ICANN is NOT a new gTLDs Marketing Agency: ICANN 53 Review, Part 3

Akram Atallah, President of  ICANN's Global Domains Division, on the "hot seat" at ICANN 53

It had to happen at some point, a mature realization that the hype and mania which formed and launched ICANN's new gTLDs program was misplaced. Signs of this epiphany were very much present at ICANN 53, which just concluded in Buenos Aires, Argentina. From stakeholders to ICANN Board Members, the judgment is emerging that the new gTLDs were a product of bad policy making, both in substance and process, as well as "horrible implementation" and the disappointing sales are self-evident proof that the policy and program were not grounded in market reality, and as a result, examples of lack of consumer demand abound. In addition, problems with new gTLD domain names "failing to work as expected on the Internet" (i.e., Universal Acceptance issues), as well as questions about new gTLDs having a negative impact on Internet root stability, are now being taken seriously.

ICANN staff, particularly Akram Atallah (see photo above) and his GDD staff, received a jolt when their underhanded attempt to apply new gTLDs URS policy against domain name registrants of legacy gTLD .TRAVEL (and by implication, all legacy gTLDs: .COM, .NET, .ORG, etc.) received an overwhelming negative response in comments posted, as well as at ICANN 53, including Philip Corwin, of the Internet Commerce Association, raising the issue throughout the meeting from Sunday through Thursday's last day public forum. "Desire for uniformity of the Registry Agreement" is a poor excuse for ICANN staff attempting to bypass stakeholder policy-making processes, and make "uniform" that which was specifically made not to be uniform, not to mention the variations and lack of uniformity within all the new gTLD registry agreements. In addition, it is hardly "voluntary" when ICANN staff prepare and present a Registry Agreement with the URS included, to a renewing legacy gTLD registry operator. Note to ICANN and Akram Atallah--start being honest for once, and stop making excuses--take the URS out of legacy gTLD registry agreements until it has been approved through a stakeholder PDP. The "affected parties" are primarily domain name registrants, and ICANN staff has no clue about domain name registrants since there is no domain name registrants stakeholder group within ICANN. ICANN officers and staff tend to forget that new gTLDs are an "experiment" and total less than 2% of all domain names registered globally. Domain Mondo hopes they "got the message."

Here are excerpts from ICANN 53 relating to new gTLDs and the above:

Krisitna Rosette (Amazon): "FWIW, Chris Disspain [ICANN Board Member] told ALAC this morning that the new gTLD round should not have gone forward when it did because the policies weren't done.  So, at least one Board member thinks that more policy work needs to be done." 

Slide from Universal Acceptance issues presentation at RySG ICANN 53 meeting

Slide above: Universal Acceptance--domain names "failing to work as expected on the internet"--is a problem for all new gTLDs (new generic top-level domains) and any TLD of more than 4 characters (note: there are no legacy gTLDs (e.g., .COM, .NET, .ORG, etc.) of more than 4 characters.) The last line is the kicker: "It's an issue if registrants can't effectively use their names."

From the Universal Acceptance topic at the Generic Registry Stakeholders Group session at ICANN 53:

“We don’t want the message going out into the market that new gTLDs don’t work but there is a problem that needs to be fixed.”

Even at the ICANN public forum on the last day (Thursday) of ICANN 53, the Universal Acceptance "defects" problems of new gTLD domain names were publicly acknowledged. After a new gTLDs lobbyist (a/k/a stakeholder) spoke and urged ICANN to undertake a multi-million dollar promotional campaign for new gTLDs (and new gTLD registry operators), ICANN Board member Mike Silber delivered the coup de grâce:

ICANN is NOT a marketing agency for new gTLD domains says ICANN Board Member Mike Silber at #ICANN53 Public Forum #newgtlds #domains

— Domain Mondo (@DomainMondo) June 25, 2015

In summary:
New gTLDs registry operators should not count on getting "marketing support" from ICANN, the DNS coordinator, and the net auction funds are going to be the subject of a lengthy community process. Some in the ICANN community definitely do not want any of the funds to be used to benefit the new gTLDs registry operators or applicants. In their view, new gTLD Registry operators and applicants knew, or should have known, the risks they were taking on, and that ICANN was never a guarantor of success nor a joint venture "partner."

ICANN is now in the process of selecting a contractor to study the impact of new gTLDs upon the stability of the root and issue a final report in 2017, which will require further steps thereafter by the ICANN staff and community. Therefore, the next round opening for new gTLDs applications, based on what was said at ICANN 53: 2018-19 best case scenario. Of course, by that time, one or more of the new gTLD registry operators will have filed bankruptcy or gone "out of business," probably bad-mouthing ICANN all the way out the door, similar to what Executive Chairman and Co-Founder of new gTLDs registry operator Minds + Machines (MMX), Fred Krueger, did after he recently left MMX and promptly sold 14,000,000 of his MMX shares, posting on Facebook: "One of the advantages of leaving MMX is that I am finally done with ICANN — which is one of the single worst organizations I have come across on this planet..."

We feel your pain Fred, but if you feel that way, why did you invest so much of your time and money in ICANN's new gTLDs program? You should have done your due diligence before you made your investment. By 2018, it's going to be the same old story, more Fred Krueger type rants, over and over again. Akram, better get used to all the rants bad-mouthing ICANN from failing new gTLD registry operators!

Note: this is the third and final part of the 3-part series ICANN 53 Review. Links to the ICANN budget for FY16 (fiscal year July, 2015-June, 2016) and other ICANN 53 related links will be posted this week on Domain Mondo's Links and ICANN pages. The previous two posts in this series can be read here:

• ICANN 53 Review, Part One: IANA Transition and ICANN Accountability
• FBI and FTC Join ICANN, GAC, PSWG: ICANN 53 Review, Part Two

See also on Domain Mondo:

• New gTLD Domain Names, Defects, ICANN Liability, FTC Complaints
• New gTLD Domains, the Walking Dead and Dying, ICANN FY15 Results
• Is It ICANN's Job To Market New gTLD Domain Names?

Caveat Emptor!


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The dot SUCKS Conundrum: ICANN, FTC, OCA, New gTLD Domains

“… they say shipwrecked fellows’ll make a meal of friend as quick as they would of a total stranger... But I don’t see the conundrum in your case, I guess it’s up to both parties to take care of their own skins.” --Edith Wharton, The Custom of the Country.

Things just keep going from bad to worse for ICANN and its new gTLDs. A year ago, ICANN predicted that 33 million new gTLD domain names would be registered in FY2015 (July 1, 2014-June 30, 2015), then lowered that estimate to 15 million domain names, and today, with only a little more than two months to go, we have a total of only about 5 million new gTLD domain names registered according to ntldstats.com, of which less than 4 million were registered in this fiscal year (about 1.4 million new gTLD domain names were already registered in June, 2014, before this fiscal year began). And now new gTLD domains are hemorrhaging registrations as first-time renewals come due and registrants decide new gTLDs are not worth the renewal registration fees.

In addition, after ICANN had collected its money and started delegating new gTLDs into the Internet Root, it was reported that the new gTLDs compromise the stability and security of the Internet DNS, fail to work across Internet, and reportedly "break stuff."

How much worse can it get? Well, as almost everyone now knows, ICANN, when confronted by the results of its own ill-conceived and misbegotten new gTLDs policy and program, decided last week to throw under the bus one of its own new gTLD contractors a/k/a ICANN's "customers" or "partners"--Vox Populi, Registry operator of .SUCKS--without any ICANN finding of wrongdoing or breach by Vox Populi of its Registry Agreement with ICANN!

How did we arrive at this sad state of affairs? Unsurprisingly, it's all about the money--there was money, a lot of money, to be made, by ICANN itself, as the sole monopoly in the world with the ability to "sell" new generic top-level domains, thanks to authority granted it by the United States Department of Commerce, as well as money to be made by the domain name industry--registry operators, registrars, consultants, lawyers, service providers, et al. In that kind of environment, the ideals of Jon Postel et al, and the public interest, were sacrificed on the high altar of Mammon.

All along the way, there were numerous warnings that ICANN chose to ignore:

"We strongly believe that ICANN should substantially reduce the maximum number of new gTLDs that could be introduced in the initial round to a much smaller number. Indeed, doubling the number of existing [22] gTLDs in one year would be an aggressive increase. The imposition of a more reasonable limit is necessary to curb the risks inherent in expanding the number of gTLDs, including the proliferation of malicious conduct. We recommend that ICANN use this round as a limited pilot program, as it has done in previous rounds, assess the organization’s ability to evaluate, introduce, and manage additional gTLDs, conduct an assessment of the increased risks posed by the program, and then consider whether a more significant expansion would be appropriate. --US Federal Trade Commission, letter to ICANN, December 16, 2011 (emphasis added).

“'The public at large, consumers and businesses, would be better served by no expansion or less expansion' of [new gTLD] domains." -- Jon Leibowitz, former Chairman of the US Federal Trade Commission (New York Times, August 17, 2013, emphasis added).

“…. I view it as little more than a predatory shakedown scheme. The business model behind this gTLD [.SUCKS] seems to be the following: force large corporations, small businesses, non-profits, and even individuals, to pay ongoing fees to prevent seeing the phrase “sucks” appended to their names on the Internet… a gTLD like “sucks” has little or no socially redeeming value and it reinforces many people’s fears that the purpose of gTLD expansion is to enrich the domain name industry rather than benefit the broader community of Internet users …” --US Senator John D. Rockefeller IV, letter to ICANN, March 12, 2014 (emphasis added).

Now resulting in this:

"... It [.SUCKS pricing] creates a mockery of the new TLD process and calls into question the very ability of ICANN as an organization to be able to administer the new gTLD program. This issue is particularly timely, given the accountability debate in which ICANN is embroiled... we call on ICANN to put a stop to this coercive scheme based on an abusive modification of ICANN’s RPMs. ICANN is the sole entity in the world charged with the orderly introduction of new gTLDs in a secure, reliable and predictable manner. If ICANN is unwilling or unable to put a halt to this, then who is?..." --Gregory S. Shatan, President, Intellectual Property Constituency (IPC), letter to ICANN, March 27, 2015 (emphasis added). 

To which ICANN responded:

A Regular Meeting of the New gTLD Program Committee of the ICANN Board of Directors was held telephonically on 1 April 2015 "... At the Committee's request, staff provided an overview of the points raised in a 27 March 2015 letter from the Intellectual Property Constituency concerning the .SUCKS TLD (pdf)... Committee members expressed various views about the claims made in the IPC letter, and staff noted that it was evaluating the claims, and exploring possible alternatives to address the noted issues. The Committee asked to receive updates on this matter going forward. The Chair called the meeting to a close."

"... John Jeffrey, ICANN’s General Counsel & Secretary, has sent a letter to the United States’ Federal Trade Commission (FTC) and Canada’s Office of Consumer Affairs (OCA) asking them to consider assessing and determining whether Vox Populi is violating any laws or regulations enforced by their respective offices... We are following up to request responses from these two regulatory agencies and hope that you and the IPC might also encourage these entities to evaluate this, and additionally might offer your assistance should they have any questions..." --ICANN's Akram Atallah letter to Gregory S. Shatan, April 9, 2015. (emphasis added)

"... ICANN, through its registry agreement, may seek remedies against Vox Populi [.SUCKS Registry] if the registry’s actions are determined to be illegal… ICANN has limited expertise or authority to determine the legality of Vox Populi’s positions, which we believe fall within your [FTC and OCA] respective regimes… should the FTC or the OCA make a determination of illegal activity, it could be that Vox Populi will also be in breach of its registry agreement…” --John O. Jeffrey, ICANN General Counsel, Letter to the U.S. government's Federal Trade Commission (FTC) and the Government of Canada's Office of Consumer Affairs (OCA), April 9, 2015 (emphasis added).

Beyond the Contract: Partnering to Strengthen Business and Consumer Protections - ICANN blog post by Allen Grogan, ICANN Chief Contract Compliance Officer, April 9, 2015: "... ICANN is not a regulator ... if Vox Populi is not complying with all applicable laws, it may also be in breach of its registry agreement. ICANN could then act...." (emphasis added)

Apparently, even if the FTC and OCA find Vox Populi has violated a regulation or law, ICANN says only it "may" then do something, and by that time, months, if not years, will have passed!

UPDATE: The ICANN Business Constituency on May 8, 2015, sent its own letters to ICANN, the FTC, and OCA, reiterating and supporting the position taken by the IPC above:

• Letter to ICANN regarding .sucks gTLD policies (pdf)
• Letter to FTC and OCA (pdf)

Questions:

• Will the FTC (or OCA) even open an investigation? Will the FTC open an investigation and expand it to include ICANN and all of its new gTLD contractors (registry operators)? Will the FTC utilize its full and broad authority and powers in both competition (anti-trust) and consumer protection matters--ICANN is a monopoly granting new gTLD registry operators a monopoly (sole authority over a TLD)?
• Will the European equivalents of the FTC and OCA (and perhaps other governmental authorities throughout the world) open their own investigations into these matters?
• How will Vox Populi, the Intellectual Property Constituency, and other interested parties now respond to ICANN, the FTC, and OCA?
• How will all of this impact the US Congress, House and Senate, and their opinions and views of the IANA transition proposed by Larry Strickling, NTIA, US Department of Commerce?
• Will the global multistakeholder community now, finally, turn away in disgust from ICANN and its conflicted, inept management and coordination of the global Internet DNS, and seek an international solution based on the global public interest, not special interests, based in Geneva or some other neutral locale and jurisdiction?

In the meantime, the media are having a field day:

New .Sucks Internet Domain: Extortion Or Free Speech? : All Tech Considered : NPR:

Caveat Emptor!


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ICANN New gTLD Domains: Chaos, Confusion, Contentions, FUBAR?

ICANN diagram of the "Contention Set On Hold" for .WEB and .WEBS

ICANN New gTLD Contention Set Status: "WEB / WEBS" - 9 applicants - Set Status "On Hold" --

ICANN: "This page reflects the current string contention sets as of the most recent update (14 March 2015) to this page. String contention sets will be updated from time to time to reflect any changes. Please note that the current status of string contention sets could change due to changes to application status as a result of withdrawals, evaluation results, dispute resolution proceedings, contention resolution processes, or the potential impact of ICANN accountability mechanisms. Except for the application statuses "Withdrawn" and "Delegated", application statuses are not final. A change in application status or update to a contention set is intended to inform the applicants and the community of an application's current status. A change or update is not a definite indication that an application may proceed to another phase of the program. For more information including definitions of application statuses see the applicant advisory."

Note the diagram above: 9 applicants x $185,000 each = $1,665,000

ICANN's New gTLD domains program--Chaos, confusion, contentions, FUBAR--a giant cl*sterf*ck--and it is obvious that ICANN forgot about, or just ignored, its own multistakeholder-developed policy, and the whole Policy Development Process including comments made during that process, as well as foundational principles that were to guide the introduction of any and all new generic top-level domains (new gTLDs)--

Final Report - Introduction of New Generic Top-Level Domains | Generic Names Supporting Organization: "... [principle A] (A): New generic top-level domains must be introduced in an orderly, timely and predictable way. Network operators and ISPs must ensure their customers do not encounter problems in addressing their emails, and in their web searching and access activities, since this can cause customer dissatisfaction and overload help-desk complaints. Hence this principle is a vital component of any addition sequence to the gTLD namespace." (emphasis added)

For follow-up references on how ICANN just ignored all of the above in its dash "to grab the money," see:

• ICANN Insiders On New gTLDs: Mistakes, Fiascos, Horrible Implementation
• Why New gTLD Domain Names Fail To Work Across the Internet
• ICANN 52, Universal Acceptance, New gTLD Domain Names "break stuff"
• ICANN, New gTLD Domain Name Renewal Fees, Price Gouging
• ICANN Process for New gTLDs Dysfunctional -- from the beginning

Bottom Line: ICANN absolutely blew it in adding new gTLDs (new generic top-level domains) to the DNS. ICANN violated, or just ignored, its own policies and principles (see above). Users, registrants, registrars, registry operators, and registry applicants, as well as the stability and security of the Internet DNS, have all been adversely affected by ICANN's inept implementation of the new gTLDs program. And now the Obama administration, in the form of Lawrence E. Strickling, wants the global multistakeholder community to just turn everything over to ICANN!


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Domain Name Investing, Making Money in China with New gTLD Domains

Reportedly another 3 to 5 billion people will soon join the rest of us online, including a lot of people living in China. Domain Mondo's caveat: don't get your hopes up. Domain Mondo hates to spoil the party, but these billions will mostly be impoverished people living at subsistence levels in the developing world, or under totalitarian regimes that really do not believe in a free and open internet. For example, good luck making your pipe-dream fortune selling to the Chinese mass market your new IDN gTLDs  that some hucksters in Vegas or elsewhere assured you were a sure pathway to success. Ever hear of the Great Firewall of China? Even Zuckerberg can't make a buck in China, and he speaks the language and is married to a Chinese American who has taught him things you will never know about China and Chinese culture. But you went to some CONference, and paid money to be CONvinced, and now you are invested, and sure you can? LOL!

• Rule #1: Nobody makes money in China unless the Party approves. Even then, it will cost you. Ask Jack Ma.
• Rule #2: The Chinese have been suspicious of outsiders for centuries (mostly for sound reasons--read Chinese history). 
• Rule #3: The Party is not a big fan of self-expression, people getting their own websites online, etc. You need a web presence to sell something inside of China? Alibaba and hundreds of others will provide that for you for free--even Amazon uses a virtual storefront on Alibaba's Tmall.com! If there is a problem, with something you are selling, or more likely, saying, the Party only has to make one call to Jack Ma et al. It's a simple system.
• Rule #4: Wealthy Chinese who are domain name investors, like smart wealthy investors everywhere else, want the "gold standard"--the dot COM domain names. Watch the markets. Why dot COM? Look at alibaba.com, jd.com, mi.com, etc. The government in China actively supports and encourages Chinese companies to capture global markets, including online global markets, which means having a dot COM domain name. Anything else is considered inferior--not recognized, breaks stuff, or fails to work across the internet.

Capiche? Or as they say in Beijing, 明白了吗？

Caveat Emptor!

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ICANN New gTLD Private Auctions, 2015 Patsy of the Year Nominees?

“If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.” ― Warren Buffett

ICANN designed a grand casino game for its new gTLDs (new generic top-level domains) program, whereby the gamblers a/k/a new gTLD applicants can mutually agree on a private auction, and, as in other casino games, it pays to know the rules, and know who the "patsy" is, in each round.

The new gTLD private auctions have become a way for new gTLD applicants to make money (or recoup some of their losses) by participating in the private auction, bid up the price, and then lose in the end to the patsy a/k/a winner of the auction who must pay the second-highest bid which is then divided evenly among the other gamblers a/k/a participating new gTLD applicants. Of course to be admitted to the game, you have to ante up $185,000 (new gTLD application fee to ICANN) and then stay in the "game" until the patsy gets stuck with the winning bid. Note that under ICANN rules, this is all allowed to be done in secret, no one even knows for sure, at this point, how much .BLOG actually sold for, although there has been speculation it was as high as $30 million (see below).

Fast forward to the private auction of new gTLD .BLOG:

TheDomains: Minds + Machines Pockets $3.5+ Million By Losing .Blog & .Store...

Got it? You WIN by LOSING! This is definitely a casino game loved by domain-name-industry- captured-ICANN insiders! So who were all the "Losers" (i.e., the real Winners) in the .BLOG auction? Besides Minds + Machines (see link above), included were industry giants Google, Afilias, Donuts, and reportedly four others. Clue #1: when you outbid companies like Google AND Afilias AND Donuts AND Minds + Machines, for a new gTLD, you are probably the patsy for that round.

Of course, while many observers were privately snickering at what reportedly happened in the .BLOG auction, predictably, some pundits in the domain name industry got the .BLOG story all wrong, here are but two examples:

1. ICANN's Auction Piggy Bank Just Got Twice As Big - actually, no, neither ICANN nor the global multistakeholder community received anything from the private auction of .BLOG and that is the way ICANN designed it--private auctions of new gTLDs were allowed in order to enhance private profit-making, thereby dispensing with any notion of the global public interest! Good Ol' ICANN--LOL!

2. "If anyone thinks that the new gTLD program is failing, I think they should have a look at ...[citing story that $30 million was reportedly paid by the private auction "winner" for .BLOG]... - actually, the new gTLDs program IS failing, badly, and the .BLOG reported sale just means one poor unfortunate new gTLD registry operator is now starting out $30 million in the hole.

Unsurprisingly, the reported "winner" of the .BLOG auction, when contacted, "didn't want to talk." 

Caveat Emptor!

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New gTLD Domains, 2014 #FAIL, Hucksters and Losers

Hope you didn't buy into any of the BS of ICANN and the new gTLD hucksters in 2014, and Domain Mondo certainly hopes you were not an investor in a new gTLD Registry--it was one of the worst investments you could have made in an otherwise up-market year--here's an example:

"Antony Van Couvering was appointed CEO of Minds + Machines Group (L:MMX) five years ago in 2009. In the last 1 year the average annualized return to shareholders was -45.4%. The present value of GBP1,000 (PV1000) invested 1 year ago is now GBP546, a loss of GBP454." (Source: www.BuySellSignals.com)

Moral of the story: "Buy into the new gTLDs (new generic Top-Level Domains)--and lose your money!"

But of course, Domain Mondo warned you all about this.

Caveat Emptor into 2015!

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HTML5, Mobile Web, Google, Apple, and Domain Names

Domain Mondo: Are Domain Names Dinosaurs?: ".... domain names altogether are increasingly irrelevant. Need a web page? Facebook or Google or Amazon or Tumblr or Twitter or LinkedIn or Pinterest (and many, many others) will gladly provide you a web page with its own distinct URL, on an easy to use platform with lots of traffic, accessible on any device, including mobile devices through a native app, all for free! So the real competition for new gTLDS are Facebook et al, and apps--a "Billion-Dollar Trend" that alone is a major domain name killer..."

Is there any hope for the mobile web or are we doomed to a world of native apps on mobile devices? There is hope--the new OS is the browser, and virtually all new software is moving to the cloud:

 On HTML5 and the Group That Rules the Web: "[HTML5].... made it possible to load in new data without refreshing the browser​—in the form of “web apps” like Google Maps, Gmail, Twitter, and Facebook​.... We still call Web pages “pages,” but many of them are actually software applications—“apps”—as complex to engineer as any word processor or video game. (Often, they are word processors, such as Google Docs, or video games, such as HexGL.)...."

And from the ReadWrite interview of Tom Dale:

What will make the Web a first-class citizen on mobile devices? What needs to happen, and who is most likely to make it happen? "I think the competition between Google and Apple will make it happen. As I mentioned before, Google has a very strong incentive to keep users on the Web, as search ads continue to be their lifeblood... Expect to see a much tighter integration of Chrome (and, therefore, Web technologies) into Android over the coming years... As for Apple... I'm cautiously optimistic about the future of Safari on iOS. In particular, the work they've been doing on JavaScript performance is just stunning..."

However, saying that the mobile web is not dead, is NOT the same as saying there is (or even ever was) a need for the new gTLDs--new generic Top-Level domains--this is not 2005--today, internet traffic is moving to mobile devices where platforms such as Alibaba and Amazon and Facebook dominate and provide users with the ability to publish a web page (without buying a domain name) AND a native or web app for distribution of that web page to the internet. Most people on mobile devices are using only a handful of apps the majority of time. For those people and businesses who have an actual need for a domain name, most are choosing, and will continue to choose, a domain name in the trusted, high-traffic, domain name extensions of .COM and well-run ccTLDs (see also full list of ccTLDs).

ICANN has admitted it never considered "demand" as a relevant factor in deciding whether and how many new gTLD domains to delegate into the root. ICANN policy was to delegate as many new gTLDs as there were applicants who could pay $185,000 and withstand ICANN's application process. ICANN said consumers would pick the winners and losers among new gTLDs, meaning, presumably, all the new gTLDs might fail. ICANN never understood the difference between healthy competition and destructive competition and all the negative consequences which result. ICANN just saw the opportunity to make a lot of money in the short term, and beyond that never fully considered all the unintended consequences of its own foolish and irresponsible program.


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Domain Names, Your Brain, and Domain Name Investing

Michael Berkens, The Domains: Rick Schwartz Now Owns More New gTLD’s Domains Than I Do

It's 2014 people: "Rick, you have lost your mind."

If your investments of choice are Domain Names -- just substitute those words for "stocks" in the slides below -- (hint: when you get to optimism bias, herding, and over-optimistic groupthink, think of the ICANN new gTLDs program!)

FPA Nor Cal 2014.Ppt
source: Barry Ritholtz presentation May 27, 2014


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