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.

Activist investor slams Rightside over “garbage” new gTLDs, looking for blood

A hedge fund manager known for causing trouble at the companies he invests in has savaged Rightside, saying its focus on new gTLDs at the expense of its registrar business is ruining the company.
J Carlo Cannell of Cannell Capital is looking for some serious bloodletting.
He wants Rightside to cut 20% of its staff, close offices, unify its products under the eNom brand and replace two of its directors.
He’s threatening to wage a proxy war to replace the Rightside board if he doesn’t get what he wants.
He wrote a scathing letter to Rightside chair Dave Panos last month, which was published in a Securities and Exchange Commission filing today.

NAME’s registrar has become like a crazy aunt kept in the basement, one that you refuse to adequately clothe or feed, but who steadfastly spins straw into gold used to subsidize a stable of largely substandard new GTLDs such as .democrat, .dance, .army, .navy, and .airforce. Most of these new GTLDs are irrelevant and will never be sold in material volumes. NAME is holding back the growth potential of your registrar by pushing garbage extensions to a user base that quietly knows better.

NAME is Rightside’s Nasdaq ticker symbol.
Cannell revealed he owned a 7% share of Rightside last month — paying reportedly just shy of $11 million for 1,389,953 shares.
He wants Rightside to sell off “or even abandon” some of its weaker gTLDs, which “should not consume all the resources of our Company at the expense of the assets that are currently profitable”, while keeping “gems” such as .news.
His letter doesn’t pull any punches.
Cannell is perhaps best known for his widely publicized tussle with Jim Cramer, TV show host and co-founder of financial news site TheStreet.

Registrars object to “unreasonable” .bank demands

Registrars are upset with fTLD Registry Services for trying to impose new rules on selling .bank domains that they say are “unreasonable”.
The Registrar Stakeholder Group formally relayed its concerns about a proposed revision of the .bank Registry-Registrar Agreement to ICANN at the weekend.
A key sticking point is fTLD’s demand that each registrar selling .bank domains have a dedicated .bank-branded web page.
Some registrars are not happy about this, saying it will “require extensive changes to the normal operation of the registrar.”
“Registrars should not be required to establish or maintain a “branded webpage” for any extension in order to offer said extension to its clients,” they told ICANN.
i gather that registrars without a full retail presence, such as corporate registrars that sell mainly offline, have a problem with this.
There’s also a slippery slope argument — if every gTLD required a branded web page, registrars would have hundreds of new storefronts to develop and maintain.
fTLD also wants registrars to more closely align their sales practices with its own, by submitting all registration requests from a single client in a single day via a bulk registration form, rather than live, or pay an extra $125 per-name fee.
This is to cut down on duplicate verification work at the registry, but registrars say it would put a “severe operational strain” on them.
There’s also a worry about a proposed change that would make registrars police the .bank namespace.
The new RRA says: “Registrar shall not enable, contribute to or willing aid any third party in violating Registry Operator’s standards, policies, procedures, or practices, and shall notify Registry Operator immediately upon becoming aware of any such violation.”
But registrars say this “will create a high liability risk for registrars” due to the possibility of accidentally overlooking abuse reports they receive.
The registrars’ complaints have been submitted to ICANN, which will have to decide whether fTLD is allowed to impose its new RRA or not.
The RrSG’s submission is not unanimously backed, however. One niche-specializing registrar, EnCirca, expressed strong support for the changes.
In a letter also sent to ICANN, it said that none of the proposed changes are “burdensome”, writing:

EnCirca fully supports the .BANK Registry’s efforts to ensure potential registrants are fully informed by Registrars of their obligations and limitations for .BANK.  This helps avoid confusion and mis‐use by registrants, which can cause a loss of trust in the Registry’s stated mission and commitments to the banking community.

fTLD says the proposed changes would bring the .bank RRA in line with the RRA for .insurance, which it also operates.
The .insurance contract has already been signed by several registrars, it told ICANN.

First new gTLD deleted from the net

.doosan today became the first new gTLD to be removed from the domain name system.
It’s no longer showing up in the DNS root zone file, and IANA’s record lists it as “retired”.
.doosan was a dot-brand managed by Korean conglomerate Doosan Group. The company never did anything with it before deciding to kill the TLD off last September.
A month ago, ICANN used the pending deletion to test its Emergency Back-End Registry Operator safety net.
If memory serves, it’s the only gTLD to be ever be removed from the root zone, excluding test internationalized TLDs previously operated by ICANN.
ccTLDs are removed somewhat regularly, when international borders are redrawn.

Van Couvering ousted from M+M, replaced by PR guy with channel focus

Antony Van Couvering has been fired as CEO of Minds + Machines and replaced by someone who was until very recently the company’s agency PR guy.
Neither Van Couvering, the company, nor incoming CEO Toby Hall, have disclosed the reason for his ouster.
But I suspect the “differences and disagreements” that Van Couvering alluded to in his CircleID piece this morning may refer to M+M’s go-to-market strategy.
Hall told DI this morning that his focus as the company’s new leader is going to be on the registrar channel.
“It’s all about engaging with the outside world and recognizing we’re a business-to-business play,” Hall said. “It’s a fundamental shift in perspective.”
The strategy “has to be stacked in a way that makes our business partners make revenue”, he said.
“We’re not a consumer registrar,” he said.
M+M is a vertically integrated domain name company, acting as both registry and registrar.
Registrar sources tell us that Van Couvering wasn’t keen on working with third-party retailers, preferring to focus on its in-house registrar.
It seems that’s going to change under Hall.
M+M said in a press release (jarringly, emailed to reporters this morning as usual by Hall himself):

Mr Van Couvering was removed from office with immediate effect by means of a unanimous resolution of directors passed at a meeting of directors held on 19 February 2016.
The Group is currently making the transition from asset gatherer to monetisation of its leading portfolio of top-level domains; the Board believes a change of leadership will assist in this process.

Hall was appointed chief marketing officer last month.
Since the early 1990s, he’s been head of the London-based PR slash investor relations outfit GTH Communications, which focuses on small-cap businesses. M+M was a GTH client almost since it was founded, Hall said.
He said he’s going to be stepping back from GTH to focus on M+M.
Van Couvering founded Minds + Machines in 2008. It was soon acquired by the company that would be known as Top Level Domain Holdings, which later changed its name to Minds + Machines.
TLDH founder Fred Krueger got canned by the M+M board last year too.
Today, Van Couvering wrote:

It’s a story told a thousand times: founder of a company ousted by investors. It’s a story so common you can find it any day of the week as a minor headline in a tech blog. Not much of a story at all really, until it happened to me…
It sucked.

dotgay has a third crack at .gay appeal

dotgay LLC has filed another appeal with ICANN, hoping to get its community-based .gay application back in the race.
It submitted a third Request for Reconsideration (pdf) this week, arguing on a technicality that its bid should have another Community Priority Evaluation.
The company has already lost two CPEs based on the Economist Intelligence Unit CPE panel’s belief that its definition of “gay” is too broad because it includes straight people.
It’s also lost two RfRs, which are adjudicated by ICANN’s Board Governance Committee.
The newest RfR addresses not the core “not gay enough” issue, but a procedural error at the EIU it believes it has identified.
According to the filing, dotgay is in possession of emails from an EIU employee who was responsible for verifying some of the dozens of support letters it had received from dotgay’s backers (generally equal rights campaign groups).
The company argues, citing the BGC’s own words, that this employee was not one of the official CPE “evaluators”, which means the EIU broke its own rules of procedure:

considering the fact that the CPE Process Document – which is considered by the BGC to be “consistent with” and “strictly adheres to the Guidebook’s criteria and requirements”, it is clear that the verification of the letters should have been performed by an independent evaluator… and not by someone “responsible for communicating with the authors of support and opposition letters regarding verification in the ordinary course of his work for the EIU”.

It wants the CPE to be conducted again, saying “it is obvious that the outcome of a process is often, if not always, determined by the fact whether the correct process has been followed”.
It’s difficult to see how the outcome of a third CPE, should one be undertaken, could be any different to the first two. Who verifies the support letters doesn’t seem to speak to the reason dotgay hasn’t scored enough points on its other two attempts.
But the alternative for the company is an expensive auction with the other .gay applicants.
Another CPE would at least buy it time to pile more political pressure on ICANN and the EIU.

DCA fails .africa evaluation

DotConnectAfrice application for the .africa gTLD has, as expected, failed its ICANN evaluation for want of government support.
The official decision (pdf) was handed down overnight.
According to the Extended Evaluation panel, DCA’s “required documentation of support or non-objection was either not provided or did not meet the criteria”.
In other words, DCA did not have a shred of support for its controversial application.
For gTLDs representing multinational regions, support or non-objection is required from 60% of the governments in that region.
In addition, there cannot be more than one objection from a government in that region.
Not only did DCA not have any support, it also had over a dozen governmental objections.
The company had relied on support letters from the African Union Commission and the UN Economic Commission for Africa, both of which have been retracted.
The AU and most African governments support rival, successful applicant ZACR.
ZACR signed its .africa registry contract with ICANN in March 2014, but its bid has been kept in limbo while DCA has exploited ICANN appeals processes to delay delegation.
Most recently, DCA sued ICANN, despite signing away its right to sue when it applied.
DCA was originally rejected due to Governmental Advisory Committee advice, before it had completed evaluation.
But the company won an Independent Review Process ruling stating that ICANN erred by accepting the advice with no explanation, compelling ICANN to put the DCA application back into evaluation.
After a six-month review, the Geographic Names Panel has now concluded that, duh, nobody supports DCA’s bid.
ICANN has now changed the status of DCA’s application from “Not Approved” to “Will Not Proceed”.
Oddly, and possibly incorrectly, this status cites the GAC advice as the reason for the failure, rather than the fact that DCA failed its evaluation.
Per ICANN practice, no application is truly dead until the applicant withdraws.

.cloud passes 20,000 names on day one

The newly launched gTLD .cloud passed 20,000 domains under management one day after entering general availability.
About 25 hours after the 1500 UTC launch yesterday, 20,347 domains had been registered, according to head of registry operations Francesco Cetraro.
He said 17,991 of those names were registered in GA.
The gTLD is priced around the $20 to $25 mark at the popular registrars I checked.
Over 20,000 names is a pretty decent start, putting the the Aruba-owned TLD within the top 100 new gTLDs by volume.
Volume-wise, it’s already in the same ball-park as the likes of .global, .sexy and .uno, which have each been around for well over a year.
Including dot-brands, there are now close to 900 new gTLDs, only about half of which have more than 100 names.

.top adds a quarter million names in a day

The new gTLD .top set a new record for one-day growth, adding almost a quarter million domains on Monday.
The February 16 .top zone file shows 1,343,665 domains, up 238,616 on the day, according to DI stats.
That’s the majority of the 287,950-name growth the whole new gTLD universe experienced that day.
It’s the second example of a single TLD growing by six figures in a day, following .xyz’s 131,000-name growth on February 6.
It seems that the majority of the names were registered via West.cn, a Chinese registrar that sells the names for CNY 4 ($0.60).
It seems we’re looking at a buying spree by a limited number of Chinese investors.
.top is run by Jiangsu Bangning Science & Technology and marketed primarily in Chinese.
It’s currently the second largest new gTLD by zone size, after .xyz.

Rightside moves into China too

Rightside has become the latest gTLD registry to open up in China.
The company said today it has created a Wholly Foreign-Owned Enterprise, basically a local subsidiary, in the country.
This is the same beachhead in China taken by Minds + Machines and Famous Four Media recently.
Draconian Chinese government regulations on domain registries and registrars require formal accreditation before domain names can be used by Chinese citizens.
Opening up a local office or working with a local proxy appear to be requirements to obtain this accreditation.
Rightside points out that 45% of new gTLD domain names — 5.4 million — are registered in China. Its own portfolio has seen 90,000 of these.