Verisign increases focus on .com after flogging public DNS to Neustar

Neustar has taken another nibble at former archrival Verisign, buying the company’s public DNS resolution service.

The companies announced yesterday that Neustar has acquired Verisign Public DNS, and will incorporate it into its existing UltraDNS Public service.

The deal means that several IP addresses used to provide the services will transition to Neustar, so end users don’t need to make any changes.

Recursive DNS services are often used by people or organizations that, for whatever reason, don’t trust their ISP to treat their browsing records confidentially.

Big players in the market include Google, Cloudflare, and Cisco’s OpenDNS.

Signing up for such services is usually free — users simply reconfigure their devices to point their DNS resolution to a provider’s IPs.

Providers get greater insight into network activity that they can use to boost their paid-for enterprise security services, and they sometimes monetize NXDOMAIN (non-existing domain) landing pages.

No monetary value was put on the deal.

“Verisign is committed to focusing on its core mission of providing critical internet infrastructure, including Root Zone management, operation of 2 of the 13 global internet root servers, operation of .gov and .edu, and authoritative resolution for the .com and .net top-level domains, which support the majority of global e-commerce,” Verisign senior VP Eb Keshavarz, said in a press release.

That quote buries the lede, of course — operating .com and .net is the only activity listed that makes Verisign any money, and now it’s pretty much the only thing Verisign does.

Neustar acquired Verisign’s security services business, including its fee-paying recursive DNS customers, two years ago.

Neustar is of course no longer competing with Verisign in the registry services market, having sold that business to GoDaddy earlier this year. It’s now GoDaddy Registry.

.web ruling might not come this year

A decision about who gets to run the .web gTLD may not arrive until early next year, according to Verisign CEO Jim Bidzos.

“A final decision from the [Independent Review Process[ panel may be issued later this year or early next year,” he told analysts late last week.

.web sold at auction for $135 million four years ago to a company being secretly bankrolled by Verisign, but the outcome is being challenged in the IRP by runner-up bidder Afilias.

Afilias argues that the auction should be voided because ICANN failed to sufficiently investigate links between Verisign and the winning bidder. ICANN denies any wrongdoing.

It’s widely believed that .web is the strongest potential competitor to Verisign’s .com, and its attempt to secure the string is largely defensive.

The IRP case heard several days of testimony in August and the panel retired to consider its decision.

These eight companies account for more than half of ICANN’s revenue

While 3,207 companies contributed to ICANN’s $141 million of revenue in its last fiscal year, just eight of them were responsible for more than half of it, according to figures just released by ICANN.

The first two entries on the list will come as no surprise to anyone — they’re .com money-mill Verisign and runaway registrar market-leader GoDaddy, together accounting for more than $56 million of revenue.

Registries and registrars pay ICANN a mixture of fixed fees and transaction fees, so the greater the number of adds, renews and transfers, the more money gets funneled into ICANN’s coffers.

It’s perhaps interesting that this top-contributors list sees a few companies that are paying far more in fixed, per-gTLD fees than they are in transaction fees.

Binky Moon, the vehicle that holds 197 of Donuts’ 242 gTLD contracts, is the third-largest contributor at $5.2 million. But $4.9 million of that comes from the annual $25,000 fixed registry fee.

Only 14 of Binky’s gTLDs pass the 50,000-name threshold where transaction fees kick in.

It’s pretty much the same story at Google Registry, formally known as Charleston Road Registry.

Google has 46 gTLDs, so is paying about $1.1 million a year in fixed fees, but only three of them have enough regs (combined, about one million names) to pass the transaction fees threshold. Google’s total funding was almost $1.4 million.

Not quite on the list is Amazon, which has 55 mostly unlaunched gTLDs and almost zero registrations. It paid ICANN $1.3 million last year, just to sit on its portfolio of dormant strings.

The second and third-largest registrars, Namecheap and Tucows respectively, each paid about $1.7 million last year.

The only essentially single-TLD company on the list is Public Interest Registry, which runs .org. Despite having 10 million domains under management, it paid ICANN less than half of Binky’s total last year.

The anomaly, which may be temporary, is ShortDot, the company that runs .icu, .cyou and .bond. It paid ICANN $1.6 million, which would have been almost all transaction fees for .icu, which peaked at about 6.5 million names earlier this year.

Here’s the list:

[table id=62 /]

Combined, the total is over $70.5 million.

The full spreadsheet of all 3,000+ contributors can be found over here.

Floodgates, open! Trademark Clearinghouse now supports .com

The Trademark Clearinghouse has added .com to the roster of TLDs supported by its infringement notification service.

The Deloitte-managed service recently announced the change to its Ongoing Notification Service, which came into effect late last month.

The update means TMCH subscribers will receive alerts whenever a .com domain is registered that contains their trademark, helping them to decide whether to pursue enforcement actions such as UDRP.

Unlike the ICANN-mandated 90-day Trademark Claims period that accompanies the launch of each new gTLD, the registrant herself does not receive an alert of possible infringement at point of registration.

The service, which is not regulated by ICANN, is still free to companies that have their marks registered in the TMCH, which charges an extra dollar for every variation of a mark the holder wishes to monitor.

Such services have been commercially available from the likes of MarkMonitor for 20 years or more. The TMCH has been offering it for new gTLDs since they started launching at the end of 2013.

With the .com-shaped gaping hole now plugged, two things could happen.

First, clients may find a steep increase in the number of alerts they receive — .com is still the biggest-selling and in volume terms the most-abused TLD.

Second, commercial providers of similar services now find themselves competing against a free rival with an ICANN-enabled captive audience.

The upgrade comes at the tail end of the current wave of the new gTLD program. With the .gay launch out of the way and other desirable open TLDs tied up in litigation, there won’t be much call for TMCH’s core services for the next few years.

It also comes just a couple months after the .com zone file started being published on ICANN’s Centralized Zone Data Service, but I expect that’s just a coincidence.

Verisign measures the industry’s lockdown bump

The domain name industry added a net 400,000 extra domain registrations in the second quarter, when compared to the same quarter a year ago.

That’s according to Verisign’s latest Domain Name Industry Brief, which is arguably the most comprehensive data on how domain names fared while much of the developed world was subject to coronavirus lockdown.

The second quarter of 2020 ended with 370.1 million regs across all TLDs, up by 3.3 million sequentially and 15.3 million year over year, Verisign said.

That compares to a Q2 2019 increase of 2.9 million domains.

ccTLDs appear — at least at first glance — to have performed particularly strongly, adding a net 2.6 million regs to end June at 160 million. That compared to Q2 2019 net adds of 1.9 million.

Unfortunately, those numbers include the free ccTLD .tk, which never deletes a domain, and that space saw 2.4 million adds in the quarter, dramatically damaging the optics for ccTLDs as a whole.

New gTLDs as a whole fared poorly, losing a net 600,000 names during the period, to end Q2 at 31.6 million.

Most of that dip is attributable to the fast-selling new gTLD .icu, which lost 400,000 domains during the quarter due to the effects of its first junk drop.

Verisign’s own .com was up by at 1.4 million names to 148.7 million at the end of June; .net was flat at 13.4 million.

The company sold 1.1 million more domains in Q2 2020 than it did in Q2 2019.

You can read the Q2 DNIB here (pdf).

The $135 million battle for .web could be won in weeks

Afilias is to get its day in “court” to decide the fate of the .web gTLD just 10 days from now.

The registry is due to face off with ICANN before an Independent Review Process panel in a series of virtual hearings beginning August 3.

The IRP complaint was filed late 2018 as the endgame of Afilias’ attempt to have the results of the July 2016 .web auction overturned.

You’ll recall that Verisign secretly bankrolled the winning bidder, a new gTLD investment vehicle called Nu Dot Co, to the tune of $135 million, causing rival bidders to cry foul.

If that win was vacated, Afilias could take control of .web with its second-place bid.

Afilias claims that ICANN broke its own rules by refusing to thoroughly analyze whether NDC had a secret sugar daddy, something DI first reported on two weeks before the auction.

It has put forward the entirely plausible argument that Verisign splashed out what amounts to about a month’s .com revenue on .web in order to bury it and fortify its .com mindshare monopoly against what could be its most formidable competitor.

In the IRP case to date, ICANN has been acting as transparently as you’d expect when its legal team is involved.

It first redacted all the juiciest details from the Verisign-NDC “Domain Acquisition Agreement” and the presumably damaging testimony of one of its own directors, and more recently has been fighting Afilias’ demands for document discovery.

In March, the IRP panel ruled against ICANN’s protests on almost every count, ordering the org to hand over a mountain of documentation detailing its communications with Verisign and NDC and its internal deliberations around the time of the auction.

But the ace up ICANN’s sleeve may be an allegation made by Verisign that Afilias itself is the one that broke the auction’s rules.

Verisign has produced evidence that an Afilias exec contacted his NDC counterpart five days before the auction, breaking a “blackout period” rule so serious that violators could lose their applications.

While Afilias denies the allegation, the IRP panel ruled in March that Afilias must hand over copies of all communications between itself and rival bidders over the auction period.

We’re not likely to see any of this stuff until the panel issues its final declaration, of course.

In the past, IRP panels have taken as long as six or seven months after the final hearing to deliver their verdicts, but the most-recently decided case, Amazon v ICANN, was decided in just eight or nine weeks.

Three big registries will take down opioid domains for US govt

Verisign, Public Interest Registry and Neustar (now part of GoDaddy) will suspend domain names being used to illegally sell opioids under a pilot scheme with the US government.

The Food and Drug Administration announced this week that this new “trusted notifier” program will go into effect for 120 days.

When the FDA finds a site suspected of selling opioids illegally, it will notify the registry as well as the web site’s owner and hosting provider.

The registries will then be able to decide whether to suspend the domain or not. It’s voluntary.

The National Telecommunications and Information Administration will also take part in the project.

Verisign runs .com and .net, PIR runs .org and Neustar runs .us, .co and .biz.

Opioids are legal, pharmaceutical pain-killers derived from opium. They’re ridiculously addictive and account for as many drug overdose deaths in the US as heroin, but are over-prescribed by US doctors.

It’s not the first time registries have agreed to trusted notifier programs. Some new gTLD registries have deals with the movie and music industries to suspend domains involved in copyright infringement.

The announcement comes just a few weeks after ICANN rejected a deal that would have seen PIR create a community oversight body with responsibilities to monitor domain-suspension policies in .org.

Verisign says its coronavirus fee waivers have saved businesses millions

Verisign has decided to extend the temporary fee waiver it introduced in April for another two months, declaring the scheme a success so far.

On April 2, the company said it would no longer charge a fee when a registrant restores a domain in the period between expiration and deletion. Many registrars passed this on to their customers.

The stated goal of the offer was to help out registrants laid low by coronavirus.

“We estimate these restore fee waivers have already saved several million dollars for registrants of all types, including hard hit small businesses,” Verisign said in a blog post yesterday.

The service typically retails for around $80, so we’re talking about tens of thousands of domains that have been restored post-expiration for free over the space of two months.

Now, Verisign says the offer, which had been due to expire at the start of June, will end on August 1.

The company added that it will also waive the restore fees for names in .cc, .tv, .name and its four IDN gTLDs effective June 1.

Industry growth driven by new gTLD(s) in Q1

The number of domain names registered worldwide increased by 4.5 million in the first quarter, a sequential growth of 1.2%, largely due to new gTLDs and one new gTLD in particular, judging by Verisign’s latest data.

According to the company’s latest Domain Name Industry Brief, ShortDot’s .icu grew by 1.6 million domains during the quarter.

That’s more than half the growth of the new gTLDs as a whole, which grew by three million names to close March at 32.3 million.

.icu is one of those inexplicable, faddy Chinese phenomena. Its top registrar, West.cn, is currently selling them for the equivalent of $0.70 for the first year.

It’s now the eighth-largest TLD of any type, sitting on the DNIB league table between .org and .nl.

Fellow Chinese favorite .top was responsible for about 300,000 extra domains, though it’s lost most of that growth post-quarter, if zone files are any guide.

.xyz also appears to have had a decent quarter, growing by a couple hundred thousand names.

Verisign’s own .com contributed an additional 1.9 million domains, ending Q1 at 147.3 million. Baby brother .net was basically flat at 13.4 million.

The ccTLD space continued the decline of the last few quarters, coming in down 200,000 names at 157.4 million. Annually, ccTLDs were up by 600,000 names, however.

Overall, there were 366.8 million domain registrations in the world at the end of Q1, an increase of 14.9 million or 4.2% compared to the same moment last year.

Verisign expects to sell fewer domains because of coronavirus

Verisign doesn’t expect its domain name base to grow as fast as previously expected this year, due to the coronavirus pandemic.

On Thursday night, it ever so slightly downgraded its guidance for the year, saying it expects domains to grow by between 2% and 3.75%, compared to a previous high-end estimate of 4%.

It’s not a lot, but given how many domains Verisign has under management it still adds up to hundreds of thousands of domains and a few million in lost potential revenue.

CEO Jim Bidzos told analysts that the updated guidance reflected a “more cautious” outlook given the “uncertainty presented by Covid-19”.

It’s encouraging news for anyone wondering how the pandemic will effect the domain industry: the market-leading registry does not expect a big impact.

Verisign’s domain base totaled 160.7 million at the end of the quarter — 147.3 million in .com and 13.4 million in .net — which equates to growth of 3.8% over Q1 2019.

The growth is coming from .com — total .net regs were down by about 400,000 year over year.

The update came during Verisign’s first-quarter earnings call, which once again showed the .com registry printing money. It even managed to report net income higher than revenue, due to some quirks in its historical tax recognition.

For the three months to March 31, the company had net income of $334 million, compared to $163 million a year earlier, on revenue that was up 2% at $313 million.

Even discounting that bottom-line tax-related boost of $168 million, profits were up. Operating income was $206 million, up 3%, and the operating margin was up from 65.4% to 66%.

Even before the perhaps inevitable price increases next year, Verisign’s still managing to grow its margins organically, demonstrating that any prices hikes will be going straight to its bottom line and its shareholders’ pockets.

The company bought back $245 million of stock during the quarter and has another $826 million tucked away for further repurchases.