.hotel battle lands ICANN in court over accountability dodges

ICANN’s accountability mechanisms, or lack thereof, have landed the Org in court.

Three applicants for the .hotel new gTLD have sued in California’s Superior Court in LA, claiming ICANN has consistently failed to provide true accountability, refusing for over seven years to implement fundamental mechanisms required by its bylaws.

They want the court to force ICANN to stick to its bylaws and to also temporarily freeze an Independent Review Process case related to .hotel.

The registries in question are Fegistry, Domain Venture Partners and Radix. They filed their complaint at the end of October, but ICANN did not publish it until the end of January, after its terse reply, and an administrative ruling, had also been filed with the court.

While the endgame is presumably to get the .hotel contention set pushed to auction, the lawsuit barely mentions the gTLD at all. Rather, it’s a broad-ranging challenge to ICANN’s reluctance to submit to any kind of accountability at all.

The main beef is that ICANN has not created a so-called “Standing Panel” of judges to preside over IRP cases, something that its bylaws have required since 2013.

The Standing Panel is meant to comprise seven legal experts, trained up in all things ICANN, from which the three panelists presiding over each IRP would be selected.

It would also operate as a final appeals court for IRP rulings, with all seven panelists involved in such “en banc” challenges.

The idea is to have knowledgeable panelists on a retainer to expedite IRPs and ensure some degree of consistency in decision-making, something that has often been lacking in IRP decisions to date.

Despite this requirement being in the bylaws since 2013, ICANN has consistently dragged its feet on implementation and today there still is no Standing Panel.

The .hotel plaintiffs reckon ICANN has dodged $2.7 million in fees by refusing to pick a panel, all the while offloading certain fees onto complainants.

It didn’t get the ball rolling until January 2018, but the originally anticipated, rather streamlined, selection process quickly devolved into the usual mess of ICANN bureaucracy, red tape and circular community consultation.

The latest development was in November 2020, when ICANN announced that it was looking for volunteers for a cross-community “IRP Community Representatives Group”, a team similar to the Nominating Committee. which would be responsible for picking the Standing Panel members.

The deadline to apply was December 4, and we’ve not heard anything else about the process since.

The .hotel litigants also have beef with the “sham” Request for Reconsideration process, which is notorious for enabling the board to merely reinforce its original position, which was drafted by ICANN staff lawyers, based on advice provided by those same ICANN staff lawyers.

They also take aim at the fact that ICANN’s independent Ombudsman has recused himself from any involvement in Reconsideration related to the new gTLD program, for unclear reasons.

The lawsuit (pdf) reads:

ICANN promised to implement these Accountability Mechanisms as a condition of the United States government terminating its formal oversight of ICANN in 2016 — yet still has wholly failed to do so.

Unless this Court forces ICANN to comply with its bylaws in these critical respects, ICANN will continue to force Plaintiffs and any other complaining party into the current, sham “Reconsideration” and Independent Review processes that fall far short of the Accountability Mechanisms required in its bylaws.

The plaintiffs say that ICANN reckons it will take another six to 12 months to get the Standing Panel up and running. The plaintiffs say they’re prepared to wait, but that ICANN is refusing and forcing the IRP to continue in its absence.

They also claim that ICANN was last year preparing to delegate .hotel to HTLD, the successful applicant now owned by Donuts, which forced them to pay out for an emergency IRP panelist to get the equivalent of an injunction, which cost $18,000.

That panelist declined to force ICANN to immediately appoint a Standing Panel or independent Ombudsman, however.

The .hotel plaintiffs allege breach of contract, fraud, deceit, negligence and such among the eight counts listed in the complaint, and demand an injunction forcing ICANN to implement the accountability mechanisms enshrined in the bylaws.

They also want an unspecified amount of money in punitive damages.

ICANN’s response to the complaint (pdf) relies a lot on the fact that all new gTLD applicants, including the plaintiffs in this case, signed a covenant not to sue as part of their applications. ICANN says this means they lack standing, but courts have differed of whether the covenant is fully enforceable.

ICANN also claims that the .hotel applicants have failed to state a factual case for any of their eight counts.

It further says that the complaint is just an effort to relitigate what the plaintiffs failed to win in their emergency hearing in their IRP last year.

It wants the complaint dismissed.

The court said (pdf) at the end of January that it will hold a hearing on this motion on DECEMBER 9 this year.

Whether this ludicrous delay is related to the facts of the case or the coronavirus pandemic is unclear, but it certainly gives ICANN and the .hotel applicants plenty of time for their IRP to play out to conclusion, presumably without a Standing Panel in place.

So, a win-by-default for ICANN?

Hacking claims resurface as .hotel losers force ICANN to lawyer up again

The fight over .hotel has been escalated, with four unsuccessful applicants for the gTLD whacking ICANN with a second Independent Review Process appeal.
The complaint resurrects old claims that a former lead on the successful application, now belonging to Afilias, stole trade secrets from competing applicants via a glitched ICANN web site.
It also revives allegations that ICANN improperly colluded with the consultant hired to carry out reviews of “community” applications and then whitewashed an “independent” investigation into the same.
The four companies filing the complaint are new gTLD portfolio applicants MMX (Minds + Machines), Radix, Fegistry, and Domain Venture Partners (what we used to call Famous Four).
The IRP was filed November 18 and published by ICANN December 16, but I did not spot it until more recently. Sorry.
There’s a lot of back-story to the complaint, and it’s been a few years since I got into any depth on this topic, so I’m going to get into a loooong, repetitive, soporific, borderline unreadable recap here.
This post could quite easily be subtitled “How ICANN takes a decade to decide a gTLD’s fate”.
There were seven applicants for .hotel back in 2012, but only one of them purported to represent the “hotel community”. That applicant, HOTEL Top Level Domain, was mostly owned by Afilias.
HTLD had managed to get letters of support from a large number of hotel chains and trade groups, to create a semblance of a community that could help it win a Community Priority Evaluation, enabling it to skip to the finish line and avoid a potentially costly auction against its rival applicants.
CPEs were carried out by the Economist Intelligence Unit, an independent ICANN contractor.
Surprisingly to some (including yours truly), back in 2014 it actually managed to win its CPE, scoring 15 out of the 16 available points, surpassing the 14-point winning threshold and consigning its competing bidders’ applications to the scrap heap.
There would be no auction, and no redistribution of wealth between applicants that customarily follows a new gTLD auction.
Naturally, the remaining applicants were not happy about this, and started to fight back.
The first port of call was a Request for Reconsideration, which all six losers filed jointly in June 2014. It accused the EIU of failing to follow proper procedure when it evaluated the HTLD community application.
That RfR was rejected by ICANN, so a request for information under ICANN’s Documentary Information Disclosure Policy followed. The losing applicants reckoned the EIU evaluator had screwed up, perhaps due to poor training, and they wanted to see all the communications between ICANN and the EIU panel.
The DIDP was also rejected by ICANN on commercial confidentiality grounds, so the group of six filed another RfR, asking for the DIDP to be reconsidered.
Guess what? That got rejected too.
So the applicants then filed an IRP case, known as Despegar v ICANN, in March 2015. Despegar is one of the .hotel applicants, and the only one that directly plays in the hotel reservation space already.
The IRP claimed that ICANN shirked its duties by failing to properly oversee and verify the work of the EIU, failing to ensure the CPE criteria were being consistently applied between contention sets, and failing in its transparency obligations by failing to hand over information related to the CPE process.
While this IRP was in its very early stages, it emerged that one of HTLD’s principals and owners, Dirk Krischenowski, had accessed confidential information about the other applicants via an ICANN web site.
ICANN had misconfigured its applicant portal in such a way that any user could very access any attachment on any application belonging to any applicant. This meant sensitive corporate information, such as worst-case-scenario financial planning, was easily viewable via a simple search for over a year.
Krischenowski appears to have been the only person to have noticed this glitch and used it in earnest. ICANN told applicants in May 2015 that he had carried out 60 searches and accessed 200 records using the glitch.
Krischenowski has always denied any wrongdoing and told DI in 2016 that he had always “relied on the proper functioning of ICANN’s technical infrastructure while working with ICANN’s CSC portal.”
The applicants filed another DIDP, but no additional information about the data glitch was forthcoming.
When the first IRP concluded, in February 2016, ICANN prevailed, but the three-person IRP panel expressed concern that neither the EIU nor ICANN had any process in place to ensure that community evaluations carried out by different evaluators were consistently applying the CPE rules.
The IRP panel also expressed concern about the “very serious issues” raised by the ICANN portal glitch and Krischenowski’s data access.
But the loss of the IRP did not stop the six losing applicants from ploughing on. Their lawyer wrote to ICANN in March 2016 to denounce Krischenowski’s actions as “criminal acts” amounting to “HTLD stealing trade secrets of competing applicants”, and as such HTLD’s application for .hotel should be thrown out.
Again, to the best of my knowledge, Krischenowski has never been charged with, let alone convicted of, any criminal act.
Afilias wrote to ICANN not many weeks later, April 2016, to say that it had bought out Krischenowski’s 48.8% stake in HTLD and that he was no longer involved in the company or its .hotel application.
And ICANN’s board of directors decided in August 2016 that Krischenowski may well have accessed documents he was not supposed to, but that it would have happened after the .hotel CPE had been concluded, so there was no real advantage to HTLD.
A second, parallel battle against ICANN by an unrelated new gTLD applicant had been unfolding over the same period.
A company called Dot Registry had failed in its CPE efforts for the strings .llc, .llp and .inc, and in 2014 had filed its own IRP against ICANN, claiming that the EIU had “bungled” the community evaluations, applying “inconsistent” scoring criteria and “harassing” its supporters.
In July 2016, almost two years later, the IRP panel in that case ruled that Dot Registry had prevailed, and launched a withering attack on the transparency and fairness of the ICANN process.
The panel found that, far from being independent, the EIU had actually incorporated notes from ICANN staff into its CPE evaluations during drafting.
It was as a result of this IRP decision, and the ICANN board’s decision that Krischenowski’s actions could not have benefited HTLD, that the losing .hotel applicants filed yet another RfR.
This one lasted two and a half years before being resolved, because in the meantime ICANN launched a review of the CPE process.
It hired a company called FTI Consulting to dig through EIU and ICANN documentation, including thousands of emails that passed between the two, to see if there was any evidence of impropriety. It covered .hotel, .music, .gay and other gTLD contention sets, all of which were put on hold while FTI did its work.
FTI eventually concluded, at the end of 2017, that there was “no evidence that ICANN organization had any undue influence on the CPE reports or engaged in any impropriety in the CPE process”, which affected applicants promptly dismissed as a “whitewash”.
They began lobbying for more information, unsuccessfully, and hit ICANN with yet another RfR in April 2018. Guess what? That one was rejected too.
The .hotel applicants then entered into a Cooperative Engagement Process — basically pre-IRP talks — from October 2018 to November 2019, before this latest IRP was filed.
It’s tempting to characterize it as a bit of a fishing expedition, albeit not a baseless one — any allegations of ICANN’s wrongdoing pertaining the .hotel CPE are dwarfed by the applicants’ outraged claims that ICANN appears to be covering up both its interactions with the EIU and its probe of the Krischenowski incident, partly out of embarrassment.
The claimants want ICANN to be forced to hand over documentation refused them on previous occasions, relating to: “ICANN subversion of the .HOTEL CPE and first IRP (Despegar), ICANN subversion of FTI’s CPE Process Review, ICANN subversion of investigation into HTLD theft of trade secrets, and ICANN allowing a domain registry conglomerate to takeover the ‘community-based’ applicant HTLD.”
“The falsely ‘independent’ CPE processes were in fact subverted by ICANN in violation of Bylaws, HTLD stole trade secrets from at least one competing applicant, and Afilias is not a representative of the purported community,” the IRP states.
“HTLD’s application should be denied, or at least its purported Community Priority relinquished, as a consequence not only for HTLD’s spying on its competitors’ secret information, but also because HTLD is no longer the same company that applied for the .HOTEL TLD. It is now just a registry conglomerate with no ties to the purported, contrived ‘Community’ that it claims entitled to serve,” it goes on.
ICANN is yet to file its response to the complaint.
Whether the IRP will be successful is anyone’s guess, but what’s beyond doubt is that if it runs its course it’s going to add at least a year, probably closer to two, to the delay that .hotel has been languishing under since the applications were filed in 2012.
Potentially lengthening the duration of the case is the claimants’ demand that ICANN “appoint and train” a “Standing Panel” of at least seven IRP panelists from which each three-person IRP panel would be selected.
The standing panel is something that’s been talked about in ICANN’s bylaws for at least six or seven years, but ICANN has never quite got around to creating it.
ICANN pinged the community for comments on how it should go about creating this panel last year, but doesn’t seemed to have provided a progress report for the last nine months.
The .hotel applicants do not appear to be in any hurry to get this issue resolved. The goal is clearly to force the contention set to auction, which presumably could happen at Afilias’ unilateral whim. Time-to-market is only a relevant consideration for the winner.
With .hotel, and Afilias’ lawsuit attempting to block the .web sale to Verisign, the last round of new gTLD program, it seems, is going to take at least a decade from beginning to end.

GRS has lost three million domains since Famous Four died

The old Famous Four Media gTLD portfolio has shrunk by roughly 60% since old management were kicked out.
At the same time, the new registry is selling less than one percent of the domains it used to add each month.
The 16 TLDs, now managed by GRS Domains, have a total of approximately 2 million domains in their zone files today, compared to about 5 million at the end of August 2018.
Last August was when GRS, which seems to have taken over the portfolio about a year ago, announced that it was introducing “much more transparent and sensible pricing strategy” of $9.98 per domain per year across the board.
Its 16 TLDs include the likes of .loan, .win and .bid. Many had been offered in the sub-$1 range, largely via former affiliate AlpNames, attracting huge volumes of registrations but low renewals and a lot of spammers.
I compared the zone file counts at the end of August 2018 to yesterday’s numbers, rounding to the nearest thousand, and came up with this:
[table id=55 /]
Don’t think for a second that the correction is over. The story of the old FFM portfolio’s decline will roll for many more months. Each TLD is still seeing monthly deletes in the thousands.
The number of new regs across the portfolio every month has dropped off a cliff — a big cliff with jagged rocks and sharks circling at the bottom — since the August price changes.
Whereas in January 2018 the 16 gTLDs saw a combined total of over 400,000 adds, by January 2019 this had dropped to fewer than 1,700, a 99.59% decline.
[table id=56 /]
In each case, the drop-off in adds started in August last year. Each TLD went almost immediately from thousands of new regs per month, to under 100.
I compared Januaries because January 2019 is the date of the most-recent registry transaction data. January 2018 was not an atypically strong month for sales for any of the TLDs; for many, it was on the slow side.
Famous Four was replaced by GRS about a year ago after investors in Domain Venture Partners, the ultimate owner of the portfolio, fell out with FFM management.
The registrar AlpNames, which was responsible for a huge share of FFM’s sales and was managed by the same people, has also since gone out of business.

Looks like .music is finally on its way

The hard-fought battle for .music appears to be over.
I’m not yet in a position to tell you which of the eight applicants for the new gTLD has been successful, but I can tell you some of those who were not.
Two applicants have this week withdrawn their bids, an almost certain sign that the contention set has been privately settled.
The first applicant to ditch its bid was dot Music Ltd, an application vehicle of Domain Venture Partners (we used to call this outfit Famous Four Media, but that’s changed).
The other is .music LLC, also known as Far Further.
We can almost certainly expect all but one of the remaining applicants to withdraw their applications over the coming days.
Applicants typically sign NDAs when they settle contention privately, usually via an auction.
Far Further was one of two unsuccessful “community” applicants for .music. It had the backing of dozens of music trade groups, including the influential Recording Industry Association of America. Even Radiohead’s guitarist chipped in with his support.
Evidently, none of these groups were prepared to fund Far Further to the extent it could win the .music contention set.
The .music contention set has been held up by the continuing protestations of the other community applicant, DotMusic Limited, the company run by long-time .music cheerleader Constantinos Roussos.
After DotMusic lost its Community Priority Evaluation in 2016, on the basis that the “community” was pretty much illusory under ICANN rules, it started to complain that the process was unfair.
The applicant immediately filed a Request for Reconsideration with ICANN.
.music then found itself one of several proposed gTLDs frozen while ICANN conducted an outside review of alleged irregularities in the CPE process.
That review found no impropriety in early 2018, a verdict DotMusic’s lawyer dismissed as a “whitewash”.
It has since stalled the process several times with requests for information under ICANN’s Documentary Information Disclosure Policy, and more RfRs when those requests were denied.
But this series of appeals finally came to an end March 14, when ICANN’s board of directors finally ruled against DotMusic’s 2016 RfR.
That appears to have opened up the .music set for private resolution.
So who won? I don’t know yet, but the remaining applicants are: DotMusic itself, Google, Amazon, MMX, Donuts and Radix.
There are certainly two very deep-pocketed companies on that list. Could we be looking at Google or Amazon as the new proprietors of .music?
If either of those companies has won, prospective registrants might find they have a long wait before they can pick up a .music domain. Neither of these giants has a track record of rushing its new gTLDs to market.
If the victor is a conventional gTLD registry, we’d very probably be looking at a launch in 2019.

I was wrong, Famous Four bosses WERE kicked out

Famous Four Media’s portfolio of gTLDs is under new management after an investor rebellion, contrary to what I speculated earlier this week.
FFM’s former stable, which includes the likes of .men and .science, is now being managed by a company calling itself GRS Domains, but this new company has absolutely nothing to do with FFM’s former management.
That’s according to Robert Maroney, founder of Connecticut-based Engineers Gate Investments, which is a shareholder of ultimate portfolio owner Domain Venture Partners.
Maroney got in touch with DI yesterday to explain some of what has recently happened to the ownership and management of the 16 high-volume new gTLDs.
Back in June I speculated based on the quite limited available information that FFM might be bankrupt.
On Tuesday, after GRS Domains announced a relaunch and a rejection of its previous volume-heavy, spam-friendly business plan, I speculated based on slightly more information that management had repurchased the TLD assets after investors forced it into administration.
I was wrong on both counts, according to Maroney. What actually happened is more akin to an investor takeover.
Maroney said he “engineered” the ouster of FFM and its two shareholders/managers, Iain Roache and Geir Rasmussen, after Roache attempted to close down DVP.
DVP is basically a collection of private and institutional investors (brought in by Roache and others) from around the world which, based on the available evidence, have little or no connection to the domain name industry.
It’s a matter of public record that each gTLD contract is owned by a distinct Gibraltar-based shell company — dot Bid Limited owns the ICANN rights to run .bid for example — and that Domain Venture Partners owns these companies.
I’ve previously reported that Famous Four was also owned by DVP, but Maroney said that this was never the case. It was owned 80-20 by Roache and Rasmussen and contracted by DVP to manage the 16 gTLDs.
The affiliated registrar AlpNames, which has been responsible for a very large portion of registrations in the portfolio, had the same ownership structure as FFM and was never directly connected to DVP, Maroney said.
Following a court battle, GRS Domains has replaced FFM as the registry manager.
GRS is owned by PricewaterhouseCoopers, and is currently being managed by court-appointed administrator Edgar Lavarello, a Gibraltar-based accountant at PwC.
Maroney did not want to get into the detailed specifics about what caused the investor revolt, but did say that shareholders were unhappy with how FFM was managing the portfolio.
Its low-price, high-volume strategy had caused its TLDs to become the destinations of choice for spammers and other abusive registrants.
But the court case was brought after Roache attempted to break up DVP, restructure ownership of the 16 individual registries, and “escape the regulation of Gibraltar”, Maroney said.
“Roache wanted to shut down DVP in a way we considered to be unlawful,” he said.
He said DVP shareholders felt Roache’s moves were “inappropriate and unlawful”, which is what caused him to “engineer”, via fellow investor Christina Mattin, DVP being placed into administration.
I have seen no independent evidence that Roache acted or attempted to act unlawfully. The court document I’ve seen appointing Lavarello as administrator contains no finding of wrongdoing by anyone.
The upshot of all this is that the group of TLDs formerly known as Famous Four Media is now GRS Domains — Global Registry Services Ltd — and that Lavarello is currently in charge.
I imagine the company will want to find permanent management at some point, but Maroney did not want to talk about that.
In the meantime, GRS has already made moves to become more transparent and to engage more with the rest of the industry.
Maroney said, and I have independently confirmed, that he was at the ICANN meeting in Panama recently, meeting senior industry figures. Famous Four executives have not been known to attend ICANN meetings or industry events in the past.
GRS has told registrars it intends to have a formal presence at ICANN 63 in Barcelona also.
The company will shortly terminate all of its promotional pricing and introduce a flat $9.98 registry fee, which is very likely to affect its volumes and reduce spamming activity over the next year or so.
UPDATE July 30 2020: This article was edited to remove an erroneous link to the web site of Engineers Gate LP, which is not the same company as Engineer’s Gate Investments LLC.
UPDATE August 12 2020: This article was edited to correct GRS’s ownership status. It’s owned by PwC, not DVP. Roache’s job title at FFM was also corrected.
In addition, Roache recently wrote to DI, almost two years after the article was originally published, and made the following statements:

Famous Four Media (FFM) was placed in voluntary administration by myself and Mr Rasmussen as respective 80% and 20% shareholders, due to invoices that went unpad by PWC Gibraltar as administrator to DVP.
…
There was NO “court battle to replace FFM with GRS”. FFM withdrew services after promises to pay FFM its outstanding invoices by PWC turned out to be untruthful.
…
To say or repeat the allegation that it was “unlawful” to close the fund down is untrue… DVP was set up as a closed end fund with a maximum maturity of April 2018 on 12 April 2012 — i.e. a 5-year fund with a one-year extensions.
Against the recommendation of myself as Investment Director and largest creditor and investor, the support of the Board, the regulated Fund Administrator Juno, the Fund’s own regulated legal counsel Isolas and the approval of the Gibraltar Financial Services Commission — a number of investors pushed to place the Fund into administration. The actions of those few investors led by Ms Mattin, Mr Maroney and PWC have been hugely prejudcial to other investors in DVP and the seed investors, including myself. In April 2018 the valuation of the Fund’s assets was in excess of £30 million and of the total registry assets more than £100 million — today the value is close to zero if not insolvent under the disastrous management of PWC, Maroney and Mattin.
Mr Maroney’s statement that he “engineering the ousting of Mr Rasmussen and I” is also untrue — I made it clear to all investors in DVP in an emaill dated October 2017 that if the Fund was not redeemed in Specie with investors honouring their debts then the alternative choice would be a structured administration which ran the risk of losing their entire remaining assets in DVP.

Famous Four is DEAD! New registry promises spam crackdown

Famous Four Media’s portfolio of gTLD registries is now under the control of a new company, Global Registry Services Ltd, which has promised to abandon its failed penny-domain strategy and crack down on spam.
(August 9 update: This article contains some incorrect assumptions and speculation. Please read this follow-up piece for clarifications.)
The company, which goes by the name GRS Domains, told registrars yesterday that FFM’s 16 gTLDs are now “controlled by the same parties that control Domain Venture Partners PCC Limited, and are no longer under the management of FFM.”
DVP also owned FFM, so it’s not clear how big of a deal this restructuring is from a management point of view.
My sense is that there’s not really been a substantial change, but it’s certainly more than a simple rebranding exercise.
I’ve learned that DVP was placed into administration under the Insolvency Act back in April, with management of the TLDs handed to a PricewaterhouseCoopers administrator, more or less as I speculated in June.
The TLDs affected are: .loan, .win, .men, .bid, .stream, .review, .trade, .date, .party, .download, .science, .racing, .accountant, .faith, .webcam and .cricket.
GRS told registrars:

Moving forward there are several changes being made with regard to the overall strategy of the portfolio of gTLDs, the main one being a change to a “quality over quantity” ethos and focusing on working with our Registrar Partners to sharply reduce abuse and spam registrations.

As such, all of its current pricing promotions will end August 20 and a “much more transparent and sensible pricing strategy” will come into play.
That means a wholesale reg fee of $9.98 across the board, at least until February 2019.
GRS also plans to take a lot of its lower-priced reserved “premium” names out of the premium program altogether, and to reprice “a considerable portion” of the more expensive ones.
Finally, the company, not known to attend ICANN meetings in the past, said it plans to show up at the Barcelona meeting in October to formally relaunch itself.
Famous Four has become notorious over the last few years for its deep-discounted TLDs, which have become a haven for spammers who want to register large numbers of super-cheap, throwaway domains.
As such, its gTLDs’ volumes have been huge — many racking up hundreds of thousands of names — but their renewals poor and their reputation worse.
If GRS’ new strategy is effective, we’re almost certainly going to see the industry-wide overall number of active new gTLD domains tank over the next year or so, giving more ammunition to those who think the new gTLD program was a huge waste of effort.
It could also have an impact on ICANN’s budget — no matter how cheap FFM sold its names, it still had to pay its ICANN fees on a per-domain basis. Fewer domains equals less money in ICANN’s coffers. FFM’s registries paid over $1.6 million in ICANN fees in the organization’s fiscal 2017.
While GRS is now apparently “controlled by the same parties that control Domain Venture Partners PCC Limited”, it’s not abundantly clear to me whether that’s the same people who’ve been running FFM for the last eight years.
DVP has not immediately responded to a request for comment today.
The DVP web site has not resolved in months. The new grs.domains site doesn’t name anyone, and the NIC sites for the gTLDs in the portfolio only identify a PwC bankruptcy accountant as the primary contact.
All the companies in question are based in tax haven Gibraltar, which isn’t particularly forthcoming about identifying company directors, partners or owners.
DVP’s directors were originally Adrian Hogg, Charles Melvin, Iain Roache, Douglas Smith, Peter Young, Joseph Garcia and a company called Domain Management II (itself chaired by Roache), according to an investor presentation (pdf) DI obtained back in 2013.
I believe Melvin at least, after a legal dispute with the others, is no longer involved.
And it appears that DVP is or was in fact in administration.
I noted back in June that the 16 gTLDs were now all being administered by PwC accountant Edgar Lavarello, and wondered aloud whether this meant FFM was bankrupt.
Today I obtained (read: paid an extortionate sum for) a Gibraltar court order dated April 23 putting DVP into administration under the Insolvency Act and appointing PwC as the administrator.
The application had been made by an investor called Christina Mattin and fellow investor Braganza, a private vehicle owned by a wealthy Scandinavian family, which was (at least last year) a 10% owner.
Other named investors the court heard from were the mysterious Liechtenstein-based Rennes Foundation, something called Northern Assets Investments Limited and Dutch multimillionaire Francis Claessens.
Overall, it smells a bit to me like DVP’s principals, having seen their previous venture put out of business by disgruntled investors, have snapped up its assets and are going to try to make a second go of running the business.
As for FFM? Well, it looks rather like we won’t be hearing that name again.
UPDATE: This article was updated several hours after it was originally posted to clarify that DVP was/is “in administration”.

Famous Four wins .party gTLD contest

Famous Four Media has won the .party new gTLD contention set after coming to a private agreement with the only other applicant for the string, Oriental Trading Company.
Financial details of the arrangement were not disclosed.
Oriental Trading is a supplier of party goods that intended to run the gTLD as closed, single-registrant namespace.
But Famous Four expects the open .party registry to be used for parties in the social gathering and political senses of the word.
It now has 13 uncontested applications and 44 more outstanding.
In related news, Minds + Machines today announced that it intends to take at least three of its applications — .garden, .property, and .yoga — at a private auction April 22 managed by Applicant Auction.

CentralNic gets its foot in the door as Famous Four back-end

New gTLD portfolio applicant Famous Four Media has selected CentralNic to provide back-end registry services, joining existing providers ARI Registry Services and Neustar.
CentralNic will be “a preferred provider” of Domain Venture Partners, which is the parent company of Famous Four’s 60 new gTLD applicants, according to a joint statement issued by the companies today.
Neither firm wanted to give any firm details about how CentralNic fits into Famous Four’s strategy, such as whether CentralNic might replace existing back-ends as it did with 27 formerly GMO Registry bids.
Famous Four is already partnered with Neustar on 52 new gTLD applications and ARI on five more.
DVP chief operating officer Charles Melvin told DI in a statement:

CentralNic will sit as one of our preferred backend technology partners. We are in the process of agreeing terms with a limited number of select providers to sit on our preferred panel. Until such agreements have been put in place it would be inappropriate for us to comment on them.

The deal is related to DVP II, an investment vehicle through which DVP hopes to raise up to $400 million “to acquire Top-Level Domain registries, some of which are already live.”
We were leaked a copy of a June 2013 investor presentation related to DVP II, in which the company said its back-end partner had “the lowest fees in the industry”.
With its new “preferred panel”, it looks like the company is hedging its bets.

New gTLD revenue projections revealed in leaked Famous Four presentation

Famous Four Media expects to make an average of almost $30 million revenue in year one from each of the new gTLDs it secures.
That’s according to a PowerPoint presentation (pdf), written for potential investors, that was provided by an anonymous source (I suspect not a fan of the company) to DI this week.
According to the presentation, “potential year 1 revenues for an average Registry” could amount to $28.4 million, the vast majority of which would come from sunrise, landrush and premium domain sales.
The presentation, dated June 2013, was prepared by Domain Venture Partners, the immediate parent of the 60 shell companies that Famous Four is using to apply for its 60 gTLDs.
The company was unable to provide an executive to discuss this story until August 14.
But according to the PowerPoint, the Domain Venture Partners II fund is an investment vehicle set up to “bridge the gap” in Famous Four’s funding requirements:

Domain Venture Partners II shall provide a unique structured regulated investment opportunity to participate in the new gTLD programme to provide secured fixed annual returns along with additional venture type returns at a time in the process where most of the major risks have been removed.

DVP is looking to raise up to $400 million, having raised £48.3 million ($73.2 million) in 2011 via the Domain Venture Partners I fund, it says. The current round opened in March and is expected to close in November.
Famous Four has applied for 60 gTLDs — mostly highly sought-after strings such as .poker, .music, .shop, .search and .buy — 10 of which were initially uncontested.
According to the presentation, landrush period auctions would account for about a third of year-one revenue in each gTLD: $9.7 million. That’s based on selling 45,697 domains for an average price of $213.34.
Revenue from trademark owners is the second-largest chunk. An average sunrise period could raise $6.9 million, assuming 39,679 domains at an average of $173.5 each, according to the PowerPoint.
Sales of regular domains during the first first year of general availability could raise $4.1 million, based on 225,759 registrations at $18.47 apiece, the presentation says.
Here’s the full slide, one of 33 in the deck:

The presentation says that the projections are “based on historical data points established by the existing operational gTLD Registries”, adding:

The figures are averages and therefore would represent projections for a standard gTLD Registry. Potential year 1 revenues for specific Registries may be below or above this average.

Some of the numbers strike me as optimistic. While the likes of .asia and .mobi may have seen these registration volumes due to the novelty and scarcity of new gTLD namespaces, my feeling is that those days are over.
The new gTLD program is likely to see scores of overlapping sunrise and landrush periods; it’s difficult to see registries benefiting from the same focus and excitement as their predecessors.
There’s a limited amount of domainer capital to spread around landrush sales and trademark owners are likely to be much more selective about where they defensively register their brands in a world of 1,300 gTLDs.
That said, Famous Four has applied for some of the nicest strings in the round so I may be wrong.
An appendix to the presentation discussing the first DVP funding round says that while Famous Four hopes to sign contracts for 30 new gTLDs, it has only secured 32% of the money it is looking for.
Securing investment appears to have been tough due in part to the complexity of the ICANN process and investors’ lack of familiarity with it, which looks like risk. It also says:

The costs associated with applications in the new gTLD have increased, the financial strength of most applicants has been reduced and the knowledge barrier to entry is too high to interest large standard venture investors.

Famous Four’s business model is based around consolidation and keeping costs down, according to the pitch. For the most part, this is due to the economies of scale of running a large number of TLDs.
With Neustar as its back-end provider, Famous Four says it has found the “lowest fees in the industry”.
But the model also involves keeping tax to a minimum. Famous Four is based in Gibraltar, where it says it will pay no tax on domain sales:

FFM is operating in a fiscal environment that has multiple advantages over others in the industry. Domain names sales are treated as royalty income which is currently zero rated in Gibraltar. This would result in an instant bottom line gain.

There’s a strong suggestion in the presentation that DVPII is not limiting its ambitions to the new gTLDs it has applied for.
It also seems to discuss acquiring other applicants and ccTLD rights, then bringing them into the Famous Four fold, but the plan was not completely clear to me and executives were unavailable for clarification.