.com is back as Verisign discounts bear fruit

Verisign’s .com returned to growth in the first quarter after the company offered its registrars marketing programs that substantially discounted the retail price of domains.

The company ended the quarter with 169.8 million .com and .net domains under management, a 777,000-name increase on the end of 2024. It’s the first time it’s reported quarterly DUM growth in almost two years.

While the company did not break out the split between the two TLDs, my records show that .com’s zone file grew by about 800,000 names during the quarter, while .net’s shrank by about 100,000.

Verisign has now upgraded its guidance for DUM growth this year to between a 0.7% decrease and a 0.9% increase, the first time its guidance has had a top-end in positive territory in some time. In February, it guided at between negative 2.3% and negative 0.3%.

The major reason for the reversal of fortunes is the program of discounts that have seen some registrars sell .com domains to customers recently for less than half of the usual $10.26 wholesale price.

“It’s still early, but we do see signs of registrars shifting towards customer acquisition, and we also see more registrar engagement with our marketing programs,” CEO Jim Bidzos said on an earnings call with analysts tonight.

In previous quarters last year, the fact that registrars were focused on squeezing more revenue out of their customers, rather than driving new registrations, was blamed for .com losing DUM.

Bidzos said that sales were up across all three of its core geographic markets — the US, EMEA and Asia-Pacific. On previous calls, North America and China were noted for weaknesses.

If there’s any reason to believe that the guidance is cautious, it’s because of what Bidzos and analysts euphemistically referred to as “the macro”, or “macro-economic situation”.

At this particular point in history, that’s code for US President Donald Trump’s erratic behavior with regard to world trade and tariffs, that has spooked economies globally. It’s not at all clear yet how this crisis might affect the domains market.

Verisign reported net income of $199 million for the quarter, up from $194 million a year ago, on revenue up 4.7% at $402 million. Operating income was up from $259 million to $271 million

The company, which has to date mainly been rewarding investors with share buybacks, has now also started issuing quarterly cash dividends. This quarter, they’re all getting $0.77 per share.

Regulator going after suicide site that even Epik banned

UK communications regulator Ofcom has opened its first public investigation under the new Online Safety Act, targeting a notorious forum that has been linked to dozens of suicides globally.

The probe demands that the site in question provide evidence that it protects its UK users from illegal or harmful content — in this case “encouraging or assisting suicide”.

Failure to do so could lead to Ofcom fining the site’s owners millions, or seeking court orders to have other companies, such as advertisers or internet service providers, disrupt its business, Ofcom said.

The law is often talked about in the context of large social media companies such as Facebook and TikTok, which are often accused of algorithmically instilling suicide ideation in children, but it applies to any service that allows user-to-user content.

This apparently extends to web forums. Some non-controversial sites have already closed down rather than bear the expense of complying.

The Act doesn’t specifically mention domain registrars and registries as being covered by its provisions, but GoDaddy, for example, certainly seems to think it does. It even reckons its domain search feature might be covered.

Ofcom isn’t naming the suicide site, so I won’t either, but it’s not hard to identify by connecting a few dots.

It uses a domain in Verisign’s .net, currently registered with Cloudflare’s registrar. Both registry and registrar are US companies.

The site in question lost its original .com name in 2021 when Epik — yes, even the controversial, free-speech-loving old Epik under Rob Monster — reportedly thought it was too hot to handle.

The site’s administrators have today called the probe “blatant overreach” and accused Ofcom of a “censorship agenda”. They’re currently begging users for cryptocurrency donations.

Media investigations have linked the site to more than 50 suicide deaths. In some cases, the site’s users reportedly goaded their victims, including some children, to take their own lives.

The admins, knowing the site is a target, have previously said they have back-up domains that they could switch to within minutes if they get shut down.

More gloom predicted for .com

Verisign is predicting more shrinkage at .com and .net in 2025, despite a few notes of optimism from its CEO.

The company said last night that its two flagship gTLDs shrunk by a combined 3.7 million domains in 2024, a 2.1% decrease, as I flagged up a couple weeks ago, and that its growth this year will be between negative 2.3% and negative 0.3%.

The quarterly loss was around 500,000 domains. Verisign ended the quarter with 169 million domains under management.

CEO Jim Bidzos again told analysts that the shrinkage was partly due to weakness in China and partly due to American registrars concentrating on profit margins over customer acquisition.

Growth was positive in the EMEA region, he said, without quantifying it.

Bidzos said that marketing programs the company recently launched show early signs of adoption by registrars, and that he expects registrars to refocus on customer acquisition as part of a cyclical trend.

He pointed to the fact that two registrars — presumably GoDaddy and Squarespace — have taken out pricey Super Bowl TV ads this weekend as an encouraging sign.

He said that Verisign is “considering looking at” applying for new gTLDs next year and is “looking at the potential for applications”.

The company reported Q4 net income of $191 million, down from $265 million a year earlier, on revenue that was up 3.9% at $395 million.

For the full year, Verisign had net income of $786 million versus $818 million in 2023, on revenue that was up 4.3% at $1.56 billion.

Americans are deserting .com

Forget China, Verisign is now seeing most of its domain sales weakness coming from the US.

The company revealed in its quarterly earnings call last week that .com and .net were down by a combined 1.1 million names in the third quarter, and 850,000 of those losses were from American registrars.

CEO Jim Bidzos told analysts that the weakness was a result of US registrars concentrating more on making existing customers more profitable and less on acquiring new customers.

Registrars are raising prices and pushing more secondary market sales, he said. That’s great for the registrars’ bottom lines, but it doesn’t help Verisign shift product.

There were 169.6 million .com and .net domains at the end of Q3, Bidzos said. The Q3 renewal rate is expected to be about 72.3%, compared to 73.5% a year ago.

There was also weakness in China, he said, due to economic factors and regulation. China has frequently been blamed for sales fluctuations in previous weak quarters. Europe was actually up by 200,000 names, Bidzos said.

Verisign now expects domain growth of between -2.9% and -2.3% for the full year, narrowing its forecast from the -3% to -2% it predicted in July and the +1% to -1% predicted at the start of the year.

Higher wholesale prices means the company is still growing, however. Revenue was up 3.8% to $391 million and net income was up from $188 million to $201 million compared to year-ago numbers.

Some Guy wants to take over .com and .net

Some Guy has noticed that domain name prices keep going up and has offered to take over the .com and .net registries from Verisign.

The Some Guy recently filed a formal Request for Reconsideration with ICANN, asking it to overturn its recent decision to renew Verisign’s .com contract and award it to him instead. The RfR reads:

I seek to become a registry operator committed to making .COM domains more affordable and accessible to students, startups, and developers. The decision to renew Verisign’s contract hinders competition, limiting opportunities for more innovative registry operators like Asxit LLC to contribute to the digital ecosystem.

The request is accompanied by a 25-page, ChatGPT-odored analysis of why Asxit LLC would be a better .com registry than Verisign, which concludes:

The introduction of Asxit LLC as a .COM registry operator would bring significant improvements in pricing, innovation, support, and accessibility compared to Verisign’s current management. By focusing on affordable and flexible solutions, Asxit LLC aims to create a more inclusive and competitive environment for all users. This change would enhance the value of the .COM domain and support the growth of a diverse and innovative digital community.

In August, Some Guy with the same last name, who said he is a student at Liberty University in Virginia, said Asxit LLC should take over .net as well.

They’re not the funniest or craziest submissions ICANN has received over the years, but they might be worth a chuckle if you’re clock-watching on a Friday afternoon.

The sad part is of course that ICANN is now duty-bound to commit legal and board resources preparing a response to this request before throwing it out entirely.

.com is shrinking but Verisign raises prices again anyway

Verisign has confirmed that it plans to exercise its fourth and final .com price-increasing power under its current registry contract, even as its domains under management continues to head south.

The company confirmed last night that it will increase the annual registration and renewal wholesale fee for a .com domain from $9.59 to $10.26 on September 1 this year. It’s the last of the four times it’s allowed to raise prices by up to 7% in its current contract with ICANN, which expires in November.

The news came as Verisign reported its fourth-quarter and full-year 2023 financial results, which were as profitable as we’ve come to expect.

But in terms of domains under management, .com and .net continued to decline, which CEO Jim Bidzos told analysts was all China’s fault. Domains managed by Chinese registrars shrank by 2.2 million in Q4, leading to an overall .com/.net shrinkage of 1.2 million names.

There were nine million new .com/.net registrations in Q4, down from 9.7 million in the same quarter in 2022.

Bidzos said the decline in China was due to factors such as stricter local regulations and a weaker economy, and said he expects those challenges to continue to hit Verisign’s numbers in 2024. He did not blamed higher prices for the drop.

Indeed, the .com zone file has been shrinking by about 1,500 domains per day on average since the start of the year. Zone numbers are usually a reliable predictor of DUM trends.

Revenue from China was down about $14.4 million, CFO George Kilguss said.

Bidzos said Verisign expects its DUM to be flat this year, with a possible 1% swing either way.

For Q4, the company reported revenue up 3% year over year at $380 million, with $265 million net income, up from $179 million a year earlier.

For the whole of 2023, revenue was up 4.8% at $1.49 billion and net income was $818 million, up from $674 million in 2022.

China has .com’s growth by the balls

Verisign has downgraded its expectations for .com/.net growth for the year into potentially negative territory, citing — not for the first time — low demand from China.

The registry expects its domain name base to grow at a maximum of 0.4% or shrink as much as 0.4% by the end of the year. That compares to a prediction of between 0% and 2.25% growth at the start of the year.

“Low demand from China remains the primary source of drag on the overall domain name base growth,” CEO Jim Bidzos told analysts on Thursday. “Excluding registrars based in China, both our domain name base and new registrations are up year-over-year”.

The company’s regulatory filing for Q3 shows that China revenue was down from $26.8 million to $22 million over the year. It was the only one of the four geographic reporting segments to show a shrinkage.

Verisign ended Q3 173.9 million .com/.net domains under management, down 0.1% over the year and down half a million names in the quarter.

While DUM growth may be on the decline, price hikes compensate and keep Verisign’s dollar-growth going.

The company reported year-over-year revenue growth up 5.4% at $376 million for the quarter of 2023. Net income was $188 million, up from $169 million a year ago.

Palage’s epic rant as he asks ICANN to cancel Verisign’s .net contract

ICANN is devolving into a trade association hiding under a thinning veneer of multistakeholderism and the domain industry is becoming a cartel.

Those are two of the conclusions reached by consultant Michael Palage, who’s been involved with ICANN since pretty much the start, in an epic Request for Reconsideration in which he asks the Org to unsign Verisign’s recently renewed .net registry contract.

ICANN’s equally intriguing response — denying, of course, Palage’s request — also raises worrying questions about how much power ICANN’s lawyers have over its board of directors.

The RfR paints a picture of a relationship where Verisign receives special privileges — such as exemptions from certain fees and obligations — in exchange for paying higher fees — contributing $55 million of ICANN’s budget — some of which is accounted for quite opaquely.

Palage claims the domain industry of being “on the precipice of becoming a cartel” due to recent consolidation, and says that is being enabled by ICANN’s failure to conduct an economic study of the market.

Verisign’s .net and .com contracts are the only registry agreements that do not oblige the registry to participate in economic studies, Palage says, reducing ICANN’s ability, per its bylaws, “to promote and sustain a competitive environment in the DNS market.”

Palage writes:

The failure of ICANN to have the contractual authority to undertake a full economic study to ensure a “competitive environment in the DNS market” undermines one of its core values. This failure is resulting in a growing consolidation within the industry which is on the precipice of becoming a cartel. ne needs to look no further than four US-based companies, Verisign, PIR, GoDaddy, and Identity Digital which currently control almost the entirety of the gTLD registry market based on domain names under management. This unchecked consolidation within the industry directly and materially impacts the ability of individual consultants to make a livelihood unless working for one of the dominant market players.

While Palage says he and other registrants are being harmed by increasing .net prices, and that an economic study would help lower them, he also asks ICANN to get Verisign to migrate to the Base Registry Agreement, which would enable Verisign to raise prices at will, without the current 10%-a-year cap.

He’s also concerned that ICANN’s volunteer community is shrinking as the domain industry becomes an increasingly dominant percentage of public meeting attendance.

Figures published by ICANN show that, at the last count, 39% of attendees were from the domain industry. ICANN stopped breaking down attendee allegiance in 2020 during the pandemic and did not resume publication of this data afterwards.

“ICANN has started down the slippery slope of becoming a trade association,” Palage writes.

While his RfR was going through the process of being considered by ICANN and its Board Accountability Mechanisms Committee, Palage separately wrote to ICANN general counsel John Jeffrey to express concerns that ICANN policy-making might be risking falling foul of antitrust law.

It seems a recent meeting of the working group discussing updates to ICANN’s Transfers Policy debated whether to cap the amount registries are allowed to charge registrars for bulk transfers. Dollar amounts were discussed.

Palage suggested ICANN might want to develop a formal antitrust policy statement that could be referred to whenever ICANN policy-makers meet, in much the same way as its Expected Standards of Behavior are deployed.

If the RfR as published by ICANN lacks some coherence, it may be because ICANN’s lawyers have redacted huge chunks of text as “privileged and confidential”. That’s something that hardly ever happens in RfRs.

It seems Palage knows some things about the .net contract and Verisign’s relationship with ICANN from his term on the ICANN board, which ran from April 2003 to April 2006, a time when Verisign and ICANN were basically at war.

Because the information Palage is privy to is still considered privileged by ICANN, it was redacted not only from the published version of the RfR but also it seems from the version supplied to the BAMC for consideration.

ICANN cited this part of its bylaws to justify the redactions:

The Board Accountability Mechanisms Committee shall act on a Reconsideration Request on the basis of the public written record, including information submitted by the Requestor, by the ICANN Staff, and by any third party.

Reading between the lines, it seems most of the redactions likely refer to the Verisign v ICANN lawsuit of 2004-2005.

Fellow greybeards will recall that Verisign sued ICANN for blocking its Site Finder service, which put a wildcard in the .com zone and essentially parked and monetized all unregistered domains while destabilizing software that relied on NXDOMAIN replies.

The October 2005 settlement (pdf) forced Verisign to acknowledge ICANN as king of the internet. In exchange, it got to keep .com forever. The deal gave Verisign financial security and ICANN legitimacy and was probably the most important of ICANN’s foundational documents before the IANA transition.

So what did the board of 2005 know that’s apparently too sensitive for the board of 2023? Dunno. I asked Palage if he’d be willing to share and he politely declined.

In any event, his RfR (pdf), which among other things asked for ICANN to reopen .net contract negotiations, was dismissed summarily (pdf) by BAMC last week on the grounds that he had not sufficiently shown how he was injured by ICANN’s actions.

ICANN actually CHANGES Verisign’s .net contract after public comments

ICANN has decided to make a change to the upcoming new version of Verisign’s .net registry agreement in response to public comments, but it’s not the change most commenters wanted.

In the near-unprecedented nod to the public comment process, the Org says it’s agreed with Verisign to change two instances of upper-case “S” in the term “Security and Stability” to lower case.

That’s it.

Some commenters had wrung their hands over the fact that the .net contract includes upper-case “Security and Stability” as defined terms, in contrast to the lower-case “security and stability” found in other gTLD contracts.

Based on a strict reading, this could in some circumstances give Verisign an excuse to avoid implementing ICANN Consensus Policies, commenters including the Business Constituency and Intellectual Property Constituency noted,

It appears that this was an oversight by ICANN and Verisign rather that some kind of nefarious plot. In its public comments analysis and summary (pdf), ICANN writes:

We acknowledge however that the capitalization of the “s” could in theory potentially lead to different interpretations of the applicability of certain future Consensus Policies under Section 3.1(b)(iv)(1) for the .NET RA.

Because in this instance it was not the intent of ICANN org nor Verisign to limit in this manner the applicability of Consensus Policy topics for which uniform or coordinated resolution is reasonably necessary to facilitate the interoperability, security and/or stability of the Internet or DNS, ICANN org and Verisign have mutually agreed to update Section 3.1(b)(iv)(1) of the .NET RA to the lower case “s.”

So there we have it: a rare instance of a public comment period accomplishing something and a confirmed victory for accountability and transparency!

Most of the comments had focused on Verisign’s ability to raise prices and a clause that some domainers thought would allow censorial government regimes to seize domains, but ICANN said that’s all fine.

Everyone hates Verisign’s new .net deal

The public has commented: Verisign’s .net registry contract should not be renewed in its currently proposed form.

ICANN’s public comment period for the renewal closed yesterday and attracted 57 submissions, most of which either complained about Verisign being allowed to raise its prices or expressed fears about domains being seized by governments.

The proposed contract retains the current pricing structure, in which Verisign is allowed to raise the price of a .net domain by 10% a year. They currently cost $9.92, meaning they could reach $17.57 by the time the contract ends.

The Internet Commerce Association, some of its supporters, Namecheap, the Registrars Stakeholder Group, the Cross-Community Working Party on ICANN and Human Rights (CCWP-HR), and TurnCommerce all oppose the price increases.

The RrSG said the price provisions “are without sufficient justification or an analysis of its potentially substantial impact on the DNS”.

These commenters and others who did not directly oppose the increases, including the At-Large Advisory Committee and consultant Michael Palage, called for ICANN to conduct an economic analysis of the domain name market.

The Business Constituency was the only commenter to openly support the increases, though its comment noted that it is opposed in principle to ICANN capping prices at all.

The Intellectual Property Constituency did not express a view on pricing, but called for greater transparency into the side-deal that sees ICANN get an extra $4 million a year for unspecified security-related work. ICANN has never revealed publicly how this money is spent.

In terms of the number of submissions, the biggest concern people seem to have is that the proposed contract contains language obliging Verisign to take down domains to comply with “applicable law, government rules or regulations, or pursuant to any legal order or subpoena of any government, administrative or governmental authority, or court of competent jurisdiction”.

This language is already in the .com contract, but before ICANN clarified this on April 26 several concerned registrants had made comments opposing its inclusion.

Notably, the founder of the controversial troll forum kiwifarms.net, which has been kicked out of registrars after being linked to suicides, submitted his own “ICANN should be destroyed” comment.

Several commenters also noted that the definition of “security and stability” in the .net contract differs to the Base Registry Agreement that almost all other registries have signed in such a way that it is feared that Verisign would not have to abide by future ICANN Consensus Policies under certain circumstances.

As several commenters note, the usual protocol following an ICANN public comment period is for ICANN to issue a summary report, pay lip service to having “considered” the input, and then make absolutely no changes at all.

This time, some commenters held out some hope that ICANN’s new, surprisingly sprightly and accommodating leadership may have a different approach.

The comments can be read here.