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Cold winds in the global domain industry

2017-08-04 Blog

By Danny Aerts (IIS.se)

The last time, in December 2016, I wrote about the Chinese speculation wave in some new generic top-level domains such as .xyz and .top. At that time, I expected the interest to decline and already after 6 months, we are seeing enormous de-registrations. Here are the statistics for .xyz and .top. I also wrote about the expected portfolio sales and that some new top-level domains would want to give up and throw in the towel.

Decline in the domain industry

Now, one doesn’t need to be especially gifted to guess what is about to happen in the domain industry. The market is mature and largely over-established. We see too much speculation, too many top-level domains, too many registries (that administer top-level domains), too many back-end providers (delivering systems for the administration of top-level domains) and apparently also too-many ICANN registrars.

This also means that much will decline in the future. We will see a decline in growth of domains in new top-level domains, in growth for .com after a large speculation wave in 2016, and in the number of registries. Growth in .se may also decline. We have received a lot of new registrations during the spring that probably will not be renewed.

Carrot and stick

With the risk of this blog post only being of interest to well-informed nerds, I thought I might make some predictions again. This time about ICANN.

In brief, ICANN is a non-profit organization that coordinates the internet’s domain name system, allocating the internet’s unique identifiers as well as their protocol addresses. ICANN accredits generic top-level domains and their administrators. ICANN also helps to develop the internet’s policy through engaging volunteers from all over the world. You can read the 28-page introduction here.

During the past year, ICANN has been in focus for many in our industry, and the ICANN conferences have been lavish and popular to attend. One can say that the attraction was both a threat and an opportunity. Or if you like, both the carrot and the stick.

The threat, or stick, was the discussion around releasing ICANN from the agreement under the auspices of the U.S. Department of Commerce. The agreement made us discuss DNS and in the long run that the internet was still owned by the U.S. Politics simply attracted many to engage in the issue.

The carrot and opportunity attracting people to ICANN conferences was the decision to open up for new top-level domains in 2012. This led to a whole new industry with suppliers, subcontractors, new services and other fortune hunters. A “gold rush of new domains.”

At the time of this writing, the rush has come and gone and the party seems to be over, everyone coming to their senses. As the so-called IANA transition was conducted in September 2016, the idea of threat has disappeared.

The cold wind begins to blow instead.

Reduced interest

If one continues to speculate, I think the interest for ICANN as an organization and for ICANN conferences will decrease. Why should one participate in ICANN’s multi-stakeholder’s process now?

In the past ten years, we have had a large group of enthusiasts who have given much time to the ICANN process. The risk is large that this group is now tired or is starting to phase out (new jobs, retirement, etc.). Asking large numbers of participants to visit upcoming (three per year) conferences that take between 6 to 10 days of travel time to Johannesburg, Abu Dhabi or San Juan, just to name the latest and upcoming destinations – feels more and more outdated.

I am aware that a new “meeting strategy” has been launched, but I believe one should think again. Maybe the wrong people were asked in the previous strategy process. I still think the number of conferences needs to decrease to two and have a clear theme or issue, much like the new GDD conference is evolving.

ICANN then needs to evaluate how many people really participate in a multi-stakeholder process. The number of visitors to ICANN conferences is a bad measure. The number of visitors says nothing when the local host adds on hundreds of visitors. How many are actually engaged? Is it enough for a handful of participants to set IDN standards? Or that those who have fortitude or energy (and probably their own interests) can steer major policy processes? How do we measure this in the ICANN health index?

ICANN’s revenues may eventually stop growing, and the strong increase of ICANN staff will turn to a gradual decline. A completely new situation after more than ten years of growth.

To think about

What does it mean? In my opinion, ICANN has to start re-thinking. Focus on costs, efficiency, lower travel costs for ICANN conferences, and a more focused activity on policy development. In a situation when things “go down” for many in the industry, it could become even more difficult to get involved in ICANN’s multi-stakeholder process – and then it’s only the “rich” that are heard in the long run.
Now, ICANN can certainly start a new round with applications of new top-level domains, but it will take at least three years and one may wonder if there’s really a need for new top-level domains. Of course the industry would like to have a new round. New top-level domains mean new blood for everyone that wants to deliver services (advice, systems, administration, strategies, etc.), and one can above all, convince large global companies to invest in important “brands”.

ICANN’s new CEO is a Swede and therefore used to cold winds. But it is difficult to convince participating organizations and visitors in Abu Dhabi that a jacket is needed.

View original article (IIS.se)