Categorized | Domaining Tips

Should ICANN Permanently Rescue Failed New gTLDs?

Posted on 30 March 2017 by Andrei

Yesterday, I’ve put three options on the table so as to try a bit of a collective brainstorming experiment. Today, I’d like to analyze the first option in more detail, which is having ICANN bail out the failed extensions.

There already is a mechanism in place for scenarios which involve failed extensions but it’s not an actual permanent bailout. At the end of the day, one might argue that ICANN can afford to bail out lots and lots of extensions if need to be. This is because, as mentioned yesterday, ICANN made a lot of money from the entire process. The initial fees have been very high and the $25,000 a year that need to be paid for each string each year are nothing to sneeze at.

What would the bailout involve?

Well, in the most optimistic scenario for registries, it might even involve direct injections of capital in the form of a refund. Another words, registries could receive perhaps a significant chunk of their initial investment back on the one hand and on the other hand, ICANN could also eliminate the yearly $25,000 fee.

The second option wouldn’t involve any direct financial injection but it would involve the either complete elimination of the yearly $25,000 fee or a significant reduction. Without these fees, it would be considerably easier for a small registry to survive, even if there aren’t a lot of domain names in the namespace.

The third option would involve extensions and being saved but they would no longer be owned by the registry. Perhaps ICANN can simply refund the initial fee as well as the yearly fees which have been paid up until a certain point to the registries and set up some sort of a permanent company through which they manage failed extensions themselves. I’m sure a lot of registries would be more than happy with this possibility of making an exit.

The fourth option, one I consider more likely than the third, is ICANN taking over the extensions but not giving the registries a full refund. How large that partial refund would end up being is up for debate but I think it’s possible to reach a compromise which would end up being acceptable to all parties. As such, registries would take a financial hit and pay for their business mistakes but at least they wouldn’t pay the full price.

The fifth option, which is the harshest, would involve ICANN simply taking over the failed extensions without offering any kind of compensation. This option would of course not exactly be popular among registries but then again, mistakes have been made and this option would basically revolve around the idea of paying the price in full.

These are five examples of options that are permanent in nature. It remains to be seen what will happen next and if you guys have any thoughts about this issue, feel free to post a comment below.

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3 Comments For This Post

  1. Tom Barrett Says:

    Andrei,

    Some feedback for you.

    Your last option #5 is the only one that Registries have.

    ICANN’s mission is to ensure security and stability of the internet. What that means here is that anyone who purchases a domain name has some assurance that they will be able to continue to use their domain for the forseeable future without disruption.

    2. It is not ICANN’s job to bail anyone out or to give refunds.

    When the new TLDs were introduced, it was not ICANN”s job to pick the winners and losers. And it is certainly not their job now, or ever, to bail out the losers.

    2. You are assuming that Registries need to be profitable within a certain time frame. You are also assuming they exist to sell domain names and generate revenue. Some Registries will never ever be profitable.

    see: The .MUSEUM TLD launched 15 years ago in 2002. It has a grand total of 471 registrations.

    So basically, a Registry fails under two conditions:
    1. They are not in compliance with their ICANN contract
    2. They cease operating the registry (in which case, ICANN will find someone else to run it with no compensation to the original registry)

    I hope this helps.

    Tom

  2. Tom Barrett Says:

    fyi. The most common exit for “failed” registries will be a sale to another business, most likely another Registry or back-end registry provider, who might be willing to take it over in return for some percentage of the sales.

    Tom

  3. Snoopy Says:

    Why would Icann give registries some kind of refund if they fail? What they actually do is the opposite, they hit them with more fees.

    It is pretty clear, the registry gets managed by someone else, they get no refund, they all lose more money form their standby letter of credit, i.e. they have to pay to run they registry even after they have gone. That is the rules Icann has set.

    “CONTINUING OPERATIONS INSTRUMENT: UNCONDITIONAL WITHDRAWAL OF FUNDS”

    https://newgtlds.icann.org/en/applicants/advisories/coi-withdrawal-05dec12-en

 
 
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