2016-05-01

News Review: New gTLDs 'Nobody Cares About' - ICANN's Trash Problem

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Domain Mondo's News Review of the past week and look ahead [pdf here]:
“... disappointed with how this whole program [ICANN's new gTLDs program] has evolved … the internet is now littered with a lot of TLDs that nobody cares about …” --Craig Schwartz, ICANN's former Chief gTLD Registry Liaison (2006-2011), interviewed on DNW Podcast #81, April 25, 2016 (starting at 27:56).  
It is unusual to hear a former ICANN staffer and new gTLD domain name industry insider, like Craig Schwartz (.BANK and .INSURANCE), be so honest and frank in assessing ICANN's new gTLDs program a/k/a ICANN's boondoggle. Schwartz's comment now ranks up there with the letter sent to new gTLD registry operator Rightside, by investor J. Carlo Cannell of Cannell Capital LLC:
"Most of these new gTLDs are irrelevant and will never be sold in material volumes. NAME [Rightside] is holding back the growth potential of your registrar by pushing garbage extensions to a user base that quietly knows better ..." (emphasis added)
Just how badly has ICANN 'littered' the internet with new gTLDs (new generic top-level domains) that 'nobody cares about'?  Take a look at the current Root Zone file of all TLDs, and even that does not include new gTLDs not yet delegated, a few of which have already been surrendered back to ICANN, which is probably one of the smartest moves any of the new gTLD registry operators or applicants have made to date. ICANN Accountability? ICANN has a lot of problems, functionally, and ethically, both as an "organization" (California non-profit corporation), and as a "community." You can start with its dysfunctional Board of Directors and leadership (just look at the past 2 CEOs), but that's just the tip of the iceberg.

ICANN, the corporation and the community, having foolishly opened a Pandora's box with the ill-conceived, misbegotten new gTLDs policy and program, is now trying to close the barn door after the horse has bolted via several different ongoing separate processes, including:
What was the market demand, innovation, or need to justify adding 1000+ new gTLDs (on top of 22 gTLDs and more than 100 ccTLDs in an already well-functioning global domain market)? There wasn't one. It was all about the money, for ICANN, and supposedly for registrars and registry service providers and operators, who dominate and control ICANN structures and processes. But we know about fools and their money.

So what should all the new gTLD proponents, from former ICANN Chairman Peter Dengate Thrush (who resigned from the ICANN Board after approving the new gTLDs program to try to cash in on new gTLDs), and former ICANN CEOs Rod Beckstrom and Fadi Chehade, to people who have already lost money, or their jobs like two former CEOs of  Minds + Machines (see here and here), have already learned? There are many, many lessons, but for those in the new gTLD domain name industrynumber one is probably this: "be wary of competing in an established marketplace. Especially one with long entrenched players. You are going to hit headwinds from minute one" (hat tip).

•  Speaking of long entrenched players, Verisign continues to take steps to protect its market-dominant brand .COM globally, including in China, CNNIC: "On 28 April, 2016, Patrick Kane, the vice president of Verisign has paid a visit to CNNIC. Researcher Xiaodong Lee, Director of CNNIC and Patrick Kane have discussed the cooperation in the field of domain names. CNNIC and Verisign have signed a cooperation agreement on 19 April that CNNIC will provide real name and domain name verification services free of charge to ".COM", “.NET” and other top-level domains managed by Verisign." CNNIC (China Internet Network Information Center) is the administrative agency responsible for Internet affairs under the Ministry of Information Industry of the People's Republic of China, and manages China's ccTLD .CN and the "Chinese Domain Name system (Internationalized domain names that contain Chinese characters" (Wikipedia).

• It is ironic that "pricing" which is the greatest .COM competitive advantage in the domain name marketplace beyond just "brand recognition"--price stability, price predictability, price protection--is only referenced under "Risk Factors" in Verisign's Form 10-Q filed with the S.E.C. on April 28, 2016:

"Pricing . Under the terms of the Cooperative Agreement with the DOC and the .com Registry Agreement with ICANN, we are generally restricted from increasing the price of registrations or renewals of . com domain names except that we are entitled to increase the price up to 7%, with the prior approval of the DOC, due to the imposition of any new Consensus Policies or documented extraordinary expense resulting from an attack or threat of attack on the security and stability of the DNS. However, it is uncertain that such circumstances will arise, or if they do, that the DOC will approve our request to increase the price for .com domain name registrations. We also have the right under the Cooperative Agreement to seek the removal of these pricing restrictions if we demonstrate that market conditions no longer warrant such restrictions. However, it is uncertain that such circumstances will arise, or if they do, that the DOC will agree to the removal of these pricing restrictions. In connection with a renewal of the . com Registry Agreement, we can seek an increase of the price for . com domain name registrations. Regardless of whether we seek such an increase, there can be no assurance of the price that DOC will approve in connection with a renewal of the . com Registry Agreement. Under the terms of the .net and .name Registry Agreements with ICANN, we are permitted to increase the price of registrations and renewals in these TLDs up to 10% per year. Additionally, ICANN’s registry agreements for the new gTLDs do not contain such pricing restrictions" (emphasis and link added). Note that the current expiration date of the Cooperative Agreement is November 30, 2018, subject to the U.S. Department of Commerce's rights to extend 'in its sole discretion.'

What prudent business owner wants to establish a website on a new gTLD domain name address where the landlord (new gTLD registry operator) can increase the "rent" from year to year without limitation? ICANN, the corporation and the community, decided there was no "public interest" in the new gTLDs policy and program, and unleashed the new gTLDs program with monopolistic predatory pricing built-in, including bait-and-switch pricing practices.

• Finally in regard to Verisign, April has come and gone without any final word about, or posting, from ICANN or Verisign about the 10-year extension of the .COM registry agreement and the new Root Zone Maintainer Agreement. Last word from ICANN on April 27th: "ICANN and Verisign continue to engage in discussion to prepare for a RZMA. The current plan for completion of a draft RZMA is the end of this month [April]"--IANA Stewardship Transition Planning Update | ICANND. James Bidzos, President, CEO & Executive Chairman of Verisign, commented during the Q1 2016 earnings conference call on April 28: "As we discussed during the last call, ICANN and VeriSign are in the final stages of preparing the Root Zone Maintainer Agreement and the .com Registry Agreement extension documents. We continue to make progress and we'll provide periodic updates as appropriate on our progress towards these objectives."

In the world of tech: In Q1 2016 earnings results reported this past week, Apple reported its first decline in revenues since 2003, while Facebook and Amazon continued to beat consensus estimates. Yahoo CEO Marissa Mayer made $36M in 2015 as disclosed in a 10-K amendment filed Friday. Co-founder and "Chief Yahoo" David Filo? $1.00. Meanwhile Yahoo reaches deal to sell Santa Clara land to Chinese company | Silicon Valley Business Journal. See also: Yahoo got bigger and became mediocre says Ex-President Sue Decker | CNBC.com and Yahoo! -- $8 Billion or B/O | Craigslist.org.

Earnings Season schedule this week on Domain Mondo's Earnings Calendar:
  • GoDaddy $GDDY Wednesday, May 4, After Market Close
  • Alibaba $BABA Thursday, May 5 Before Market Open
  • Web.com $WEB Thursday, May 5 After Market Close
• This past week's five most popular posts on Domain Mondo (# of pageviews Sun-Sat):
  1. News Review [24 Apr 2016]: ICANN Bylaws, Comments, ICANN Chairman's Op-ed Flops
  2. Twitter $TWTR Q1 2016 Financial Results April 26, Gary Vaynerchuk Video
  3. Amazon $AMZN, Neustar $NSR, Verisign $VRSN, Q1 2016, April 28
  4. Facebook $FB Q1 2016 Financial Results, LIVE Webcast April 27 5pm ET
  5. Apple $AAPL Q1 2016 Results, Used iPhones Resistance in India (video)
Honorable Mention: Apple's First Revenue Decline in 13 Years (video) & Mobile Ate The World

• Other Recommendations (with a little taste of the content or my commentary):
  1. Apple's Numbers - Lefsetz Letter"So we’re down to three, Amazon, Google and Facebook, Apple is over."
  2. Might want to make that 'down to two'--Larry Page Punts on a Chance to Explain Alphabet’s Woes | MIT Technology Review: "Every year since Google went public in 2004, its founders have published a letter explaining their vision of the company’s future and current business—until this year. Breaking that 13-year tradition neatly helped Larry Page and Sergey Brin avoid having to update the world on how Alphabet, the holding company they created last year, is doing. Lately there have been signs that the company ... is troubled." See also Google faces first EU fine in 2016 with no deal on cards: sources | Reuters.
  3. Alibaba's UC Browser launches in Kenya | Targets Africa's growing mobile population | TechMoran"UC Browser has over 65.9% market share in China and [is] the leading browser in India with over 34% market share according to StatCounter. Alibaba Group acquired UCWeb in June 2014 ..."
  4. Even at 1.0, Vivaldi closes in on the cure for the common browser | Ars Technica
  5. FCC chairman, Justice Department sign off on Charter's takeover of Time Warner Cable - LA Times"The union of three cable companies -- Charter, Time Warner Cable and Bright House -- accelerates the consolidation of media by creating the second largest cable TV and Internet service provider in the nation with more than 23 million customers in 41 states.  Only Comcast Corp. will have more cable customers."
  6. Mark Zuckerberg’s audacious plan to control Facebook as he sells his stock, explained | Vox
  7. As a follow-up to noting last week HTC's rise among Android smartphones, the rumor mill is that HTC will make the next Nexus phones | The Verge.
  8. Warren Buffett's Long Road Back Into Manufacturing - Bloomberg But don't forget that Buffett is one of the largest stockholders in Verisign and other "utilities."
  9. Unmasking the Men Behind Zero Hedge, Wall Street's Renegade Blog - Bloomberg: "...The site’s ethos is perhaps best summed up by the tagline at the top of its homepage, also borrowed from Fight Club: “On a long enough timeline the survival rate for everyone drops to zero.” ... hell-bent on bringing down the corrupt system of the global elite—an attitude often reflected in Zero Hedge’s content. With that in mind, the website has argued that “pseudonymous speech” is necessary ..."
  10. San Francisco’s long shadow - Washington Post"the nation’s housing boom, bust and recovery over the last cycle has exacerbated inequality along lines of geography, race and income."
  11. The limitations of Big Dataadvertising, and experts: "Cruz's operation was oriented around microtargeting various types of voters using big data ... Trump's operation essentially consisted of the candidate doing news interviews, flying around to speak at rallies, and issuing direct public statements on channels like Twitter ... Unlike Cruz, he appears to have done no polling or other type of opinion research. Rather than microtargeting, Trump aimed for mass appeal among the GOP electorate ... If you had described these two approaches to any professional in politics before the campaign started, they would have predicted Trump to fail spectacularly ..." --Rich Danker in What Trump Saw and Cruz Did Not | The Weekly Standard.
  12. Some good news following up on my "good news" mention last week of the new Acer Chromebook 14 for Work, note that HP announced this week its own new HP Chromebook 13: up to 16GB RAM; QHD+ panel with 5.76 million pixels (3200 X 1800 pixels), razor-sharp text and photos and video; up to 11.5 hours of battery life; Bang & Olufsen audio; 802.11ac dual-band wireless; 32GB of storage; webcam; SD card reader, integrated Intel HD 515 graphics; USB-C ports for charging and connect peripherals like external storage; available USB-C dock for connectivity to ethernet, external displays, other peripherals; available May 6th; starting price $499. Sounds like HP just gave Acer some competition!
Have a great week!

-- John Poole, Editor, Domain Mondo




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