Weak Q3 for the domain universe, Verisign reports

The number of domain names registered worldwide decreased slightly in the third quarter, according to Verisign’s latest Domain Name Industry Brief.

The total of 362.3 million domains was down 0.1 million on the quarter. It would have been up had it not been for a 1.1 million decline in the combined .com and .net gTLDs, a pattern we’ve seen for the last several quarters.

.com was down to 156.7 million names from 157.6 million, while .net slipped below 13 million to 12.9 million, Verisign said.

Pre-2012 gTLD domains not including .com and .net were up 100,000 to 17.3 million and ccTLD registrations were up by the same amount to 140.1 million at the end of the quarter, the DNIB says.

New gTLD registrations were up 800,000 to 35.4 million, Verisign said.

Senator says domain industry “enables” Russian disinfo attacks

An influential US senator has accused major registries and registrars including GoDaddy and Namecheap of facilitating Russian disinformation campaigns.

Senator Mark Warner, the Democrat chair of the Senate Select Committee on Intelligence, told registrars that “legislative remedies” may be required unless they “take immediate steps to address the continued abuse of your services for foreign covert influence”.

The threat came in letters sent to registrar groups Namecheap, GoDaddy, Cloudflare, NewFold Digital, NameSilo, and .com registry Verisign today.

Warner’s letters seem to have been inspired by Facebook owner Meta, perhaps the domain industry’s most prolific antagonist, and align closely with Meta’s views on issues such as cybersquatting and Whois access.

The criticisms also stem from a recent FBI seizure of 32 domains that were being use to proliferate fake news about the invasion of Ukraine and the upcoming US presidential election.

The Russian campaign, known as Doppelganger, used domains such as fox-news.in and washingtonpost.pm to trick visitor into thinking they were reading news sources they trust.

Warner tells the registrars (pdf) they have “ostensibly facilitated sustained covert influence activity by the Russian Federation and influence networks operating on its behalf”.

The main concern appears to be the lack of access to private information in Whois records. Warner’s list of industry sins includes:

withholding vital domain name registration information from good-faith researchers and digital forensic investigators, ignoring inaccurate registration information submitted by registrants, and failing to identify repeated instances of intentional and malicious domain name squatting used to impersonate legitimate organizations

Warner called for “immediate” action “to address the continued abuse of your services” as the US presidential election looms, and in its aftermath. Voters go to the polls November 5.

Verisign gets eight more years running the root

Verisign and ICANN have renewed their deal that sees Verisign run the DNS root, according to the company.

Verisign said the Root Zone Maintainer Agreement was renewed on October 20 for another eight-year term.

The RZMA is basically a technical services contract under which Verisign updates and publishes the root zone file (basically a list of TLDs and their nameservers) according to ICANN’s instructions. All the other root zone operators mirror that file.

It’s the first renewal since ICANN secured its independence from the US government in 2016, but Verisign and its predecessors have been managing the root since 1993.

The deal is separate from Verisign’s contracts to run .com and .net.

Some Guy wants to take over .com and .net

Some Guy has noticed that domain name prices keep going up and has offered to take over the .com and .net registries from Verisign.

The Some Guy recently filed a formal Request for Reconsideration with ICANN, asking it to overturn its recent decision to renew Verisign’s .com contract and award it to him instead. The RfR reads:

I seek to become a registry operator committed to making .COM domains more affordable and accessible to students, startups, and developers. The decision to renew Verisign’s contract hinders competition, limiting opportunities for more innovative registry operators like Asxit LLC to contribute to the digital ecosystem.

The request is accompanied by a 25-page, ChatGPT-odored analysis of why Asxit LLC would be a better .com registry than Verisign, which concludes:

The introduction of Asxit LLC as a .COM registry operator would bring significant improvements in pricing, innovation, support, and accessibility compared to Verisign’s current management. By focusing on affordable and flexible solutions, Asxit LLC aims to create a more inclusive and competitive environment for all users. This change would enhance the value of the .COM domain and support the growth of a diverse and innovative digital community.

In August, Some Guy with the same last name, who said he is a student at Liberty University in Virginia, said Asxit LLC should take over .net as well.

They’re not the funniest or craziest submissions ICANN has received over the years, but they might be worth a chuckle if you’re clock-watching on a Friday afternoon.

The sad part is of course that ICANN is now duty-bound to commit legal and board resources preparing a response to this request before throwing it out entirely.

Verisign agrees to .com takedown rules

Verisign has agreed to take down abusive .com domains under the next version of its registry contract with ICANN.

The proposed deal, published for public comment yesterday, could have financial implications for the entire domain industry, but it also contains a range of changes covering the technical management of .com.

Key among them is the addition of new rules on “DNS Abuse” that require Verisign to respond to abuse reports, either by referring the domain to its registrar or by taking direct action

Abuse is defined with the now industry-standard “malware, botnets, phishing, pharming, and spam (when spam serves as a delivery mechanism for the other forms of DNS Abuse listed in this definition)”.

The language is virtually identical to the strengthened DNS abuse language in the base Registry Agreement that almost all other gTLD registries have been committed to since their contracts were updated this April. It reads:

Where Registry Operator reasonably determines, based on actionable evidence, that a registered domain name in the TLD is being used for DNS Abuse, Registry Operator must promptly take the appropriate mitigation action(s) that are reasonably necessary to contribute to stopping, or otherwise disrupting, the domain name from being used for DNS Abuse. Such action(s) shall, at a minimum, include: (i) the referral of the domains being used for the DNS Abuse, along with relevant evidence, to the sponsoring registrar; or (ii) the taking of direct action, by Registry Operator, where Registry Operator deems appropriate.

The current version of the .com contract only requires Verisign to publish an abuse contact on its web site. It doesn’t even oblige the company to respond to abuse reports.

In domain volume terms, .com is regularly judged one of the most-abused TLDs on the internet, though newer, cheaper gTLDs usually have worse numbers in terms of the percentage of registrations that are abusive.

Verisign will also get an obligation that other registries don’t have — to report to ICANN “any cyber incident, physical intrusion or infrastructure damages” that affects the .com registry.

ICANN won’t be able to reveal the details of such incidents publicly unless Verisign gives its permission, but in a side deal (pdf) the two parties promise to work together on a process for public disclosure.

Verisign will also have to implement two 20-year-old IETF standards on “Network Ingress Filtering” that describe methods of mitigating denial-of-service attacks by blocking traffic from forged IP addresses.

The contract is open for public comment.

New .com contract could see ALL domain prices go up

Verisign will retain its power to increase .com prices by 7% a year, and prices in other gTLDs could well go up too, under a new proposed registry contract designed to help patch up ICANN’s budget.

The proposed .com Registry Agreement was posted for public comment this evening, and the pricing terms within could have broad implications for all registrants of gTLD domains.

For starters, as usual the deal lets Verisign raise .com prices, currently $10.26 a year, by 7% in the final four years of the six years of its term. This is an option Verisign has never failed to exercise in the past.

But the deal would also give ICANN the power, in its sole discretion, to raise the per-transaction fees Verisign pays it for each added, renewed, or transferred .com domain, in line with the latest US inflation numbers.

The fee is currently $0.25 per transaction, and it hasn’t gone up ever, as far as I recall.

The proposed text on inflation is pretty much the same as found in all post-2012 gTLD Registry Agreements, but adds a clause saying that ICANN cannot raise the .com fees unless it also raises fees in “multiple other registry agreements”.

Yet another clause strongly suggests that ICANN intends to exercise its existing right to increase its fees, again according to the US Consumer Price Index, across other gTLDs — presumably all of them — rather soon:

ICANN and Registry Operator hereby agree that if ICANN delivers notice of a fee adjustment to other registry operators after November 1, 2024 and prior to the Effective Date, ICANN may concurrently deliver such fee adjustment notice to Registry Operator, in which case the provisions of Section 7.2(d) shall be deemed to have applied at the time such notice was sent.

Translated, this means that ICANN can put Verisign on notice that its fees are going up even before the contract is signed, but only if it also raises the fees on other registries at the same time.

It’s difficult to imagine why this language is there unless it’s describing something ICANN is actually planning to do.

Unlike Verisign, other gTLD operators do not have regulated pricing, so any ICANN fee increase on them could very well be passed on to registrars and ultimately registrants with increased wholesale prices.

The new contract is being proposed a few months after ICANN laid off staff because its budget was $10 million light, and CEO Sally Costerton said the Org was “evaluating ICANN’s fee structure to ensure it scales realistically with inflation”.

Verisign, and .com in particular, is ICANN’s biggest single source of funding, contributing $47.3 million of its $145.5 million in revenue in its last fiscal year.

The proposed new .com contract and public comment opportunity can be found here.

Four more dot-brands switch back-ends

Four dot-brand gTLDs have recently changed their back-end providers, according to the latest records, three moving away from Verisign.

US insurance company American Family Insurance has moved its .americanfamily and .amfam from Verisign to GoDaddy, as has AARP, a US interest group representing retired people, with .aarp.

Aquarelle.com Group, a French flower delivery company, has meanwhile switched from French ccTLD operator Afnic to London-based CentralNic (which is still Team Internet’s registry brand).

The AmFam moves are notable because while Verisign has for some time been getting out of the dot-brand back-end business, most of its clients have been migrating to Identity Digital.

I count seven gTLDs making the Verisign-GoDaddy switch, compared to 60 going Verisign-Identity Digital over the last couple years. Verisign is now down to a few dozen dot-brands.

The Aquarelle.com move is notable because it’s rare for a dot-brand to use a back-end in a different time zone that predominantly uses a different language, but Team Internet does have a footprint in France and other Francophone countries so it’s perhaps not wholly weird.

Three of the dot-brands are not heavily used — .aarp has three resolving domains that redirect to aarp.org, while .amfam has about 10 names in its zone that do not publicly resolve and .americanfamily has none.

You might infer from the name “Aquarelle.com” that the company is not a big believer in the dot-brand concept, but you’d be surprisingly wrong — .aquarelle has more than 50 domains that resolve to web sites without redirecting to traditional TLDs.

ICA finally comments on .com pricing talks

With the latest public debate about whether Verisign is ripping off registrants with its .com pricing now into its third month, one voice has been conspicuously absent.

But the Internet Commerce Association, which represents domain investors and domaining registrars, has now publicly called for .com wholesale fees to continue to be capped and Verisign’s profit margins to be tempered.

Issuing a statement late last week, the ICA revealed that it has participated in talks with the US National Telecommunications and Information Administration regarding its upcoming renewal of the .com Cooperative Agreement.

ICA said it is “encouraging NTIA to focus on ensuring that price caps have some relation to both the cost of operating the .com registry and a reasonable, if not healthy operating margin”, adding:

We believe that it in the absence of actual competitive market forces determining price, it is crucial that an economic study be conducted to determine what a reasonable price would be for .com registrations, having regard to the costs of operating the .com registry on behalf of ICANN while also taking into consideration the need to make a reasonable profit from the exclusive license. As a trade association focused on Internet commerce, although we are generally uncomfortable with determining prices by any method other than via a competitive marketplace, this method is the next best thing in the circumstances.

The statement completely ignores Verisign’s attempt to preemptively flip the debate on its opponents when it recently claimed that the true price gouging occurs in the “unregulated” retail and secondary markets.

The .com pricing debate first came back into the public sphere in July, when three campaign groups called on NTIA to cancel the Cooperative Agreement and allow the .com registry contract to be open for competitive bidding.

The agreement, terms of which routinely make their way into ICANN’s Registry Agreement with Verisign, allow the company to raise prices 7% in four of each six-year term, options Verisign habitually exercises.

The result is a .com registry that generates the company operating margins in excess of 60%, returning mountains of cash to investors.

Three Republican lawmakers then raised the issue with NTIA and NTIA later said that it intended to renew the Cooperative Agreement, but that it had invited Verisign to talks focused on pricing.

In apparently coordinated statements, both parties said the talks would also extend to pricing in the retail channel and secondary market, which should have made ICA members nervous.

Verisign even put out a lengthy statement calling out registrars and domain investors for selling .com domains at hugely inflated prices, conveniently ignoring the facts that the registrar market is genuinely competitive and that domainers shoulder the risk that the domains they pay annual rent to Verisign for very probably will not ever sell.

Verisign’s arguments are sufficiently flawed that it’s perhaps surprising on the face of it that ICA’s new statement completely fails to address or challenge them.

The fact that Verisign is prepared to throw its most dedicated customers under the bus without too much fear of retaliation — something it does every time .com pricing comes up for debate — is perhaps indicative of its market power.

It’s the only dealer in town, and it knows it can say whatever it wants about the crackheads who frequent its corner.

US could change .com pricing terms

The US government and Verisign are to enter talks about possible changes to .com pricing.

The National Telecommunications and Information Administration has told the company that it “intends to renew its Agreement with Verisign” but said it welcomed Verisign agreeing to talks that “may include an amendment to the pricing terms”.

The news came in an exchange of letters between NTIA assistant secretary Alan Davidson and Verisign chief Jim Bidzos over the weekend, published last night. Davidson wrote:

NTIA has questions related to pricing in the .com market. We are therefore pleased that Verisign has agreed to discussions regarding .com pricing and the health of the .com ecosystem, including retail and secondary markets. The parties will discuss possible solutions that benefit end-users, both businesses and consumers, and serve the public interest

The Cooperative Agreement between NTIA and Verisign gives the company the right to raise prices by 7% in four of the six years of its term, all of which Verisign exercised in the current run, which ends in a couple months.

The price-rising powers were frozen under Obama administration but reinstated under Trump, giving Verisign masses of extra revenue and huge profit margins, even as .com volume numbers took a prolonged dive.

NTIA’s intervention follows letters from three campaign groups calling .com a “cartel” and inquiries from three Congresspeople.

In response to NTIA’s letter, Bidzos wrote:

We have observed that our capped .com price increases have not always been passed through to benefit end-users and therefore we welcome an opportunity to have this important discussion. We are prepared to consider structures to address this and other issues, including ways to make .com pricing more predictable for the channel as part of it.

It’s clear from this rather tense exchange that the two parties might not exactly see eye-to-eye on their desired outcomes.

Verisign’s position recently has been that .com volumes have been falling in large part because of what Bidzos called the “unregulated retail channel” pumping up prices to increase profit-per-domain over domains under management.

He also pointed out in the company’s most-recent quarterly earnings call that the average price of .coms on the secondary market is $1,600, or 166x the wholesale price.

As some have pointed out, Verisign complaining about profiteering in the channel is the height of chutzpah, given its own mouth-watering margins, which appear to be what it seeks to protect more than anything else.

If Verisign reckons the registrar business is so great, why hasn’t it launched a registrar of its own yet? The company has been legally permitted by the Cooperative Agreement and its ICANN contract to do so for years.

Domain world growth despite .com slide

In the fastest-published quarterly Domain Name Industry Brief in many years, Verisign last night reported that the world’s extant domain name registrations increased by 5.8 million in the second quarter.

The report was published to coincide with Verisign’s Q2 earnings report, and came just two weeks after the publication of the Q1 brief.

The trend of the domain universe, hampered by the ongoing decline of Verisign’s own .com and .net, which lost 1.8 million names compared to Q1, being buttressed by ccTLDs and new gTLDs, continued.

New gTLDs were up 1.3 million names sequentially and 6.5 million annually — 4.0% and 23.2% respectively — to 34.6 million, but we sadly have to assume that a great many of these new names are speculative or abusive.

Verisign estimates the “combined renewal percentage estimate” for new gTLDs was 38.0%, about half of where .com’s somewhat depressed number lies.

ccTLD domains were at 140 million at the end of June, up 400,000 (0.3%) sequentially and three million (2.2%) annually, the DNIB states.

Pre-2012 gTLD names were up 122,100 sequentially and 154,200 annually, ending the quarter at 17.2 million.