ICANN expects “significant” budget impact from coronavirus

The ongoing coronavirus pandemic is expected to have a “significant” impact on ICANN’s budget, according to an update from the organization.

The organization published its expectations of a $140.4 million budget for the fiscal year that begins this July last December, and opened it up for public comments.

In its summary of those comments (pdf), which had a February 25 deadline and therefore were not focused on the pandemic’s potential impact, ICANN said:

the COVID-19 pandemic is affecting significantly the entire world. ICANN expects that its activities and financial position will be significantly impacted as well. The ICANN org is working with the Board to assess and monitor the potential impact to ICANN’s funding, and planned work such as face-to-face meetings, travel, etc.

Any pandemic-related changes to the budget will be published prior to board approval, ICANN said.

So where is ICANN expecting the impact? It’s not entirely clear. I would expect to see some minor gains from slashing its travel budget in the wake of social distance rules, but it’s less obvious where a “significant” shortfall could occur.

ICANN had operational revenue — the money it gets from billing registries and registrars — of $136.8 million in the fiscal year ending June 30, 2019, its most recently reported year (pdf).

Of that total, roughly $56 million came from the market leaders in both segments, Verisign and GoDaddy, both of which have been given glowing analyst coverage since the outbreak began.

One commentator recently wrote that Verisign is “immune” from coronavirus and GoDaddy’s CFO told analysts just last week that he expects the impact of coronavirus to be “minimal” in the first quarter. That could of course change in future.

Almost half of ICANN’s revenue, some $65.7 million, comes from the top 10 registries and registrars.

So is ICANN expecting to see weakness in the long tail, the few thousand accredited registrars and gTLD registries that account for under $1 million in ICANN contributions per year? Is it expecting reduced voluntary contributions from the ccTLDs and Regional Internet Registries?

Will coronavirus cause huge numbers of small businesses to abandon their domains as they go out of business? Will it inspire large numbers of the recently unemployed and quarantined to start up web-based businesses in an attempt to put food on the table? Will it cause large portfolio owners to downsize to save costs?

All of these outcomes seem possible, but these are unprecedented times, and I couldn’t being to guess how it will play out.

ICANN grants Verisign its price increases, of course

ICANN has given Verisign its ability to increase .com prices by up to 7% a year, despite thousands of complaints from domain owners.

The amendments give Verisign the right to raise prices in each of the last four years of its six-year duration. The current price is $7.85 a year.

Because the contract came into effect in late 2018, the first of those four years begins October 26 this year, but Verisign last week said that it has frozen the prices of all of its TLDs until 2021, due to coronavirus.

Not accounting for discounts, .com is already already worth $1.14 billion in revenue to Verisign every year, based on its end-of-2019 domains under management.

In 2019, Verisign had revenue of $1.23 billion, of which about half was pure, bottom-line, net-income profit.

In defending this shameless money-grab, ICANN played up the purported security benefits of the deal, while offering a critique of the domainers and registrars that had lobbied against it.

Göran Marby, ICANN’s CEO, said in a blog post.

I believe this decision is in the best interest of the continued security, stability, and resiliency of the Internet.

…

Overall, the decision to execute the .COM Registry Agreement amendment and the proposed binding Letter of Intent is of benefit to the Internet community.

The decision was explained in more detail in a eight-page analysis document (pdf) published late last week.

I’ll summarize this paper in three bullet points (my words, not ICANN’s):

• Domainers are hypocrites.
• The deal is good for DNS security.
• Our hands were tied anyway.

First, while ICANN received over 9,000 comments about the proposed amendment, almost all negative, it said that publicity campaigns from domainer group the Internet Commerce Association and domainer registrar Namecheap were behind many of them.

the Internet Commerce Association (ICA) and Namecheap, are active players in the so called “aftermarket” for domain names, where domain name speculators attempt to profit by “buying low and selling high” on domain names, forcing end users to pay higher than retail prices for desirable domain names

It goes on to cite data from NameBio, which compiles lists of secondary market domain sales, to show that the average price of a resold domain is somewhere like $1,600 (median) to $2,400 (mean).

Both Namecheap and ICA supporter GoDaddy, which sells more .coms than any other registrar, have announced steep increases in their .com retail renewal fees in recent years — 20% in the case of GoDaddy — the ICANN document notes.

This apparent hypocrisy appears to be reason ICANN felt quite comfortable in disregarding many of the negative public comments it received.

Second, ICANN reckons other changes to the .com contract will benefit internet security.

Under a side deal (pdf) Verisign’s going to start giving ICANN $4 million a year, starting next January and running for five years, for what Marby calls “ICANN’s initiatives to preserve and enhance the security, stability, and resiliency of the DNS.” These include:

activities related to root server system governance, mitigation of DNS security threats, promotion and/or facilitation of Domain Name System Security Extensions (DNSSEC) deployment, the mitigation of name collisions, and research into the operation of the DNS.

Note that these are without exception all areas in which ICANN already performs functions, usually paid for out of its regular operating budget.

Because it looks like to all intents and purposes like a quid pro quo, to grease the wheels of getting the contract amendments approved, Marby promised that ICANN will commit to “full transparency” as to how its new windfall will be used.

The new contract also has various new provisions that standardize technical standardization and reporting in various ways, that arguably could provide some minor streamlining benefits to internet security and stability.

But ICANN is playing up new language that requires Verisign to require its registrars to forbid their .com registrants from doing stuff like distributing malware and operating botnets. Verisign’s registrar partners will now have to include in their customer agreements:

a provision prohibiting the Registered Name Holder from distributing malware, abusively operating botnets, phishing, pharming, piracy, trademark or copyright infringement, fraudulent or deceptive practices, counterfeiting or otherwise engaging in activity contrary to applicable law and providing (consistent with applicable law and any related procedures) consequences for such activities, including suspension of the registration of the Registered Name;

Don’t expect this to do much to fight abuse.

It’s already a provision that applies to hundreds of other TLDs, including almost all gTLDs, and registrars typically incorporate it into their registration agreements by way of a link to the anti-abuse policy on the relevant registry’s web site.

Neither Verisign nor its registrars have any obligation to actually do anything about abusive domains under the amendments. As long as Verisign does a scan once a month and keeps a record of the total amount of abuse in .com — and this is data ICANN already has — it’s perfectly within the terms of its new contract.

Third and finally, ICANN reckons its hands were pretty much tied when it comes to the price increases. ICANN wrote:

ICANN org is not a competition authority or price regulator and ICANN has neither the remit nor expertise to serve as one. Rather, as enshrined in ICANN’s Bylaws, which were
developed through a bottom up, multistakeholder process, ICANN’s mission is to ensure the security and stability of the Internet’s unique identifier systems. Accordingly, ICANN must defer to relevant competition authorities and/or regulators, and let them determine if any conduct or behavior raises anticompetition concerns and, if so, to address such concerns, whether it be through price regulation or otherwise. As such, ICANN org has long-deferred to the DOC and the United States Department of Justice (DOJ) for the regulation of wholesale pricing for .COM registry services.

It was of course the DoC, under the Obama administration, that froze Verisign’s ability to raise prices and, under the Trump administration, thawed that ability in November 2018.

If you’re pissed off that the carrying cost of your portfolio is about to go up, you can blame Trump, in other words.

Namecheap and others banning coronavirus domains

Anyone wanting to buy a coronavirus-related domain for scamming purposes won’t be able to do it via Namecheap, which has preemptively banned keyword domains on its storefront.

For the last several days, the registrar has rejiggered its web site to prevent customers adding domains containing certain keywords — such as “coronavirus” or “covid” or “vaccine” — to their shopping carts.

The company said today that customers wishing to register such domains for legitimate purposes can continue to do so by calling up Namecheap customer service and having the name registered manually.

CEO Richard Kirkendall said in an email to customers that Namecheap is also “actively working with authorities to both proactively prevent, and take down, any fraudulent or abusive domains or websites related to COVID19”.

A GoDaddy spokesperson told DI this week that it has also taken down domains when alerted to their usage as coronavirus scams.

Meanwhile, .uk registry Nominet said that it has added keywords such as “coronavirus” and “covid” to its Domain Watch initiative, the same semi-automated system it uses to flag and suspend phishing and “rape” domains preemptively at point of registration. Nominet said:

Those that look suspicious — based on our algorithm and then a manual check — are suspended until we see evidence of good intentions from the registrants.

So far, we have suspended over 180 domains while we conduct this extra due diligence. A small proportion responded to our satisfaction and had their domain names reactivated. It’s highly likely that those who did not respond were intending to use their domains to manipulate a public in need of information.

Another domain company taking action is aftermarket site Dan.com, which today said on Twitter that it will remove all coronavirus related domains from its marketplace.

Starting from today, we will be removing all Corona Virus related domains from https://t.co/vpmKVzih2D.

We're seeing astronomical high prices being asked for these domains and find that unethical and unacceptable.

— DAN.COM (@Undeveloped) March 26, 2020

Namecheap is also offering some customers payment flexibility when it comes to some products — largely non-domain products such as hosting — if they can convince customer service reps of their coronavirus-related financial hardship.

“I urge you not to abuse this offer, please allow it to be used by those who need it most, who are otherwise unable to pay,” Kirkendall wrote.

Verisign, the .com registry, yesterday hinted that it will be offering its registrars some similar flexibility, which one assumes could be passed on to registrants.

US officials gunning for coronavirus domains

US state and federal law enforcement are pursuing domain names being used to push bogus products and misinformation related to coronavirus Covid-19.
In separate actions, the US Department of Justice forced Namecheap to take down a scam site that was allegedly using fear of coronivirus to hoodwink visitors out of their cash, while the New York Attorney General has written to registrars to demand they take action against similar domains.
The DoJ filed suit (pdf) against the anonymous “John Doe” registrant of coronavirusmedicalkit.com on Saturday and on Sunday obtained a temporary restraining order obliging Namecheap to remove the DNS from the domain and lock it down, which Namecheap seems to have done.
Namecheap is not named as a defendant, but the complaint notes that the DoJ had requested the domain be taken down on March 19 and no action had been taken by the evening of March 21.
The web site in question allegedly informed visitors that the World Health Organization was giving away free coronavirus vaccines to anyone prepared to pay a $4.95 shipping fee by handing over their credit card details.
This is an identity theft scam and wire fraud, the complaint says.
Meanwhile, NYAG Letitia James has sent letters, signed by IT chief Kim Berger, to several large US registrar groups — including GoDaddy, Dynadot, Name.com, Namecheap, Register.com, and Endurance — to ask them to “stop the registration and use of internet domain names by individuals trying to unlawfully and fraudulently profit off consumers’ fears around the coronavirus disease”.
In the letter to GoDaddy (pdf), Berger asks for a “dialogue” on the following preventative measures:

• The use of automated and human review of domain name registration and traffic patterns to identify fraud;
• Human review of complaints from the public and law enforcement about fraudulent or illegal use of coronavirus domains, including creating special channels for such complaints;
• Revising your terms of service to reserve aggressive enforcement for the illegal use of coronavirus domains; and
• De-registration of the domains cited in the articles identified above that were registered at GoDaddy, and any holds in place on registering new domains related to coronavirus, or similar blockers that prevent rapid registration of coronavirus-related domains.

In other words: try to stop these domains being registered, and take them down if they are.
No specific malicious sites are listed in the letter. Rather, Berger cites a study by Check Point Software that estimates that something like 3% of the more than 4,000 coronavirus-related domains registered between January and March 5 are “malicious” in nature.

GoDaddy cancels in-person investor day over coronavirus fears

GoDaddy has followed in the footsteps of many other companies and organizations, cancelling a large in-person meeting to avoid exacerbating the coronavirus pandemic.
The market-leading registrar, listed on the New York Stock Exchange, announced this week that will host its investor day, scheduled for April 2, as a webcast only, out of “concern for the health and well-being of participants and attendees”.
There had been planned a face-to-face component in New York, but that will no longer go ahead.
New York’s mayor this week slapped a ban on public gatherings of over 500 people, but GoDaddy’s announcement predates that edict.
The news came as ICANN conducted its first-ever online-only public policy meeting.

Guy gets 14 years for trying to steal a domain with a gun

An American man has received a sentence of 14 years in prison after being found guilty of a plot to steal a domain name at gunpoint.
Rossi Lorathio Adams II received the sentence on Monday, according to the US Attorney’s Office in Iowa, having been found guilty of “one count of conspiracy to interfere with commerce by force, threats, and violence”.
Adams, who went by the screen name Polo, attempted to obtain the domain doitforstate.com from its registrant to support a popular social media channel he managed.
When the registrant refused multiple times, Adams drove his cousin — armed with a gun and written instructions how to push the domain into Adams’ GoDaddy account — to the registrant’s house.
A fight broke out, described vividly by the US Attorney, during which both the registrant and the gunman got shot.
Both survived, and the gunman got 20 years behind bars for his role in the attack.
If there’s a moral about domaining here, I invite the reader to discover it on their own.

GoDaddy girls often make more money than the men

Women in some roles at GoDaddy are making more money than their male counterparts, according to data released by the registrar today.
In technical positions in the US, female employees are making on average $1.03 for every $1 men make, GoDaddy said. Women in leadership positions make two cents more than men.
But women in non-techie, non-leadership jobs make a penny less than males, the company said.
“The 2019 global salary data shows that GoDaddy is paying men and women at parity across the company, when comparing men and women in like roles,” GoDaddy said.
The new data also shows that 29% of GoDaddy employees globally are female, which is the same as last year.
But the proportion of women in technical jobs decreased by two points to 17%.
Meanwhile, 36% of non-technical roles are staffed by women, up one point from 2018.
In the US, the female contingent was a little higher — 30% overall, 19% of techies and 37% of non-techies.
The male-female mix at GoDaddy appears to be in the same ballpark as what we generally see with attendance statistics coming out of ICANN meetings — roughly 70/30.
GoDaddy started publishing this data five years ago as part of a plan to foster diversity, reduce unconscious bias, and generally get away from its roguish foundational image as a company that flogged millions of domains with “GoDaddy Girls” — usually busty spokesmodels in skimpy clothing.

US official Heineman joins GoDaddy

Former US government official Ashley Heineman has joined the staff of GoDaddy.
Heineman was until quite recently a policy specialist at the US National Telecommunications and Information Administration and the US representative on ICANN’s Governmental Advisory Committee.
But GoDaddy confirmed to DI today that she’s now left NTIA and joined the market-leading registrar.
I don’t know what her job title is yet. One assumes it’s related to policy or legal issues.
Heineman spent 15 years at NTIA and has been the ICANN GAC rep for the US for the last few years.
She’s had a respectably hands-on role, for a GACer, including being a member of the ongoing “EPDP” cross-community working group conducting a post-GDPR review of Whois policy.
Judging by my embarrassing error at the weekend, the US is currently being represented on the GAC by the NTIA’s Vernita Harris.
I’ve also heard rumors from ICANN 66 that another former NTIA official has also recently moved into the domain name industry. I’ll blog it up just as soon as I get confirmation.

Berkens says new gTLDs mostly suck but geos suck hardest

Ever since he cashed out his massive portfolio of domain names in a bulk sale to GoDaddy three and a half years ago, domain investor Mike Berkens has been dabbling in new gTLDs, and so far he’s not impressed.
In a recent conference speech and blog post, he revealed some of his experiences parking and trying to sell his new g names, and he has come down particularly harshly on geographic TLDs.
City TLDs such as .london, .nyc and .miami are “death” to a domain investor, he said at a domainer meetup in Asheville, North Carolina last week.
His portfolio of 29 .miami names has had just 532 type-in visits in the last year, and have not received a single offer, he wrote on TheDomains.com.
On the flip-side, Berkens told his audience that domain combinations that naturally fit together, such as online.dating, atlantic.city, moving.company and bank.loans are profitable from type-in traffic and can get thousands of visitors a year.
They can be profitable even when the registry charges a premium renewal fee, he said. The domain obama.care makes him $500 a year parked and has a $150 annual renewal, he said.
But when asked directly whether he would recommend new gTLDs to domain investors, Berkens said he would not, citing among other things the added risk of unregulated price increases in the new gTLD space.
Berkens made eight figures selling his portfolio of 70,000 names to GoDaddy in 2015, but the deal apparently did not include the new gTLD names he’d picked up along the way.
You can watch his 24-minute talk here.

Record-breaking $30 million domain sale was financed by cryptocurrency

Records were broken yesterday when voice.com became the most-expensive domain name ever sold.
Handed over for a cool $30 million cash, it more than doubled the previous record for a domain-only transaction, 2010’s $13 million sale of sex.com.
The seller was MicroStrategy, an analytics software provider that just happens to have a stash of high-end, one-word .com domains among its assets.
The new owner is Block.one, a blockchain software developer that has raised a staggering amount of money despite not yet having any products.
The voice.com domain will be used for Voice, its first service, a social media platform based on the EOSIO blockchain platform that Block.one develops.
How Voice specifically differs from existing social media offerings is currently a little vague. It’s currently just a press release and a beta-signup form.
But the company says it will be more transparent than competitors such as Facebook or Instagram, with revenue generated feeding its content-creating users rather than the platform owner.
Not even the blogs covering crypto on a daily basis seem to understand the Voice business model yet.
A crucial step in the early stages appears to be enticing so-called “influencers” — social media personalities with large followings — over from the current dominant platforms with the promise of huge financial rewards (presumably paid in cryptocurrency) if they bring their fans with them.
Key differences include the fact that users will need a government-issued ID to sign up (mitigating the problem of anonymous trolling and bots), and that every post will be recorded for eternity in the blockchain.
Is this what social media users are crying out for? More friction and less privacy? I don’t get it, personally. But then I didn’t get Twitter at first either.
The product was announced at a flashy news event in Washington, DV a few weeks ago. An executive discusses the value proposition briefly at around the 20-minute mark in this video recording.
Block.one itself is an equally odd fish.
It has amassed oodles of cash despite having no obvious business model. It may be the only company with a billion-dollar-plus valuation that doesn’t even have its own Wikipedia page.
It reportedly raised over $4 billion through an initial coin offering — where speculators buy a basically unused cryptocurrency in the hope that it will be adopted and its value will rise — over the space of a year.
The ICO’s success appears to be partly based on the personal branding of its founders, backers and executives, who have made names for themselves in the burgeoning crypto space.
Since the ICO ended about a year ago, the company has been pumping tens of millions of dollars into third-party projects that use its EOS blockchain, in an attempt to spur adoption.
It also reportedly expects to spend $150 million developing Voice.
So, $30 million is pretty much pocket change to these guys, who’ve rewarded MicroStrategy’s speculation in domain names with the fruits of their own investors’ speculation in another type of essentially worthless digital record.
In many ways, I guess cryptocurrency really is turning out to be to this decade what domain investment was to the last.
Ten years from now, perhaps voice.com will be sold for a trillion dollars, paid for in telepathic tulips or something.