round gTLD .asia.
I can’t help but feel that he has grasped a poison chalice.
The two examples we have of child-friendly domains to date are .kids.us, which was introduced by point-scoring US politicians under the Bush administration and promptly discarded when (almost literally) nobody used it, and .дети, the Russian equivalent, which usually has fewer than a thousand names in its zone file.
I believe that would-be registrants are broadly wary of signing up to vague content restrictions that could prove PR disasters if inadvertently violated.
In its 2012 application, DotKids said that .kids “will have a core mandate to advocate the production and publishing of more kids friendly content online”.
But what is a “kid”? DotKids said it would adopt the United Nations Convention on the Rights of Child definition as “every human under 18 years old”.
Because the parents of every five-year-old would be happy for their kid to view sites designed for 17-year-olds, right?
It’s going to be challenging to get this one right, I think.

Schilling laughing as Uniregistry beats Google to .lol

Uniregistry’s portfolio of quirky new gTLDs grew today. The company seems to have beaten Google to .lol in a private deal.
The two companies were the only ones to apply for .lol, and Google’s application was formally withdrawn today.
As usual for private contention set settlements, the winning price has not been disclosed.
Uniregistry has 18 delegated gTLDs in its stable, with five more currently uncontested applications (.lol makes six) waiting in the wings.
I like .lol as a gTLD. It’s a punchy, short, meaningful string that certainly belongs to the right of the dot.
I can see it being deployed in the near term by the incessant sewer of BuzzFeed clones that are increasingly stinking up social media, which could give increased visibility and helpful viral marketing.
Longer term, there may be a worry if in future the kidz stop using “lol” and start viewing it as something their parents say, but we’re probably a ways from that yet.

Battles for .chat, .style, .tennis, bingo and .sas over

Seven new gTLD contention sets have been formally resolved with application withdrawals this morning, five of which we haven’t previously reported on.
Most appear to have been settled by private auctions, with Donuts often the victor.
The standout, however, is .sas, an unusual case of a contention set of two would-be dot-brand registries being resolved.
The business software maker SAS Institute, which applied as Research IP, has prevailed over the Scandinavian airline holding company SAS AB for the .sas gTLD.
Both applicants had applied for closed, single-registrant namespaces.
On the regular, open gTLD front, .chat has gone to Donuts after withdrawals from Top Level Spectrum, Radix and Famous Four Media.
.style has also gone to Donuts, after Uniregistry, Top Level Design, Evolving Style Registry and Minds + Machines withdrew their applications.
.tennis is another Donuts win. Applications from Famous Four, Washington Team Tennis and Tennis Australia have been withdrawn, after a failed Community bid from Tennis Australia.
Donuts, finally, beat Famous Four to .bingo.
Afilias and Top Level Spectrum have officially withdrawn their .wine applications. As we reported earlier this week, this leaves Donuts as the sole remaining applicant.
Top Level Spectrum’s bid for .sucks has also been withdrawn, confirming DI’s report from earlier this week that the controversial gTLD has been won by Vox Populi Registry.
But Donuts failed to win .online, withdrawing its application today. Only two applicants — Radix and I-Registry — remain in this once six-way contention set.
We’ll know the winner (my money’s on Radix) in a matter of days, I expect.

.now and .realestate will be restricted, but Donuts keeps .tires open

It was a battle between open and restricted registration rules this week, as three more new gTLD contention sets were resolved between applicants with opposing policies.
Donuts won .tires (open), Amazon won .now (closed) and the National Association of Realtors won .realestate (restricted).
Donuts beat Goodyear and Bridgestone — two of the biggest tire companies in the world — to .tires. Both withdrew their respective applications over the last week.
If it was an auction it was not conducted via the usual new gTLD auction houses. It seems like Donuts settled the contention privately (or maybe just got lucky).
Both tire companies had proposed single-registrant closed generic spaces. Donuts, of course, has not.
Goodyear has active dot-brand applications for .goodyear and .dunlop remaining. Bridgestone has active applications for .bridgestone and .firestone, also dot-brands.
Amazon, meanwhile, won the .now contention set over five other applicants — Starbucks HK, XYZ.com, One.com, Global Top Level and Donuts, which have all withdrawn their bids.
Amazon’s application for .now envisages a closed registry in which all the second-level domains belong to the company’s intellectual property department.
Also this week, the NAR, which already has the dot-brand .realtor under its belt, beat Donuts, Minds + Machines and Uniregistry to the complementary generic .realestate.
Unfortunately for estate agents worldwide, the NAR plans a tightly restricted .realestate zone, in which only its own members will at first be able to register, according to its application.
The application does seem to envisage a time when others will be permitted to register, however.
The organization said in a press release this week that .realestate will be more open than .realtor, but that full policies will not be released until next year.

Donuts beats trademark owner to .coach

Donuts has won the right to the new gTLD .coach, after an exact-match trademark owner withdrew its bid.
Coach Inc is a chain of clothing and accessories outlets, best known for its handbags, founded in New York in 1941.
The company owns coach.com, but withdrew its application for .coach this week, leaving Donuts unchallenged.
Coach had filed a Legal Rights Objection against Donuts, claiming .coach would infringe its trademark, but the objection panelist disagreed (pdf).
The panelist agreed instead with Donuts that “coach” has multiple meanings, and that that was “a risk that the Objector assumed when it adopted as its trademark a common dictionary word.”

Straat-backed bidder beats Donuts and Afilias to .health

DotHealth has won the four-way contention set for the controversial new gTLD .health.
Afilias and Donuts both withdrew their competing applications this week. Famous Four withdrew its application over a month ago.
DotHealth is backed by Straat Investments, the investment vehicle chaired by .CO Internet’s Juan Calle.
The new gTLD will run on a Neustar (which now owns .CO) back-end.
.health is likely to be restricted, or at least policed, to ensure fake pharmacies are scrubbed from the zone.
DotHealth is supported by, among other health groups, the National Association of Boards of Pharmacy (NABP) which often targets registries and registrars in its campaigns against bogus online pharmacies in the US.
The company plans to use LegitScript to monitor its namespace.
.health will compete against the unrestricted .healthcare, which has been delegated to Donuts.
All four applicants for .health faced adverse Governmental Advisory Committee advice and unsuccessful public interest objections from the Independent Objector.