ICANN throws out another challenge to the Donuts-Afilias deal

ICANN is set to reject a plea for it to reconsider its decision to allow Donuts to buy Afilias last December.

Its Board Accountability Mechanisms Committee recently threw out a Request for Reconsideration filed by Dot Hotel and Domain Venture Partners, part of a multi-pronged assault on the outcome of the .hotel gTLD contention set.

The RfR was “summarily dismissed”, an infrequently used way of disposing of such requests without considering their merits. BAMC concluded that the requestors had failed to sufficiently state how they’d been harmed by ICANN’s decision, and therefore lacked standing.

The requestors, both applicants for .hotel, had said that they were harmed by the fact that Donuts now owns two applications for .hotel — its own open, commercial one and Afilias’ successful community-based one.

It also said that ICANN’s seemingly deliberate opacity when it came to approving the deal broke its bylaws and sowed confusion and risk in the registry industry.

At some point before the December 17 board meeting that approved the acquisition, ICANN staff briefed the board on its decision to approve the deal, but no formal resolution was passed.

By exploiting this loophole, it’s not clear whether the board actually voted on the deal, and ICANN was not obliged by its bylaws to publish a rationale for the decision.

But BAMC, acting on the advice of ICANN’s lawyers, decided (pdf) that the statements of alleged harm were too vague or seemed to rely on potential future harms.

DVP and Dot Hotel are also party to a lawsuit and an Independent Review Process case against ICANN related to .hotel.

A Documentary Information Disclosure Request related to the Afilias acquisition was also thrown out in March.

BAMC’s dismissal will be rubber-stamped by ICANN’s full board at a later date.

$40 million UNR auction brings fresh blood to domain industry

Six entities are entering the domain registry business for the first time following UNR’s auction last month, which saw over 20 new gTLDs sold off for a total of over $40 million, according to UNR.

While playing its cards close to its chest and revealing the auction results in rather general terms, UNR disclosed last week that there were 17 bidders at the three-day event, which ran in late April.

It said “between 10 and 20 bidders came away as winners”, which I assume we have to interpret as “between 10 and 17”.

Anyone predicting a bulk purchase by a rival portfolio registry was dead wrong, it appears.

UNR said that, while it will not disclose their identities, “established registries, investment firms, blockchain companies, and high net-worth individuals” were among the winners.

None of the ICANN Registry Agreements have yet changed hands, according to ICANN records.

While existing registries and investment firms (presumably the kind of private equity interests that have shown high levels of interest in the domain industry in recent years) will come as no surprise as buyers, blockchain companies and high net-worth individuals will perhaps raise more eyebrows.

ICANN won’t, to the best of my knowledge, sign an RA with an individual, so we’ll no doubt be seeing a corporate vehicle or two established to take over contracts on behalf of those buyers.

The idea of a blockchain company taking over a TLD in the internet’s official root zone is particularly interesting.

The closest we’ve had to that scenario to date is MMX’s experiments integrating .luxe into the Ethereum blockchain, which has been described as genuinely innovative.

But most forays by blockchain outfits into “domain names” have been strictly alt-root moves, such as Unstoppable Domains’ use of .crypto addresses, which do not use the ICANN root and instead require browser plug-ins to function.

These kinds of services usually have their ability to avoid centralized oversight and control as a USP, which makes an attempt from this sector to suck on the ICANN teat especially intriguing.

And which of UNR’s TLDs would be most suited to blockchain applications? .link? .click? .lol?

UNR has not broken down how much was paid for each TLD, and we’ll likely never know, but the $40 million top-line is far above the $11.65 million minimum opening bids it had established for the no-reserve auction.

But it still works out as under $2 million on average across each of the 23 gTLDs on offer, many of which had been on the market for six or seven years, begging the question of whether UNR CEO Frank Schilling’s big bet on new gTLDs back in 2012 was ultimately a success.

Schilling said in a press release: “All UNR shareholders should be exceptionally pleased with the final outcome of this first-of-its-kind event. We are deeply satisfied to have seen so much new interest and blood enter the arena.”

The TLDs auctioned were: .audio, .blackfriday, .christmas, .click, .country, .diet, .flowers, .game, ,guitars, .help, .hiphop, .hiv, .hosting, .juegos, .link, .llp, .lol, .mom, .photo, .pics, .property, .sexy and .tattoo.

DI will of course reveal the winners over time as their ICANN contracts are updated to reflect the new operators.

IWF finds 3,401 “commercial” child porn domains

The Internet Watch Foundation last year found child sexual abuse material on 3,401 domains that it says appeared to be commercial sites dedicated to distributing the illegal content.

The UK-based anti-CSAM group said in its annual report, published last week, that it found 5,590 domains containing such material in 2020, and 61% were “dedicated commercial sites… created solely for the purpose of profiting financially from the distribution of child sexual abuse material online.”

That’s a 13% increase in domains over 2019, the report says. It compares to 1,991 domains in 2015.

IWF took action on 153,369 URLs containing CSAM last year, the report says.

For example, the TLD with the most CSAM abuse is of course .com, with 90,879 offending URLs in 2020, 59% of the total. That compares to 69,353 or 52% in 2019.

But because those 90,000 URLs may include, for example, pages on image-hosting sites that use .com domains, the number of unique .com domains being abused will be substantially lower.

Same goes for the other TLDs on the top 10 list — .net, .ru, .nz, .fr, .org, .al, .to, .xyz and .pw.

.co, .cc and .me were on the 2019 list but not the 2019 list, being replaced by .al, .org and .pw.

The most disturbing part of the report, which is stated twice, is the alarming claim that some TLDs exist purely to commercially distribute CSAM:

We’ve also seen a number of new TLDs being created solely for the purpose of profiting financially from the distribution of child sexual abuse material online.

…

We first saw these new gTLDs being used by websites displaying child sexual abuse imagery in 2015. Many of these websites were dedicated to illegal imagery and the new gTLD had apparently been registered specifically for this purpose.

I can only assume that IWF is getting confused between a top-level domain and a second-level domain.

The alternative would be that the organization believes one or more TLD registries are purposefully catering primarily to commercial child pornographers, and for some reason it’s declining to do anything about it.

I’ve put in a request for clarification but not yet received a response.

IWF is funded by corporate donations from primarily technology companies. Pretty much every big domain registry is a donor. Verisign is a top-tier, £80,000+ donor. The others are all around the £5,000 to £10,000 mark.

UPDATE May 26: IWF has been in touch to clarify that it was in fact referring to SLDs, rather than TLDs, in its claims about dedicated commercial CSAM sites quoted above. It has corrected its report accordingly.

UNR cuts $5.2 million from price of new gTLD portfolio

UNR has reduced the opening bids on almost all of the gTLDs it plans to auction off later in the week, to the tune of a whopping $5.2 million.

According to the minimum opening bids listed on the auction web site today, the job lot of 23 TLD contracts could go for as little as $11.65 million, if there’s no competitive bidding whatsoever.

That’s compared to the $16.87 million total when the TLDs were first announced for auction back in January.

It’s a no-reserve auction of UNR’s entire portfolio of gTLDs that runs from Wednesday to Friday this week.

Some gTLDs, such as .hiv and .juegos, have no minimum bids.

The only TLD to receive a price increase since January is .llp, which had a $0 listing back then but is now listed at $200,000. There’s been no change in .llp’s fortunes since then — it’s still unlaunched.

The music-themed .country, which had no list price in January, now has a $300,000 tag.

The biggest discount comes on .link, once listed with a $3 million opener, now reduced to $2 million.

Nine of the gTLDs are now priced at below the original ICANN application fee of $186,000.

Here’s a table comparing the January minimum bid to today’s pricing.

[table id=66 /]

UNR, which sold off its registrar and secondary market businesses to GoDaddy and its stakes in three car-themed gTLDs to XYZ.com last year, plans to remodel itself as a back-end operator post-auction.

UPDATE: According to UNR, the January prices were preliminary and published accidentally, and no changes have been made since late January or early February.

Decision on $135 million .web auction expected in weeks

ICANN, Verisign, Donuts, and the other applicants for .web will find out who gets to control the fiercely contested gTLD by the first week of June at the latest, according to Verisign’s CEO.

Jim Bidzos told analysts tonight that the Independent Review Process panel currently handling a complaint filed by Afilias declared its case closed April 7, and said that a decision will come within 60 days.

Afilias, now owned by Donuts, came second in an ICANN “auction of last resort” in which a Verisign-backed company called Nu Dot Co agreed to pay $135 million for the coveted string.

Afilias wants the auction declared invalid because ICANN, it claims, did not sufficiently pursue allegations that NDC was being secretly bankrolled by Verisign, which it says broke ICANN bylaws and new gTLD application rules.

This is denied by ICANN, as well as NDC and Verisign, which have filed legal documents with the IRP panel despite not being parties.

Afilias and others suspect that Verisign wants .web in order to bury it, keeping what could be a strong .com competitor weak, which Verisign also denies.

The IRP panel held a seven-day virtual hearing last August, but has continued to receive briefs from ICANN and Afilias since then.

Ahead of GoDaddy acquisition, MMX to scrap premium fees on 725,000 domains

MMX plans to remove hundreds of thousands of domains from its premium list later this month, and reduce prices on a hundred thousand more.

Dubbed The Great Release, the April 23 adjustment will see 725,400 names currently reserved at premium prices released to the available pool at the usual wholesale fee for their respective gTLDs.

Another 102,000 names will keep a premium ticket, but will see their price reduced. MMX says it’s wiped $145 million from the list price of a total of 827,000 names.

The names are available in 26 of MMX’s portfolio of new gTLDs, which GoDaddy currently intends to buy for $120 million.

An MMX spokesperson said that the current pricing had been in place since 2014 and was up for review. He said:

Premium pricing is not something that had been looked at in great detail since it launched its TLDs, and MMX felt that its pricing was out of step with current market trends. MMX also saw that it had held back much of its inventory without ever releasing it, and following a large volume of enquiries over the last 12 months, MMX decided to release all reserved names to get them into the hands of users.

A searchable database of releasing names can be found here, but you’ll need to hand over your email address to access it.

ICANN threatens to seize gTLD after Whois downtime

Are we about to see our next gTLD registry implosion?

ICANN has whacked the company behind .gdn with a breach notice and a threat that it may seize the TLD, after its Whois systems allegedly suffered days of downtime.

According to ICANN, .gdn exceeded its weekly and monthly downtime limits in late March and early April, in both months triggering the threshold whereby ICANN is allowed to transition the TLD to an Emergency Back-End Registry Operator.

gTLD registries are allowed to have 864 minutes (about 14 hours) of unplanned Whois downtime per month. Downtime exceeding 24 hours per week is enough to trigger ICANN’s EBERO powers.

It appears to be the third time .gdn’s Whois has gone on the blink for longer than the permitted period — ICANN says it happened in April 2018 and August 2019 too. Those incidents were not publicized.

It seems the Russian registry, Joint Stock Company “Navigation-information systems”, managed to fix the problem on April 2, and ICANN is not invoking the EBERO transition, something it has done just a couple times before, just yet.

But it does want NIS to present it with a plan showing how it intends to avoid another spell of excessive downtime in future. It has until May 8, or ICANN may escalate.

.gdn is by most measures a bullshit TLD.

While it was originally intended to address some kind of satellite navigation niche, it eventually launched as a pure generic with the backronym “Global Domain Name” in 2016.

It managed to rack up over 300,000 registrations in the space of a year, almost all via disgraced and now-defunct registrar AlpNames, and was highlighted by SpamHaus as being one of the most spam-friendly of the new gTLDs.

After AlpNames went out of business two years ago, ICANN transferred some 350,000 .gdn names to CentralNic-owned registrar Key-Systems.

Today, Key-Systems has fewer than 300 .gdn domains. The TLD’s zone file dropped by about 290,000 domains in a single day last December.

.gdn had fewer than 11,000 domains under management at the end of 2020, 90% of which were registered through a Dubai-based registrar called Intracom Middle East FZE.

Intracom pretty much only sells .gdn domains, suggesting an affiliation with the registry.

Web searches for live sites using .gdn return not much more than what looks like porn spam.

A busted Whois looks like the least of its problems, to be honest.

China could block GoDaddy’s $120 million MMX swoop

GoDaddy’s proposed $120 million acquisition of essentially all the meaningful assets of portfolio gTLD player MMX will be subject to Chinese government approval, it emerged this morning.

Following GoDaddy’s bare-bones press release announcing the deal last night, this morning MMX added a whole bunch of flesh, including a list of closing conditions, in its statement to shareholders.

GoDaddy is proposing to buy essentially MMX’s entire operating business — the 28 gTLD registry agreements with ICANN, including the four porn-related strings belonging to subsidiary ICM Registry.

Not only do MMX shareholders have to approve the deal — and holders of 64% of the shares have already promised they will — but ICANN approval will be required for the registry contracts to be reassigned.

This may prove a hurdle or delay if third parties raise competition concerns, but ICANN’s pretty opaque approval process generally doesn’t frown too much on industry consolidation.

Another known unknown is China.

MMX told shareholders that it needs: “Approval of Chinese authorities for the change of control of MMX China (including change of control in respect of relevant licenses held by MMX China permitting it to distribute TLDs in China).”

The reason for this is quite straightforward: in volume terms, quite a lot of MMX’s business has been in China in recent years. Popular sellers such as .vip, with over 800,000 names today, have been driven primarily by Chinese investors.

A local presence (in this case MMX China) and approval from the Ministry of Industry and Information Technology is required to legally sell a TLD to Chinese registrants via Chinese registrars.

I’ve no particular reason to believe MIIT will withhold its approval for MMX China to move into GoDaddy’s ownership, but a failure to get the nod from China appears to be a deal-breaker.

MMX’s statement to the markets this morning also provided some clarity on what exactly it is that GoDaddy is proposing to buy.

The gTLDs to be acquired are: .vip,.nrw, .casa, .vodka, .xxx, .fit, .miami, .fishing, .porn, .beer, .surf, .boston, .adult, .yoga, .garden, .abogado, .work, .fashion, .horse, .rodeo, .sex, .wedding, .luxe, .dds, .law, .bayern, .cooking, and .country.

It seems that when Tony Farrow took over as MMX CEO last year, after his predecessor left due to an accounting snafu, he had the portfolio audited and came to the conclusion that it could expect only pretty crappy growth over the coming years.

It had banked on selling expensive defensive trademark blocks in its four porn-themed gTLDs to big brands to make up the shortfall, but then GoDaddy approached in December brandishing its rather large checkbook.

MMX reckons the deal values the company at a 92% premium over its closing share price Tuesday, and 87% and 78% premiums over its 20-day and 90-day average selling price.

.bayern, .nrw and the four porn gTLDs belong to subsidiaries that GoDaddy will acquire outright, but GoDaddy is not proposing to buy MMX itself.

Rather, MMX will likely stay alive and publicly traded long enough to redistribute its cash windfall to investors and sell or wind down about a dozen non-operating subsidiaries.

It has a transition services agreement to manage certain business functions of the registry until January next year, which sounds a bit like what fellow GoDaddy acquisition .CLUB Domains explained to me last night.

After that, London’s Alternative Investment Market rules will treat MMX as a “cash shell”, and it will either have to acquire an operating business from somewhere or make itself the subject of a reverse takeover by a company looking for a quick way to the public markets.

.CLUB CEO on selling to GoDaddy, Clubhouse, and .club’s “twerking moment”

.CLUB Domains CEO Colin Campbell says he’s planning to continue to promote the .club gTLD long after its acquisition by GoDaddy Registry, announced earlier today, closes.

The deal was one of several announced last night by GoDaddy, the highlight being the $120 million purchase of MMX’s portfolio of 28 gTLD contracts.

While the price of the .club deal was not disclosed, Campbell confirmed that it’s a contract reassignment rather than a purchase of the company. He’s not expecting any ICANN regulatory friction, pointing out that .club is relatively small fry in the grand scheme of things.

But .club is arguably one of the success stories of the new gTLD program.

It currently stands at over a million domains under management, recently boosted by the launch of the third-party audio conferencing app Clubhouse, which has driven demand.

“I think Clubhouse was the twerking moment for .club,” Campbell said. “It’s the moment everyone realized — holy shit this is the best domain on the market to start a community, to start a club.”

“Our volume of premium domains went up 700% in January,” he said. “We exploded.”

I understand a “twerking moment” to be a nodal point in a business’s performance so sensational that one feels obliged to stand up at one’s desk and “twerk“. I’d rather not think about it too much, to be honest.

Campbell said the volume decline .club was experiencing prior to Clubhouse launching — its zone file shrank by 200,000 names in 2020 — is misleading as a metric of measuring growth.

“We’ve always been growing,” he said. “What we’ve been doing the last few years is raising prices for the first year, so our quality of registrations is higher now than it’s ever been. Volume’s a joke… what we’re talking about is real registrations, real users. It’s all about usage.”

He was ambivalent on whether the GoDaddy deal would have happened without the Clubhouse boost.

“.club was growing very fast with real usage,” he said. “Clubhouse had nothing to do with this — in my opinion — but who knows, you’d have to ask GoDaddy.”

It seems .CLUB Domains the company will wind up eventually, but Campbell said it will continue to promote the TLD even after the deal closes in a few months.

“I will never stop supporting .club, this is part of my DNA,” Campbell said. Pressed, he said that the company will continue to operate until at least the end of the year.

But why sell his baby? Campbell said “.club was never for sale”, so it appears GoDaddy reached out to .CLUB first. But Campbell sees GoDaddy as a safe pair of hands.

“The people that run GoDaddy Registry are Nicolai [Bezsonoff], and Lori Anne [Wardi], who were the co-founders of .co and they’ve done a good job of promoting .co and I really believe that can promote .club in a similar way,” Campbell said.

GoDaddy buys 30 new gTLDs for over $120 million

GoDaddy Registry has just announced it is acquiring 28 new gTLDs from rival MMX, along with the TLDs .club and .design.

The MMX deal is worth at least $120 million; the value of the other two deals was not disclosed.

GoDaddy is also taking over the back-ends for .rugby and .basketball, which had been contracted to MMX, and said it has won the back-end deal for the dot-brand, .ally.

It’s the most significant pieces of registry consolidation since Donuts and Afilias hooked up in December.

GoDaddy Registry will wind up being the contract holder or back-end for over 240 TLDs, with over 14 million domains under management, the company said.

It’s not entirely clear which gTLDs GoDaddy is acquiring right now, but it appears to be all of those listed on the MMX web site.

It’s currently listed by IANA as the sponsor for 21 gTLDs: .cooking, .fishing, .horse, .miami, .rodeo, .vodka, .beer, .luxe, .surf, .nrw, .work, .budapest, .casa, .abogado, .wedding, .yoga, .fashion, .garden, .fit, .vip and .dds.

MMX subsidiary ICM Registry runs .xxx, .porn, .adult and .sex, not an easy fit with the family-friendly image GoDaddy has attempted to cultivate in recent years.

MMX also manages geographic gTLDs .boston, .london and .bayern on behalf of their respective local governments.

The company hinted in January that it was considering selling off some of its under-performing registries, after a crappy 2020 that saw it forced to restate revenues, lay off staff and can its top executives.

MMX, which is publicly traded in London, has yet to make a statement on the deal but we should no doubt expect something in the morning before the markets open.

The deal appears to be bad news for Nominet, which runs the back-end for most MMX gTLDs. GoDaddy will very likely migrate them over to its own platform eventually.

MMX aside, GoDaddy is also buying .club from .CLUB Domains, according to its press release.

.CLUB is a bit of a rarity — a single-string new gTLD registry that done really rather well for itself without tarnishing its brand by becoming synonymous with cheap domains and spam.

.design, the other GoDaddy acquisition today, is run by Top Level Design, which also runs .ink, .wiki and .gay.

.design has over 120,000 domains in its zone file today, while .club has over 1 million. Both have been on a growth trajectory recently.

GoDaddy also said as part of the same announcement that it has signed Ally Financial’s dot-brand business for .ally, but as Ally was already a client of Neustar (which GoDaddy owns) I’m not entirely sure what it’s getting excited about.