No, .kids isn’t a community either

DotKids Foundation has comprehensively lost is .kids Community Priority Evaluation.
The company’s CPE results came out at the weekend (pdf), showing a score of 6 out of the 16 available points, a long way short of the 14-point passing score.
Like other “community” new gTLD bids before it, .kids failed because the Economist Intelligence Unit panel decided that the application was an attempt to create a community rather than represent an existing one. It wrote:

The Panel determined that this application refers to a “community” construed to obtain a sought-after generic word as a gTLD string, and that the application is attempting to organize the various groups mentioned in the documentation through a gTLD.

The application scored a big fat 0/4 on the question of whether the community exists and, as a knock-on effect, another 0/4 on whether the .kids string represents the community.
It picked up 3/4 for its registration policies and 3/4 on community endorsement.
The CPE failure means DotKids will have to face rival Amazon at auction, where one imagines the not-for-profit foundation will have a hard time winning.
ICANN’s CPE pipeline currently only has one active application, where Merck KGaA is fighting to avoid an auction with rival Merck Registry Holdings, Inc.
The latter .merck, and Vistaprint’s .webs application, have both also been invited to CPE.

Minds + Machines dumps back-end and registrar in Nominet, Uniregistry deals

Minds + Machines is to get out of the registrar and back-end registry services markets in separate deals with Nominet and Uniregistry.
The cost-saving shake-up will lead to about 10 job losses, or about 25% to 30% of its current headcount, CEO Toby Hall told DI this morning.
Under the Nominet deal, M+M will outsource the back-end registry functions for 28 new gTLDs, currently managed in-house, to the .uk ccTLD manager.
The deal covers all the gTLDs for which M+M is the contracted party (such as .law, .cooking and .fashion), as well as the four it runs in partnership (eg .london) and the five where it currently acts as back-end for a third party registry (eg .broadway).
The company also plans to dump its “unprofitable” registrar entirely, migrating its existing customers to Uniregistry’s Uniregistrar business.
About 49,000 domains will be affected by this move, Hall said.
Uniregistry will pay M+M a commission over the lifetime of the accounts.
Focusing on the registry business was the plan from the moment Hall took over M+M, following a shareholder coup that kicked out founding CEO Antony Van Couvering in January.
Hall told DI:

It [previously] had a very ambitious plan. It wanted to be vertically integrated, but the considered view is there are people out there who are far better able to run parts of the exercise than ourselves, both on the RSP piece and likewise the registrar piece. The strategy from day one was to rapidly evolve into becoming a business-to-business marketing-led registry business and radically overhauling our cost structure at the same time.

The company is currently in a financial quiet period and will not yet disclose the amount of savings it expects to reap, Hall said. He added:

Reducing cost isn’t a strategy for growth, and as a business that will be where we will be judged. Growing our portfolio, growing our domains under management, growing our revenue within those domains. That’s what the business has to be focused on. We see within the industry that the highest value is in the [TLD] ownership part.

The job losses are expected to be largely on the technical side of the house.
The RSP outsourcing means that Nominet significantly boosts its stable of managed TLDs. While it’s in the top five back-ends in terms of DUM (due to the 11 million in .uk) its portfolio of clients there is relatively small, largely limited to a handful of dot-brands.
Nominet CEO Russell Haworth said in a statement:

This partnership takes us into the top tier of registry operators globally by volume of TLDs and compliments the brands we currently manage, such as .BBC, .Bentley and .Comcast. It also underlines our long-term strategy to provide a more diversified range of services to gTLDs and registrars.”

With the Uniregistry registrar deal, Hall said that competing with its own channel “was just not right for us”.
It might be worth noting that Uniregistry is actually a vertically integrated triple-play along the lines of M+M, also, managing its own back-end, registry and registrar businesses.
Hall said that the M+M registrar had sold mainly to domain investors with little interest in buying value-added services such as email and hosting, which is often where much of the profit lies.
Both deals are subject to ICANN approvals, and client approval in case of the back-end transition, will be phased in over many months, and are expected to be finalized by the end of the year.
UPDATE: M+M said later this morning that it is changing its official company domain to mmx.co from mindsandmachines.com.

Rightside offers $10 renewals on premium names

Rightside is to run a promotion that will discount renewals on premium names down to .com prices.
From May 16 to June 30, if you buy any of the domains that Rightside has marked as premium — except the super-premium “Platinum” names — the wholesale renewal fee will be just $10.
Registrars will mark this up according to their own pricing models.
Normally, the price you pay at the checkout is the price you pay every year after that.
The deal is overtly targeted at domainers.
Rightside said: “At these reduced prices, you’ll have more time to find the right buyer for any domains you register, and incur lower fees to transfer to them once you do. If you’re looking to add high-quality domains to your portfolio, this will be the time to do it.”
The reduced renewals only apply to names registered during the six-week window, but they do pass on to subsequent registrants if the domain is sold.
Rightside is calling it a “first-of-its-kind” promo, but in reality it’s just a temporary regression to the once-standard industry model.
Remember, prior to the 2012-round gTLDs, only exceptions like .tv charged premium rates for renewals.
Premium renewals are now very commonplace, but are by no means the rule, in the new gTLD industry.
For Rightside, the offer means the company may experience a brief cash windfall as domainers, who generally hate premium renewals, take a chance on the registry’s names.
There’s also a potential marketing benefit to be gained from having more domainers on board as unpaid salespeople.
But it does rather suggest the premiums are not flying off the shelves at the rate Rightside wants.
The company recently disclosed that in the first few months of the year it made revenue of $674,610 selling 1,820 premium names, leading to an average price of $372. Twelve five-figure names had been sold.
Over its portfolio of 39 gTLDs, Rightside has flagged over 964,000 as premium, or about 25,000 per TLD.

China floats domain crackdown plans

The Chinese government is planning a crackdown on internet domains that could see mass censorship of non-Chinese names.
Draft rules floated for public comment this week are being widely reported as potentially blocking any domain that is not registered via a registry or registrar with a government license.
There are more than 50 provisions in the draft, but Article 37 is the one causing the most concern.
A translation published by Quartz yesterday has it reading like this:

Domain names engaging in network access within the borders shall have services provided by domestic domain name registration service bodies, and domestic domain name registration management bodies shall carry out operational management.
For domain names engaging in network access within the borders, but which are not managed by domestic domain name registration service bodies, Internet access service providers may not provide network access services.

At its worst, it suggests that every domain name not registered entirely through China-approved registries and registrars could be blocked from resolving in China.
You’d need a domain in .cn or a licensed gTLD, registered through a Chinese registrar, to access Chinese internet users, in other words.
But even Chinese locals who follow the issue closely are reportedly saying the regulations are vaguely worded, so it’s not clear exactly what would be blocked.
If you can read Chinese, the draft rules can be downloaded from this page. I’d be interested in hearing your take on them.
The rules also demand that domain name companies prevent domains carrying words deemed harmful from being registered.
There are additional controls on content — bans on porn, “rumor” and basically anything the Chinese government does not like — and registrant identity validation requirements.
The rules appear to be designed to replace the existing 2004 regulations that among other things force registrars and registries to obtain government licenses before the names they sell are allowed to resolve.
Those rules have led to several Western new gTLD registries, including Rightside, Famous Four Media and Minds + Machines, opening up corporate entities in China, in order to tap into the thriving market.
Local entities are of course subject to local laws — and ICANN contracts oblige them to abide by all applicable laws — which opens up the risk of Chinese regulations leaking out into the wider internet.
That almost happened with XYZ.com, which announced and then retracted (or clarified) an apparent plan to globally block domains deemed unsuitable by the Chinese censors.
It is inevitable that the proposals, which are open for public comment until April 25, will be used by US Congressional Republicans as a stick to beat ICANN and fight the imminent transition of IANA away from US government oversight.
High profile GOP politicians including presidential hopeful Ted Cruz have pointed to Chinese censorship as a risk of removing the USG from DNS root zone management.
But this isn’t really an ICANN problem as such. It’s a market forces problem.
Some new gTLD registries are seeing huge sales volume from Chinese registrants, who are trading many thousands of short, meaningless domains like baseball cards at the moment.
DI data shows that Chinese registrars accounted for 18.4 million gTLD domains in November 2015, up by 8.8 million domains in 12 months.
That number is likely to be several millions greater now, given the speculative activity of the last few months.
For registries, fully exploiting this market requires some sort of local presence, which in turn means exposing themselves to the already pretty bad Chinese censorship regime.
They’re going to have to be careful if they want to avoid China using the market to achieve the kind of back-door policy control it would never be able to obtain via ICANN.

Schilling, Famous Four rubbish Spamhaus “worst TLD” league

Uniregistry and Famous Four Media have trashed claims by Spamhaus that their gTLDs are are much as 75% spam.
FFM says it is “appalled” by the “wholly inaccurate” claims, while Uniregistry boss Frank Schilling said Spamhaus has “totally jumped the shark here.”
In a statement to DI today, FFM chief legal officer Oliver Smith said the spam-fighting organization’s recently launched World’s Worst TLDs list is “reckless”, adding that the numbers are:

not only wholly inaccurate, but are misleading and, potentially, injurious to the reputation of Famous Four Media and those TLDs it manages. It is particularly worrisome that Spamhaus’s “findings” seem to have been taken as gospel within certain corners of the industry, despite not being proffered with any analytical methodology in support of the same.

The Spamhaus report, which is updated daily, presents the 10 TLDs that are more spam than not.
The rank is based on a percentage of domains seen by Spamhaus that Spamhaus considers to be “bad” — that is, are advertised in spam or carry malware.
Today, Uniregistry’s .diet tops the chart with “74.4% bad domains”, but the scores and ranks can and do shift significantly day by day.
Spamhaus describes its methodology like this:

This list shows the ratio of domains seen by the systems at Spamhaus versus the domains our systems profile as spamming or being used for botnet or malware abuse. This is also not a list that retains a long history, it is a one-month “snapshot” of our current view.

The words “seen by the systems at Spamhaus” are important. If a domain name never crosses Spamhaus’s systems, it isn’t counted as good or bad. The organization is not running the whole zone file against its block-list to check what the empirical numbers are.
In important ways, the Spamhaus report is similar to the discredited Blue Coat report into “shady” TLDs last September, which was challenged by myself and others.
However, in a blog post, Spamhaus said it believes its numbers are reflective of the TLDs as a whole:

In the last 18-years, Spamhaus has built its data gathering systems to have a view of most of the world’s domain traffic. We feel the numbers shown on this list are representative of the actual full totals.

I disagree.
In the case of .diet, for example, if 74% of the full 19,000-domain zone was being used in spam, that would equate to 14,000 “bad” domains.
But the .diet zone is dominated by domains owned by North Sound Names, the Frank Schilling vehicle through which Uniregistry markets its premium names.
NSN snapped up well over 13,000 .diet names at launch, and Schilling said today that NSN owns north of 70% of the .diet zone.
That would mean either Uniregistry is a spammer, or Spamhaus has no visibility into the NSN portfolio and its numbers are way the hell off.
“Spamhaus’ assertion that 74% of the registrations in the .diet space are spam is a numerical impossibility,” Schilling said. “They totally jumped the shark here.”
NSN’s domains don’t send mail, he said.
He added that diet-related products are quite likely to appear in spam, which may help account for Spamhaus’s systems identifying .diet emails as spam. He said:

Spamhaus is a high-minded organization and we applaud their efforts but this report is so factually inaccurate it casts into doubt the validity of everything they release. Spamhaus should be smarter than this and at a minimum consult with registries (our door is open) to gain a better understanding of the subject matter they wrongly profess to be expert in.

Similarly, FFM’s .review gTLD was briefly ranked last week as the “worst” gTLD at 75.1% badness. With 66,000 domains, that would mean almost 50,000 names are spammy.
Yet it appears that roughly 25,000 .review domains are long-tail geo names related to the hotels industry, registered by a Gibraltar company called A Domains Limited, which appears to be run by AlpNames, the registry with close ties to FFM itself.
Again, if Spamhaus’s numbers are accurate, that implies the registrar and/or registry are spamming links to content-free placeholder web sites.
FFM’s Smith says the registry has been using Spamhaus data as part of its internal Registry Abuse Monitoring tool, and that its own findings show significantly less spam. Referring to .review’s 75% score, he said:

This simply does not accord with FFM’s own research, which relies heavily on data made available by Spamhaus. The reality is that, in reviewing registration data for the period 8 February to 8 March 2016, only 4.8% of registered domains have been blacklisted by Spamhaus – further, it is questionable as whether every single such listing is wholly merited. When reviewing equivalent data for the period of 1 January to 8 March 2016 across ALL FFM managed TLDs this rate averages out to a mere 3.2%.

I actually conducted my own research into the claims.
Between March 8 and March 15, I ran the whole .review zone file through the Spamhaus DBL and found 6.9% of the names were flagged as spam.
My methodology did not take account of the fact that Spamhaus retires domains from its DBL after they stop appearing in spam, so it doesn’t present a perfect apples-to-apples comparison with Spamhaus, which bases its scoring on 30 days of data.
All told, it seems Spamhaus is painting a much bleaker picture of the amount of abuse in new gTLDs than is perhaps warranted.
During ICANN meetings last week and in recent blog comments, current and former executives of rival registries seemed happy to characterize new gTLD spam as a Famous Four problem rather than an industry problem.
That, despite the fact that Uniregistry, Minds + Machines and GMO also feature prominently on Spamhaus’s list.
I would say it’s more of a low prices problem.
It’s certainly true that FFM and AlpNames are attracting spammers by selling domains for $0.25 wholesale or free at retail, and that their reputations will suffer as a result.
We saw it with Afilias and .info in the early part of the last decade, we’ve see it with .tk this decade, and we’re seeing it again now.

.mobile will be restricted after Donuts loses auction to Dish DBS

The contention set for the new gTLD .mobile has been resolved, seemingly by private auction, with Dish DBS emerging victorious.
The portfolio registry withdrew its application at the weekend, leaving the satellite TV provider the only remaining applicant.
This means that .mobile will be a restricted gTLD, available only to vetted members of the mobile telephony industry.
Dish had originally proposed .mobile as a so-called “closed generic”, in which it would be the registry and only registrant, but changed its application last year.
It’s a similar story to .phone, which Dish also won.
Dish applied for 13 gTLDs. It withdrew two applications, and 10 others are either in pre-delegation testing or ICANN contracting.

ICANN ups new gTLD revenue forecast

ICANN has increased its new gTLD revenue projections for fiscal 2016.
The organization released its draft FY17 budget over the weekend, showing that it expects its revenue from new gTLDs for the 12 months ending June 30, 2016, to come in at $27.3 million.
That’s a 13% increase — an extra $3.1 million — on what it expected when it adopted its FY16 budget last June.
The anticipated extra money comes from registry and registrar transaction fees, spurred no doubt by the crazy speculation in the Chinese market right now.
Registry transaction fees are now expected to be $2.8 million (up from the earlier prediction of $2 million) and $3 million (up from $2.3 million).
The bulk of the new gTLD revenue — $21.5 million — still comes from fixed registry fees, which do not vary with transaction volume.
For fiscal 2017, which starts July 1 this year, ICANN is predicting new gTLD revenue of $41.5 million, a 52% annual growth rate.
The adopted FY16 budget is here. The new proposed FY17 budget is here. Both are PDF files.
The FY17 proposals are open for public comment.

Amazon files appeal on rejected .amazon domain

Amazon has appealed the rejection of its proposed .amazon new gTLD.
The company this week told ICANN that it has invoked the Independent Review Process, after 18 months of informal negotiations proved fruitless.
Amazon’s .amazon application was controversially rejected by ICANN in May 2014, due to advice from the Governmental Advisory Committee.
The GAC, by a consensus, had told ICANN that .amazon should be rejected.
South American nations that share the Amazonia region of the continent had said the string was “geographic” and should therefore be unavailable to the US-based company.
The word “Amazon” is not protected by ICANN’s geographic string rules, because “Amazon” is not the name of a region, and was only rejected due to governmental interference.
The GAC’s decision came only after the US, which had been preventing consensus in order to protect one of its biggest native internet companies, decided to step aside.
Amazon has been in ICANN’s Cooperative Engagement Process — an informal set of talks designed to avoid the need for too many lawyers — since July 2014.
Those talks have now ended and Amazon has told ICANN that an IRP is incoming, according to ICANN documentation published on Tuesday (pdf).
The IRP documents themselves have not yet been published by ICANN.
UPDATE: This article originally incorrectly stated that the US withdrew its objection to the GAC consensus on .amazon after the IANA transition was announced. In fact, it did so several months prior to that announcement.

Amazon plotting registrar workaround?

Amazon has given an early hint at how it may manage its new gTLD registries.
The company seems to be planning to make its own web site the place to go to for its new gTLD domains, relegating registrars to secondary players in the sales path.
It also seems to be planning to up-sell registrants with services, possibly including hosting, before they even get to the registrar’s storefront.
Amazon has filed a Registry Services Evaluation Process request with ICANN, relating to its gTLD .moi (French for “.me”) covering a “Registration Authentication Platform”.
.moi isn’t a brand, but Amazon says it plans to verify registrant “eligibility” before allowing a registration to take place.
To date, it has not revealed what the eligibility requirements for .moi are.
Its RSEP filing says that it intends to offer registrants a suite of optional add-on “technology tools or applications” at the point of verification.
Crucially, that’s before they get bounced to their registrar of choice to actually register the name.
Amazon is basically putting its up-sell pitch into the sales path before registrars get to do the same.
The RSEP explains it like this:

After the customer selects the Technology Tools of interest and/or ancillary products or services (if any), the customer will select its registrar of choice from among the complete list of .MOI-accredited registrars and be directed to that registrar’s site to permit that registrar to collect the required registrant information for the domain name registration, and to submit payment for the selected .MOI domain name. Upon completion of these steps, the registrar, through the normal EPP processes, shall transmit the required registration information to the Registry and the .MOI domain name shall be registered. A customer that first visits a .MOI-accredited registrar’s website will be directed to the Registry’s .MOI website to undergo the process noted above. After pre-registration policy verification, those customers will be transitioned back to the originating registrar’s site.

The RSEP does not explain what the “technology tools” are, but I’d be very surprised if they did not include for example web hosting, a staple higher-margin registrar product.
It’s not entirely clear what, if any, consultations Amazon has had with registrars regarding its proposals. The RSEP language is evasive:

Amazon Registry reached out to several registrars to have general discussions about their experience with pre-registration policy verification and how that experience (including customer experience) could be improved. Any consultations that may have occurred regarding the Technology Tools and the ancillary products and services would have occurred subject to a Mutual Non-Disclosure Agreement and cannot be disclosed.

Currently, the RSEP only covers .moi. Amazon would have to file additional RSEPs if it wanted the new service applied to its 32-TLD-strong portfolio, which includes the likes of .book, .song and .tunes.
ICANN has already made a preliminary determination that the RSEP “does not raise significant competition, security or stability issues”.
As usual, there’s a public comment period, which ends April 14.

Schilling agrees with activist Rightside investor

Uniregistry boss Frank Schilling agrees to a large extent with the fellow Rightside investor who was revealed today to be threatening a boardroom coup at Rightside.
Schilling, who is believed to have paid $8.4 million for 6.1% of Rightside, told DI tonight that he believes Rightside’s management has not done a good job over the last few years.
He said he agrees with 7.32% shareholder J Carlo Cannell, who says that Rightside should get rid of some of its weaker new gTLDs.
Cannell, of Cannell Capital, is demanding Rightside lay off one in five of its staff, dump its weakest new gTLDs, and refocus the company on its eNom registrar business.
He’s threatening to launch a proxy fight at the company in order to replace the Rightside board of directors with his own slate if management does not do what he wants.
Cannell’s letter called out .democrat, .dance, .army, .navy, and .airforce as “irrelevant” or “garbage” gTLDs in Rightside’s portfolio that should be sold or simply “abandoned” in order to focus on its better gTLDs, such as .news, and its cash-generating registrar business.
Schilling told DI tonight that he agrees with Cannell, at least partly.
He said that if Cannell’s proposal for the company is good for shareholders and the company he would support it.
It may sound counter-intuitive for Schilling, one of the most ardent proponents of new gTLDs, to support somebody encouraging Rightside to invest less in marketing its new gTLD portfolio.
After all, Uniregistry has a couple dozen new gTLDs — including .sexy, .christmas, .pics and .link — in its stable
But Schilling has form when it comes to advocating portfolio rationalization.
Today he pointed to comments he made on a DI article in December
“Operators may make the decision to give away or sunset unprofitable strings,” he said in those comments. “I don’t view that as such a bad thing.”
Schilling said that weaker strings should be “bootstrapped” rather than aggressively invested in.
One of Cannell’s beefs with Rightside is that the company is focusing too much on new gTLDs. He’s not opposed to new gTLDs in general — in fact, he likes them — but he wants Rightside to put money only into those gTLDs he considers worthwhile.
Cannell also wants Name.com rebranded to eNom and moved to Rightside’s Seattle headquarters, for two of its directors to be replaced and for 20% of Rightside’s “weakest” staff to be laid off.
I asked Schilling whether he agreed with Cannell that that 20% of Rightside’s staff should be let go.
He said: “I do not think it is healthy to name arbitrary numbers but I do think some wrong people are in the wrong seats.”
Schilling also said that he believes Rightside has been “subservient” to Donuts, and has given Donuts too much for too little.
Donuts is the portfolio gTLD registry play that uses Rightside as its back-end registry provider.
Donuts has a much better portfolio, in my irrelevant opinion.
Another notable investor in Rightside is XYZ.com CEO Daniel Negari and his COO Michael Ambrose, who collectively invested roughly $8.5 million in Rightside at around the same time as Schilling and Cannell bought their stakes.
Like Schilling, they’re an obviously pro-new-gTLD play. I’ve asked Negari for his opinion on Cannell’s letter and will update should I ever receive a response.