Did XYZ.com pay NetSol $3m to bloat .xyz?

Evidence of a possibly dodgy deal between XYZ.com and Network Solutions has emerged.
Court documents filed last week by Verisign suggest that the .xyz registry may have purchased $3 million in advertising in exchange for $3 million of .xyz domain names.
Verisign, which is suing .xyz and CEO Daniel Negari over its allegedly “false” advertising, submitted to the court a list of hundreds of exhibits (pdf) that it proposes to use at trial.
Among them are these two:

• Email from Negari to Andrew Gorrin re EPP Feed and billing directly for $3,000,000 in domains
• Credit Memo to Andrew from Negari “We have elected to pay for our $3MM Q2 advertising insertion order, which was dated May 20th with a credit…….” (5/31/14)

Gorrin is Web.com’s senior VP of marketing and Negari is Daniel Negari, XYZ.com’s CEO.
The documents these headings refer to are not public information, and are not likely to be any time soon, but they appear to refer to on the one hand XYZ billing NetSol for $3 million in domain names and on the other NetSol billing XYZ for $3 million in advertising.
Only one of the two document headings is dated, so we don’t know how closely they coincided.
Other headings, among the 446 documents Verisign wants to use at trial, suggest that they happened at pretty much the same time:

• Email from Andrew Gorrin to Ashley Henning (web.com) re Bulk Purchase of .xyz domains (5/29/14)
• Email from Andrew Gorrin to Negari re XYZ.Com Advertising IO and Marketing Agreement attaching signed agreements (5/20/14)
• Email string Ashley Henning to Christine Nagey, Andrew Gorrin, Edward Angstadt re Bulk Purchase of .XYZ Domains (5/30/14)

The emails Verisign cites were dated May 2014, shortly before .xyz went into general availability June 2.
What we seem to be looking at here — and I’m getting into speculative territory here — are references to two more or less simultaneous transactions, both valued at exactly $3 million, between the two parties.
Both companies have consistently refused to address the nature of their deal, citing NDAs.
As you recall, the vast majority of .xyz’s early registrations were provided by NetSol, which pushed hundreds of thousands of free .xyz domains into its customers’ accounts without their explicit consent.
The number of freebies is believed to be about 350,000, based on comments Negari recently made to The Telegraph, in which he stated that .xyz, which had about 850,000 domains in its zone at the time, would have 500,000 registrations if the freebies were excluded.
With a registry fee roughly equivalent to .com’s (.xyz’s is believed to be a little lower), 350,000 names would work out to roughly $3 million.
Negari has stated previously that every .xyz registration was revenue-generating, even the freebies.
Is it possible that NetSol paid XYZ’s registry fees using money XYZ paid it for advertising? Is it possible no money changed hands at all?
I’m not saying either company has done anything illegal, and it’s completely possible I’m completely misunderstanding the situation, but it does rather put me in mind of the old “round-trip” deals that tech firms used to dishonestly prop up their tumbling revenue at the turn of the century.
Back in 2000, the dot-com bubble was on the verge of popping, taking the US economy with it, and companies facing the decline of their businesses came up with “creative” ways to show investors that they were still growing.
AOL Time Warner, for example, “effectively funded its own online advertising revenue by giving the counterparties the means to pay for advertising that they would not otherwise have purchased”.
Regulators exercised their legal options in these cases only where there appeared to be dishonest accounting, and I’ve seen no evidence to suggest that XYZ or Web.com unit NetSol have failed to adhere to anything but the highest accounting standards.
Again, I’m not saying we’re looking at a “round-trip” deal here, and there’s not a great deal of evidence to go on, but it sure smells familiar.
Certainly, questions have been raised that Verisign did not raise in its initial complaint.
Anyway.
On a personal note, I’d like to disclose that among the documents Verisign demanded from XYZ are dozens of pages of previously confidential emails exchanged between myself and Negari.
I’ve read them, and they’re mostly heated arguments about a) his refusal to give details about the NetSol deal and b) my purported lack of journalistic integrity whenever I published a post about .xyz with an even slightly negative angle.
XYZ had no choice but to supply these emails. I can’t blame it for complying with its legal requirements.
I wasn’t the only affected blogger. Mike Berkens, Konstantinos Zournas, Rick Schwartz and Morgan Linton also had their private correspondence compromised by Verisign.
I don’t know how they feel about this violation, but in my view this shows Verisign’s contempt for the media and its disregard for the sanctity of off-the-record conversations between reporters and their sources.
And that’s what I have to say about that.

Afilias wins $10m judgment in Architelos “trade secrets” case

Afilias has won a $10 million verdict against domain security startup Architelos, over claims its flagship NameSentry abuse monitoring service was created using stolen trade secrets.
A jury in Virginia today handed Afilias $5 million for “misappropriation of trade secrets”, $2.5 million for “conversion” and another $2.5 million for “civil conspiracy”.
The jury found (pdf) in favor of Architelos on claims of business conspiracy and tortious interference with contractual relations, however.
Ten million dollars is a hell of a lot of cash for Architelos, which reportedly said in court that it has only made $300,000 from NameSentry.
If that’s true, I seriously doubt the four-year-old, three-person company has even made $10 million in revenue to date, never mind having enough cash in the bank to cover the judgment.
“We’re disappointed in the jury’s verdict and we plan to address it in some post-trial motions,” CEO Alexa Raad told DI.
The lawsuit was filed in January, but it has not been widely reported on and I only found out about its existence today.
The original complaint (pdf) alleged that three Architelos employees/contractors, including CTO Michael Young, were previously employees or contractors of Afilias and worked on the company’s own abuse tools.
It claimed that these employees took trade secrets with them when they joined Architelos, and used them to build NameSentry, which enables TLD registries to monitor and remediate abuse in their zones.
Architelos denied the claims, saying in its March answer (pdf) that Afilias was simply trying to disrupt its business by casting doubt over the ownership of its IP.
That doubt has certainly been cast, though the jury verdict says nothing about transferring Architelos’ patents to Afilias.
The $5 million portion of the verdict deals with Afilias’ claim that Architelos misappropriated trade secrets — ie that Young and others took work they did for Afilias and used it to build a product that could compete with something Afilias had been building.
The other two counts that went against Architelos basically cover the same actions by Architelos employees.
The company may be able to get the amount of the judgment lowered in post-trial, or even get the jury verdict overturned, so it’s not necessarily curtains yet. But Architelos certainly has a mountain to climb.

Panel throws out ludicrous .shop confusion ruling

The new gTLD strings .shop and .通販 are not too confusingly similar-looking to coexist on the internet.
While that may be blindingly obvious to anyone who is not already blind, it’s taken the ICANN process three years to arrive at this conclusion.
An August 18 ruling by a three-person International Centre for Dispute Resolution appeals panel has “reversed, replaced and superseded” a two-year-old decision by a lone String Confusion Objection panelist. The appeals panel found:

the [original] expert panel could not have reasonably come to the decision reached by it in connection with the underlying String Confusion Objection
…
The two strings indisputably have no visual or aural similarity, are in different languages, written in different scripts that look very different, and have different phonetic spellings and pronunciations.

.通販 is the Japanese for “.onlineshopping”, applied for by Amazon in the 2012 new gTLD round.
.shop is a contested string applied for by Commercial Connect and others.
The two strings were ruled dissimilar by the String Similarity Panel in February 2013, but Commercial Connect filed the SCO a few weeks later.
In an SCO, the complainant must show that it is “probable, not merely possible” that the two strings will get mixed up by internet users.
In August 2013, ICDR panelist Robert Nau ignored that burden of proof and inexplicably ruled that the two strings were too similar to coexist and should therefore be placed in a contention set.
Nau would later rule that .shop and .shopping are also confusingly similar.
The .通販 decision was widely criticized for being completely mad.
Amazon appealed the decision via the ICANN Request for Reconsideration, but predictably lost.
After much lobbying, last October ICANN’s board of directors created an appeals process for SCO decisions, but limited the appellant pool to Amazon with .通販 and applicants for .cam (which had been ruled similar to .com).
Now, 10 months later, we finally have a sane decision in the Amazon case. Its application will presumably now be removed from the .shop contention set.
Read the final ruling here.

Radix targets 25,000 names for .online’s first day

Radix Registry reckons .online will move at least 15,000 domains in its first day of general availability, but it’s aiming higher.
“We are confident .online will be amongst the biggest new gTLDs that have launched,” Radix business head Sandeep Ramchandani said in a press release today.
“The same sentiment across several Registrar Partners has reinforced our beliefs. We expect to start off with at least 15,000 registrations at launch and would love to break .club’s launch record,” he said.
When .CLUB Domains launched .club in 2014, its zone file showed over 25,000 domains after the first 10 hours.
Radix is basing its projections not only on its registrar conversations, but also on .online’s sunrise period, which ended yesterday with 775 sales.
That number is of course low by pre-2012 standards, but it’s in the top tier of sunrise periods for non-controversial new gTLDs.
The only strings to top 1,000 names to date have been ICM Registry’s .porn and .adult and Vox Populi’s .sucks.
.CLUB’s sunrise weighed in at 454 domains.
Radix had better hope .online is successful — the gTLD sold for seven or eight figures at private auction.
The gTLD will go to its Early Access Period tomorrow before settling down to regular pricing August 26.

No, CentralNic isn’t the biggest new gTLD back-end

CentralNic’s registry back-end business may have got a big boost by last week’s news that Google has adopted a .xyz domain for its new parent, but it is not yet the biggest back-end provider.
That honor still belongs to Rightside, which currently leads CentralNic by a few hundred thousand names, according to zone files.
When Google started using abc.xyz as the primary domain for its new company last Monday, it caused a sharp spike in .xyz’s daily zone file growth.
The volume-leading new gTLD’s zone had been netting about 3,000 domains per day over the previous week, but that number has risen to almost 8,000 on average since the Google announcement.
While undoubtedly good news for XYZ.com and CentralNic, the growth has not been enough to propel CentralNic into the top-spot just yet.
CentralNic said in a press release today that it currently has 1,444,210 domains, making it the “number one registry backend”.
But according to DI’s numbers, Rightside has at least 1,701,316 domains in new gTLDs running on its back-end.
The CentralNic press release, as well as an earlier piece on The Domains, both cite ntldstats.com as their source.
That site had been listing Donuts as the top new gTLD back-end provider for over a year, with CentralNic in second place.
The problem is that Donuts is not a back-end provider. Never has been.
The portfolio registry disclosed right from the start that it was using Rightside (then Demand Media).
A Donuts spokesperson confirmed to DI today that it still uses Rightside.
The company runs its 190 delegated new gTLDs on Rightside’s back-end. Rightside manages another 39 of its own on the same infrastructure.
Combined, these gTLDs make up 1,701,316 second-level domains, making it the largest back-end registry provider.

After abc.xyz, will Google now switch to .google?

Google provided the new gTLD industry with one of its most prominent endorsements to date when it revealed this week that its new parent company, Alphabet, will use a .xyz domain name.
But it could just be the first move away from traditional TLDs such as .com — its new gTLD .google entered its “general availability” phase today.
Alphabet will be the holding company for Google the search engine provider, as well as many other subsidiaries focused on non-core areas of its business, and will replace Google as the publicly traded entity.
The new company will use abc.xyz as its primary domain.
XYZ.com CEO Daniel Negari told Wired that the move is “the ultimate validation”, and it’s hard to disagree.
Despite this, almost all the coverage in the tech and mainstream media over the last 24 hours has been about the fact that it does not own alphabet.com.
A Google News search for “alphabet.com” today returns over 67,000 results. Refine the search to include “abc.xyz” and you’re left with fewer than 2,700.
This is perhaps to be expected; BMW owns alphabet.com and has told the New York Times it does not intend to sell it. Journalists naturally gravitate towards conflict, or potential conflict.
Some reporters even suggested, with mind-boggling naivety, that Google hadn’t even done the most cursory research into its new brand before embarking on the biggest restructuring in its history as a public company.
But perhaps the reality is a little simpler: owning a .com that exactly matches your brand just isn’t that important any more.
If any company has insight into the truth of that hypothesis, it’s Google.
It should hardly be surprising that Google digs the possibilities offered by new gTLDs — remember, it applied for 101 strings and has 42 of them already delegated.
Its senior engineers have also blogged repeatedly that all gTLDs, including .com, are treated equally by its search algorithms.
Now that it has made the decision to brand its holding company on a new gTLD domain, could we expect it be similarly nonchalant about a switch to .google?
The dot-brand today came out of its pre-launch phase and entered “general availability”, meaning that the gTLD is now free for it to use.
The .google zone file only has a few domains in it at present, so we’re probably not going to see anything deployed there overnight, but I’d be surprised if we have to wait a long time before .google is put to use in one way or another.
The company set up a fleeting April Fool’s Day website at com.google earlier this year.
Google’s application for .google states:

The mission of the proposed gTLD, .google is to make the worldʹs information universally accessible and useful through the streamlined provision of Google services. The purpose of the proposed gTLD is to provide a dedicated Internet space in which Google can continue to innovate on its Internet offerings. The proposed gTLD will augment Googleʹs online presence in other registries, provide Google with greater ability to categorize its present online locations around the world, and in turn, deliver a more recognizable, branded, trusted web space to both the general Internet population and Google employees. It will also generate efficiencies and increase security by reducing Google’s current dependence on third-party infrastructure.

The company has also stated on its Google Registry web site that it intends to use .google, .youtube and .plus “for Google products”.

SEO site toppled as most-popular new gTLD domain

There’s a new domain topping the charts as the most-visited new gTLD site.
A few days ago, namu.wiki replaced searchengines.guru in the top spot, the first time the leading position has changed hands since DI PRO first started tracking daily Alexa scores in July 2014.
namu.wiki appears to be a Japanese Korean wiki site dedicated to some kind of manga/anime thing. It was registered in April.
searchengines.guru is a Russian forum devoted to discussions of search engine optimization.
The Japanese Korean site has an Alexa rank of 1,875 today, compared to 1,994 for the SEO site. The highest score we’ve ever recorded for a new gTLD domain was 717.
Interestingly, only two of the site in the top 10 are in English. Two appear to be associated with spam.
The usual caveats about the reliability of Alexa data applies.

.music applicant caught using bogus Wikipedia page

DotMusic Limited, the .music applicant founded by Constantine Roussos, is using a highly suspicious Wikipedia page in its attempt to win the .music contention set.
The applicant and many supporters have been citing the Wikipedia “music community” page in support of DotMusic’s ongoing Community Priority Evaluation, despite the fact that the page draws text, without citation, from DotMusic’s own application.
The Wikipedia page was created October 21, 2014, just two weeks after rival .music applicant Far Further spectacularly failed in its own Community Priority Evaluation bid.
In March this year, DotMusic cited (pdf) a November 26 version of the Wikipedia page in whole in a controversial application change request.
Three of its supporters (Jeunesses Musicales International, International Society of Music Education, and International Federation of Musicians) have cited the Wikipedia article in DotMusic-drafted letters sent to ICANN.
An early version of the sign-and-submit form letter DotMusic is encouraging supporters to send to ICANN included the Wikipedia reference (this one, for example) but it appears to have been removed from form comments sent after the end of July.
Its web site currently says that its definition of “music community” is “confirmed by Wikipedia”.
In fact, the Wikipedia page pulls lots of its language from DotMusic’s 2012 new gTLD application, as represented in the table below.
[table id=34 /]
The phrase “logical alliance” originates in the ICANN Applicant Guidebook, as part of the CPE rules.
But that still leaves two sentences that appear to have been only lightly edited after being taken wholesale from the DotMusic application.
The Wikipedia page does not refer to domain names or ICANN, nor does it cite DotMusic as a source, despite the fact (per a Google search) that phrases such as “socio-economic interactions between music creators” have only ever appeared in .music’s application.
That’s unusual, because the citations in the article, many of which are to weighty, barely comprehensible scholarly works, give the impression of a well-researched and well-sourced piece.
Only one Wikipedia editor, known by the handle Dr. Blofeld, has contributed anything of substance to the page. Three others have provided cosmetic edits.
While a prolific editor since 2006, the closest he had previously come to writing an article about music were his contributions to a page about a green Versace dress once worn by singer Jennifer Lopez, according to Blofeld’s user page.
He seems to be much more interested in nature, architecture and film (including James Bond films, naturally).
On wonders why he had the sudden urge to scratch-build a 375-word article about the “music community”, having evidently read a dozen academic works on the topic, that fails to cite DotMusic’s application as the source of some of the text.
In summary, the evidence points towards the article being created solely for the purpose of assisting DotMusic towards a CPE victory that would save it the seven-figure sum .music is likely to fetch if it goes to auction.
There are eight applicants for .music in total.

Dozens of dot-brands finally sign ICANN contracts

Dot-brand gTLD applicants that were playing wait-and-see with ICANN’s contracting process signed Registry Agreements in droves last week.
At least 67 new RAs were signed in the last three days of July, on or around the ICANN’s July 29 deadline, ICANN’s web site shows.
This means that there are still about 50 applicants that have not pulled the trigger and may have to apply for an 60-day last-chance extension.
A week before the deadline, roughly 170 brands had still not signed contracts.
The July 29 deadline was put in place for dot-brands last year due to delays creating Specification 13 of the RA, which gives brands special opt-out clauses dealing with things like sunrise periods.
Those that have still not obtained RAs are expected to be flagged as “Will Not Proceed” and will have to apply to ICANN for the extension under its Application Eligibility Reinstatement process.

African Union slams “dysfunctional” IRP as ICANN tries to fend off cover-up claims

The African Union Commission has criticized ICANN’s “dysfunctional accountability process” that has kept the proposed .africa gTLD in limbo for the last few years.
In a communique yesterday (pdf), the AUC also reiterated that .africa applicant ZA Central Registry has the support of both the AUC and its member states, and that governments used almost every avenue available to them to object to the rival DotConnectAfrica bid.
The letter reads:

The Africa region, African Internet stakeholders, the ZACR and AUC are the unfortunate victims of a dysfunctional accountability process and an independent review panel that did not delve more deeply to understand the new gTLD process, the role of governments in that process, and how the ICANN multistakeholder model functions in general.

A few weeks ago, an Independent Review Process panel controversially ruled that ICANN had treated DCA’s application unfairly, in violation of its bylaws, when it accepted Governmental Advisory Committee advice to reject it.
The panel said that ICANN should have at least asked the GAC for the rationale behind its advice, something that the new gTLD program’s rules did not require it to do.
One of the issues at the heart of the subsequent debate is whether ICANN inappropriately helped out ZACR’s bid by drafting an AUC letter of support and then tried to cover its actions up by inappropriately redacting information from the IRP ruling before publication.
On Friday, ICANN published a new version of the ruling that had these references restored, while retaining redactions related to the actions of Kenyan government officials.
We know what the still-redacted text says because Kieren McCarthy, writing for The Register, obtained a clean copy and published it a couple of weeks ago.
ICANN also promised to publish its reasoning if it makes redactions to any documents in future.
In a blog post on Friday, general counsel John Jeffrey said that ICANN helping the AUC draft its letter of support was not a unique case, nor was it inappropriate:

ICANN staff has helped many applicants and their supporters understand how to properly document support. Not only did we make a template support letter publicly available to all as part of the New gTLD Program Applicant Guidebook (see Appendix to Module 2), we have answered questions, received through our customer service channel, as to how interested parties can document support for a given gTLD application. In the case of ZA Central Registry, ICANN appropriately assisted the applicant in documenting support from the AUC.
Our actions surrounding the .AFRICA applications were not unique, since we assist any applicant who requests assistance, or who needs clarification in learning how best to document support or other matters. We have provided assistance to all applicants regarding their applications to the maximum extent possible.

On the claims that ICANN tried to “cover up” this assistance by redacting the IRP’s ruling and previous IRP filings, Jeffrey said that the information was covered by a confidentiality agreement agreed to by itself and DCA and endorsed by the IRP panel.
He said that ICANN was “motivated by our obligation to the community to post the document quickly and the competing, yet mandatory obligation, to respect confidential information while being as transparent as possible.”
He said ICANN attempted to reach out to those affected by the “confidential” parts of the ruling to seek permission to remove the redactions.
But McCarthy also seems to have seen emails exchanged between DCA and ICANN, and he says that ICANN redacted it over DCA’s objections.
McCarthy further says that ICANN only became interested in removing the redactions after he had already published the clean version of the ruling at The Reg — five days after the initial publication by ICANN.
Jeffrey’s post, which refers to “erroneous reporting” in an apparent allusion to McCarthy’s articles, nevertheless fails to address this claim, lending credibility to the cover-up allegations.
The .africa gTLD has been contracted to ZACR, but DCA’s rejected application has been returned to evaluation per the IRP’s ruling, where it is broadly expected to fail for want of governmental support.
Disclosure #1: I recently filed a Documentary Information Disclosure Policy request seeking the release of all the unredacted exhibits in DCA v ICANN. Given ICANN’s wont to usually respond to such requests only at the end of the full 30 days permitted by the policy, I should not expect to see an answer one way or the other until the last week of August.
Disclosure #2: As regular readers may already be aware, due to my long-held and never-disguised view that DCA was mad to apply for .africa without government support, I was once accused of being a part of a “racial conspiracy” against DCA on a blog I believe to be controlled by DCA. Naturally, after I stopped laughing, this libelous allegation pissed me off no end and enhanced my belief that DCA is nuts. Around the same time DCA also, under its own name, filed an “official complaint” (pdf) with ICANN, omitting the race card, alleging that I was part of a conspiracy against it.