End of the road for Neustar as GoDaddy U-turns again and buys out its registry biz

GoDaddy has changed its mind about the registry side of the industry yet again, and has acquired the business of Neustar, one of the largest and oldest registries.

The deal will see GoDaddy purchase, for an undisclosed sum, all of Neustar’s registry assets, amounting to 215 TLDs and about 12 million domains.

It means the gTLD .biz is now under the new GoDaddy Registry umbrella, as are the contracts to run the ccTLDs .us, .in, and .co, 130 dot-brand gTLDs and 70 open gTLDs.

Neustar’s registry staff are also being taken on.

“We’re bringing the whole team aboard. One of the things we’re very excited about is bringing the team aboard,” Andrew Low Ah Kee, GoDaddy’s chief operating officer, told DI today.

He added that, due to coronavirus job insecurities wracking many minds right now, GoDaddy has promised its entire workforce that there will be no layoffs in the second quarter.

Nicolai Bezsonoff, currently senior VP of Neustar’s registry business, will run the new unit. He said for him the opportunity for “innovation” was at the heart of the deal.

“We’ve always been one step removed from the customer, so it can be hard to understand what customer wants to do,” he said. “This gives us huge customer insight into what customers want and how they want to use domains.”

Pressed for hypothetical examples of innovation, Bezsonoff floated ideas about selling domains for partial-year periods, or doing more to crack down on DNS abuse.

The deal is an example of “vertical integration”, which has been controversial due to the potential risk of a dominant registry playing favorites with its in-house registrar, or vice versa.

While registries such as Donuts, CentralNic and until recently Uniregistry vertically integrated with little complaint, the industry is currently nervous about Verisign’s newfound ability under its ICANN contract to own and run a registrar.

Because GoDaddy is the Verisign — the runaway market leader — of the registrar side of the industry, one might expect this deal (expected to close this quarter) to get more scrutiny than most.

But the company says it’s going to “strictly adhere to a governance model that maintains independence between the GoDaddy registry and registrar businesses”.

Low Ah Kee said that this means the registry and registrar “won’t share any information that gives or appears to given any unfair advantage” to the GoDaddy registrar, that their business performance will be assessed separately, and that they’ll be audited to make sure they’re not breaking this separation.

If GoDaddy appears to be preemptively expecting criticism, there’s a good reason why: the proposed acquisition of .org manager PIR by private equity group Ethos Capital has caused huge upset in recent months, and there are some parallels here.

First, like .org, pricing restrictions were lifted in Neustar’s .biz under a contract renewal with ICANN last year. It fell under the radar a little as .biz is substantially smaller, not a legacy gTLD as such, and not widely used.

Like the .org deal, the transfer of control of .biz will also be subject to ICANN’s approval before GoDaddy and Neustar can seal the deal.

Could we be looking at another big public fight over a gTLD acquisition?

But unlike Ethos with .org, GoDaddy says it has no intention of raising prices with .biz.

“We will not be raising prices, in fact we will look into reducing prices for some TLDs,” Bezsonoff said.

One TLD where one assumes prices won’t be going down is .co, where Neustar has just had its margins massively slashed by the Colombian government.

The acquisition was announced just days after the Colombian government announced that it has renewed its contract with Neustar to run .co for another five years, but under financial terms hugely more favorable to itself.

Whereas the initial 10-year term saw the government being paid 6% to 7% of the .co take, that number has soared to 81%, making .co — arguably Neustar’s registry crown jewel — a substantially less-attractive TLD to manage.

One assumes that the acquisition price would have fluctuated wildly based on the outcome of the .co renegotiation, but the GoDaddy/Neustar execs I talked to today didn’t want to talk about terms.

GoDaddy’s history with the registry side of the business has been changeable.

As far as ICANN contract is concerned, it is already a registry because it owns the .godaddy dot-brand. But that’s currently unused, with the registry functions outsourced to — cough — Neustar’s arch-rival Afilias.

Given Neustar’s religious devotion to the dot-brand concept, and the weirdness of using one of your primary competitors for a key function, one might expect both of those situations to change.

GoDaddy did also apply for .casa and .home back in 2012, but changed its mind and abandoned both bids fairly early in the process.

The sudden excitement about the registry business today begs the question of why GoDaddy didn’t buy Uniregistry’s registry business at the same time as it bought its secondary market and registrar earlier this year, but apparently it was not for sale.

Following the acquisition, Neustar is keeping its DNS resolution services and GoDaddy will continue to use them, so Neustar is not entirely out of the domain game, but it looks like the end of the road for Neustar as a brand I regularly report on.

The registry started life in 2000 as “NeuLevel”, a joint-venture between Neustar and Aussie registrar Melbourne IT formed to apply to ICANN for new gTLDs. It wanted .web, but got .biz, which now has about 1.7 million names under management, down from a 2014 peak of 2.7 million.

Is the .co rebid biased toward Afilias? Yeah, kinda

The Colombian government has come under fire for opening up the .co registry contract for rebid in a way that seems predetermined to pick Afilias as the winner, displacing its fierce rival Neustar.
As I blogged in November, Colombia thinks it might be able to secure a better registry deal, so it plans to shortly open .co up to competitive proposals.
A company called .CO Internet, acquired by Neustar for $109 million in 2014, has been running the ccTLD for the last decade. There are currently around 2.3 million .co domains under management, according to Colombia.
With the renewal deadline looming, the government’s technology ministry, MinTIC, published an eyebrow-raising request for proposals last month.
What’s surprising about the RFP is that some of the four main technical performance criteria listed are so stringent that probably only two companies in the industry qualify — Verisign and Afilias, and so far Verisign has not been involved in the RFP process.
The companies that have been engaging with the government to date are Afilias, Neustar/.CO, Nominet, CentralNic and Donuts.
First, MinTIC wants a registry that’s had at least two million domains under management across its portfolio continuously for two years. All five registries qualify there.
Second, it wants a registry that’s been involved in the migration of a TLD of at least one million names, either as the gaining or losing back-end.
That immediately narrows the pack to just two of the five aforementioned registries — Neustar and Afilias.
Verisign would also qualify, if it’s in the bidding, but I suspect it’s not. Taking over .co would look like a “buy it to kill it” strategy, which would be horrible optics for the Colombian government.
There have only ever been three migrations over one million names, to my knowledge: the Verisign->Afilias .org transition of 2003, the Neustar->Afilias .au move of 2018, and last year’s Afilias->Neustar .in handover.
CentralNic, Nominet and Donuts have all moved numerous TLDs between back-ends, but with much smaller per-TLD domain volumes.
Third — and here’s the kicker — the successful .co bidder will have to show that it processes on average 25 million registry transactions — defined as “billable EPP (write) transactions, as well as all EPP search (read) transactions” — per day. (All of the RFP quotes in this post have been machine-translated from Spanish by Google and run by a few generous Spanish speakers for verification.)
The RFP is not entirely clear on what exact data points it’s looking at here, but my take is that qualifying transactions include, at an absolute minimum, attempts to create a domain, renew a domain, transfer a domain and check whether a domain is registered.
The vast majority of such transactions are in the check and create functions, and I believe a great deal of that activity relates to drop-catching, where registries are flooded with add requests for just-deleted domains.
Whichever way you split it, 25 million a day is a ludicrously high number. Literally only .com, which sees 2.3 billion checks and 1.5 billion adds per month, sees that kind of action.
According to Neustar, which actually runs .co, it only sees 6.4 million transactions per day on average. The requirement to handle 25 million a day is “exaggerated, unjustified and discriminatory” against Neustar, Neustar told MinTIC.
But the RFP allows for the bidding registries to spread their 25-million-a-day quota across all of the TLDs they manage, and this MAY sneak Afilias over the line.
I say MAY in big letters because I don’t believe the numbers that Afilias (and probably other registries too) reports to ICANN every month are reliable.
If you add up the reported, qualifying EPP transactions for September in Afilias’ top four legacy gTLDs — .org, .info, .mobi and .pro — you get to over 25 million per day.
But those same records show that, for example, .mobi, .pro and .info had exactly the same number of EPP availability checks that month — 215,988,497 each.
This is clearly bad data.
I reported on this issue last May, when ICANN’s Security and Stability Advisory Committee informed ICANN that major registries were providing “not reliable” or possibly “fabricated” data about port 43 Whois queries.
Afilias, which was one of the apparent offenders, told me at the time that it was addressing the issue with ICANN, but it does not yet appear to have fully fixed its reporting to enable TLD-by-TLD breakdowns of its registry activity.
It is of course quite possible, even very likely, that Afilias has on average more than 25 million qualifying EPP transactions per day, but how’s it going to prove that to the Colombian government when the numbers it reports under contract to ICANN are clearly unreliable?
It’s a little harder to determine whether Neustar would qualify under the 25-million transaction rule, because some of its largest zones are ccTLDs — .co, .in and .us — that do not publicly report this kind of data. Its comments to the RFP suggest it would not.
Numbers aside, I’ll note that there’s very probably an inherent bias towards legacy gTLD operators like Afilias and against relative newcomers such as CentralNic if you’re counting EPP transactions. As I noted above, a lot of these transactions are coming from drop-catch activity, which is more prevalent on larger, older TLDs where there are more dropping domains that are more likely to have existing backlinks and traffic.
The fourth technical requirement in the Colombian RFP that looks a bit fishy is the requirement that the new registry must have channel relationships with at least 10 of the largest 25 registrars, as listed by a web site called domainstate.com.
I can’t say I’ve looked at domainstate.com very often, if at all, but a quick look at its numbers for September strongly suggests to me that it does not count post-2012 new gTLD registrations in its registrar league table. One registrar with almost four million domains under management doesn’t even show up on the list. This arguably could give an advantage to a registry that plays strongly in legacy gTLDs.
That said, it’s probably an academic point — I don’t think any of the bidders for the .co contract would have difficulty showing that they have 10 of the top 25 registrars on board, whichever way you calculate that league table.
Cumulatively, these four technical hurdles have led some to suggest that Afilias has somehow steered MinTIC towards creating an RFP only it could win.
Apart from what I’ve discussed here, I’ve no evidence that is the case, and Afilias has not yet responded to my request for comment today.
Luckily for the bidding registries, the Columbian RFP has not yet been finalized. Comments submitted by the bidders and others are apparently going to be taken on board, so the barriers to entry for respondents could be lowered before bids are finally accepted.
MinTIC posted an update last night that extends the period that the RFP could run, and the transition period should Neustar lose the contract. A handover, should one happen at all, could now happen as late as February next year.

Neustar’s .co contract up for grabs

Colombia is looking for a registry operator for its .co ccTLD.
If you’re interested, and you’re reading this before noon on Wednesday November 6 and you’re at ICANN 66 in Montreal, hightail it to room 514A for a presentation from the Colombian government that will be more informative than this blog post.
Hurry! Come on! Move it!
The Ministry of Information Technology and Communications (MinTIC) has published a set of documents describing some of the plan to find a potentially new home for .co.
There doesn’t appear to be a formal RFP yet, but I gather one is imminent.
What the documents do tell us is that Neustar’s contract to run .co expires in February, and that MinTIC is looking into the possibility of a successor registry.
Currently, .co is delegated to .CO Internet, a Colombian entity that relaunched the TLD in 2010 and was acquired by Neustar for $109 million in 2014.
But under a law passed earlier this year, it appears as if MinTIC is taking over policy management for .co and may therefore seek IANA redelegation.
There’s no indication I could see that there’s a plan to reverse the policy of allowing anyone anywhere in the world to register a .co, indeed MinTIC seems quite proud of its international success.
The documents also give us the first glimpse for years into .co’s growth.
It had 2,374,430 names under management in September, after a couple of years of slowing growth. The documents state that .co had an average of 323,590 new regs per year for the first seven years, which has since declined to an average of 32,396.
.co is not the cheapest TLD out there, renewing at around $25 at the low end.

Radix acquires another gTLD

Radix has added the 10th new gTLD to its portfolio with an acquisition last month, bringing its total TLD stable to 11.
The company has acquired .uno from Missouri-based Dot Latin LLC for an undisclosed amount.
.uno, which of course means “one” in Spanish, has been around for over five years but has struggled to grow.
It’s current ranked as the 131st largest new gTLD, with 16,271 domains in its zone file. It peaked at about 22,000 about three years ago.
That said, it appears to have rather strong renewals, at least by Radix standards, with no evidence of relying on discounts or throwaway one-year registrations for growth.
.uno names can currently be obtained for roughly $12 to $20 per year.
Radix said its expects to migrate the TLD off its current Neustar back-end onto long-time registry partner CentralNic by “early 2020”.
The company appears to be excited that its only the second three-letter TLD in its portfolio.
It already runs .fun, along with the likes of .website, .tech and .online. It also runs .pw, the repurposed ccTLD for Palau.
.uno was Dot Latin’s only gTLD, though affiliated entity Dot Registry LLC signed its ICANN registry agreement for .llp (for “Limited Liability Partnership”) in August. That TLD has yet to launch.

Mystery .vu registry revealed

Neustar has been selected as the back-end domain registry operator for the nation of Vanuatu.
The company, and the Telecommunications Radiocommunications and Broadcasting Regulator, announced the appointment, which came after a competitive tender process between nine competing back-end providers, last night.
The ccTLD is .vu.
It’s unrestricted, with no local presence requirements, and currently costs $50 per year if you buy directly from the registry, Telecom Vanuatu Ltd (TVL).
Unusually, if you show up at TVL’s office in Vanuatu capital Port Vila, you can buy a domain for cash. I’ve never heard of that kind of “retail” domain name option before.
A handful of international registrars also sell the domains marked up, generally to over the $80 mark.
TVL was originally the sponsor of the ccTLD, but ICANN redelegated it to TRBR in March after Vanuatu’s government passed a law in 2016 calling for redelegation.
Under the deal, Neustar will take over the registry function from TVL after its 24 years in charge, bringing the .vu option to hundreds of other registrars.
Most registrars are already plugged in to Neustar, due to its operation of .us, .biz and .co. It also recently took over India’s .in.
There’s no public data on the number of domains under management, but Vanuatu is likely to have a much smaller footprint that Neustar’s main ccTLD clients.
It’s quite a young country, gaining independence from France and the UK in 1980, a Pacific archipelago of roughly 272,000 people.
Neustar expects the transition to its back-end to be completed September 30.

Neustar takes control of two new gTLDs

Neustar has started taking over former dot-brand new gTLDs belonging to its former clients.
It recently took control of .compare and .select, which previously belonged to Australian insurance company iSelect.
Neustar had been the back-end registry provider for both TLDs.
As previously blogged, iSelect abandoned its primary dot-brand, .iselect, in June.
That was despite that fact that it was actually in use, with domains such as home.iselect, news.iselect and careers.iselect all resolving to web sites.
Now, the generic dot-brands .compare and .select have been assigned to the blandly named Registry Services LLC, a new Neustar subsidiary.
They’re not the first examples of dictionary words functioning as dot-brands being repurposed as generics.
Notably, XYZ.com took over .monster from Monster.com and ShortDot bought .bond from Bond University.
Neustar has not yet announced its plans for its two new acquisitions.

Neustar to keep .us for another decade

Neustar has secured a renewal of its contract to run the United States’ ccTLD until up to 2029.
The company and the National Telecommunications and Information Administration announced the new contract last week.
The initial term of the deal runs until August 2021, but there are four two-year renewal options after that.
Neustar has been running .us since 2001. It doesn’t pay NTIA for the privilege, nor does the NTIA pay Neustar.
There are currently around two million registered .us domain names. The TLD appears to be still growing, but not especially fast.

Another five Amazon TLDs move to Nominet

Another five gTLDs owned by Amazon have made the back-end switch from Neustar to Nominet.
According to changes to IANA records this week, Nominet is now the registry services provider for .bot, .zappos, .imdb, .prime, and .aws.
This brings the number of Amazon TLDs to migrate from Neustar to Nominet recently to 40.
Amazon has 52 gTLDs in its portfolio. It moved 35 of them to Nominet a couple weeks ago.
Neustar told us at the time:

in an effort to diversify their back-end support, Amazon has chosen to move some, but not all, of their TLDs to another provider. Neustar will still manage multiple Amazon TLDs after the transition and we look forward to our continued partnership.

Moving .bot is notable as it is one of only six Amazon TLDs currently accepting registrations. It’s still many months away from general availability, but it has about 1,500 names in its zone. The other four movers are currently pre-launch.
It may or may not be significant that no non-Latin-script TLDs belonging to Amazon have made the transition.
According to IANA records, Neustar is still managing 12 Amazon strings, only three of which — .song, .coupon and .zero — are not internationalized domain names.
If those three TLDs were to also make the jump to Nominet over the coming weeks, I would not be in the least bit surprised.
Nominet does not currently handle IDN TLDs for any client.

Neustar loses most of its Amazon back-end biz to Nominet

Amazon has switched two thirds of its large portfolio of new gTLDs over to Nominet’s back-end registry services, replacing Neustar.
Judging by changes to IANA records this week, Amazon has moved 35 gTLDs to Nominet, leaving 17 at Neustar.
A Neustar spokesperson confirmed the changes, telling DI:

in an effort to diversify their back-end support, Amazon has chosen to move some, but not all, of their TLDs to another provider. Neustar will still manage multiple Amazon TLDs after the transition and we look forward to our continued partnership.

The switch more than doubles Nominet’s number of TLDs under management. Its biggest customer to date was MMX, which pushed 20 of its TLDs to the .uk registry in a restructuring a few years ago.
The Amazon loss, and a few others recently, also mean that Neustar is by my back-of-the-envelope calculation no longer the largest back-end when measured by the number of TLDs under management.
Those bragging rights would go to Donuts, which self-manages its own rather large portfolio of 241 TLDs. Neustar would remain the largest provider in terms of service provided to third-party clients.
The Neustar-to-Nominet technical migration appears to have kicked off a couple of weeks ago and emerged Wednesday when Nominet’s Technical Contact information replaced Neustar’s in most of Amazon’s IANA records.
Customers will not have noticed, because the TLDs in question barely have any customers.
The only one of the 35 affected TLDs with any registrations at all is .moi, which has just a couple hundred domains in its zone.
The other affected TLDs, none of which have launched, are: .moi, .yamaxun, .author, .book, .buy, .call, .circle, .fast, .got, .jot, .joy, .like, .pin, .read, .room, .safe, .smile, .tushu, .wanggou, .spot, .tunes, .you, .talk, .audible, .deal, .fire, .now, .kindle, .silk, .save, .hot, .pay, .secure, .wow and .free.
The TLDs remaining with Neustar are: .bot, .zero, .ポイント, .書籍, .クラウド, .ストア, .セール, .coupon, .zappos, .ファッション, .食品, .song, .家電, .aws, .imdb, .prime, and .通販.
Six of the TLDs staying with Neustar have launched, but only one, .bot, has more than 100 registrations.
.bot is a tightly restricted, experimental space currently in a long-term “limited registration period” which is not due to end until next January. It has around 1,500 names in its zone file.
Four of Amazon’s dot-brands are staying with Neustar, which is probably the most enthusiastic cheerleader for dot-brands out there, and four are going to Nominet.
Neustar appears to be keeping all of Amazon’s internationalized domain names. Nominet currently manages no IDNs.
How important the adjustment is from a dollar perspective would rather depend on what the per-domain component of the deals were, and whether Amazon ever plans to actually make its gTLDs commercially available.
In recent weeks, XYZ.com also moved its recently acquired .baby gTLD from Neustar, where it had been an unused dot-brand, to preferred provider CentralNic, while .kred and .ceo, both under the same ownership, also switched to CentralNic.

Nevett headhunts top execs from three rivals

Public Interest Registry has filled out its executive team by poaching senior staff from rivals Afilias, Donuts and Neustar.
Judy Song-Marshall of Neustar has joined as chief of staff, Joe Abley of Afilias is the new chief technology officer and Anand Vora has joined from Donuts as VP of business affairs.
They’re the first senior level appointments to be announced since Donuts co-founder Jon Nevett was appointed CEO three months ago.
PIR, the non-profit which runs .org and related gTLDs, has also let it be known that it’s looking for a chief financial officer. The job ad can be found here.