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Verisign loses prestige .gov contract to Cloudflare

Kevin Murphy, January 16, 2023, Domain Registries

Cloudflare is to take over registry services for the US government’s .gov domain, ending Verisign’s 12-year run.

It seems .gov manager CISA, the Cybersecurity and Infrastructure Security Agency, opened the contract up for bidding last August and awarded it to Cloudflare in mid-December.

The deal is worth $7.2 million, Cloudflare said in a press release on Friday, which is more than twice as much as Verisign charged when it took over the .gov back-end in 2011.

But it seems the deal includes Cloudflare providing authoritative DNS for .gov domains, something Verisign does not currently provide the TLD, in addition to managing the zone file, registry, Whois, etc.

It’s not clear who’s running the exclusive .gov registrar, but CISA appears to be building a new one.

.gov domains are only available to US federal, state, tribal and local government organizations, and there was a $400-a-year fee until April 2021, when CISA made them free to register.

There are about 8,600 .gov domains today. Not a lot, but the deal comes with bragging rights.

CISA took over .gov from the General Services Administration in March 2021 and dropped the fees a month later.

It’s not clear whether Verisign had bid for a renewed contract or simply walked away, as it did when it conceded .tv to GoDaddy last year. I’ve asked the company for comment.

The loss of .gov is obviously a drop in the ocean compared to .com, which continues to make Verisign one of world’s most-profitable companies.

While it’s an ICANN-accredited registrar, I believe this is Cloudflare’s first foray into registry services. Might we see the company as an emergent threat to the established players in the next new gTLD round? It’s certainly looking that way.

New gTLDs grow in China as .cn regs slide

Kevin Murphy, January 5, 2023, Domain Registries

China-based registrations of .cn domains decreased in the first half of last year, while new gTLD swelled to pick up the slack, according to the local registry’s semi-annual report.

CNNIC published the English translation of its first-half 2022 statistical report in December, showing a steep decline in .cn regs, from 20,410,139 at the end of 2021 to 17,861,269 at the end of June last year.

These appear to be registrations made by registrants based in China. Verisign’s Domain Name Industry Brief for Q2 2022 shows .cn at 20.6 million.

While .cn slumped, new gTLDs saw an uptick of almost a million names in China, from 3,615,751 domains to 4,590,705 over the six months. New gTLDs accounted for 13.6% of all China-registered domains, the CNNIC report says.

The report also shows that the number of Chinese-registered .com names dropped by about half a million, to 10,093,729 from 10,649,851, over the period.

The full report can be viewed here (pdf).

Domain universe shrinks again: .com and .cn down, .au up

Kevin Murphy, December 9, 2022, Domain Registries

The number of registered domain names in the world shrank again in the third quarter, with mixed results across various TLDs, according to Verisign’s latest Domain Name Industry Brief.

There were 349.9 million names across all TLDs at the end of September, down 1.6 million sequentially but up 11.5 million compared to Q3 2021, the DNIB states.

The industry has downsized in every quarter this year, judging by Verisign’s numbers.

The company’s own .com, suffering from post-Covid blues, macroeconomic factors and (possibly) pricing issues, dragged the overall number down in Q3 by 200,000 domains, ending with 160.9 million.

But China’s .cn was hit harder, ending the period down from 20.6 million to 18 million. As I pondered in September, this may be due to how Verisign sources data.

Australia’s .au benefited from the launch of second-level availability, which boosted its number by 400,000 domains, ending with 4 million and overtaking .fr and .eu to become the seventh-largest ccTLD.

The ccTLD world overall shrunk sequentially by 1.7 million names but grew by 5.7 million on the year to end the quarter with 132.4 million.

New gTLDs ended with 27.3 million names, up 300,000 sequentially and 3.8 million year over year.

Stop me if you’ve heard this…

Kevin Murphy, November 30, 2022, Domain Services

The collective noun for wildebeest is “an implausibility”.

In the incredibly unlikely event that you’re ever confronted by a large group of these majestic bovine quadrupeds, that’s how you should describe what you see.

An implausibility of wildebeest.

I tell you this not because it’s relevant to anything else that appears in this article, but because a series of unfortunate and unavoidable circumstances have kept me offline for the last few weeks, and you may find this round-up piece tells you lots of things you already know.

If that’s the case for you, I can only apologize, with the caveat that you probably didn’t know about the wildebeest thing, so at least this post has provided some value.

Let’s start with ICANN, shall we?

My ICANN announcements feed contains 20 unread articles this morning, and as far as I can tell from a cursory glance over the headlines, the Org has done almost nothing of consequence recently.

It’s mostly outreach-this, engagement-that, review-the-other. If official announcements were any guide, ICANN would look like an entity far more concerned with promoting and promulgating its own increasingly debatable legitimacy, rather than doing the stuff it was originally set up to do.

Like new gTLDs, for example…

While ICANN continues to fart around with its working groups and consultations and Dantean layers of bureaucracy, the blockchain/crypto/web3 crowd are continuing to bolster their efforts to eat the Org’s breakfast, lunch and dinner.

Most notably, blockchain-based alt-root naming services including Unstoppable have launched the Web3 Domain Alliance, which, even if it misses its goals, promises to make the next new gTLD round an even bigger litigation clusterfunge than the last.

The alliance intends to among other things “advocate for the policy position that NFT domain registry owner-operators create trademark rights in their web3 TLDs through first commercial use with market penetration.”

In other words, if some well-financed crypto bro creates .example on some obscure blockchain root and gets a little bit of traction, ICANN shouldn’t be allowed to create .example on the authoritative consensus root.

This has the potential to make Jarndyce and Jarndyce look like a parking ticket hearing and I take some comfort from the fact that I’ll most likely be long dead before the lawsuits from the next new gTLD round have all played out.

The Web3 Domain Alliance is promising imminent pledges of support from “web2” companies, and it will be interesting to see if any company in the conventional domain name industry is ready to break ranks with ICANN and sign up.

In actual gTLDs…

Another thing that will likely post-date my death is the launch of the last gTLD from the 2012 application round. Many still lie dormant, but they do still continue to trickle out of the gates.

While I’ve been offline, we’ve witnessed the general availability launch of Google’s .boo and .rsvp — the former criminally missing the increasingly lengthy and bewildering Halloween season and the latter probably a little late for the Christmas party season — while non-profit .kids went GA a couple of days ago.

In the world of ccTLDs…

GoDaddy is formally relaunching .tv, the rights to operate it won in a bidding process earlier this year after incumbent registry Verisign declined to compete.

It’s talking about a “a complete rebrand and marketing makeover”, with a new, very colorful, destination site at TurnOn.tv.

Many years ago, a senior Verisign exec described .tv to me as “better than .com”, and in a world where any shouty teenage pillock can essentially launch their own TV show for the price of an iPhone and broadband connection, that’s probably never been truer.

Meanwhile, Ukrainian ccTLD registry Hostmaster isn’t going to let the little matter of an ongoing Russian invasion interfere with its 30th birthday celebrations and the 12th annual UADOM conference.

It’s being held remotely for obvious reasons. It starts tomorrow, runs for two days, and more details can be found here and here.

In other conference news, NamesCon has also announced dates for its 2023 NamesCon Global conference. According to Domain Name Journal, it will return to Austin, Texas, from May 31 to June 3 next year.

DomainPulse, the conference serving the Germanophone region of Europe (albeit in English), has set its 2023 event for February 6 and 7 in Winterthur, Switzerland.

Scoop of the month…

By far the most interesting article I’ve read from the last month came from NameBio’s Michael Sumner, a reverse-exposé of the successful .xyz domain investor who goes by the name “Swetha”.

This area of the industry is not something I spend a lot of time tracking, but I’ll admit whenever I’ve read about this mononymed India-based domainer’s extensive, expensive .xyz sales, I’ve had a degree of skepticism.

It turns out that skepticism was shared by some fellow industry dinosaurs, so Sumner did the legwork, amazingly and ballsily obtaining Swetha’s Afternic login credentials (with her consent) and hand-verifying years of sales data.

He concluded that the sales she’s been reporting on Twitter are legit, and that she’s a pretty damn good domainer, but understandably could not fully disprove the hypothesis that some of her buyers are .xyz registry shills.

Elliot Silver later got a comment from the registry in which it denied any kind of collusion and implied skepticism was the result of sexism and/or racism, rather than the sketchiness sometimes displayed by anonymous Twitter accounts and the registry itself.

Earnings, M&A, IPOs…

  • The otherwise-consolidating industry is getting its first IPO in some time, with United-Internet pitching a public markets spin-off of its IONOS group, which includes brands such as Sedo and InternetX, to potential investors. DNW pulled out some of the more interesting facts from its presentation.
  • Industry consolidator CentralNic reported a strong Q3, though its growth is no longer dependent on its domain name business.
  • Tucows reported modest growth (pdf) for Q3, hindered by flat-to-down results in its domain name business.
  • GoDaddy, which no longer breaks out numbers for its domains business, reported a billion-dollar quarter.
  • Smaller, faster-growing registrar NameSilo reported turning a loss into a profit in the quarter.
  • In M&A, Namespace, owner of EuroDNS, announced it has acquired fellow German registrar Moving Internet.

And finally…

The DNS turned 35. So that’s nice.

Now, if you’ll excuse me, I have 600 unread emails to deal with…

Verisign growth slows with post-Covid blues

Kevin Murphy, October 31, 2022, Domain Registries

Verisign sold fewer .com and .net domains than it did a year ago in the third quarter and has once again slashed its outlook for the year.

It had 174.2 million names across the two TLDs at the end of September, an increase of 1.2% over the year but down by around 100,000 names (rounded) on the quarter.

There were 9.9 million new domains sold. That compares to 10.1 million in the second quarter and 10.7 million in Q3 last year.

It now expects its total domains under management to increase by between 0.25% and 1% for the full year. That compares to the between 0.5% and 1.5% it predicted at the end of Q2, the 1.75% and 3.5% predicted in April, and the between 2.5% and 4.5% it predicted in February.

That equates to 2022 revenue of $1.418 billion to $1.426 billion, CFO George Kilguss told analysts. Verisign’s always jaw-dropping operating margin is expected to be between 65.75% and 66.25%.

CEO Jim Bidzos told analysts the slower growth can the attributed to the general macroeconomic malaise, Verisign coming off the lockdown bump experienced in 2020 and 2021, and the perennial issue of Chinese lumpiness.

Renewal rates for Q3 are expected to be 73.8%, the same as Q2 but down from 75% a year-ago.

But the company continues to make money hand over fist. Revenue was up 6.8% compared to Q3 last year at $357 million and net income was up to $169 million compared to $157 million a year ago.

Taliban seizing domains to silence journalists

Kevin Murphy, October 5, 2022, Domain Registries

The Taliban is attempting to close down independent media outlets in Afghanistan by deleting their .af domain names.

The Ministry of Communications and Information Technology tweeted that the sites of Hasht-e Subh Daily and Zawia News were “taken down” for publishing “unbalanced reports and fake news”.

.af’s registry is government-run.

According to the Committee to Protect Journalists, the two sites have been reporting by Afghans in exile since the Taliban retook the country over a year ago.

Both outlets have now switched domains to TLDs based in the US — Verisign and Identity Digital, where presumably they’re pretty safe from the Taliban’s reach. They’re now using zawiamedia.com and 8am.media instead of the original .af names.

.com and .net are the drag factor on domain industry growth

Kevin Murphy, September 22, 2022, Domain Registries

Verisign’s own gTLDs .com and .net slowed overall domain industry volume growth in the second quarter, according to its latest Domain Name Industry Brief.

June ended with 351.5 million registrations across all TLDs, up 1 million sequentially and 10.4 million year-over-year.

Growth would have been slightly better without the drag factor of .com and .net, which were down 200,000 domains each sequentially, as Verisign previously reported in its Q2 financial results. There were 161.1 million names in .com and 13.2 million in .net.

The ccTLD world grew by 700,000 names sequentially and 2.6 million compared to a year earlier, the DNIB states.

New gTLD names were up by the same amount sequentially and 4.1 million year over year, ending the quarter at 27 million.

Did a sexy Russian spy nerf the o.com auction?

Kevin Murphy, August 29, 2022, Domain Registries

It’s been over three years since Verisign won the right to auction off the domain name o.com for charity, and so far there’s no sign of a sale. Could a pro-Trump conspiracy theorist’s affair with a Russian spy be the reason?

The .com registry operator received permission from ICANN for a one-off auction — a unique exception to the decades-old convention that single-character .com domains are reserved — in March 2019, and that was the last we heard of it.

There’s been no announcement of an auction date, and neither ICANN nor Verisign have mentioned it since.

I asked Verisign a couple of weeks ago what the company’s plans were and at the weekend received the reply: “Thanks for reaching out and your interest is noted. Once there is an update, we will reach back out to you.”

I don’t think I’m getting into conspiracy theory territory to suggest that the reason for the lack of movement is that the domain’s most likely buyer, the man most likely behind Verisign asking ICANN’s permission in the first place, lost his job a few months after the auction was approved.

When in 2017 Verisign filed its request with ICANN it was widely believed to be primarily the result of a pressure campaign by Patrick Byrne, then-CEO of online retailer Overstock.com, that had gone on for over a decade.

Byrne had been nagging Verisign and ICANN to let him register the domain since at least 2004, as this published correspondence (pdf) illustrates.

Former senior ICANN staffer Kurt Pritz later recounted how Byrne “slid a check for $1,000,000 payable to ICANN across my desk” to persuade a then-broke ICANN to release the name, around the same time. The offer was rebuffed.

Byrne’s obsession with o.com continued, but in 2010 he seemed to throw in the towel briefly when Overstock paid relaunching Colombian ccTLD operator .CO Internet a whopping $350,000 for the domain o.co, which Overstock promptly rebranded around.

Overstock even purchased the naming rights to the Oakland Coliseum baseball stadium, which was known as the O.co Coliseum from 2011 to 2016.

But rebranding is always a risk, not least when it’s to an unfamiliar TLD, and Byrne admitted in 2012 that the move had been a huge mistake.

“O.co was my bad call,” Byrne said at the time, adding that “about eight out of 13 people who were trying to visit us through O.co, eight were typing O.com”.

So when Verisign got the nod to sell o.com, you might have expected Byrne to be champing at the bit.

But in August 2019, Byrne quit Overstock after it emerged he had been in a sexual relationship — according to him encouraged by shadowy FBI agents — with a Russian woman half his age convicted in the US of being a spy in 2018.

Byrne admitted the reportedly three-year relationship with Maria Butina, who after her release from US prison became a member of Russia’s parliament with Putin’s United Russia party, in August 2019. It’s a pretty wild story.

He quit his job at Overstock, the company he had founded, at the same time and a month later sold all his stock in the company.

Byrne has since gone on to be a full-time conspiracy theorist, including reportedly being one of several people who, in December 2020, had a bizarre White House meeting in which they attempted to explain to then-President Trump how the 2020 election had been stolen — the birth of the “Big Lie”.

That was reportedly the first time he had met Trump. There’s no evidence I’m aware of that he had the president’s ear while Verisign was asking his administration to lift the price freeze on .com domains, which it did in 2018.

Conspiracies aside, it’s undoubtedly true that Byrne’s resignation means Verisign has lost its most motivated bidder for o.com, so an auction would likely prove disappointing, unless Oprah Winfrey is feeling particularly frivolous.

Verisign to crack down on Chinese domains

Kevin Murphy, August 15, 2022, Domain Registries

Verisign has asked for permission to implement a more stringent regime for denying or suspending .com and .net domain names registered in China, to comply with the country’s strict licensing rules.

The changes appear to mean that customers of Chinese registrars who have not verified their identities, which Verisign says is a “very small percentage”, will be prevented from registering new domains and may lose their existing domains.

The company has filed a Registry Services Evaluation Process request with ICANN, proposing to tweak the registrant verification system it has had in place for the last five years in a few significant ways.

China has a system called Real Name Verification, whereby Chinese citizens have to provide government-issued ID when they register domains. Local, third-party Verification Service Providers such as ZDNS typically carry out the verification function for Verisign and other foreign registries.

The big change is that Verisign will no longer allow names to be registered without a valid code.

The RSEP says that attempts by China-based registrars to register domains without the required government verification code will result in the EPP create command failing, meaning the domain will not be registered.

Under the current system, outlined in a 2016 RSEP (pdf), the name is registered and Verisign presumably takes the money, but the domain is placed on serverHold status, meaning it is not published in the zone and will not resolve.

The new system will also allow Verisign to retroactively demand codes for already-registered names, when they come up for renewal or transfer, with the option to suspend or delete the names if the codes are not provided. The RSEP (pdf) states:

With regard existing domain names without the required verification codes, which currently comprise a very small percentage of domain name registrations from registrars licensed to operate in the People’s Republic of China, Verisign intends to address compliance issues with these domain names directly with registrars. Verisign reserves the right to deny, cancel, redirect or transfer any domain name registration or transaction, or place any domain name(s) on registry lock, hold or similar status

It’s not clear what a “very small percentage” means in hard numbers. A small slice of a big pie is still a mouthful.

Verisign has substantial exposure to the Chinese market. On the odd occasion when .com shrinks, it’s largely due to speculative registrations from China not being renewed, such as in the second quarter this year.

The RSEP names the service the Domain Name Registration Validation Per Applicable Law service. While it’s in theory applicable to any jurisdiction’s laws, in practice it’s all about addressing the demands of the Chinese government.

Verisign announces ANOTHER price increase as regs slide

Verisign posted a rare decrease in its .com/.net registered name base in the second quarter, but said it is going to raise its .net prices next year anyway.

The company also massively slashed its growth outlook for domain sales this year.

The annual cost of a .net name will go up 10%, the maximum permissible under its contract with ICANN, to $9.92 from February 1 next year, the registry said

Registrants will as usual be able to lock-in the current renewal fee of $9.02 for up to 10 years if they renew before the hike kicks in.

It’s the first .net price increase since 2018. The TLD has been stagnating in volume terms for several years, due no doubt in part to behavioral changes following the introduction of new gTLDs starting in late 2013.

The news came as Verisign reported that its domain base shrunk during Q2.

The company ended June with 174.3 million names under management, up 2.2% over a year earlier but down 350,000 domains compared to the end of Q1.

The split was 161.1 million for .com and 13.2 million for .net — that’s a sequential decrease of 200,000 for .com and a decrease of 200,000 for .net. Both rounded, of course.

CEO Jim Bidzos told analysts tonight that renewals were affected by a great many first-time registrations from China not renewing. General post-pandemic and macro-economic factors also played a role, he said.

The preliminary renewal rate was 75.9% compared to 76.0% a year earlier, but the number of new regs was down to 10.1 million from 11.7 million over the same period.

Verisign reported Q2 revenue up 6.8% on a year ago at $352 million, with net income of $167 million compared to $148 million. Its operating margin swelled to 67.1% percent from 64.7%.

Bidzos told analysts that the company is cutting its registered name growth prediction for the year to between 0.5% and 1.5%, a huge decrease from the already-downgraded estimate of 1.75% and 3.5% it made after the first quarter.

He said that he expects Q3 and Q4 to go much the same way as Q2.

Bidzos said he thinks the current factors affecting regs are a bump in the road and he expects things to stabilize over time.

UPDATE 2148 UTC — The article was updated to correct the comparison of the decrease in .com/.net regs.