Iran reported to Ombudsman after new gTLD conspiracy theory

ICANN’s Ombudsman has stepped in to resolve a complaint from the Iranian government that it was being “excluded” from discussions about the next phase of the new gTLD program.
Kavouss Arasteh, Iran’s Governmental Advisory Committee representative, earlier this month accused the leadership of the New gTLD Subsequent Procedures Working Group of deliberately scheduling teleconferences to make them difficult for him to attend.
He said the 0300 UTC timing of a meeting made it “painful” for European volunteers to participate (though it’s 0730 in Tehran).
When WG co-chair Avri Doria said that the time had been selected to avoid clashes with other working groups and declined his request, Arasteh said in an email: “If you insist, I interpret that this is an effort to EXCLUDE GAC TO ATTEND THE PDP.”
In other words, he was accusing the WG leaders of trying to exclude governments from helping to develop the rules of the new gTLD program.
Doria responded that she took the tone of the remarks as “abusive”, adding:

since my motives have been attacked and since I have been accused of trying to prevent GAC participation, I have no choice other than to turn this issue over to the Ombudsman.
The only other alternative I can think of is to accept the fact that I am incapable of co-chairing this group and step down.

Fellow co-chair Jeff Neuman chipped in with a detailed explanation of how, in the global ICANN community, there usually isn’t a time of day that is not inconvenient to at least some volunteers.
(It’s sometimes possible to hear snoring on these calls, but that’s not always due to the time of day.)
Today, Ombudsman Herb Weye responded to Doria’s complaint, saying that it has been “resolved” between the two parties. He wrote:

Without going into detail I am pleased to advise the working group that this complaint has been resolved and that I can bear witness to a unanimous demonstration of support for the leadership of the working group.
I would like to highlight the professional, “human” approach taken by all involved and their willingness to communicate in a clear, respectful and objective manner. This cooperative atmosphere allowed for a timely discussion and quick resolution.

Aratesh has for some time been one of the most vocal and combative GAC reps, noticeably unafraid to raise his voice when he needs to make his point.
He recently publicly threatened to take his concerns about ICANN’s policy on two-character domains to the International Telecommunications Union if his demands were not met.

More change at the top at Donuts as Tindal steps down

Donuts has lost co-founder and COO Richard Tindal, who has announced his retirement.
Tindal was one of the four domain industry executives who founded Donuts in order to take advantage of ICANN’s new gTLD program about seven years ago.
No reason was given for his departure, which was announced in a blog post, beyond “retirement”.
Co-founders Paul Stahura, Jon Nevett and Dan Schindler are all still with the company, but founding CEO Stahura recently stepped into the chairman’s role to give venture capitalist Bruce Jaffe the corner office.
Tindal had previously worked in senior roles for Verisign, Neustar and Demand Media (now Rightside).

Second emergency registry tested with dead dot-brand

ICANN is running its second test of the Emergency Back-End Registry Operator system, designed as a failover for bankrupt gTLDs.
This time, the EBERO under the microscope is CORE Association, one of the three approved providers.
It this week took over operation of .mtpc, a dot-brand gTLD that Mitsubishi applied for, was delegated, never used, and then decided it didn’t want to run any more.
ICANN said:

ICANN is conducting a test of the Emergency Back-End Registry Operator program. Simulating an emergency registry operator transition will provide valuable insight into the effectiveness of procedures for addressing potential gTLD service interruptions. Lessons learned will be used to support ICANN’s efforts to ensure the security, stability and resiliency of the Internet and the Domain Name System.

The first test was conducted by ICANN and EBERO provider Nominet earlier this year, using the similarly unloved dot-brand .doosan.
I expect we’ll see a third test before long, using CNNIC, the third EBERO provider.
It would have plenty of dead dot-brands to choose from.

MMX stung for $7.7 million by crappy .london contract?

Did MMX take a $7.7 million accounting hit to renegotiate a crappy .london gTLD contract? It looks a bit like that to me.
Found in the company’s full-year 2016 financial results yesterday is the disclosure that it had to pay off an undisclosed gTLD partner after originally making “overly ambitious” predictions about its likely popularity.
The deal apparently had MMX — then under previous management as Minds + Machines — making guaranteed payments to its partner on the assumption that it would sell a lot more domains than it eventually did.
.london currently has about 56,000 names in its zone file, down from a post-launch peak of about 65,000.
According to its statement to the markets, MMX recorded a 2016 one-time contract restructuring expense of $3.8 million and has added a $3.9 million intangible asset to its balance sheet in relation to the contract.
That’s a total of $7.7 million, but CEO Toby Hall told DI that the cash payment was nowhere near that amount. He said:

in reality we have paid no where near that amount and much of this is the accounting treatment of a new contract that we believe has the potential to deliver future economic value to the business and will be covered from future revenues.

The gTLD in question is not named in the statement, and Hall also declined to name it in response to a DI inquiry, but MMX says of the contract:

In very early 2012, at the time when ICANN was still accepting new generic Top Level Domain applications, the then Executive Team entered into an overly ambitious agreement that it believed would provide value to the overall profile of the Group. The agreement had very significant financial commitments over the life of the contract and did not include any clauses that could allow the Group to renegotiate those commitments should the specific top-level domain not perform to the agreed financial projections. The growth of this top-level domain has not come close to meeting those expectations and the agreement has proven – and would have continued proving – to be a significant drag on the Group’s ability to generate positive cashflow from the given TLD.
In late Q4 of 2016 the current Executive team was able to successfully conclude renegotiations of certain components of the agreement by either restructuring or buying out certain financial commitments thus making it more economically viable going forward. As a result of the renegotiation effort, the Group has revised its modeling and believes that it can derive future economic benefit from the renegotiated contract. Accordingly, based on Management’s review, a portion of the buy out ($3.8million) has been expensed as a one-off restructuring cost while the remaining portion ($3.9million) will be capitalized as an intangible asset with future economic benefit.

All the evidence points to .london being the gTLD in question.
First, MMX says that the deal was entered into in “very early 2012”, which ties up with the timing of the request for proposals by the Mayor’s marketing office, London & Partners.
Second, MMX doesn’t have any other partner-based gTLDs that would plausibly have such ambitious commitments.
Third, MMX has previously stated that it was renegotiating some “burdensome” contracts. Last year, without relating it to a renegotiation, it said in a trading update that it was “encouraging to see an increasingly commercial and flexible approach from London & Partners, our Dot London partners”.
Fourth, word on the street back in 2012 was that L&P (which remember is affiliated with the London Mayor, an elected political office) had gone with tax-haven-based MMX rather than UK-based non-profit Nominet because MMX (then Minds + Machines) had offered the best financial incentives.
The scrapping of the old deal is perhaps another indicator of the hubris that accompanied the opening of the new gTLD program five years ago.
While L&P is the “owner” of .london, for want of a better word, in practice I gather that MMX runs it pretty much as if the gTLD was part of its regular portfolio.
The news of the contract changes were made in MMX’s audited 2016 results, which showed its billings doubling to $15.8 million during the year.
Revenue was $15 million, up from $6.3 million in 2015. Less partner payments, revenue was $13.5 million versus $5.5 million a year earlier.
The statement has half a dozen or more bottom lines, depending on what costs you exclude, but the one MMX wants us to look at is “Billings Operating EBITDA before one off restructuring costs”, which was $4.2 million compared to a loss of $6.6 million in 2015.
That, in other words, means that an unprofitable company has become a profitable one.
A lot of that has to do with the revenue from hundreds of thousands of .vip domain sales in China and a swingeing restructuring that led to headcount being slashed from 43 people to 20 people.
The company also sold off its registrar business to Uniregistry and started outsourcing its back-end functions to Nominet.
For 2017, the company has already disclosed two huge sales that will boost domains under management considerably, but at the risk of concentrating a larger part of MMX’s business outlook in just a few hands.
UPDATE: This article was updated a few hours after publication to clarify what MMX has said in relation to .london in previous trading statements.

MarkMonitor tells .feedback to take a hike after “breach” claim

MarkMonitor is to voluntarily terminate its registrar relationship with Top Level Spectrum after the .feedback registry hit it with a breach of contract notice.
Troy Fuhriman, director of domain management at the registrar, told DI today that the company has just sent TLS a letter stating that it no longer wishes to sell .feedback names.
TLS earlier this month accused MarkMonitor of breaking the terms of its Registry-Registrar Agreements by leaking details of that agreement to media outlets including yours truly.
While TLS CEO Jay Westerdal told DI that an apology from MarkMonitor would be enough to make the termination threat go away, MarkMonitor has clearly decided against that route.
“We’re going to terminate all accreditation agreements for .feedback,” he said. “In part it’s a response to ICANN’s finding that Top Level Spectrum violated its Pubic Interest Commitments, and what we believe is a retaliatory breach notification from them.”
MarkMonitor and a small posse of high-profile clients including Facebook recently won a Public Interest Commitment Dispute Resolution Policy complaint against .feedback, related to the transparency of its launch policies and pricing.
It was in that complaint that MarkMonitor released details contained in the RRA that TLS deemed to be confidential.
Terminating the agreement means that MarkMonitor will no longer be able to sell .feedback names as a registrar and will have to transfer its existing registrations to a different registrar.
Not many clients are affected. MarkMonitor had only 45 .feedback domains under management at the last count (which was still enough to make it the fourth-largest independent .feedback registrar).
Most of these domains will be moved to 101domain, which with fewer than 200 domains is still the leading .feedback registrar.
UPDATE: Westerdal says that MarkMonitor was in fact terminated on Monday. Neither party claims that MarkMonitor made any effort to comply with the breach notice by apologizing.

Mystery buyer pumps $500,000 into MMX gTLDs

MMX has inked a deal to sell 90,000 domain names to a mystery buyer.
The company formerly known as Minds + Machines today disclosed to the markets that the deal is worth $500,000 in the first year, and that the names will be registered at some point over the coming 12 months.
CEO Toby Hall declined to identify the buyer or the gTLDs concerned, but told DI that it’s an end-user buyer rather than a domain investor, and that the buyer is not Chinese.
It’s unrelated to the $1.3 million a Chinese domain investor paid for 200,000 .vip domains a couple weeks ago.
In both cases, the sales were disclosed to the market because they were financially material.
In this case, the 90,000 domains will cause a 37% uptick in MMX’s total registration base, if you exclude .vip from the portfolio.
The names are not registry-reserved, and are not premium-priced.
It works out to about $5.55 per domain, which is a first-year discount MMX agreed to with the undisclosed registrar that brought in the business. If they renew, they will renew at whatever the standard renewal price is at the time.
Hall said he did not know exactly when the domains will be registered, but MMX’s statement to the market said that it would be within the next 12 months.
Quite how the buyer can commit to buying 90,000 names without even knowing whether the names it wants will be available when it comes to register them, I’m not sure.
It’s all a bit mysterious, but my gut feeling is that we’re probably looking at one of those networks of low-quality, machine-aggregated, niche-content portals that spring up from time to time.
Previous efforts linked to the gTLD industry, such as Zip.pro and Socium Networks, haven’t exactly set the world alight.
But it this case it appears to buy a genuine third-party buyer, not a registry front.
Hall said that he was unaware of whether the buyer has also made large-scale purchases from other registries that do not have the same disclosure requirements, but said it was certainly possible.

.club premium sales approaching $5 million

.CLUB Domains sold half a million dollars worth of reserved premium names in the first quarter, bringing its cumulative to-date total to almost $5 million, the registry reported at the weekend.
Q1 sales were $505,139, the company said, bringing its total since launch to $4,844,428.
There were 475 premium sales in total, sold via auctions, registrars and aftermarket platforms, it said.
Headline sales in the period included seniors.club and pet.club for $18,000 apiece, and photo.club for $10,000.
The numbers may indicate that its broker program and financing options, introduced in January, may be taking off.
The registry’s Q1 sales amount to more than half of what it sold in the whole of 2016.
More sales figures are available in the .CLUB Domains blog post.

Companies losing $10 BILLION by ignoring new gTLDs — report

The world economy is “conservatively” losing out on almost $10 billion of annual revenue due to a lack of support for new gTLDs and internationalized domain names, according to an ICANN-commissioned research report.
The report, conducted by Analysys Mason for the semi-independent Universal Acceptance Steering Group, calculated that patchy new gTLD support means $3.6 billion of activity is lost, with lack of IDN support costing $6.2 billion.
Despite “new” gTLDs being around for a decade and a half, there are still plenty of web sites and apps that incorrectly assume that all TLDs are either two or three characters. Others don’t support non-Latin scripts.
This leads to internet users abandoning transactions, the report says, when their email addresses are rejected as invalid.
Mason calculated the $3.6 billion number by multiplying the estimated number of email addresses using new gTLD domains (152 million) by the estimated average annual revenue generated per email address ($360), then calculating what portion of these transactions cannot happen due to incomplete TLD support.
Earlier research by .CLUB Domains suggests that 13% of sites do not support new gTLDs, so that’s the number Mason used. The researchers then cut the number in half, to account for the 50% of people it reckons would simply switch to an email address in a legacy TLD name.
That gets you to $3.6 billion of potential revenue lost for want of gTLD support.
Another, more cynical way to spin this would be to say that new gTLDs are causing $3.6 billion of economic damage. After all, if everyone were to use legacy TLDs there would be no problem.
For the IDN number, Mason calculated how many users of five major language groups (Russian, Chinese, Arabic, Vietnamese and Indian languages) are not currently online, then estimated how much revenue would be generated if just 5% of these users (17 million people) were persuaded online by the existences of IDN TLDs.
The report was commissioned in order to raise awareness of the financial benefits of universal acceptance.
The UASG has spent most of its efforts so far focusing on UA as a “bug fix” to be communicated to engineers, so the report is intended to broaden its message to catch the attention of the money people too.
The report, which goes into much more detail about how the numbers were arrived at, can be downloaded here.

Uniregistry to grandfather existing domains before big price increases

Uniregistry has backtracked on its plan to hike renewal fees on thousands of domain name registrations.
CEO Frank Schilling described the U-turn, which followed a ferocious backlash from domain investors, as “the right thing to do”.
The company had announced price increases across 16 of its 27 gTLDs that in one case exceeded 3,000% but in many more cases represented increases in the hundreds of percent.
The increases were to apply to new and renewing registrations, and Schilling had said that they were necessary to keep the affected TLDs afloat.
But domainers were furious, taking to blogs and message boards to announce and decry the death of all new gTLDs.
Leading registrar Go Daddy soon said that it would no longer sell Uniregistry TLDs, at least temporarily.
But yesterday Uniregistry announced a change of heart, providing an unusually detailed account of the thought process leading to the price increases that’s worth quoting at length.

“The registration providers we consulted reported that differentiating prices based on the time of the registration was technically difficult and confusing for customers,” said Bret Fausett, head of the Registry Services Team. “Based on that feedback, and considering the small number of registrants affected, we made the difficult decision to raise prices for all registrants.”
“After the announcement, however, we, and our registration partners, have heard clearly from our end users that the ability to register ten-years at the existing price does not ameliorate the pain of subsequent price increases for registrants facing substantial price increases,” said Mr. Fausett. “So, for the names in our highest-priced tiers, the price changes will affect only new registrations. We are asking our registration partners to do whatever is necessary to enable this approach.”
“Creating a legacy tier of prices for inaugural registrants in our niche, premium top-level domains is technically more difficult,” said Frank Schilling, Managing Director of Uniregistry, “but it’s the right thing to do for those pioneering individuals and companies who have staked their claims in the new Internet real estate.”

In other words, if you register a name in the affected gTLDs before September 8, your renewal fee will be at the current lower level.
Whether this will be enough to mitigate Uniregistry’s reputational damage in the domainer community remains to be seen.
But the company also said it plans to overhaul its premium names pricing by the end of the second quarter, scrapping the multi-tier pricing approach in favor of a one-size-fits-all menu.
Schilling said that price reductions will affect “millions” of reserved names and mean “hundreds of millions” of dollars of hypothetical value have been wiped from the portfolio.

China approves more Donuts, Afilias gTLDs

Donuts and Afilias have had two batches of new gTLDs approved for use in China.
The Ministry of Industry and Information Technology approved five Afilias TLDs and six Donuts TLDs last month. This means customers of Chinese registrars will now be able to legally use those names in China.
Afilias was approved for .info, .mobi and .pro, which were delegated following the 2000 and 2003 new gTLD application rounds and .kim and .red from the 2012 round.
Donuts simultaneously was cleared for .ltd, .group, .游戏 (“game”), .企业 (“business”), .娱乐 (“entertainment) and .商店 (“store”).
The approvals more than double the number of new gTLDs in Latin script to get the nod from MIIT, in what now appears to be a monthly occurrence.
In February, .ink and four Chinese-script TLDs passed the regulatory process, following .site and .shop in January and .vip, .club and .xyz in December.
MIIT approval means the chance of usage by Chinese registrants should go up, but it also ties these Western registries to relatively Draconian government policies when it comes to Chinese registrations.