DropCatch raises antitrust concerns about Donuts’ Dropzone proposal

TurnCommerce, the company behind DropCatch.com and hundreds of accredited domain name registrars, reckons Donuts’ proposed Dropzone service would be anticompetitive.

Company co-founder Jeff Reberry has written to ICANN to complain that Dropzone would introduce new fees to the dropping domains market, raising the costs involved in the aftermarket.

He also writes that Donuts’ ownership of Name.com, a registrar that DropCatch competes with in the drop market, would have an “unfair competitive advantage” if Dropzone is allowed to go ahead:

Donuts is effectively asking every entity in the ICANN ecosystem to bear the costs of introducing a new service with no benefit outside of a financial benefit to itself, while forcing all registrars to spend more money and resources to register available domain names.

Donuts is proposing Dropzone across its whole portfolio of 200+ gTLDs. It’s a parallel registry infrastructure that would exist just to handle dropping domains in more orderly fashion.

Today, companies such as TurnCommerce own huge collections of shell registrars that are used to ping registries with EPP Create commands around the time valuable domains are going to delete.

Under Dropzone, they’d instead submit create requests with the Dropzone service, and Donuts would give out the rights to register the domains in question on a first-come, first-served basis.

While ICANN had approved a similar request from Afilias before it was acquired by Donuts, the Dropzone proposed by Donuts has one major difference — it proposes a new fee for accessing the system.

No details about this fee have been revealed, which has TurnCommerce nervous.

Donuts is asking for Dropzone via the Registry Services Evaluation Process and ICANN has not yet approved it.

Reberry says ICANN should consult with the relevant governmental competition authorities before it approves the proposal.

You can read Reberry’s letter here (pdf) and our original article about Dropzone here.

ICANN could block Donuts from buying Afilias

In what appears to be an almost unprecedented move, ICANN is to review Donuts’ proposed acquisition of rival Afilias at the highest level, raising a question mark over the industry mega-merger.

The org’s board of directors will meet Thursday to consider, among other things, “Afilias Change of Control Approval Request”.

It’s highly unusual for a change of control to be discussed at such a high level.

Every registry contract contains clauses requiring ICANN’s consent before a registry switches owners, and it has approved hundreds over the last decade. But the process is usually handled by legal staff, without board involvement.

The only time, to my memory, that the board has got involved was when it withheld consent from .org manager Public Interest Registry earlier this year.

It’s not entirely clear why Afilias has been singled out for special treatment.

It’s probably not due to its status as a legacy gTLD registry operator because of .info — when GoDaddy bought .biz operator Neustar’s registry business earlier this year, there was no such board review.

In addition, the .info contract’s change of control provisions are very similar to those in the standard new gTLD contract.

Could it be due to Donuts executives former ties to ICANN and the perception of a conflict of interest? Again, it seems unlikely.

While Donuts CEO Akram Atallah is former president of ICANN’s Global Domains Division, former ICANN CEO Fadi Chehadé is no longer involved with Donuts owner Abry Partners, having jumped to erstwhile PIR bidder Ethos Capital this July.

Are there competition concerns? It’s a possibility.

Afilias holds the contracts for 24 gTLDs new and legacy, but supports a couple hundred more, while Donuts is contracted for over 240.

But between them, they have barely 10 million domains under management. Donuts isn’t even the market leader in terms of new gTLD registrations.

And ICANN avoids making competition pronouncements like the plague, preferring instead to refer to national competition regulators.

Could ICANN’s interest have been perked by the fact that Afilias is the back-end provider for .org’s 10 million domains, and the proposed Donuts deal comes hot on the heels of the failed PIR acquisition? Again, it’s a possibility.

But none of the dangers ICANN identified in the .org deal — such as pricing, freedom of speech, and the change from a non-profit to for-profit corporate structure — appear to apply here.

There could be technical concerns. Atallah told DI a couple weeks ago that the plan was to ultimately migrate its managed TLDs to its Amazon cloud-based registry.

But moving its clients’ TLDs to a new back-end infrastructure would require their consent — it would be up to PIR and its overlords at the Internet Society to agree to moving .org to the cloud.

I think it’s likely that a combination of all the above factors, and maybe others, are what’s driving the Afilias acquisition to the ICANN boardroom. It will be interesting to see what the board decrees.

Get a free ticket to NamesCon here

NamesCon, the annual domain name industry conference, runs in Las Vegas at the end of the month, and DI has five free tickets to give away to readers.
The catch: only people who have never been to NamesCon before are eligible. It’s a strictly n00bs-only giveaway.
NamesCon starts January 28 and runs for three days at the Tropicana Hotel in Las Vegas.
Kicking off the show, in surely one of life’s “together at last” moments, Andrew Allemann of Domain Name Wire will sit down for a live interview with David Ellefson, founder of the metal band Megadeth. It’s probably going to be one of those “you had to be there” experiences.
There’s a strong focus on blockchain and cryptocurrency this year, given the interest many domainers are showing in this area as a new investment opportunity.
But the agenda is made up of the usual mix of industry experts discussing themes such as domain investment, web site development, branding, intellectual property and the like.
There’s even a Women In Domaining Dinner, where women can discuss whether it’s worth investing in .makeup and .horse domains, and a Christian Domainers’ Breakfast, where followers of Our Lord can eat bacon in peace and prevaricate on why greed is definitely not as bad as the Bible unambiguously states it is.
It’s usually a pretty good show with a good turn-out. The networking opportunities alone make it worth a trip.
To claim one of the five complimentary conference passes, simply leave a comment on this blog post stating clearly that you want one, and complete this sentence in 10,000 words or fewer:

I want to spend three nights away from my partner in Las Vegas because…

Use a functioning email address or I won’t be able to send you the ticket details.
The first five people to leave a qualifying comment get a ticket each.
It should go without saying that this ticket only gets you into the conference itself. How you get to Vegas and where you sleep when you get there is your problem.
Again, and I can’t stress this enough, if you’ve been to NamesCon before you’re not eligible for this competition. That’s NamesCon’s rule, not mine, so no arguing.
In the unlikely event that all five tickets have gone by the time you read this post, you may want to check out some of my co-conspirators at other domain community blogs, several of which I gather also have tickets to give away today.

ICANN punts o.com auction to US watchdogs

Verisign’s proposed auction of the domain o.com might have a negative effect on competition and has been referred to US regulators.
That’s according to ICANN’s response to the .com registry’s request to release the domain, which is among the 23 single-letter domains currently reserved under the terms of its contract.
ICANN has determined that the release “might raise significant competition issues” and has therefore been referred to “to the appropriate governmental competition authority”.
It’s forwarded Verisign’s request to the US Department of Justice.
Verisign late last month asked ICANN if it could release o.com to auction as a test that could presumably lead to other single-character .com names being released in future.
The plan is for a charity auction, in which almost all the proceeds are donated to internet-related good causes.
Only the company running the auction would make any significant money; Verisign would just take its standard $7.85 annual fee.
ICANN told the company that it could find no technical reason that the release could not go ahead.
The only barrier is the fact that Verisign arguably has government-approved, cash-printing, market dominance and is therefore in a sensitive political position.
Whether its profitless plan will be enough to see the auction given the nod remains to be seen.
A certain bidder in the proposed auction would be Overstock.com, the online retailer, which has been pressuring ICANN and Verisign for the release of O.com for well over a decade and even owns trademarks covering the domain.
Disclosure: several years ago I briefly provided some consulting/writing services to a third party in support of the Verisign and Overstock positions on the release of single-character domain names, but I have no current financial interest in the matter.

ICANN urged to crack down on new gTLD abuse

Registries selling dirt-cheap new gTLD domains should be rewarded with lower ICANN fees when they get proactive about abuse, while registrars that turn a blind eye to spammers should be suspended, an ICANN working group will recommend.
In its second batch of findings, the Competition, Consumer Trust, and Consumer Choice Review Team (CCT) said that financial incentives and a new complaints procedure should be used to persuade registries and registrars to fight DNS abuse.
The CCT said it “proposes the development of incentives to reward best practices preventing technical DNS abuse and strengthening the consequences for culpable or complacent conduits of technical DNS abuse” in a paper published today.
The review, which drew on multiple sources of market and abuse data, original research, and analysis of third-party research, is probably the most comprehensive study into the impact of the new gTLD program to date.
It concluded that overall rates of DNS abuse did not increase as a result of the program, but that bad actors are increasingly migrating away from legacy gTLDs such as .com to 2012-round TLDs such as .top, .gdn and Famous Four Media’s stable.
Indeed, much of the paper appears to be a veiled critique of FFM’s practices.
The registrar AlpNames, known to be affiliated with FFM and responsible for most of its retail sales, is singled out as the currently accredited registrar particularly favored by abusers.
The CCT report notes that AlpNames regularly sells domains for under $1, or gives them away for free, and offered a tool allowing registrants to randomly generate up to 2,000 available domains in 27 different gTLDs, pretty much inviting abuse.
“Certain registries and registrars appear to either positively encourage or at the very least willfully ignore DNS abuse. Such behavior needs to be identified rapidly and action
must be taken by ICANN compliance as deemed necessary,” the paper says.
The review found that gTLDs with no registration restrictions and the lowest prices had the most abuse. Duh.
“Generally, the DNS Abuse Study indicates that the introduction of new gTLDs did not increase the total amount of abuse for all gTLDs,” its report says. “[F]actors such as registration restrictions, price, and registrar-specific practices seem more likely to affect abuse rates.”
Drawing on data provided by 11 domain block-lists (SURBL, SpamHaus, etc), the paper states that at least one TLD (FFM’s .science) had an abuse rate excess of 50%.
Using SpamHaus data, the paper identities FFM’s .science, .stream, .trade, .review, .download and .accountant as having over 10% abuse during the period of its study. Also on that list: Uniregistry’s low-price .click and the China-based .top and .gdn.
One thing they all have in common is that AlpNames is a leading registrar, usually accounting for at least a quarter of domains under management.
There’s no way AlpNames/FFM is not aware of the amount of bad actors in its customer base, the question is what can ICANN do about it?
The CCT team recommends that registries and registrars with over 10% of their names used for abusive purposes should be tasked by ICANN with proactively cleaning up their zones. Those that fail to do so should be subject to a new Domain Abuse Dispute Resolution Process, it said.
These companies should have their contracts suspended when they’re “associated with unabated, abnormal and extremely high rates of technical abuse”, the report recommends.
There’s a big boilerplate specifying, tellingly, that registry operators that control registrars are affected by this recommendation too.
It should be noted that there was not a full consensus of support for the idea of a DADRP. Half a dozen working group members filed minority statements opposing it.
It’s not all stick in the report, however. There’s some carrot, too.
The CCT report recommends financial incentives such as fee reductions for registries that have “proactive anti-abuse measures” in place.
It noted that there is precedent for ICANN doing this kind of thing when it implemented an anti-tasting policy that seriously restricted registrars’ ability to get registry refunds.
The CCT Review Team was formed to figure out what impacts the 2012 new gTLD round had on the domain name market.
The completion of its work is one of several gating factors to the next new gTLD application round under ICANN’s new bylaws and the old Affirmation of Commitments with the US government.
It published initial recommendations earlier this year. This new set of recommendations is now open for public comment until January 8.

People are forgetting .com exists — ICANN survey

Have you ever heard of .com, .net and .org?
That question was posed to 3,349 domain name registrants in 24 countries by market research firm Nielsen this June and guess what — awareness of all three cornerstone gTLDs was down on a comparable 2015 survey.
Unbelievably, only 85% of respondents professed to be aware of .com’s existence, compared to 86% in 2015.
Equally unbelievably, awareness of .net and .org fell from 76% to 69% and from 70% to 65% respectively between 2015 and 2016, the survey found.
Those are just three among many hundreds of findings of the Nielsen survey, which was carried out in order to inform ICANN’s Competition, Consumer Trust & Consumer Choice Review.
The CCT is one of the reviews deemed mandatory before ICANN is able to launch the next round of new gTLD applications.
A great many of the numbers revealed by the survey are seriously open to question — some could even be empirically proven wrong.
But David Dickinson, project lead for Nielsen on the survey, told DI yesterday that the numbers themselves are less important than the trends, or lack thereof, that they might represent.
Nielsen carried out two surveys in 2015 — one of consumers and one of registrants — then repeated both surveys again a year later.
Respondents were selected from a pool of people who have at some point indicated to third-party market research companies that they are available to take surveys online, Dickinson said. They are usually compensated via some kind of redeemable loyalty points scheme.
The registrant surveys were limited to those who said they have registered a domain name. The consumer survey was limited to those who said they spend more than five hours a week online.
While the number of respondents were measured in the low thousands, the idea is that they provide a representative sample of all internet users and domain name registrants.
But there’s a lot of weirdness in the numbers.
Dickinson said that the 85% awareness number for .com could be due partly to random “mechanical errors” — people clicking the wrong buttons on their survey form — but said that lack of awareness was more common among younger respondents who were more likely to be aware of newer, less generic TLDs.
The surveys also highlighted a bizarre split in TLD awareness between consumers and registrants.
Given that registrants are a subset of consumers, and given that they are by definition more familiar with domain names, you’d expect respondents to the registrant surveys to show higher TLD awareness than those responding to the consumer surveys.
But the opposite was true.
The surveys found, for example, that 95% of consumers knew about .com, but only 85% of registrants did. For .net and .org the numbers were 88%/69% and 83%/65% respectively. None of it makes any sense.
Dickinson said that the 2015 consumer/registrant awareness numbers were “almost identical”.
“My only real conclusion here is that [in 2016] there was some systematic difference in the diligence that the registrants selected these names on these awareness questions, and that a large portion of that is just due to random variation,” he said.
“However, when we do look at those people who are registering new gTLDs, they tended to have much lower awareness of those legacy gTLDs than those people who were unaware or had not registered those new gTLDs,” he said.
“The people who said they did not recognize any of those new gTLDs at all the are very very centric on the legacy gTLDs and in particular .com,” he said.
“I think the data is overstated because of the random variation but there is a learning here when we break it down… that those legacy domains are becoming less relevant or less noticed by the younger people and the people who are registering these new gTLDs,” he said.
“I think there is a shift going on, but it’s not as big as what is stated here [in the numbers],” he said.
The surveys also looked at awareness and registration levels for new, 2012-round gTLDs, but again the numbers probably don’t accurately reflect reality.
For example, 39% of registrants claimed to have heard of .email domain names and 15% claimed to have actually registered one.
Again, these numbers don’t seem plausible. There are fewer than 60,000 .email domains in existence today. Even if there were only one million domain registrants in the world, 15% registration rate would mean at least 150,000 names should have been sold.
Dickinson said that this number could have been higher due to selection bias. The survey took about half an hour on average to fill out, so people more personally interested or invested in internet or domain name related stuff might have been more likely to stick around and complete it.
Interestingly, new gTLD awareness rates in North America were substantially lower than awareness elsewhere in the world. For example, only 25% of North Americans professed to have heard of .news, but that grew to 42% in Asia where most languages use a different script.
My sense here is that respondents — which all took the surveys in their native languages — may have just been clicking to confirm English words they recognized, rather than TLDs they had seen in the wild.
Nielsen clearly suspected that there would be an element of “false recall” among respondents because it actually included some fake TLDs among the real ones.
This led to findings such as: 26% of Africans have heard of .cairo, 17% of North Americans have heard of .toronto and 21% of South Americans have heard of .bogota.
None of those city TLDs exist.
Dickinson explained this as “assumed familiarity”.
“What very much seems to happen is that if something has an implied ‘face validity’ — it seems to make sense or seems to be readily interpretable — then those ones will get higher stated awareness than the ones that are just random letters, such as .xyz,” he said.
Indeed, while there are over six million .xyz domains out there today, with high-profile registrants including Google, only 13% of respondents claimed to be aware of it.
“The more implied familiarity or sense of familiarity there is, the more likely people are to feel like they’ve been there or seen it, so it’s definitely a false recall, but the learning from that is that the more interpretable… those things are then they have more easy acceptance by consumers than things that are not interpretable,” Dickinson said.
The surveys did not only cover awareness and registration patterns. There are literally hundreds of data points in there covering different perceptions of TLDs new and old. I’ve just focused here on the ones that made me question whether the survey was worth the time, expense and paper it was written on.
But Dickinson said that the raw numbers are not necessarily what the ICANN review teams should be looking at.
“Maybe the absolute number is not exactly dead-on, but what are the relationships between the numbers?” he said.
“I tend to look at the relationships, so for example one of the objectives of doing this survey was to see if the new gTLD program impacted the perception of the industry in any way, or trustworthiness in the industry,” he said.
“For example, we can say we’re not sure it improved — the numbers didn’t change significantly in that direction to allow us to definitively say it improved — but it certainly did not decline,” he said. “We can rule out that it declined.”
“Overall, we can say that the new gTLD program is emerging with fairly strong awareness, relative,” he said.
“We can also say with certainty that none of those new gTLDs are anywhere approaching the awareness of the legacy gTLDs, and even if there is some erosion in the legacy gTLDs it’s going to take a long time for those to reach parity, if they ever do,” he said.
The Nielsen surveys are one input to the work of the volunteer CCT Review Team, which intends to publish its preliminary report before the end of the year.
CCT-RT chair Jonathan Zuck recently published a blog post on the ICANN web site giving a progress report on recent work.

newdomains.org ticket compo winners announced

The winners of the recent DI prize draw, with three free tickets for the newdomains.org conference at stake, have been confirmed.
To enter the competition, you simply had to leave a comment on DI completing the sentence “The biggest challenge facing new gTLDs next year will be…”
I read all the submissions and found them all interesting but ultimately the comments were completely irrelevant in determining the winners, which were selected by three random numbers generated by Random.org.
The winners were:

• Colin Campbell of .CLUB Domains.
• Jeffrey Sass of .CLUB Domains.
• Phil Buckingham of DotAdvice.

It definitely looks weird that two people from the same company won tickets. Weird enough that for half a second I wondered whether justice would be better serviced if were to fix a different outcome.
But I didn’t. If it looks unjust, blame randomness. Fate’s a bitch.
Many thanks to all who entered. There were some interesting comments.

How many defensive registrations is too many?

How will ICANN measure the success of its new top-level domains program, and how many defensive registrations is too many?
These questions are now firmly on the ICANN agenda, following the publication of 37 draft recommendations for how to measure the success or otherwise of new gTLDs.
The advice of the Consumer Trust Working Group, published last night and now open for public comment, is a must-read for anyone interested in the emerging new gTLD market.
The recommendations describe myriad ways ICANN could benchmark the performance of new gTLDs three years from now, to fulfill its promise to the US Department of Commerce to study the effect of the program on consumer choice and competition.
While it’s a broad document covering a lot of bases, I’m going to be disappointingly predictable here and immediately zero in on the headline wedge issue that I think will get most tongues wagging over the coming weeks and months:
Defensive registrations.
The working group decided to recommend that, as a measure of success, domain name registrations in new gTLDs should be no more than 15% defensive* three years after launch.
Defensive in this case would mean they were registered during the mandatory Sunrise period.
The idea is that consumer choice can be demonstrated by lots of registrations in new gTLDs, but that defensive registrations should not count toward that goal.
The 15%-Sunrise baseline number was chosen fairly arbitrarily – other suggestions were 20% and 12% – and is designed to spur community discussion. It’s not final.
Still it’s interesting.
It implies that if a registry has 15,000 Sunrise registrations, it needs to sell another 85,000 domains in three years to be seen as having made a successful contribution to consumer choice.
By way of an example, if it were to be retroactively applied to .xxx, the most recent gTLD to launch, ICM Registry would have to get its total registrations up to 533,000 by the end of 2014.
Is 15% too low? Too high? Is it even a useful metric? ICANN wants to know.
Whatever the ultimate number turns out to be, it’s going to be handy for plugging into spreadsheets – something opponents of new gTLDs will find very useful when they try to make the case that ICANN endorses a certain dollar value of trademark extortion.
Because many registries will also accept defensive registrations after Sunrise, two more metrics are proposed.
The group recommends that domains in new gTLDs that redirect to identical domains in legacy TLDs – strongly implying a defensive registration – should be no more than 15% after three years.
It also recommends that ICANN should carry out a survey to see how many registrants own matching second-level domains in legacy TLDs, and that this should also be lower than 15%.
I’ve only outlined three of the working group’s recommendations here. Many of the other 34 are also interesting and will be much-debated as the new gTLD program continues.
This is vitally important stuff for the future of new gTLDs, and applicants would be well advised to have a good read — to see what might be expected of them in future — before finalizing their applications.
* It should be noted that the recommendation as published confusingly reads “Post-Sunrise registrations > 15% of total registrations”, which I think is a typo. The > operator implies that non-defensive registrations only need to be over 15% of total registrations, which I’m certain is not what the working group intended to say.
(UPDATE: this typo has now been corrected).

Win $5,000 for your new gTLD idea

Afilias is offering $5,000 for the best idea about what to do with a new generic top-level domain.
The company has kicked off a competition today designed to stimulate interest in ICANN’s new gTLD program.
It said in a press release this evening:

With this contest, Afilias is looking for unique new TLD ideas, whether that domain is a “dot Brand” (for a company) or a “dot Niche” (for a concept or community) or a “dot City” domain. The goal is to discover ideas for “right of the dot” domains that cannot be done today with any of the existing domains, like .com or .net.

Basically, you send in your best new gTLD idea – not just a string, but an innovative way to use it – and you stand a chance of winning prizes of $5,000, $3,000 or $1,500.
The contest web page can be found here. The rules are here.
According to the press release, I’ve agreed to be on the judging panel, apparently as the latest stage of my ongoing campaign of utterly shameless self-promotion.
The other judges are former ICANN president Paul Twomey, Matthew Quint of the Center on Global Brand Leadership and David Rogers of BRITE, both at Columbia Business School, as well as Afilias’ CTO and CMO, Ram Mohan and Roland LaPlante.
I’m not sure what to expect, but it strikes me that if you have a halfway decent idea for a new gTLD – and you don’t actually plan to apply for it – you may not have much to lose by entering.
Afilias is accepting submissions until October 17, just two weeks from now, and the winners will be announced October 24.

Last chance to win newdomains.org tickets

Congratulations to Jim Davies, you’ve just won a free conference pass for newdomains.org worth $1,000 for entering the latest DomainIncite competition.
Random.org’s random number sequence generator selected the winning order of tweets qualifying for the draw, and Twitter handle @PerthPom came top of the list.
That’s a second Australia-based winner, by the looks of things, after Michael’s win on Monday. I hope you guys can both afford the airfare.
Competition Day Three
I have two final tickets to give away.
To reiterate, they’re Full Conference passes for the newdomains.org conference in Munich, Germany, on September 26 and 27. Flights, hotels and Oktoberfest not included. Details here.
If you want a pass, just leave a comment here before 2359 UTC Sunday August 14, saying why you think you should get one. Make something up.
I’ll use Random.org again to pick the two lucky winners and announce the names on Monday.
All winners will be contacted by somebody from the conference organizer, United-Domains, next week.
UPDATE: Proving just how random Random.org is, the winning order it selected was 1, 2, 3, 4, 5. The winners are TAG and Daniel. I’ll be in touch.