Verisign hopeful after decision reached in .web gTLD case

The fate of .web has been decided, over 20 years after it was first applied for, and Verisign thinks it might emerge triumphant.

The company said last night that the ICANN Independent Review Panel handling the case of Afilias v ICANN reached a decision May 20 and delivered it to Verisign the following day.

Verisign says the panel “dismissed Afilias’ claims for relief seeking to invalidate the .web auction and to award the .web TLD to Afilias, concluding that such issues were beyond its jurisdiction.”

Sounds good for Verisign so far. Afilias wanted its $135 million bid for .web, submitted via an intermediary called Nu Dot Co, thrown out due to claims that ICANN violated its own bylaws by not sufficiently vetting the bidder.

But Verisign goes on to say “the panel’s ruling recommends that ICANN’s Board of Directors consider the objections made about the .web auction and then make a decision on the delegation of .web”.

It adds that the panel found that ICANN violated its fairness and transparency commitments:

With respect to ICANN, the ruling finds that certain actions and/or inaction by ICANN in response to Afilias’ objections violated aspects of ICANN’s bylaws related to transparency and fairness. These findings are particular to ICANN’s actions and not conduct by Verisign. Verisign anticipates that ICANN’s Board will review the panel’s ruling and proceed consistent with the panel’s recommendation to consider the objections and make a decision on the delegation of .web.

Based on Verisign’s statements, it seems that ICANN lost, but Afilias didn’t win.

The revelation was buried in a Securities and Exchange Commission filing on an unrelated financial matter last night. Hat tip to @jintlaw for spotting and tweeting about it.

It’s the most eagerly anticipated IRP ruling since 2011’s .xxx case, but in stark contrast to Rod “let’s draft this tweet” Beckstrom-era ICANN, where the decision was posted in a matter of hours, the 2021 org has not yet posted the panel’s findings or made a public statement acknowledging the ruling.

Verisign says it intends to “vigorously pursue” .web, but “can provide no assurance” as to which way the ICANN board of directors will swing.

ICANN chair reins in new gTLD timeline hopes

Don’t get excited about the next round of new gTLDs launching any time soon.

That’s my takeaway from recent correspondence between ICANN’s chair and brand-owners who are apparently champing at the bit to get their teeth into some serious dot-brand action.

Maarten Botterman warned Brand Registry Group chair Cole Quinn that “significant work lies ahead” before the org can start accepting applications once more.

Quinn had urged ICANN to get a move on last month, saying in a letter that there was “significant demand” from trademark owners.

The last three-month application window ended in March 2012, governed by an Applicant Guidebook that said: “The goal is for the next application round to begin within one year of the close of the application submission period for the initial round.”

That plainly never happened, as ICANN proceeded to tie itself in bureaucratic knots and recursive cycles of review and analysis.

Any company that missed the boat or was founded in the meantime has been unable to to even get a sniff of operating its own dot-brand, or indeed any other type of gTLD.

Spelling out some of the steps that need to be accomplished before the next window opens, Botterman wrote:

the 2012 Applicant Guidebook must be updated with more than 100 outputs from the SubPro PDP WG; we will need to apply lessons learned from the previous round, many of which are documented in the 2016 Program Implementation Review, and appropriate resources for implementing and conducting subsequent rounds must be put in place. At present it appears that WG recommendations will benefit from an Operational Design Phase (ODP) to provide the Board with information on the operational implications of implementing the recommendations. As part of such an ODP, the Board may also task ICANN org to provide an assessment of some of the issues of concern that the Board raised in its comments on the Draft Final Report, as well as those topics that did not reach consensus and were thus not adopted by the GNSO Council. The outcome of such an assessment could also add to the work that would be required before launching subsequent rounds.

…

The Board notes your views regarding SAC114. We are aware of discussions that took place during ICANN70 and the Board is in communication with the Security and Stability Committee (SSAC) and its leadership, as per the ‘Understand’ phase of the Board Advice Process. As with all advice items received, the Board will treat SAC114 in accordance with that process.

Breaking that down for your convenience…

The reference to “more than 100 outputs from the SubPro PDP WG” refers to the now six-year old Policy Development Process for New gTLD Subsequent Procedures working group of the GNSO.

SubPro delivered its final report in January and it was adopted by the GNSO Council in February.

ICANN asked the Governmental Advisory Committee for its formal input a few weeks ago, has opened the report for a public comment period that ends June 1, and will accept or reject the report at some point in the future.

SubPro’s more significant recommendations include the creation of a new accreditation mechanism for registry back-end service providers and a gaming-preventing overhaul of the contention resolution process.

The “the 2016 Program Implementation Review” is a reference to a self-assessment of the 2012 round that the ICANN staff carried out six years ago, producing a 215-page report (pdf).

That report contains about 50 recommendations covering areas where staff thought the system of actually processing new gTLD applications could possibly be improved or streamlined in subsequent rounds.

The Operational Design Phase (ODP) Botterman refers to is a brand-new phase of ICANN bureaucracy that is currently untested. It fits between GNSO Council approval of recommendations and ICANN board consideration.

The ODP is basically a way for ICANN staff to insert itself into the process, between community policy-making and community policy-approval, to make sure the GNSO’s tenuous consensus-building exercise has not produced something too crazily complicated, ineffective or expensive to implement.

Staff denies this is a power-grab.

The ODP is currently being deployed to assess proposed changes to Whois privacy policy, and ICANN has already stated multiple times that it will also be used to vet SubPro’s work.

Botterman’s reference to “issues of concern that the Board raised in its comments on the Draft Final Report” seems to mean this September 2020 letter (pdf) to SubPro’s chairs, in which the ICANN board outlined some of its initial concerns with SubPro’s proposed policies.

One fairly important concern was whether ICANN has the power under its bylaws (which have changed since 2012) to enforce Public Interest Commitments (now called Registry Voluntary Commitments) that SubPro thinks could be used to make some sensitive gTLDs more trustworthy.

The reference to SAC144 may turn out to be a big stumbling block too.

SAC114 is the bombshell document (pdf) submitted by the Security and Stability Advisory Committee in February, in which ICANN’s top security community members openly questioned whether allowing more new gTLDs is consistent with ICANN’s commitment to keep the internet secure.

While SAC114 seems to reluctantly acknowledge that the program will likely go ahead regardless, it asks that ICANN do more to address so-called “DNS abuse” before proceeding.

Given that the various factions within the ICANN community can’t even agree on what “DNS abuse” is, how ICANN chooses to “understand” SAC114 will have a serious impact on how much further the runway to the next round gets extended.

In short, Botterman is warning brand owners not to hold their breath anticipating the next application window. I think I even detect some serious skepticism as to whether demand is really as high as Quinn claims.

And quite beyond the stuff Botterman outlines in his letter, there’s presumably going to be at least one round of review and revision on the next Applicant Guidebook, as well as the time needed for ICANN to build or upgrade the systems it needs to process the applications, to hire evaluators and resolution providers, and to make sure it conducts a sufficiently long and broad global marketing program so that potential applicants in the developing world don’t feel left out. And that’s a non-exhaustive list.

Introducing competition into the registry space is of course one of ICANN’s foundational raisons d’être.

After the org was founded in September 1998, it took less than two years before it opened up the first new gTLD application round.

It was another three years before the second round launched.

It then took eight and a half years for the 2012 window to open.

It will be well over a decade from then before anyone next gets the opportunity to apply for a new gTLD. It’s entirely feasible that we’ll see an applicant in the next round headed by somebody who wasn’t even born when the first window opened.

Sav.com buys FIFTY new registrars

Who said competition in the domain drop-catching space was dying?

Domain registrar Sav.com, which has been emerging as a bit of a favorite among domain investors over the last year or so, has just formed 50 new registrars with ICANN accreditation to power its drop-catching service.

ICANN records show the creation of newly accredited registrars named “Sav.com, LLC – 1” through “Sav.com, LLC – 50” in recent days, each with the same contact information.

They’re no doubt there to increase Sav’s pool of registry EPP connections, increasing the company’s chance of successfully securing dropping domains.

The company has proven popular among domainers recently due to its no-win-no-fee back-ordering service and its habit of passing on registry wholesale discounts to its customers, resulting in very low first-year pricing.

Since its launch in late 2019, it’s been using its original accreditation, purchased from NameKing.com that year, to catch names. It’s grown from around 4,000 names under management to over 400,000 in that time.

Fifty new registrars means at least an extra $200,000 a year going into ICANN’s pocket for accreditation fees. ICANN’s budget for its current fiscal year predicted its registrar base decreasing by 380 accreditations.

The emergence of this new dropnet comes just days after ICANN canned former dropcatcher Pheenix, which used to have over 500 registrars in its network.

ICANN to auction off first failed new gTLD

ICANN is planning to auction off .wed, the first new gTLD from the 2012 application round to fail.

The TLD has been running on Nominet’s Emergency Back-End Registry Operator platform since late 2017, when former registry Atgron suffered a critical failure — apparently planned — of its registry services.

After some lawyering, Atgron finally lost its registry contract last October.

Now, ICANN has confirmed that .wed will be the subject of an open Request For Proposals, to find a successor registry operator.

It’s the first time it’s had to roll out its Registry Transition Process mechanism. All previous gTLD terminations were single-registrant dot-brands that were simply quietly removed from the DNS root.

The RFP will basically amount to an auction. Registries will have to pass the usual technical and financial background checks, but ultimately the winner will be selected based on how much they’re willing to pay.

In ICANNese: “The RFP process will identify the highest economic proposal and utilize it as the deciding factor to proceed to evaluation.”

But the money will not stuff ICANN’s overflowing coffers. After it’s covered the costs of running the RFP, any remaining cash will go to Atgron. There’s a non-zero chance the company could make more money by failing than it ever did selling domain names.

It currently has 39 domains under management, the same 39 it’s had since Nominet took over as EBERO, and the successor registry will be expected to grandfather these names. Only 32 of the names appear to be genuine end-user registrations.

Atgron’s business model, which was almost antithetical to the entire business model for domain names, is to blame for its failure.

The company tried to sell domains to marrying couples for $50 a year, on the understanding that the renewal fee after the first two years would be $30,000.

Atgron wanted to actively discourage renewals, in order to free up space for other couples with the same names.

Unsurprisingly, registrars didn’t dig that business model, and only one signed up.

Fortunately, whichever registry takes over from Atgron will be under no obligation to also take over its business model.

ICANN said it expects to publish its RFP “in the coming months” and pick a winner before the end of the year.

Pheenix goes AWOL, gets canned

Drop-catch registrar Pheenix has had its registrar contract terminated by ICANN after apparently going AWOL.

ICANN has been chasing the company for breaches related to Whois and access to registrant data since October 2019, but hasn’t heard a peep out of the outfit for a year.

As I noted when ICANN published its first breach notice last month, ICANN hasn’t been able to connect with Pheenix via email or phone or fax since May 2020.

Since then, it’s also discovered that the company is no longer at the mailing address it has on record.

The registrar has not added any domain names since April 2020. It seems clear it no longer has any interest in doing, or perhaps ability to do, business.

The de-accredited registrar bulk transfer process will now kick in. ICANN will select a registrar to move Pheenix’s 6,000-odd domains to.

Pheenix once specialized in drop-catching, and had over 500 ICANN-accredited registrars to its name. Almost all of those were ditched in November 2017.

Locked-down .music could launch this year

One of the most heavily contested new gTLDs, .music, could launch this year after new registry DotMusic finally signed its Registry Agreement with ICANN.

The contract was signed over two years after DotMusic prevailed in an auction against Google, Amazon, Donuts, Radix, Far Further, Domain Venture Partners and MMX.

It seems the coronavirus pandemic, along with ICANN bureaucracy, was at least partly to blame for the long delay.

I speculated in April 2019 that .music could launch before year’s end, but this time DotMusic CEO Constantinos Roussos tells me a launch in 2021 is indeed a possibility.

The contract the company has signed with ICANN contains some of the most stringent restrictions, designed to protect intellectual property rights, of any I’ve seen.

First off, there’s going to be a Globally Protected Marks List, which reserves from registration the names of well-known music industry companies and organizations, and platinum-selling recording artists.

Second, registrants are going to have to apply for their domains, proving they are a member of one of the registry’s pre-approved “Music Community Member Organizations”, rather than simply enter their credit card and buy them.

DotMusic will verify both the email address and phone number of the registrant before approving applications.

There’s also going to be a unique dispute resolution process, a UDRP for copyright, administered by the National Arbitration Forum, called the .MUSIC Policy & Copyright Infringement Dispute Resolution Process (MPCIDRP).

Basically, any registrant found to be infringing .music’s content policies could be slung out.

The content policies cover intellectual property infringement as you’d expect, but they also appear to cover activities such as content scraping, a rule perhaps designed to capture those sites that aggregate links to infringing content without actually infringing themselves.

The registry is also going to ban second-level domains that have been used to infringe copyright in other TLDs, to prevent the kind of “TLD-hopping” outfits like The Pirate Bay have engaged in in the past.

In short, it’s going to be one of the least rock-n-roll TLDs out there.

Tightly controlled TLDs like this tend to be unpopular with registrars. Despite the incredibly strong string, my gut feeling is that .music is going to be quite a low-volume gTLD. There’s no word yet on pricing, but I’d err towards the higher end of the spectrum.

MMX’s year marked by terrible renewals

MMX saw its revenue dip in 2020, and it reported shocking renewal rates at two of its highest-volume gTLDs, according to the company’s annual financial results, published this morning.

The portfolio registry, which is in the process of selling off essentially its entire operating business to GoDaddy, reported revenue of $16.8 million for the year, down from $17.2 million in 2019.

Profit was up very slighty, to $2.9 million from $2.8 million.

The 2019 results included a few one-off gains, including $588,000 from losing a new gTLD auction, which accounted for most of the 2020 revenue decline.

But the company also reported a 19% decline in domains under management, from 2.46 million to 1.99 million, based on some terrible renewal rates in its .vip and .work gTLDs.

The DUM decline can be attributed mostly to .vip, a popular TLD among Chinese speculators, which started 2020 with around 1.4 million domains but finished the year with just over a million.

.work actually ended the year up on where it started, with around 709,000 names under management.

But MMX today disclosed that the renewal rates for .vip and .work were 36% and 18% respectively. In a business where 70%+ is considered healthy, these are some poor numbers indeed.

However, the company discontinued first-year promotions on these TLDs in 2020, focusing instead on selling domains likely to lead to recurring renewal revenue, which lead to 14% (.vip) and 19% (.work) increases in revenue.

Fewer domains. More money.

MMX said that it is seeing these trends continuing into 2021. Public transaction reports show both these TLDs losing 40-50,0000 names in January. The company expects revenue to fall 4% in the first quarter compared to Q1 2020.

One bright spot appears to be “The Great Relese”, the company’s move last month to mark down hundreds of thousands of premium-priced domains. That’s brought in $170,000 since its April 23 launch.

One basket where the company is placing a lot of its eggs is AdultBlock, the trademark protection service it inherited when it acquired ICM Registry a few years back. It enables customers to block their brands in .xxx, .porn, .adult and .sex without actually having to register the names.

The 10-year period ICM allowed brands to block when it launched in 2011 is coming to an end, so MMX is banking on renewals (which retail at $349 to $799 per year before multi-year discounts) to boost revenue.

“While it is early in the AdultBlock Sunrise B renewal period, we are encouraged by Registrar interest and some early sales of this product,” CEO Tony Farrow said in a statement.

This reliance on AdultBlock for short-term organic growth was one of the reasons MMX is selling up to GoDaddy.

The market-leading registrar and fast-emerging registry consolidator agreed to pay $120 million for MMX’s portfolio, which will leave MMX as a shell company only long enough to distribute the cash to investors before fading away quietly.

That deal has an August deadline to close and is dependent on approvals from business partners, ICANN and the Chinese government.

Two world wars and one dot-brand? Americans beat Germans in long-running gTLD fight, kinda

A chemicals company called Merck has beaten another chemicals company called Merck for the right to run .merck as a dot-brand gTLD.

But it looks like we may be looking at an unprecedented case of a shared dot-brand.

US-based Merck Registry Holdings and Germany-based Merck KGaA appear to have resolved their long-running battle over the string, with the German company recently withdrawing its application, enabling its rival to sign a contract with ICANN and go live on the internet.

But it’s not as straightforward as one applicant emerging victorious over the other. Recent changes to the American company’s winning gTLD application strongly suggest that the two companies intend to share the space.

The application was substantially rewritten in March to make it clear that American Merck plans to allow unaffiliated third parties to register .merck names, and that it may substantially change its eligibility policies not long after launch.

Whereas its original 2012 application was pretty much boilerplate dot-brand territory, the March 2021 version is more nuanced. It now talks about extending eligibility to “other registrants” rather than merely “licensees”, for example.

The application now says it “reserves the right to consider allowing third party registrants outside of current affiliate or subsidiary relationships to own .MERCK domains at a future date.”

But, more importantly, it now also says that it intends to transfer its .merck Registry Agreement to a new shell company, London-based MM Domain Holdco Ltd, shortly after ICANN signs it off.

Company records show that MM Domain Holdco has directors — trademark lawyers — from both the American and German companies.

So we’re looking at some kind of shared dot-brand, it seems. If you don’t count Amazon’s uneasy deal with South American governments, that’s pretty much unprecedented for new gTLDs.

The US applicant is a subsidiary of Merck & Co Inc, a New York-listed company with a market cap of $197 billion. The German company is listed in Frankfurt with a market cap of €17 billion.

The German firm is 350 years old and was the parent of the American company until it was seized, and eventually re-privatized as a separate entity, by the US government during World War I.

Both have trademark rights to the term “Merck” and a decades-old cooperation agreement, but have nevertheless been in legal disputes over the mark in recent years.

It will be interesting to see whether the two Mercks ultimately share and actively use .merck, or like so many other dot-brands merely own a defensive, inactive gTLD.

The resolution of the contention set comes after the better part of a decade and many years of negotiations and legal tussles with ICANN.

ICANN had been bent on forcing the companies to a last-resort auction of which it would be the financial beneficiary. Whether this was because it wanted to force the Mercks to the negotiating table to resolve their differences amicably, or because it saw dollar signs… you decide. Maybe both.

The Mercks have in recent years repeatedly delayed the auction, using different ICANN appeals mechanisms. The contention set had been in a Cooperative Engagement Process since late last year, but had been slated to go to auction yesterday, May 12.

The settlement occurred before that date, however, so ICANN won’t be getting any auction money this time.

ICANN CEO is first to get paid over $1,000,000 a year

ICANN CEO Göran Marby was paid over a million bucks out of the domain-buying public’s pocket in the org’s fiscal 2020, newly released tax documents show.

He’s now, I believe, the best-paid CEO ICANN’s ever had and the first to make more than $1 million per year in the role.

ICANN’s FY20 tax return, which covers the year to June 30, 2020, discloses Marby’s total reportable compensation as $991,557, with another $67,665 in estimated additional compensation, making a total of $1,059,222.

That’s an increase of $193,652 over the $865,570 he received in FY19.

Marby’s been making more than immediate predecessor Fadi Chehadé for a few years, but now he’s also overtaken Rod Beckstrom, who made $961,672 in 2012, his last full year on the job.

Neither Beckstrom nor his predecessor Paul Twomey ever quite made it into seven figures.

This February, ICANN’s board of directors voted to give Marby another 5% pay raise, though a few directors voted against the package.

ICANN’s form 990 tax releases also disclose salaries for another 36 senior staff and board members, showing 19 of them get paid more than $300,000 a year.

Five, including Marby, made over half a million, though a few of those are no longer with the organization.

General counsel John Jeffrey, the second-biggest earner, now has total compensation of $709,784, compared to the $314,628 he was getting 10 years ago when he was in exactly the same job.

PDR wins beauty contest to take over Net4’s stranded customers

PublicDomainRegistry.com, part of the new Newfold Digital registrar group, has been picked to take over thousands of domain names from disgraced and defunct Net 4 India.

ICANN seems to have used the beauty contest method of picking Net4’s successor, saying that PDR was picked in part because it already operates in the region. It’s based in Mumbai.

ICANN expects PDR to start reaching out to its new customers next week with instructions on how to get access to their domains at their new registrar.

It goes without saying that Net4 customers should be wary of possible scams, which sometimes accompany this kind of event.

Customers won’t be charged for the transfers, and they won’t have to deal with transfer authorization codes, ICANN said.

PDR was part of the Endurance group until its recent merger with the Web.com group, which created Newfold.

It’s the second-largest registrar group and undoubtedly a safer set of hands than Net4, which has left thousands of customers struggling to renew, manage and transfer their domains for several months.

The bulk transfer to PDR comes after ICANN terminated Net4’s contract for multiple breaches.