2016-04-12

ICANN Is Now Holding Over $101 Million in Net Auction Proceeds

#FollowTheMoney
  • Why is ICANN holding over $101 Million in new gTLDs Auction Net Proceeds?
  • What's going to happen to ICANN's New gTLDs auction net proceeds?

Short answer: Most new gTLD auctions were private and the bidders split the proceeds in accordance with their private, undisclosed agreements, as intended by ICANN. The global internet community has received nothing ($-0-) from the introduction of over 1000 new gTLDs into the global DNS Root Zone. The only parties benefiting financially from the introduction of new gTLDs are ICANN, a California corporation, and the domain name industry, primarily new gTLD domain name registrars and the new gTLD registry operators who receive, essentially, rights in perpetuity to each respective new gTLD and can charge the public whatever they want for new gTLD domain names.  The ICANN 'last resort' auctions are different than the private auctions, and those proceeds are to be held by ICANN pending a determination by the ICANN Board of Directors as to their use. A Cross Community Working Group (CCWG), yet to be formed, will submit proposals to the ICANN Board of Directors for use of the funds. Currently, a drafting team has begun work to draft the CCWG's Charter. The new gTLD domain name industry has, through its lobbyists-stakeholders in ICANN, made clear it wants ALL of the net auction proceeds for its own purposes, primarily for marketing the new gTLDs. Others disagree:
"....when a decision is taken about a possible new top-level domain, ICANN's job is to work out, in a transparent and accountable manner, whether it is really in the best interest of the world as a whole, not just of those launching the new domain. It also means that ICANN's use of the funds should be spent in a beneficent way..."--Tim Berners-Lee (emphasis added)
Any proceeds from [ICANN new gTLD] auctions will be reserved and earmarked until the uses of funds are determined. Funds must be used in a manner that supports directly ICANN’s Mission and Core Values and also allows ICANN to maintain its not for profit status. Possible uses of auction funds include formation of a foundation with a clear mission and a transparent way to allocate funds to projects that are of interest to the greater Internet community, such as grants to support new gTLD applications or registry operators from communities in subsequent gTLD rounds, the creation of an ICANN-administered/community-based fund for specific projects for the benefit of the Internet community, the creation of a registry continuity fund for the protection of registrants (ensuring that funds would be in place to support the operation of a gTLD registry until a successor could be found), or establishment of a security fund to expand use of secure protocols, conduct research, and support standards development organizations in accordance with ICANN's security and stability mission.” --New gTLD Applicant Guidebook, 4 June 2012 – Section 4.3, footnote 1, Page 4-19, Module 4 (emphasis added)

"Auction proceeds will be reserved and earmarked until the [ICANN] Board determines a plan for the appropriate use of the funds through consultation with the community." --New gTLD Auction Proceeds | ICANN New gTLDs.

Letter From: Steve Crocker
Date: Thursday,
February 11, 2016
To: James Bladel

Thank you for chairing the drafting team for the charter of the CCWG on the auction funds, and thank you for reaching out to the Board for participation. I apologize for the delay in responding. My queue was clogged with the CEO announcement process and our recent retreat.

We have chosen Asha Hemrajani and Erika Mann to actively participate in this effort. Asha is co-chair of our Finance Committee and Erika is chair of our Audit Committee. We wanted to have strong involvement from the financial side of the Board.

I understand from the public comment period that the need for broad and inclusive participation was echoed by respondents. We hope that this will be embodied from the very start of the next steps in the form of an open drafting team and also would like the inclusion of two staff members, to include Nora Abusitta, SVP Development and Public Responsibility Programs as she has been involved in the preparations of this discussion thus far, and Sam Eisner, Senior Counsel, who can both help inform on the topic, including the impact and limitations set forth by previous work in this area.

I am glad to see this processing kicking off officially and thank you in advance for your efforts on this. The CCWG is empowered to gather ideas and create one or more proposals which the Board
will consider in final decision-making. As such, we want to take the time to stress the importance of the following items to ensure a successful, responsible, and productive process for all involved:

• The CCWG has to be run as a project with proper budget and schedule. Regarding budget: the cost for the drafting process and operation of the CCWG will come out of our regular operating budget, not out of the auction funds.
o Once a system is set up for distribution, the cost of administering the distribution of the funds will
naturally come out of the auction funds.
• Proposal(s) for the administration of the funds must include tight control of the overhead. A nominal goal for the overhead is no more than 5%.
The CCWG must cast a wide net, not limited to just the existing SO and AC structures. The focus should be first on general principles, not choices of specific projects.
• To avoid conflicts of interest, there should be clear separation of those deciding the general direction, those choosing specific projects, and those receiving the funds.
Thanks,
Steve

(emphasis added)

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