ICANN has 100 new gTLD applicants

One hundred companies have registered to apply for generic top-level domains, according to ICANN senior vice president Kurt Pritz.
ICANN has decided not to provide a running commentary about how many applications have been received, but it did say that 25 companies registered in the first week the program was open.
“That number is now up to 100,” Pritz said today at the The Top Level conference in London.
He was referring to companies paying their $5,000 to sign up for ICANN’s TLD Application System, which is likely to be much smaller than the actual number of gTLD applications. Each TAS account can store up to 50 applications, Pritz said.
There are only 45 days left on the clock to register for a TAS account. After March 29, you’re in for a wait of at least three years (my estimate) before the opportunity comes around again.
Pritz’s revelation was one of the more interesting things to emerge during today’s half-day gathering at the offices of the PR firm Burson-Marsteller, which attracted about 40 attendees.
The other big surprise was that Scandinavian Airlines System Group, the dot-brand applicant that was due to give a presentation on its plans for .sas, was a no-show.
I gather that somebody more senior at SAS found out about the conference and decided that revealing all was not such a great business strategy after all.
Most dot-brand applicants are playing their hands close to their chest, even if they’re not heading into a contested gTLD scenario (which SAS may well be if the software firm SAS Institute also applies for .sas).
I also found it notable that there’s still substantial confusion about the program among some potential dot-brand applicants, several of which did show up as general attendees.
I talked to one poor soul who had read the latest revision of the 349-page Applicant Guidebook back-to-back after it was published January 11, trying to figure out what had changed.
He was apparently unaware that ICANN had simultaneously published a summary of the changes, which were very minimal anyway, in a separate document.
These are the types of applicant – people unfamiliar not only with ICANN’s processes but also even with its web site – that are being asked to hack the Guidebook to make the rules compatible with a dot-brand business model, remember.
One potential applicant used a Q&A session during the conference to bemoan the fact that ICANN seems intent to continue to move the goal-posts, even as it solicits applications (and fees).
Pritz and Olof Nordling, manager of ICANN’s Brussels office, reiterated briefly during their presentation today that the current public comment period on “defensive” applications could lead to changes to the program’s trademark protection mechanisms.
But this comment period ends March 20, just nine days before the TAS registration deadline. That’s simply not enough time for ICANN to do anything concrete to deter defensive applications.
If any big changes are coming down the pipe, ICANN is going to need to extend the application window. Material changes made after the applications are already in are going to cause a world of hurt.

ARI signs up 21 new gTLD clients

ARI Registry Services says it signed up 21 new generic top-level domain clients in the first week after ICANN opened the program earlier this month.
The majority were dot-brand applicants, ARI said in a press release today. It has found that dot-brands represent about 60% of all the companies expressing interest in a new gTLD.
They all signed contracts between January 12, when ICANN starting taking applications, and January 19, the registry services provider said.
A spokesperson said that ARI expects to name some of its clients “in a matter of weeks”, but it’s not clear whether this will happen before March 29 – the deadline for making your first down-payment with ICANN – when it would be of most marketing use.
In the absence of this specific positive reinforcement of its message, the company today tried some FUD instead.
CEO Adrian Kinderis is quoted:

We have clients that are still undecided about whether they should apply. They have been put off by the negativity that has been surrounding the program. There have been delays and speculation. There is also a misguided perception amongst some that they can wait until the next round to secure their brand or generic category name. My message to those clients is that there is no certainty about when there will be another round. Potential applicants need to understand that if they take a ‘wait and see’ approach, they may miss out all together.

I’m not keen on this kind of fear-based marketing, but Kinderis has a point: the timing of the second-round is currently uncertain. Based on current evidence, I think an optimistic view is 2015.
I cover the subject in some depth on DomainIncite PRO (which you simply must subscribe to, otherwise your house will burn down with all of your cats inside… oh, look, I’m doing it now.)

Stop the nonsense about TLD-squatting

Barely a day has passed recently without a news report about how companies are being forced to apply for new top-level domains to prevent cybersquatters moving in on their brands.
It’s complete nonsense, of course, brought about by a lack of basic research coupled with years of bad feeling towards the domain name industry and an ICANN new gTLDs outreach campaign that spent six months failing to effectively tackle widely held misconceptions.
Cybersquatters are not going to apply for new gTLDs. If they do, they won’t be approved.
Unfortunately, this does not mean that we’re not going to see lots of “defensive” new gTLD applications.
Due to the way the program is structured, it may actually make strategic sense for some companies to apply for a dot-brand gTLD even if they are otherwise pretty clueless about domain names.
It worries me to think that a few years from now the TLD space – which is currently running at almost 100% utilization – will start to resemble the second level in pretty much every major TLD, with lots of essentially unused, redundant defensive domain names.
I don’t think this will be good for the domain name industry or ICANN.
That said, what looks good for ICANN and the domain name industry is of little concern to brand owners – they just want to make sure their brands are not damaged by the program.
I’ve written a 4,500-word paper analyzing the actual need for companies to file “defensive” gTLD applications, which is now available to DomainIncite PRO subscribers.

With 86 days to go, the cost of new gTLDs is still unknown

If you’re planning to apply for a new generic top-level domain or two, wouldn’t it be nice to know how much it’s going to cost you?
It’s less than three months before ICANN opens the floodgates to new gTLD applicants, but you’re probably not going to find out how big your bank account needs to be until the last minute.
With 86 days on the clock until the application window opens, and 177 until it closes, there are still at least two huge pricing policies that have yet to be finalized by ICANN.
The first relates to reduced application fees and/or financial support handouts for worthy applicants from developing nations. I’ll get to that in a separate piece before Dakar.
The second is the controversial Continued Operations Instrument, a cash reserve designed to ensure that new gTLDs continue to operate even if the registry manager goes out of business.
In the current Applicant Guidebook, prospective registries are told to prove that they have enough money – either with a letter of credit or in a cash escrow – to keep their gTLD alive for three years.
To be clear, the COI money doesn’t go into ICANN’s coffers; applicants just need to show that the cash exists, somewhere.
The funds would be used to pay the Emergency Back-End Registry Operator (whichever company that turns out to be) in the event of a catastrophic gTLD business failure.
With hundreds of new gTLDs predicted, many of them likely to be laughably naive, we’re likely to see plenty of such failures.
With that in mind, ICANN wants to make sure that registrants and end users are not impacted by too much downtime if they put their faith in incompetent or unlucky registries.
It is estimated that the COI will amount to a six-figure sum for almost all commercial registries. For generics with a higher projected registration volume it could easily run into the millions.
It’s controversial for a number of reasons.
First, it raises the financial bar to applying considerably.
Forget the $185,000 application fee. Under the COI provision, applicants need to be flush enough to be able to leave millions of dollars dormant in escrow for at least five years.
It’s been sensibly argued that this money would be better devoted to making sure the registry doesn’t fail in the first place.
Second, even though the Guidebook gives .brand applicants the ability to shut down their gTLDs without the risk of another provider taking them over, it also expects them to create a COI.
This appears to be an unnecessary waste of cash. If a single-registrant .brand gTLD fails, the registry itself is the only registrant affected and the COI is essentially redundant.
Third, some applicants are thinking about low-balling their business model projections in order to keep their COI to a manageable amount.
This, as the better new gTLD consultants will tell you, could be a bad idea. When applications are reviewed the evaluators will be looking for discrepancies like this.
If you’re making one set of financial projections to investors and another to ICANN, you risk losing points on and possibly failing the evaluation.
Anyway, with all this in mind (and with apologies for burying the lead) ICANN has just said that it’s thinking about completely revamping the COI policy before applications are accepted.
Seriously.
ICANN’s Registry Stakeholder Group community has made a proposal – which appears to be utterly sensible on the face of it – that would reduce costs by pooling the risk among successful applicants.
The RySG said it that the COI “should not be so burdensome as to actually become a roadblock to the success of new registries by causing capital to be tied up unduly.”
Rather than putting up enough cash to cover its own failure, each successful applicant would pay $50,000 up-front into a Continued Operations Fund that would cover all potential registry failures.
The COF would be administered by ICANN (or possibly a third party), and would be capped at $20 million. In a round of 400 new gTLDs, that target would be reached immediately.
If the COF fell short of $20 million, each registry would have to pay $0.05 per domain name per year into the fund until the cap was reached.
It’s a shared-risk insurance model, essentially.
While ICANN’s COI policy is ultra-cautious, implicitly assuming that ALL new gTLDs could simultaneously fail, the COF proposal assumes that only a small subset will.
Reverse-engineering the RySG’s numbers, the COF appears to cover the risk of failure for registries representing some 10 million domain-years.
ICANN has opened up the proposal to public comments until December 2.
This means we’re unlikely to see any concrete action to approve or reject the COF alternative until, at the earliest, about a month before the first round application window opens.
ICANN likes cutting things fine, doesn’t it?