.web auction to go ahead after ICANN denies Donuts/Radix appeal

The new gTLD .web seems set to go to auction next week after ICANN rejected an 11th-hour delay attempt by two applicants.
ICANN’s Board Governance Committee said yesterday that there is no evidence that applicant Nu Dot Co has been taken over by a deep-pocketed third party.
The BGC therefore rejected Donuts’ and Radix’s joint attempt to have the July 27 “last resort” auction delayed.
Donuts and Radix had argued in a Request for Reconsideration earlier this week that Nu Dot Co has changed its board of directors since first applying for .web, which would oblige it to change the application.
Its failure to do so meant they auction should be delayed, they said.
They based their beliefs on an email from NDC director Jose Ignacio Rasco, in which he said one originally listed director was no longer involved with the application but that “several others” were.
There’s speculation in the contention set that a legacy gTLD operator such as Verisign or Neustar might now be in control of NDC.
But the BGC said ICANN had already “diligently” investigated these claims:

in response to the Requesters’ allegations, ICANN did diligently investigate the claims regarding potential changes to Nu Dot’s leadership and/or ownership. Indeed, on several occasions, ICANN staff communicated with the primary contact for Nu Dot both through emails and a phone conversation to determine whether there had been any changes to the Nu Dot organization that would require an application change request. On each occasion, Nu Dot confirmed that no such changes had occurred, and ICANN is entitled to rely upon those representations.

ICANN staff had asked Rasco via email and then telephone whether there had been any changes to NDC’s leadership or control, and he said there had not.
He is quoted by he BGC as saying:

[n]either the ownership nor the control of Nu Dotco, LLC has changed since we filed our application. The Managers designated pursuant to the company’s LLC operating agreement (the LLC equivalent of a corporate Board) have not changed. And there have been no changes to the membership of the LLC either.

The RfR has therefore been thrown out.
Unless further legal action is taken, the auction is still scheduled for July 27. The deadline for all eight applicants (seven for .web and one for .webs) to post deposits with ICANN passed on Wednesday.
As it’s a last resort auction, all funds raised will go into an ICANN pot, the purpose of which has yet to be determined. The winning bid will also be publicly disclosed.
Had the contention set been settled privately, all losing applicants would have made millions of dollars of profit from their applications and the price would have remained a secret.
NDC is the only applicant refusing to go to private auction.
The applicants for .web are NDC, Radix, Donuts, Schlund, Afilias, Google and Web.com. Vistaprint’s bid for .webs is also in the auction.
The RfR decision can he read here (pdf).

Is Verisign .web applicant’s secret sugar daddy?

The fiercely contested .web gTLD is being forced into a last-resort auction and some people seem to think a major registry player is behind it.
Two .web applicants — Radix (pdf) and Schlund (pdf) — this week wrote to ICANN to demand that the .web auction, currently planned for July 27, be postponed.
They said the sale should be delayed to give applicants time “to investigate whether there has been a change of leadership and/or control” at rival applicant Nu Dot Co LLC.
Nu Dot Co is a new gTLD investment vehicle headed up by Juan Diego Calle, who launched and ran .CO Internet until it was sold to Neustar a couple of years ago.
I gather that some applicants believe that Nu Dot Co’s .web application is now being bankrolled by a larger company with deeper pockets.
The two names I’ve heard bandied around, talking to industry sources this week, are Verisign and Neustar.
Nobody I’ve talked to has a shred of direct evidence either company is involved and Calle declined to comment.
So is this paranoia or not?
There are a few reasons these suspicions may have come about.
First, the recent revelation that successful .blog applicant Primer Nivel, a no-name Panama entity with a Colombian connection, was actually secretly being bankrolled by WordPress, has opened eyes to the possibility of proxy bidders.
It was only after the .blog contention set was irreversibly settled that the .blog contract changed hands and the truth become known.
Some applicants may have pushed the price up beyond the $19 million winning bid — making the rewards of losing the private auction that much higher — had they known they were bidding against a richer, more motivated opponent.
Second, sources say the .web contention set had been heading to a private auction — in which all losing applicants get a share of the winning bid — but Nu Dot Co decided to back out at the last minute.
Under ICANN rules, if competing applicants are not able to privately resolve their contention set, an ICANN last-resort auction must ensue.
Third, this effective vetoing of the private auction does not appear to fit in with Nu Dot Co’s strategy to date.
It applied for 13 gTLDs in total. Nine of those have already gone to auctions that Nu Dot Co ultimately lost (usually reaping the rewards of losing).
The other four are either still awaiting auction or, in the case of .corp, have been essentially rejected for technical reasons.
It usually only makes sense to go to an ICANN last-resort auction — where the proceeds all go to ICANN — if you plan on winning or if you want to make sure your competitors do not get a financial windfall from a private auction.
Nu Dot Co isn’t actually an operational registry, so it doesn’t strictly have competitors.
That suggests to some that its backer is an operational registry with a disdain for new gTLD rivals. Verisign, in other words.
Others think Neustar, given the fact that its non-domains business is on the verge of imploding and its previous acquisition of .CO Internet from Calle.
I have no evidence either company is involved. I’m just explaining the thought process here.
According to its application, two entities own more than 15% of Nu Dot Co. Both — Domain Marketing Holdings, LLC and NUCO LP, LLC — are Delaware shell corporations set up via an agent in March 2012, shortly before the new gTLD application filing deadline.
Many in the industry are expecting .web to go for more than the $41.5 million GMO paid for .shop. Others talk down the price, saying “web” lacks the cultural impact it once had.
But it seems we will all find out later this month.
Responding to the letters from Schlund and Radix, ICANN yesterday said that it had no plans to postpone the July 27 last-resort auction.
All seven applicants had to submit a postponement form by June 12 if they wanted a delay, ICANN informed them in a letter (pdf), and they missed that deadline.
They now have until July 20 to either resolve the contention privately or put down their deposits, ICANN said.
The applicants for .web, aside from Nu Dot Co, are Google, Donuts, Radix, Schlund, Web.com and Afilias.
Due to a string confusion ruling, .webs applicant Vistaprint will also be in the auction.

Buy it or lose it? Governments could get first dibs on two-letter domains

Governments and ccTLD registries would get new rights to own two-letter domains in new gTLDs under a proposed ICANN policy.
These highly-prized domains, many of which are likely worth thousands or tens of thousands of dollars, would be subject to a mini sunrise period, under the proposal.
The so-called Exclusive Availability Pre-registration Period would be limited to those companies or government entities in charge of matching ccTLDs.
The measures are outlined in “Proposed Measures for Letter/Letter Two-Character ASCII Labels to Avoid Confusion with Corresponding Country Codes” (pdf), published by ICANN late last week.
The surprisingly succinct document outlines three things new gTLD registries must do if they want to start selling two-letter domains matching ccTLDs, which are currently restricted.
The key measure is:

Registry Operator must implement a 30-day period in which registration of letter/letter two-character ASCII labels that are country codes, as specified in the ISO 3166-1 alpha-2 standard, will be made exclusively available to the applicable country-code manager or government.

In other words, if you’re a government or company listed as the ccTLD manager here, you get 30 days of exclusive opportunity to buy the LL.example matching your ccTLD.
Until now, governments have been able to block the release of LL new gTLD domains matching their ccTLDs.
The new proposal, introduced in an attempt to settle a long-running debate about the most appropriate way to enable the release of two-character strings, appears to add a “buy it or lose it” component to existing policy.
Under the base New gTLD Registry Agreement, all two-character domains were initially reserved.
Then, in late 2014, ICANN said registries could release all letter-number, number-letter and number-number combinations.
Many registries have already released such names, some selling for thousands at auction. When Rightside released its LN/NL/NN names, some carried price tags as high as $50,000.
Letter-letter domains could also be released following a formal registry request to ICANN, but were subject to a 60-day period during which governments could object.
Almost 1,000 new gTLDs have submitted such requests, and almost all have been “partially approved”.
That means some governments objected to the release of ccTLD-matching domains. Over 16,000 unique domain names have been objected to and therefore blocked over the last year or so.
The new proposal would add an extra process under which these blocked domains could be released, with ccTLD concerns getting first rights.
Interestingly, it appears to bring ccTLD managers into the mix, rather than restricting the names simply to governments.
The Governmental Advisory Committee has been the main driving force behind demands for restrictions on LL domains, but the proposed policy appears to also extend rights to private entities.
Remember, many ccTLDs are operated independently by private companies, without local government oversight.
For example, .uk is managed by Nominet, a non-governmental entity. The UK government has blocked many uk.example domains from being registered. The new policy appears to allow either Nominet or the government to register these names.
The one-page proposal is light on some details. It does not say, for example, what happens when the government and the ccTLD manager both want the name.
In keeping with ICANN’s habit of staying out of pricing, it does not specify price caps either.
It does, however, oblige registries to ban registrants from pretending to be affiliated with the relevant government when they are not.
Governments also get to complain, and registries have to investigate, if the relevant domains are causing “confusion”, though registries do not appear to be under a strict obligation to delete or suspend domains.
The policy is open for public comment until August here.

Chinese gTLD cranks up renewal prices from $18 to $100

Chinese new gTLD registry Beijing RITT-Net has said it intends to more than quintuple its registration and renewal prices.
From January 1, 2017, prices for .手机 will go up from $18 a year to $100 a year, the company said in a notice to ICANN late last month.
.手机 (.xn--kput3i) is a Chinese internationalized domain name meaning “.cell” or “.cellphone”.
The registry told ICANN:

it is our sincere hope to adjust the initial registration and renewal fees from 18 dollars to 100 dollars with the aim to keep up with the status quo of China’s domain name market and to provide registrants with better services. We wish the new price will be effective from Jan 1st, 2017.

I believe this is the biggest renewal price hike for a new gTLD registry to date.
Around 25,000 existing registrations appear to be affected, but very few registrars will have to deal with the ramifications.
According to registry reports, over 99% of its registrations were made via Beijing Innovative Linkage Technology, which does business at dns.com.cn.

GoDaddy gets its dot-brand

GoDaddy has become a new gTLD registry with the delegation yesterday of .godaddy.
It’s a dot-brand, so domain name registrations will not be made available to the general public.
In one of the shortest mission statements found in new gTLD applications, the company describes .godaddy like this:

The mission or purpose of the .GODADDY gTLD is strictly for branding protection and internal use. The gTLD .GODADDY will give visitors to any .GODADDY site the assurance that they are truly dealing with Go Daddy and not an imposter or cybersquatter.

GoDaddy has not yet gone live with its nic.godaddy site.
It’s not the first domain name firm to get its own dot-brand. Notably, Neustar and Verisign own .neustar and .verisign.
It’s not the only registrar with a dot-brand, either. France’s OVH got there first with .ovh.
GoDaddy originally applied for two other gTLDs — .home and .casa — but withdrew their applications almost immediately after a shift of company strategy.

Rightside refuses Donuts’ “opportunistic” $70m gTLD offer

Rightside has rebuffed Donuts’ semi-hostile takeover attempt for its portfolio of gTLD registry contracts.
The question now is: will Donuts up the offer from the $70 million already on the table?
In a pre-markets statement today, Rightside said the offer “undervalued” the assets.
CEO Taryn Naidu is quoted as saying:

After thoughtful evaluation, Rightside’s Board has determined that Donuts’ proposal significantly undervalues Rightside’s Registry assets. We believe Donuts’ proposal is an opportunistic attempt to acquire Rightside’s valuable portfolio of domain extensions with an undervalued price and in a manner that would not be in the best interests of Rightside shareholders.

The company reckons its gTLDs will be bringing in $50 million to $75 million in revenue a year in the next three two five years, which would represent substantial growth over current levels.
It made $2.6 million from the registry business in the first quarter this year.
Donuts’ offer could be considered “opportunistic” given that there’s some shareholder dissatisfaction with Rightside’s success rate with new gTLDs today.
Activist investor J Carlo Cannell and Uniregistry CEO Frank Schilling, both of whom own small but significant chunks of Rightside, have called on the company to get rid of some of its under-performers.
By announcing the offer publicly — apparently after months of private offers — Donuts might have been trying to capitalize on this unrest.
But pissed-off investors don’t necessarily want these gTLDs sold off cheap.
Rightside has 40 new gTLDs. A $70 million offer equals $1.75 million per gTLD. That’s fair way below the average sale price for gTLDs at ICANN auction, which is $7 million (or $3 million if you take the median).
Will Donuts now increase its offer, or back away?

dotgay loses third .gay appeal

Death warrant or portent of impending legal action?
dotgay LLC has lost its third attempt to get ICANN to reconsider tossing its application for community priority status in the fight for the .gay gTLD.
According to ICANN, on Sunday its Board Governance Committee threw out dotgay’s third Request for Reconsideration, an attempt to give the company an unprecedented third go at the Community Priority Evaluation process.
CPEs allow community gTLD applicants to avoid expensive auctions, but dotgay has lost two primarily on the grounds that its definition of community includes people who are not gay.
Its latest RfR was pretty weak, based on a technicality about which staffers at the Economist Intelligence Unit (which carries out the CPEs) were in charge of verifying its letters of community support.
The rationale for the BGC’s determination, which still needs to be rubber-stamped by the full ICANN board, has not been published yet.
But it seems from a blog post that ICANN now expects .gay to go to auction, where there are four competing applicants in total.
ICANN does not usually publish blog posts on RfR decisions, but in the .gay case it has been keen to avoid being accused of any motivation beyond a dogged pursuit of correct procedure.
So will dotgay go quietly? It remains to be seen.
While all new gTLD applicants had to sign a release promising not to sue ICANN, .africa applicant DotConnectAfrica sued earlier this year and managed to get a sympathetic judge who seems bent on allowing the case to go to trial.

Fight as ICANN “backtracks” on piracy policing

ICANN has clarified that it will not terminate new gTLD registries that have piracy web sites in their zones, potentially inflaming an ongoing fight between domain companies and intellectual property interests.
This week’s ICANN 56 policy meeting in Helsinki saw registries and the Intellectual Property Constituency clash over whether an ICANN rule means that registries breach their contract if they don’t suspend piracy domains.
Both sides have different interpretation of the rule, found in the so-called “Public Interest Commitments” or PICs that can be found in Specification 11 of every new gTLD Registry Agreement.
But ICANN chair Steve Crocker, in a letter to the IPC last night, seemed to side strongly with the registries’ interpretation.
Spec 11 states, among other things, that:

Registry Operator will include a provision in its Registry-Registrar Agreement that requires Registrars to include in their Registration Agreements a provision prohibiting Registered Name Holders from distributing malware, abusively operating botnets, phishing, piracy, trademark or copyright infringement, fraudulent or deceptive practices, counterfeiting or otherwise engaging in activity contrary to applicable law, and providing (consistent with applicable law and any related procedures) consequences for such activities including suspension of the domain name.

A literal reading of this, and the reading favored by registries, is that all registries have to do to be in compliance is to include the piracy prohibitions in their Registry-Registrar Agreement, essentially passing off responsibility for piracy to registrars (which in turn pass of responsibility to registrants).
Registries believe that the phrase “consistent with applicable law and related procedures” means they only have to suspend a domain name when they receive a court order.
Members of the IPC, on the other hand, say this reading is ridiculous.
“We don’t know what this clause means,” Marc Trachtenberg of the IPC said during a session in Helsinki on Tuesday. “It’s got to mean something. It can’t just mean you have to put a provision into a contract, that’s pointless.”
“To put a provision into a contract that you’re not going to enforce, has no meaning,” he added. “And to have a clause that a registry operator or registrar has to comply with a court order, that’s meaningless also. Clearly a registry operator has to comply with a court order.”
Some IPC members think ICANN has “backtracked” by introducing the PICs concept then failing to enforce it.
IPC members in general believe that registries are supposed to not only require their registrars to ban piracy sites, but also to suspend piracy domains when they’re told about them.
Registries including Donuts have started doing this recently on a voluntary basis with partners such as the Motion Picture Association of America, but believe that ICANN should not be in the business of content policing.
“[Spec 11] doesn’t say what some members of the IPC think it says,” Donuts VP Jon Nevett said during the Helsinki session. “To say we’re in blatant violation of that PIC and that ICANN is not enforcing that PIC is problematic.”
The fight kicked off face-to-face in Helsinki, but it has been happening behind the scenes for several months.
The IPC got mad back in February when Crocker, responding to Governmental Advisory Committee concerns about intellectual property abuse, said the issue “appears to be outside of our mandate” (pdf).
That’s a reference to ICANN’s strengthening resolve that it is not and should not be the internet’s “content police”.
In April (pdf) and June (pdf) letters, IPC president Greg Shatan and the Coalition for Online Accountability’s Steve Metalitz called on Crocker to clarify this statement.
Last night, he did, and the clarification is unlikely to make the IPC happy.
Crocker wrote (pdf):

ICANN will bring enforcement actions against Registries that fail to include the required prohibitions and reservations in its end-user agreements and against Registrars that fail to main the required abuse point of contact…
This does not mean, however, that ICANN is required or qualified to make factual and legal determinations as to whether a Registered Name Holder or website operator is violating applicable laws and governmental regulations, and to assess what would constitute an appropriate remedy in any particular situation.

This seems pretty clear — new gTLD registries are not going to be held accountable for domains used for content piracy.
The debate may not be over however.
During Helsinki there was a smaller, semi-private (recorded but not webcast live) meeting of the some registries, IPC and GAC members, hosted by ICANN board member Bruce Tonkin, which evidently concluded that more discussion is needed to reach a common understanding of just what the hell these PICs mean.

Survey: more people know about new gTLDs but fewer trust them

People are becoming more aware that new gTLDs exist, but there’s less trust in them that there was a year ago, according to an ICANN-sponsored survey.
The second annual Global Consumer Survey, which was published late last week, shows that 16% of respondents had heard of specific new gTLDs, on average.
That’s up 2% on last year’s survey.
The number for TLDs added in the last year was 20%, with .news leading the pack with 33% awareness.
However, fewer people were actually visiting these sites: 12% on average, compared to 15% a year ago. For TLDs added in the last year, visitation averaged 15%.
And the amount of trust placed on new gTLDs added prior to the 2015 survey was down from 49% to 45% — half the level of .com, .org and .net.
For TLDs added since last year’s survey, trust was at 52% on average.
The 2015 survey looked only at .email, .photography, .link, .guru, .realtor, .club and .xyz. For this year’s survey, respondents were also asked about .news, .online, .website, .site, .space, .pics, .top, .bank, .pharmacy, and .builder.
The number of registered domains did not seem to have an impact on how aware respondents were on individual extensions.
.xyz, for example, had the lowest awareness of those used in the survey — 9% versus 5% in 2015 — despite being the runaway volume market leader and having scored PR coups such as Google’s adoption of abc.xyz for its new parent company, Alphabet.
Likewise, .top, second only to .xyz in the size league table, could only muster up 11% awareness.
.news, .email and .online topped the awareness list — with 33%, 32% and 30% respectively — despite having only about 500,000 names between them.
I’m not sure I buy much of this data to be honest. There’s some weirdness.
For example, the survey found that 28% of respondents claim to have visited a .email web site.
That’s a gTLD at least partially if not primarily designed for non-web use, with roughly 20,000 names that are not parked.
If over a quarter of the population were visiting .email sites, you might expect some of those sites to show up prominently in Alexa rankings, but they don’t.
But perhaps, if we take this survey as a measure of consumers perceptions, it doesn’t matter so much whether it reflects the reality of internet use.
The survey, conducted by Nielsen for ICANN, covered dozens of other aspects of internet use, including feelings on cybersecurity, navigation and such, and weighs in at 160 pages. Read it all over here.

One in seven new gTLD domain names are actually just numbers

Roughly one out of every seven new gTLD domain names active today is numbers-only before the dot, according to DI research.
It might be surprising to some that the DNS, designed to turn immemorable numbers into memorable names, is actually being used to register millions of numeric domains.
Using the almost 1,000 new gTLD zone files we had access to on July 19*, DI counted 20,933,637 unique domain names of which 3,259,684 were purely numeric.
In other words, 15.57% of new gTLD domain names only contain numbers before the dot.
Fourteen gTLDs have a third or more of their zones fully numeric. One is two-thirds numeric.
The reason for this, of course, is China.
Numeric domains are said to be popular in China due to the fact that digits are the only 10 characters permissible in DNS that Chinese speakers natively understand.
Many popular web sites in China use short, numeric .com or .cn domain names. Some short numeric domains have sold for six or seven figures to end-user companies.
So there’s a thirst for numerics among Chinese domainers, as well as domainers elsewhere who want to exploit the Chinese market.
I talked to a successful domainer recently who acquired thousands of numeric domain names purely to flip to Chinese investors.
Personally, I think the market is overblown. Data suggests there’s a limited appetite for numerics among actual end users.
Fewer than 2,700 of top one million most-visited domains, as ranked by Amazon’s Alexa service, are numeric. A quarter of a percent. Even if Alexa is wrong by a factor of 10, that’s still only 2.7% of the internet’s biggest sites using numeric domain names.
So which gTLDs are most exposed to the numeric market?
Surprisingly, given the registry’s reluctance to deeply discount its domains, two Donuts gTLDs — .gold and .run, both relatively small TLDs — top the table with 66.32% and 54.65% respectively.
I think these are anomalies. The majority of Donuts’ portfolio have far smaller percentages of numerics.
Fellow portfolio players Afilias (.bet, .kim) and Uniregistry (.lol, .mom) also feature prominently on the list.
Here’s the top 30 new gTLDs, ranked by the percentage of their zones that are numeric. It includes every gTLD over 20%.
[table id=43 /]
In absolute terms, the larger-volume registries naturally have the larger number of numeric domains in their zones.
XYZ.com’s .xyz alone has over 867,000 numeric domains in its zone. That’s a lot of names, but in percentage terms it’s below the industry mean.
.top, .wang, .win and club, all heavily marketed in China, fill out the top five in volume terms.
Here’s the top 30 gTLDs with the largest absolute number of numerics. They account for 3,099,981 numeric domains of the 3,259,684 industry total.
[table id=44 /]
While short domains are more attractive to investors and end users, the vast majority of numeric domains in new gTLDs are of course longer than five digits.
.xyz, for example, has over 757,000 numeric domains of six or more characters. .top, .wang and .win are also measured in the hundreds of thousands in this regard.
Four gTLDs — .club, .wang, .top and .xyz — are over 99% full when it comes to five-digit numeric domains (that is, they have over 99,000 numeric domains in their zones).
.win is over 95% full on that basis, after which the numbers drop sharply to 65% and below.
In terms of four-number domains, there are 10 gTLDs that are over 99% full and 16 over 90% full.
There are 36 new gTLDs over 90% full in terms of three-digit numeric domains. More than a dozen appear to be completely full (giving myself some wriggle-room for reserved names and those that otherwise don’t appear in the zone files).
So what to make of all this?
I’m not a domainer, but I’ve sometimes heard domainers compare domains to baseball cards.
Going with that analogy, I’d say that if the typical numeric domain name collection contains the odd vintage Babe Ruth**, he’s far outnumbered by cards depicting some guy’s kid playing catch in the park.
That may be true of all domain portfolios, numeric or otherwise, but I feel numerics exist primarily right now to be traded between domainers.
As long as this continues, new gTLD registries — at least the ones actually charging for their names — will continue to benefit.
* A note on methodology. Due to the way access to zone files via ICANN works (ie, sporadically) we were missing some zone files on July 19. Including the missing gTLD may alter the league tables presented above, but I don’t believe the missing data was significant to the overall totals. Only one of the top 100 gTLDs, a zone of about 28,000 names, was missing.
** I know nothing about baseball.