ICANN 50% renewal predictions not based on registry data

ICANN’s projection that new gTLDs will see renewals of between 25% and 50% is not based on empirical data from new gTLD registries.
The predictions, which come in under industry standard expectations, are “conservative and somewhat subjective”, ICANN said.
The organization last week revealed that its 2016 budget is partly based on a high estimate of 50% renewals, with 25% for registries that gave their domains away for free.
Because ICANN would have been in possession of actual registry transaction reports for February at the time of publication, I wondered whether the 50% number was anchored in early new gTLD registries’ actual experience.
Transaction reports give the actual number of renewals each registry gets in any given month.
But ICANN told DI today that its 2016 budget was “produced in November 2014 and reviewed in January 2015 by the GDD Domain Name Services team.”
An ICANN spokesperson said:

These projections are strictly for revenue planning, so they are rather conservative and somewhat subjective. We have limited historical data to refer to when examining new gTLD domain name renewals; these are uncharted waters.
…
As renewals occur, we will be in a better position to refine our assumptions when and if the actual data varies widely from what we have assumed in our model.

Donuts’ current renewal number, revealed as part of a blog series, is 71%. It has not yet stabilized.

Does Chehade agree with Donuts on .doctor?

Should governments have the right to force business-limiting restrictions on new gTLD operators, even though they don’t have the same rules in their own ccTLDs?
ICANN CEO Fadi Chehade evidently believes the answer to that question is “No”, but it’s what ICANN is controversially imposing on Donuts and two other .doctor applicants anyway.
Donuts recently filed a Request for Reconsideration appeal with ICANN over its decision to make the .doctor gTLD restricted to medical professionals only.
It was an unprecedented “Public Interest Commitment” demanded by ICANN staff in order to keep the Governmental Advisory Committee happy.
The GAC has been asking for almost two years for so-called “Category 1” gTLD strings — which could be seen to represent highly regulated sectors such as law or medicine — to see a commensurate amount of regulation from ICANN.
Governments wanted, for example, registrants to show professional credentials before being able to register a name.
In the vast majority of instances, ICANN creatively reinterpreted this advice to require registrants to merely assert that they possess such credentials.
These rules were put in registries’ contracts via PICs.
But for some reason in February the organization told Donuts that .doctor domains must be “ascribed exclusively to legitimate medical practitioners.”
According to Donuts, this came out of the blue, is completely unnecessary, an example of ICANN staff making up policy on the spot.
Donuts wants to be able to to sell .doctor names to doctors of any discipline, not just medical doctors. It also wants people to be able to use the names creatively, such as “computer.doctor” or “skateboard.doctor”.
What makes ICANN’s decision especially confusing is that CEO Fadi Chehade had the previous day passionately leaped to the defense of new gTLD registries in their fight against unnecessary GAC-imposed red tape.
The following video, in which Chehade uses .dentist as an example of a string that should not be subject to even more oversight, was taken February 11 at a Q&A with the Domain Name Assocation.
The New gTLD Program Committee meeting that authorized ICANN staff to add the new PIC took place February 12, the very next day. Chehade did not attend.

It’s quite remarkable how in line with registries Chehade seems to be.
It cuts to the heart of what many believe is wrong with the GAC — that governments demand of ICANN policies that they haven’t even bothered to implement in their own countries, just because it’s much easier to lean on ICANN than to pass regulations at home.
Here’s the entire text of his answer. He’s describing conversations he’d had with GAC members earlier in the week.

They’re saying stop all the Category 1 TLDs. Stop them. Freeze them!
And we said: Why do we need to freeze them? What’s the issue?
They said: It’s going to harm consumers.
How will it harm consumers? We started having a debate.
It turns out that they’re worried that if somebody got fadi.casino or fadi.dentist, to pick one of Statton’s [Statton Hammock, VP at Rightside, who was present], that this person is not a dentist and will pluck your ear instead of your teeth. How do you make sure they’re a dentist?
So I asked the European Commission: How do you make sure dentist.eu is a dentist?
They said: We don’t. They just get it.
I said: Okay, so why do these guys [new gTLD registries] have to do anything different?
And they said: The new gTLD program should be better or a model…
I said: Come on guys, do not apply rules that you’re not using today to these new folks simply because it’s easy, because you can come and raise flags here at ICANN. Let’s be fair. How do you do it at EU?
“Well, if somebody reports that fadi.dentist.eu is not a dentist, we remove them.”
Statton said: We do the same thing. It’s in our PICs. If fadi.dentist is not, and somebody reports them…
They said: But we can’t call compliance.
You can call compliance. Anyone can call compliance. Call us and we’ll follow up. With Statton, with the registrar.

What we have here is Chehade making a passionate case for the domain name industry’s right to sell medical-themed domain names without undue regulation — using many of the same arguments that Donuts is using in its Reconsideration appeal — then failing to show up for a board meeting the next day when that specific issue was addressed.
It’s impossible to know whether the NGPC would have reached a different decision had Chehade been at the February 12 meeting, because no formal vote was taken.
Rather, the committee merely passed along its “sense” that ICANN staff should carrying on what it was doing with regards implementing GAC advice on Category 1 strings.
While Chehade is but one voice on the NGPC, as CEO he is in charge of the ICANN staff, so one would imagine the decision to add the unprecedented new PIC to the .doctor contract falls into his area of responsibility.
That makes it all the more baffling that Donuts, and the other .doctor new gTLD applicants, are faced with this unique demand to restrict their registrant base to one subset of potential customers.

All eyes on Donuts as first new gTLD renewal figures roll in

Donuts is about to give the world the clearest picture yet of the ongoing demand for new gTLD domain names.
The company has taken the unprecedented decision to disclose its renewal figures on a pretty much live basis.
COO Richard Tindal has been blogging renewal stats for .bike, .clothing, .guru, .ventures, .holdings, .plumbing and .singles for the last few days.
Those were the first seven of its gTLDs to hit general availability.
To Saturday, the renewal status of 6,352 names in these gTLDs was known and the renewal rate was 85.3%.
However, that rate is boosted by the relatively high proportion of the names that were registered during sunrise periods.
Donuts said that “two thirds” of the 6,352 reported domains were registered after sunrise.
That doesn’t make a whole lot of sense to me, given that Donuts has previously put the total number of sunrise regs across the seven TLDs at just 1,404, which would work out at about 22%, not 33%.
On Friday, the company had said that the status of 4,534 names was known and the renewal rate was 91.6%.
If you deduct the Friday numbers from the Saturday numbers, you get to 1,265 renewals and 553 drops, a renewal rate of almost 69.6% for that particular day.
That number, which is a few percentage points off what a gTLD such as .com regularly reports, could of course fluctuate.
The full-year renewal rate, which would factor out much of the domainer activity, of course won’t be known for another year.
Donuts said it expects its renewal rate to drop to the mid-70s in its next daily report, expected today, which will cover an additional 22,910 domains.
The company’s decision to blog its numbers comes a day or two after we reported that ICANN is only budgeting for renewals of 50%.
The 14.6% of names not renewed works out to about 933 domains.
“We believe most of those names will be re-registered by another party within the next 35 days,” Tindal wrote.
As they were all registered in the early days of GA, one might expect them to be of a reasonably high quality.
While GA began at the end of January 2014, renewal rates are not known until the Auto-Renew Grace Period, which can be as long as 45 days, has expired.

Donuts launches first “not com” ad campaign

Donuts has launched its first ad campaign, part of its plan to raise awareness about new gTLDs as a category.
It’s a digital-only video campaign, expected to run on sites including YouTube, the New York Times, Forbes, Mashable and Fast Company.

The theme is “freedom of choice”, using the slogan “Welcome to the not com revolution”.
“It’s going to be a lot of digital, a lot of online marketing, and it’s going to be about choice and the fact that this new product category represents an opportunity to grab an identity on the internet, that really reflects what it is you are and what you do,” COO Richard Tindal told DI in a recent interview.
The ad campaign going to be US-only, which chimes with what Tindal said as he laid out some of Donuts’ vision and marketing plans for 2015.
“I think that level of awareness is very low at sort of five to ten percent,” he said in the January interview. “It varies from country to country. Probably in the US it is even a little lower than other places.”
Tindal told us that Donuts is primarily concerned with marketing the “category” of new gTLDs, rather than any specific TLD.
“Our mission in 2015 is to have those people be aware of the category before they turn up at the registrar,” he said. “They are still going to get the story from the registrar, but we want them to know all about this new thing before they turn up.”
Donuts says that the new ad campaign will drive traffic to Your.domains.
That domain actually redirects to Domainr — a sparse, but quite smart, name-spinner app developed by the little-known nb.io.

That site, which appears to be monetized with affiliate links, quickly presents relevant domains based on user keywords and sends leads to a selection of registrars.
Such “smart search” is an important part of Donuts’ strategy, but one where the new gTLD industry as a whole is failing to make much of an impact at the moment.
Here in the UK, it’s pretty obvious from Go Daddy’s advertising that the market-leading registrar would sooner take the Verisign shilling and plug .com rather than risk promoting the largest expansion of inventory in its history.
Tindal said in our interview that Donuts’ aim in 2015 is to promote smart search over paid placement.
Asked whether registrars’ economic interests are aligned with new gTLD registries’, he said he’s convinced that for all the domains sold in 2014, new gTLDs have better metrics for registrars than .com. The only problem is volume.

If you look at the metrics of those .com names, under every criteria the registrar is better off selling one of ours.
The customer finds a name more quickly. It’s got more margin for the registrar, because they’re better quality names. They’re going to buy more. The problem, as you’ve just noted is of course just the volume. At the moment, there’s so much volume for them in .com that they tend to stick to that, and so we’re seeing the sort of behaviors, if you like, that are sort of clouding what we would like to see.

Awareness-raising is important, therefore, to get customers actively looking for more relevant domains, rather than being served up .com by default at registrars unwilling to take a risk on new TLDs.
Donuts’ announcement can be found here.
The full interview with Tindal, which also covers topics such as SEO and dot-brands, can be read by DI PRO subscribers here.

Donuts bought .reise

Donuts has been confirmed by a German news site as the new owner of .reise, which was auctioned by its previous owner last week.
It was the first time a live gTLD had been sold at auction.
The deal, which is believed to have cost Donuts at least $400,000, means the company now owns .reise and .reisen.
Both mean “.travel”. According to my GCSE German skillz, last exercised 22 years ago, .reisen is a verb and .reise is a noun, but .reisen is also the plural of the noun .reise.
I believe this means that Donuts is the first company to own both the plural and singular forms of a new gTLD string.
Heise Online reports that former registry Dotreise was forced to sell up due to competition from Donuts.
Donuts’ .reisen has over 4,000 names in its zone file, compared to .reise’s 1,300. It’s a small market so far, but Donuts has the lion’s share.
The article notes that Donuts got a better position in ICANN’s prioritization draw in late 2012, meaning it got to market slightly earlier. Donuts also sells for a much lower price.
I doubt time to market was as much of a factor as price.
But it might be interesting to note that while Donuts’ advantage was just six days in terms of contract-signing, that lead had been extended to six weeks by the time .reise was delegated.
Donuts, which has more experience than any other company when it comes to the transition to delegation process, managed to hit general availability two weeks sooner than .reise, even though Donuts’ sunrise period was twice as long.

.xxx boss says new gTLD registries need to “wake up”

ICM Registry president Stuart Lawley may be just weeks away from launching his second and third gTLD registries, but that doesn’t mean he has a positive outlook on new gTLDs in general.
“I think people need to wake up,” he told DI in a recent interview. “If you do the math on some of these numbers and prospective numbers, it just doesn’t stack up for a profitable business.”
“The new ‘Well Done!’ number seems to be a lot less than it was six months ago or 12 months ago,” he said.
Lawley said he’s among the most “bearish” in the industry when it comes to new gTLD prospects. And that goes for ICM’s own .porn, .sex and .adult, which are due to launch between March and September this year.
While he’s sure they’ll be profitable, and very bullish on the search engine optimization benefits that he says registrants could be able to achieve, he’s cautious about what kind of registration volumes can be expected. He said:

If you add up everybody that has ever bought a .xxx name, including the Sunrise B defensives, we have got a target market of about 250,000 names. People to go back to and say, “Look, you still have a .xxx or you had a .xxx at some stage. Therefore, we think you may be interested in buying .porn, .sex or .adult for exactly the same reasons.”
So, our expectations to sell to a whole new market outside of those quarter of a million names is probably quite limited.

Lawley said that he believes that the relatively poor volume performance of most new gTLDs over the last year will cause many registrars to question whether it’s worth their time and money to offer them.

I can see why registrars can’t be bothered. How many of these am I going to sell? Am I going to sell two hundred of them? Am I going to make five dollars per name? That’s one thousand dollars. It’s not worth it to me to put in ten thousand dollars worth of labor and effort to make one thousand dollars in revenue. So, I think that’s a challenge that many of the small lone player TLDs may face.

Lawley said he’s skeptical about the ability of major portfolio players, such as Donuts, to effectively market their hundreds of gTLDs, many of which are targeted at niche vertical markets.
He said in an ideal world a gTLD would need to spend $20 million to $30 million a year for a few years in order to do a proper PR job on a single TLD — ICM spent about $8 million to $9 million, $5.5 million of which was on US TV spots — and that’s just not economically viable given how many names are being sold.
But he added that he thinks it’s a good thing that some new gTLDs are seeing a steady and fairly linear number of daily additions, saying it might point to better long-term stability.

A lot of the TLDs that seem to be doing okay — .club for argument’s sake and several others in that ilk — seem to be doing their three hundred domains per day ADD, or 32 or 12 or whatever the number is, in a relatively linear fashion six or seven months after launch, which I think is potentially positive if one extrapolates that out.

The full interview, which also addresses SEO, dot-brands, registrar pay-for-placement and smart search, can be read by DI PRO subscribers here.

Generics versus brands as two more gTLDs are sold

Two more new gTLD contention sets have been settled by auction, one a case of a portfolio applicant prevailing over a closed generic applicant, the other a case of a brand owner paying off a portfolio applicant.
Donuts has won the right to .jewelry over $10 billion-a-year jewelry firm Richemont, owner of brands including Cartier.
Richemont applied for several TLDs, some of which were generic terms. It was awarded .watches uncontested, but apparently didn’t want to fork out as much as Donuts for the matching .jewelry.
Google, meanwhile, won the two-horse race for .moto against Rightside. This one’s interesting because it’s basically a case of Rightside forcing Google to pay up to own one of its own brands.
Google owns a trademark on “Moto” due to its acquisition of Motorola Mobility a few years ago, but Rightside applied for it in its generic sense as an abbreviation of “motorcycle” or “motorbike”.
Google had filed a legal rights objection against its rival for .moto, but lost. Now it’s been forced to cough up at auction instead.
Prices, as usual, have not been disclosed.

.reise to start at $400k in no-reserve auction

Applicant Auction has revealed the starting price of the first live new gTLD to be auctioned off.
Dotreise’s .reise will have a minimum starting bid of $400,000 when it hits the block on February 27, the company revealed.
There will be no reserve.
It seems quite possible that the registry is barely covering its costs, assuming the TLD sells. The application fee was $185,000, and no doubt the company has racked up many more expenses over the last three or four years.
The TLD, which is German for “.travel” has been in general availability since August but has fewer than 1,300 registrations, selling at up to $180 a year.
It competes with Donuts’ $25-a-year .reisen, which pretty much means the same thing.

New gTLD registries talk up marketing plans at NamesCon

This week’s NamesCon conference here in Las Vegas, which ended yesterday, offered several new domain registries the chance to talk about their efforts past and future to market new gTLDs.
One theme to emerge was how registries need to work with each other and with their registrar channel partners to raise awareness of alternatives to .com.
Donuts VP Dan Schindler said during a Tuesday keynote that the company plans to ramp up its marketing in 2015.
“There’s still a tremendous amount of work to be done by all the beneficiaries in this process,” he said, saying that Donuts intends to carry out a “broad education and awareness program over course of 2015 and beyond”.
He said the company is pursuing co-marketing efforts with some of its registrar partners at trade shows and such and “possibly including television”.
Schindler also spoke out against paid placement — where registries pay popular registrars for prominent shelf space — “not because we’re cheap”, but because Donuts doesn’t believe it offers registrants the best choice of relevant TLDs.
Here’s a photo of Schindler talking, offered for no other reason than it just cost me £6 to upload from my phone. Note the juxtaposition of a) the extensive Verisign .com/.net sponsorship, b) the Donuts “Not Com Revolution” messaging, and c) my thumb.

Uniregistry CEO Frank Schilling said in his keynote an hour later that he expected “more marketplace collaboration… where it is in our best interest to collaborate” on new gTLD promotion.
But he offered a somewhat dissenting tone with regards what he called the “dog and pony shows” of marketing new gTLDs.
Saying the company is “bootstrapping” some of its strings, he said big marketing spends now would lead to Uniregistry needing to raise its prices in two to three years to cover today’s costs.
Instead, he pointed to efforts such as its decision to release most of .click’s available names for a flat, cheap registration fee at launch, which he said should get names into the hands of users more quickly.
Contrarily, .CLUB Domains CEO Colin Campbell boasted during a brief pre-auction address on Tuesday of his company’s $2.2 million marketing spend for 2014, which he said would increase to $3.5 million in 2015.
Another recurring theme emerging from the conference (and from every other new gTLD event I’ve ever been to) was, as Schindler put it, that “use begets use”. The more high-profile sites a gTLD gets, the more likely it is to gain mindshare and sell more domains.
DotStrategy, the .buzz registry, is to be the beneficiary of such customer marketing.
Howard Lefkowitz, CEO of travel site operator One Degree World (which revealed it paid $100,000 for vegas.club earlier this week) revealed during NamesCon that some of his company’s city-related .buzz domains, such as sydney.buzz, are to feature for two weeks on the US TV game show Wheel Of Fortune as prize sponsors.
Will we see a bump in .buzz sales as a result? The gTLD currently has fewer than 8,500 names in its zone file, so if the TV time bears fruit it should be fairly easy to spot.

Last resort gTLD auction loser wants share of $5m winning bid

An unsuccessful new gTLD applicant wants ICANN to share the proceeds of its “last resort” auction with itself and the other losing applicants.
Aesthetics Practitioners Advisory Network had applied for .salon, but found itself in a contention set with three other applicants and was ultimately beaten at auction by a winning bid of over $5 million from Donuts.
Now, the company has written to ICANN to ask for the money from the ICANN-run auction to be shared out among the losing bidders in much the same way as it is when a contention set goes to private auction.
APAN CEO Tina Viney wrote (pdf):

On the basis that ICANN received such a large amount ($5.175million) for the bidding of this auction it would be fair and equitable for the losing parties to be considered in the distribution of the winning financial bid. We believe that ICANN should review this consideration for losing parties who have had to incur numerous costs, not just the application fee, but also toward the preparation of documents so that we could meet with ICANN’s requirements. These include, but are not limited to registry fees, solicitor’s fees, financial services, not to mention the enormous amount of time that is required of an applicant in preparing for their application.
As a result, we respectfully request ICANN as part of their funds distribution policy to consider the applicants who did not win at the auction, BUT WERE SUCCESSFUL IN PASSING THE EVALUATION PROCESS.

She said that private auctions, which allow losing applicants to recoup some or all of their costs, should be mandatory when a majority of the applicants in a contention set want one.
In .salon’s case, one of the four applicants didn’t agree to a private auction, according to Viney. As Donuts is the enthusiastic pioneer of the private auction concept, that means the holdout was either DaySmart Software or L’Oreal.