First .xxx domain name prices revealed

New .xxx domain name registrations could retail for as much as $158 a year, a markup of almost $100 over the wholesale registry fee, it has emerged.
Key-Systems, one of the first registrars approved to sell .xxx names, plans to charge €92.44 ($133), or €110.00 ($158) including VAT, per name per year during general availability.
The prices were revealed on the German company’s consumer-facing web site, DomainDiscount24.com.
ICM Registry’s wholesale fee is $60 per year. Excluding VAT, Key-Systems stands to make a whopping $73 margin on .xxx domains.
For comparison, the registrar’s margin on .com domains is less than $10.
Prices for trademark holders that wish to register .xxx names defensively will be even higher.
In the first sunrise period, reserved for porn companies with trademarks, the company will charge a non-refundable application fee of €134.95 ($194), plus €130.90 ($188) per name per year.
In a second sunrise, which “grandfathers” registrants of porn domains in other TLDs, domains will cost €95.20 ($137) in non-refundable application fees, with the same again for the first year’s registration.
If you’re a non-porn trademark holder, and you want to block your brand from the .xxx namespace – say you’re Disney and you want disney.xxx permanently reserved – it will cost €450 ($648).
That’s a “one-time fee”, but it’s not yet clear how many years it covers for 10 years, which works out to €45 per year.
Landrush fees, for non-trademark holders, will be €80 ($115) per application, non-refundable, plus €95 ($137) per domain per year.
Key-Systems is the first registrar to disclose its pricing plans. It’s possible other registrars will offer lower (or, I suppose, higher) prices.

ICANN tries to dodge .jobs legal fees

“Please don’t sue us!”
That’s the message some are taking away from the latest round of published correspondence between lawyers representing ICANN and .jobs registry Employ Media.
Employ Media last week said it will take ICANN to the International Chamber of Commerce, after they failed to resolve their dispute over the company’s controversial Universe.jobs venture.
Now ICANN has asked the registry’s executives to return to the negotiating table, apparently to reduce the risk of having to spend millions of dollars on lawyering.
In a letter (pdf) to Employ Media’s attorneys, ICANN outside counsel Eric Enson of Jones Day said that ICANN wishes to avoid “costly legal fees associated with arbitration or litigation”:

I again request a meeting among the business persons involved in this matter to discuss potential resolutions before spending more of ICANN’s funding on unnecessary litigation.

The latest round of published correspondence, like the last one, and the one before that, seems to contain a fair bit of legal posturing, with both sides accusing the other of conducting negotiations in “bad faith” for various reasons.
Filing the arbitration notice with the ICC might turn out to be a smart move by Employ Media, knowing how risk-averse and cash-conscious ICANN is.
ICANN is still smarting from the last time it headed to arbitration, for its Independent Review Panel over ICM Registry’s .xxx top-level domain.
ICANN lost that case in February 2010, and had to cover the panel’s almost $500,000 in costs, as well as its own legal fees. The overall price tag is believed to have comfortably made it into seven figures.
But that may well turn out to be small beer compared to the price of losing arbitration against the .jobs registry.
Unlike the IRP, in which both parties pay their own lawyers no matter who wins, Employ Media’s contract states that the losing party in arbitration must pay the legal fees of the winner.
To go up against .jobs at the ICC and lose could hit ICANN’s coffers harder than the .xxx dispute, in other words. That’s not to say it would lose, but with matters as complex as this there is that risk.
It’s worth noting that Employ Media’s lead attorney has form when it comes to reaching into ICANN’s pockets – Crowell & Moring’s Arif Ali also represented ICM Registry in the .xxx IRP case.

Europe asked the US to delay .xxx

European Commissioner for the Digital Agenda Neelie Kroes asked the US Department of Commerce to delay the introduction of the .xxx top-level domain after ICANN approved it, I can reveal.
In an April 6 letter to Secretary of Commerce Gary Locke, a copy of which I have obtained, Kroes expressed dismay with ICANN’s decision, and wrote (my emphasis):

I would therefore consider it necessary for the [ICANN Governmental Advisory Committee] to reflect, at a senior level, on the broader implications of the Board’s decision on .XXX, and to do so before the TLD is introduced into the global Internet. I assume that the United States government would appreciate the opportunity to hear the views of other countries on this important issue, and I very much hope therefore that I can count on your support for such an initiative.

The letter was sent after ICANN had approved .xxx, but nine days before the National Telecommunications and Information Administration instructed VeriSign to add it to the DNS root.
It seems to be an implicit request for the NTIA to delay .xxx’s go-live date to give the Governmental Advisory Committee of ICANN time to regroup and consider how best to continue to oppose the domain.
As I reported this morning, assistant secretary Lawrence Strickling replied to Kroes later in April, agreeing with her in principle but saying that to intervene could do more harm than good.
Kroes objected on the grounds that GAC had “no active support” for .xxx, that national-level blocking of the TLD could threaten internet stability, and that parents will be given a “false sense of security” if they choose to filter .xxx domain names.
She also didn’t buy ICANN’s rationale for its decision, saying it contained “mostly procedural arguments that do not adequately reflect the significant political and cultural sensitivities” created by .xxx.
She additionally noted that:

Most importantly, perhaps, are the wider consequences that we have all have to deal with as a result of this decision. We are both aware of the broader geo-political Internet governance debate that continues regarding the legitimacy of the ICANN model. I am concerned therefore that ICANN’s decision to reject substantive GAC advice – of which there is also an apparent risk in relation to the new generic TLD process – may be detrimental to the multi-stakeholder, private sector-led model which many of us in the international community have been stoutly defending for years.

This seems to be a reference to the longstanding debate over whether the International Telecommunications Union, or another intergovernmental body, may be better suited to overseeing domain name system policy.
In his reply to Kroes, Strickling offered to meet her by teleconference or in person in Brussels, in order to discuss how to proceed.
The fallout from .xxx’s approval may not be over by a long shot.
UPDATE: Read the Kroes letter: Page One, Page Two.

Did Europe ask America to block .xxx?

The European Commission may have asked the US Department of Commerce to block or delay the .xxx top-level domain, it has emerged.
I’ve heard rumors for a few weeks that Neelie Kroes, vice president of the Commission responsible for the digital economy, wrote to Commerce in April, asking it to delay the go-live date for .xxx.
Today, a reply from Lawrence Strickling, assistant secretary at Commerce, has emerged, published on the blog of Polish technology consultant Andrzej Bartosiewicz.
It appears to confirm the rumors. Strickling wrote:

While the Obama Administration does not support ICANN’s decision, we respect the multi-stakeholder Internet governance process and do not think it is in the long-term best interest of the United States or the global Internet community for us unilaterally to reverse the decision.

It’s certainly possible to infer from this that Kroes had asked the US to exercise its unique powers over the domain name system’s root database to block or delay .xxx.
The Kroes letter was evidently sent April 6, about 10 days before the National Telecommunications and Information Administration, part of Commerce, instructed VeriSign to add .xxx to the root.
In his April 20 response, Strickling shared Kroes’ “disappointment” with ICANN’s decision, saying the organization “ignored the clear advice of governments worldwide, including the United States”.
He said the decision “goes against the global public interest and will spur more efforts to block the Internet” and agreed that ICANN “needs to make to engage governments more effectively”.
To that end, Strickly offered to fly to Brussels to meet with Kroes to conduct a “senior level exchange” on how to better work with ICANN.
While it’s probably too late for any of this to affect .xxx, operated by ICM Registry, it is a clear sign that governments are taking a renewed interest in ICANN’s work.
ICANN’s Governmental Advisory Committee issued weak advice on .xxx, noting merely that no governments outright supported it, and that “several” were opposed. The was no consensus.
Because the GAC did not explicitly say “do not approve .xxx”, ICANN was able to rationalize its decision by saying it was not explicitly overruling governmental advice.
At least three countries — Saudi Arabia, India and Kenya — have already indicated that they may block .xxx domains within their borders.
UPDATE: Kroes did in fact ask Commerce to delay .xxx.

ICM adds another .xxx registrar

DomainMonster has become the latest registrar, the first in the UK, to announce support for ICM Registry’s upcoming .xxx porn-only top-level domain.
The company said it has been accredited by ICM, and that it will start taking pre-orders for the domains on its Domainbox reseller platform soon.
Others registrars to have announced that they plan to carry .xxx domains over the last few months include Network Solutions, Blacknight, EnCirca, RRPProxy.net and United Domains.
I’m not sure if any have been officially accredited yet — no .xxx registrars show up on ICANN’s offical list.
DomainMonster CEO Matt Mansell said: “We anticipate the .XXX launch to be the biggest we’ve seen in recent years. The demand our support teams are seeing already far outstrips anything that’s gone before.”
ICM has previously projected somewhere between 300,000 and 500,000 registrations after launch. It took around 600,000 pre-reservations in the few years before it was approved by ICANN.
Getting .xxx accrediation is said to be quite a lengthy process. Registrars have to answer 14 detailed questions, including agreeing to abide by ICM’s policies and detailing how they plan to promote the domains.

.xxx domains go live

Click here: icmregistry.xxx, then come back.
That’s right. After ICM Registry’s almost 11 years of campaigning, and almost $20 million in legal and other expenses, .xxx domain names are actually live in the domain name system.
ICANN, IANA, the US government and VeriSign, in that order, have all agreed to delegate the internet’s newest gTLD, and the first few .xxx domains went live within the last couple hours.
The domains sex.xxx and porn.xxx are now also resolving to placeholder sites. They’re currently “safe for work”, but possibly not for much longer.
IANA has a .xxx page, complete with a lengthy delegation report (in a snazzy new pdf format) that broadly explains the convoluted process ICANN used to ultimately, albeit reluctantly, approve the TLD.

Why ICANN’s CEO did not vote on .xxx

President and CEO Rod Beckstrom has explained his decision to abstain from voting on ICM Registry’s .xxx top-level domain when it came before the ICANN board last month.
As expected, Beckstrom provided substantially the same explanation for his abstention as he did at the Brussels meeting last June – not on the merits of .xxx, but because he had legal concerns.
Specifically, he abstained because he objected to one of the majority findings of an Independent Review Panel, which forced .xxx back to the table last year after ICANN had tried to reject it.
Beckstrom wrote, in a recently published statement (pdf):

while I accept the contribution to ICANN’s accountability and transparency provided by the existence and the use of the independent panel review process, I nonetheless remain concerned about the determination by two of the three panelists that the ICANN board should not use business judgment in the conduct of its affairs.

This refers to the “business judgment rule”, a piece of California law under which courts give deference to the judgment of company directors, unless their decisions were made in bad faith.
If an IRP panel – the last port of appeal for companies upset with ICANN’s decisions – were required to use this rule, it would substantially raise the bar for a successful complaint.
But the panel in the case of ICM Registry versus ICANN (the only such panel to date) decided, by a 2-1 vote, that ICANN’s actions should be “appraised not deferentially but objectively.”
This allowed ICM to win its case by merely showing ICANN had acted outside its bylaws, and not necessarily in bad faith.
The dissenting IRP panelist, Dickran Tevrizian, wrote: “The rejection of the business judgment rule will open the floodgates to increased collateral attacks on the decisions of the ICANN Board of Directors”.
However, the IRP did not specifically rule that ICANN “should not use business judgment” as Beckstrom’s statement suggests, just that the IRP was not obliged to defer to it.
Beckstrom’s statement also gives a shout-out to the Governmental Advisory Committee:

In addition, I note the concerns of the GAC, which while not expressed as a clear decision, was nonetheless directional.

As I previously blogged, ICANN approved the .xxx contract over the objections of some members of the GAC, using the fact that the GAC’s official advice was vague enough to be worked around without explicitly rejecting it.
Beckstrom, incidentally, did not even sign the .xxx contract with ICM, which I believe is a first for an ICANN registry contract. It was instead signed by general counsel John Jeffrey.
(via InternetNews.me)

ICM faces porn anger over .xxx

ICM Registry executives took the brunt of angry opposition to the .xxx top-level domain from pornographers at an adult industry trade show this week.
A two-hour session on .xxx, which took place at The Phoenix Forum in Arizona the day after ICM and ICANN signed their registry contract, saw the new TLD attacked on multiple fronts.
Defending, ICM’s Vaughn Liley tried to explain why .xxx isn’t as bad as many in the US adult industry believe but, on the back foot from a misjudged opening gambit (asking the openly hostile audience of pornographers if any of them supported child porn), often found himself adding to the confusion.
Now that .xxx has been approved and the contract signed, the discussion focused largely on how ICM and its policy body, the International Foundation For Online Responsibility, will actually function.
Pornographers wanted to know, for example, why anybody would want to invest in marketing a .xxx domain if IFFOR could one day make a policy that excluded their business from the TLD.
I get the impression that the pro-ICM speakers, which included Greg Dumas of GEC Media, could have benefited from having copies of the company’s policy documents in front of them.
At one point, Liley flatly denied that ICM plans to “spider” .xxx domains to enforce compliance with IFFOR policies, such as the prohibition on meta tags that suggest the presence of child pornography.
Minutes later, a .xxx opponent read aloud from the IFFOR policy (pdf) that says all registrants must consent to “automated monitoring”.
A semantic misunderstanding? Possibly. But it left Liley facing calls of “liar” from the audience.
The question of whether this monitoring will extend to, say, .com domains, if the registrant chooses to redirect their .xxx names, was left unanswered.
IFFOR policies will be created by a Policy Council of nine members, five of which will be drawn from the adult entertainment industry.
Earlier in the discussion, Liley denied that IFFOR’s board of directors or ICM will have “veto” power over these Policy Council policies, calling it “factually incorrect”.
Again, an audience member reading aloud from the IFFOR Policy Development Process document (pdf) showed that the IFFOR board has the ability to block a policy under certain circumstances.
Not only that, but ICM gets to object to policies that emerge from IFFOR, under certain circumstances. If this happens, ICM will work with IFFOR “to modify the Proposed Policy to address any concerns identified by ICM”.
There may be enough limitations on ICM’s powers to mean it’s not technically a “veto”, but it’s close.
It makes perfect sense for ICM to have this safeguard, of course. If IFFOR were to be captured by the haters, they could easily make mischief that could ruin its business.
Many of the other questions raised at the forum related to issues that will effect all new TLD launches and concern all new TLD opponents, such as brand protection.
My conclusion after watching the two-hour session: ICM needs to work on its messaging.
The company actually has several ideas for how it could help the porn industry make money, but you wouldn’t know it from any of its public statements to date.
If you have a free couple of hours, the video can be watched here.

ICANN doubles .xxx fees

ICANN has doubled the amount it will charge ICM Registry to register .xxx domain names, adding potentially hundreds of thousands of dollars to its top line.
The two parties yesterday signed a registry agreement (pdf), but it has been revised in quite significant ways since the last published version.
In short: ICANN has substantially increased its revenue whilst substantially reducing its risk.
Notably, ICANN will now charge the registry $2 per .xxx domain per year, compared to the $1 anticipated by the version of the contract published in August 2010 (pdf).
With ICM hoping for 300,000 to 500,000 registrations in its first year, that’s a nice chunk of change. Porn domains could be a $1 million business for ICANN quite soon.
For comparison, successful applicants under the new generic top-level domains program will only have to pay $0.25 per domain per year, and that fee only kicks in after 50,000 domains.
If there’s a .sex or a .porn, they’ll pay an ICANN fee an eighth of ICM’s.
Text from the new gTLD Applicant Guidebook that allows ICANN to raise fees in line with US inflation has also been added to ICM’s contract.
ICANN said in a blog post that the increases “account for anticipated risks and compliance activities”. It appears to be expecting trouble.
A number of other changes address the legal risks and compliance problems ICANN seems to be anticipating.
The contract now allows ICANN to more easily impose monetary fines on ICM for non-compliance, for example.
A new mediation procedure has been added to resolve disputes, to come between face-to-face talks and formal arbitration.
The contract would also would oblige ICM to pay for ICANN’s legal costs in the event of a third-party dispute, such as an Independent Review Panel hearing, being filed.
While the original contract required ICM to indemnify ICANN against third-party lawsuits, the revised version also includes a broad waiver (pdf) “to resolve all outstanding dispute/possible litigation matters” between ICM and ICANN.
I am not a lawyer, but it appears that ICM has signed away a fairly comprehensive chunks of its rights, and has agreed to shoulder most of the risk, in order to get its hands on the potentially lucrative deal.

Porn affiliate network to shun .xxx

The Free Speech Coalition has announced support for its .xxx boycott from what looks to be a significant player in the porn affiliate network market.
Gamma Entertainment, which runs programs such as LiveBucks.com, said it plans to defensively register some of its brands in .xxx.
But for every dollar the company spends with ICM Registry, it also plans to make a matching donation to the top-level domain’s opponents, such as the FSC.
Xbiz quotes Gamma president Karl Bernard: “Gamma is committed to using our resources to lead by example – by pledging our support in the efforts to combat ICM’s .xxx.”
The company will continue to focus development on its .com web sites, according to the article.
The FSC announced its boycott earlier this week, to signal its objection to ICANN’s approval of the TLD.