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New gTLD Fees Threaten the Diversity of the Name Space

Tim Johnson

The great promise of the new gTLD programme is not that it will spawn dozens of .COM clones, but rather that it will lead to the creation of a global constellation of unique names embraced by specific interest groups. As an ICANN community, our challenge now is to ensure that the policy framework we've created to manage new gTLDs advances that vision by not penalising the very sorts of domains that the programme was designed to encourage.

The first thing we did when we started our "cultural" registry was to choose a gTLD that actually would have little appeal for 99.93% of the world's potential consumers. That's a suspect strategy if you're planning to be the next .COM, but not if your goal is to provide a relevant, targeted address to the people of the country nearest your heart.

Our domain, .KIWI, is targeted at New Zealanders (fondly known as Kiwis) all over the world, who account for about 5 million of the more than 7 billion people on earth. If all Kiwis all around the world registered two .KIWI addresses, we still wouldn't reach 10% of .COM's global registration base. Far from being a weakness of .KIWI, we see this as our greatest strength — a clear signal of our intention to create a thriving and robust online space that serves the specific needs and interests of Kiwis.

And while .KIWI is obviously very special to us, it is not unique among new gTLDs in that it serves comparatively small communities. Indeed, it is the community-driven model that has been the poster child for selling the new gTLD programme to the world. So why are ICANN's registry fee policies so heavily biased against smaller operators like .KIWI?

Like every other new gTLD, .KIWI pays $25,000 USD per year in ICANN fees. At our current registration totals, that amounts to more than $3 for every domain we have under management, which, by way of perspective, is 12 times higher than the $0.25 fee that Verisign pays for each .COM name.

In the future, if we are fortunate enough to reach 50,000 registrations, our policy-mandated reward will be that we only pay double what the operators of .COM, .ORG, .INFO and .BIZ pay per name. Worse yet, if we reach 50,001 names, ICANN actually penalises us by charging an additional $12,500 fee, effectively removing our extremely brief reward of paying merely double.

From a policy perspective that's an interesting message to send to deliberately targeted and community focused gTLDs. From our perspective, it is at odds with ICANN's publicly stated goals of fostering diversity, competition and consumer choice.

As any new gTLD operator knows, the road to launch was (and continues to be for many) a lengthy one, fraught with delays and obstacles. While some may argue that we knew full well the fee structure we were agreeing to when we put our support behind the Applicant Guidebook, most of us didn't see that we had much of a choice and we accepted the imperfect as a tradeoff for achieving the good.

But that doesn't mean we should be complacent about accepting policy framework in a multi-stakeholder environment that consistently advantages legacy providers over new and innovative market entrants.

Across the board, new gTLDs bear comparatively greater costs, heavier operating burdens and greater regulatory exposures than legacy gTLDs. This is not a way to create a sustainable, dynamic and most importantly, innovative expansion of the name space.

In fact, many of these additional burdens and costs were not present when ICANN set the proposed registry fees. Additionally, ICANN received many more applications than the 500 it expected. There must be some economies of scale and efficiencies that come from the additional number of registries. We've seen ICANN offer "forgiveness" of two-thirds of registrar variable fees for registrars that are "considerably smaller in size", so why is the same principle not being applied for registries?

One truly progressive policy change ICANN could make without much difficulty would be to harmonize the cost of annual fees between legacy and new gTLDs. The $25,000 figure came from the very early iterations of the Draft Applicant Guidebook in 2009. We have never seen a cost basis for that number, and the meager ICANN budgetary data available suggests that it is far higher than what ICANN needs to ensure its own operational stability.

There are a lot of great stories to tell about the first nine months of new gTLDs, including exciting growth across the broadest possible range of domains, but the good news shouldn't stop us from working to ensure that the programme fulfills the vision for which it was created.

By Tim Johnson, Founder, Dot Kiwi Ltd
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A Must read for future applicants Jean Guillon  –  Oct 04, 2014 1:52 AM PDT

Thanks for sharing. It gives a real view of what happens once a TLD is launched.

New gTLD Remorse? John Poole  –  Oct 04, 2014 6:08 PM PDT

Your whining and complaining are hardly persuasive, although not surprising to those of us who questioned ICANN's dysfunctional new gTLDs program from the beginning. However, you knew the rules when you applied for your new gTLD. Now you realize you made a bad decision and a bad investment and your new gTLD has too few domain name registrations to even pay the modest ICANN fees. Well, ICANN always said (long before new gTLD applications were taken) that they were not in the business of picking "winners and losers" among the new gTLDs. I am sure you are disappointed with your low registration numbers--if it makes you feel any better, you are not alone. All of you new gTLD registry operators should have done your "due diligence" before, instead of after, you jumped into the ICANN new gTLDs program. Every issue you have raised was either known or easily foreseen at the time you applied for your new gTLD. I hope you learn from this experience and think about that next time, before you make your next investment.

Depends... Jean Guillon  –  Oct 05, 2014 2:38 AM PDT

Hello John, it depends at what price you sell your domains at the Registry level.

Not quite... Rubens Kuhl  –  Oct 04, 2014 7:27 PM PDT

... long after the closing of applications, ICANN introduced the need for a new RAA to be signed by registrars that wanted to sell new gTLDs. This immediately took out a good chunk of sales channels; in my country, of 6 ICANN-Accredited Registrars we have 0 (Zero) RAA-2013 registrars. Since the new RAA also comes with increased costs and obligations, this also changed the relation between wholesale price and end-user price.

It's also of notice that the namespace collision lists are still in effect blocking lots of good domain names, so the registration numbers we see prior to mid-November will still be below the actual potential of the TLDs.

Now tell me where both of these issues were listed in ICANN documentation so they could be factored into investment decisions.

Seriously Rubens? The whole approval for the Paul Tattersfield  –  Oct 06, 2014 6:18 AM PDT

Seriously Rubens? The whole approval for the new gTLD program was premised on a new RAA being agreed and signed!

Only as a way to expedite the Rubens Kuhl  –  Oct 06, 2014 7:24 AM PDT

Only as a way to expedite the need for updating who is accredited at what registries, not as a requirement. It was also not expected that the added cost of RAA 2013 would be so high.

Oh, no, we won't all get rich from gTLDs John Levine  –  Oct 05, 2014 9:27 AM PDT

Having observed the repeated failure of .MUSEUM and .AERO and .TRAVEL and other purported communiy TLDs to get any community acceptance, it's hard to imagine why anyone would expect things to be different this time around.
People in New Zealand are sensible, and they know where to find a .NZ name if they want one. They're cheaper than .KIWI, too.

*cough*.cat*cough* Kevin Murphy  –  Oct 05, 2014 9:45 AM PDT

*cough*.cat*cough*

about .cat John Levine  –  Oct 05, 2014 10:28 AM PDT

It has 77,000 names, in a region with a population of 7.5 million, without a ccTLD that covers the exact same area. By comparison, .es says they have over 1.7 million names. Catalonia has about 16% of Spain's population, so their share of .es would be about 270,000 names.

If your point is that .cat is another community TLD that is going nowhere, I agree.

Referendum Jean Guillon  –  Oct 05, 2014 10:34 AM PDT

I think the future referendum won't give them a ccTLD anyway so .CAT should remain and strengthen their identity.

oh, sure John Levine  –  Oct 05, 2014 10:42 AM PDT

Since .cat already exists, there's no more reason to kill it than there is for .museum. Some people use it and it appears to have enough revenue to cover its costs. It also did a useful experiment that tells us what a bad idea it is to try and handle IDN variants with DNAMEs.

It's hard to imagine a situation more favorable to a community TLD than Catalonia: they've had a strong identity for a thousand years, it doesn't have a ccTLD, and it's rich and well wired so the number of potential registrants is large. But it's still a weak second to .es.

.cat is growing at 12% a year. Kevin Murphy  –  Oct 05, 2014 10:48 AM PDT

.cat is growing at 12% a year.

really? John Levine  –  Oct 05, 2014 11:43 AM PDT

When I count the names in the zone file, that's not what I see.

In any event, they've had a decade to catch up with .ES and they're not even close.

According to the registry's transaction reports, .cat Kevin Murphy  –  Oct 05, 2014 4:20 PM PDT

According to the registry's transaction reports, .cat had 75,489 domains under management at the end of May 2014, compared to 66,841 at the end of May 2013. I make that a 12.94% increase.

.BZH Jean Guillon  –  Oct 05, 2014 10:30 AM PDT

I'd say .BZH is a good test too, we've been talking about this one for a long time in France. Let'see what happens.

Wait for .cat to be extended for Rubens Kuhl  –  Oct 05, 2014 10:51 AM PDT

Wait for .cat to be extended for cats. Domains for kitten pictures will have more registrants than .com.

PS John Levine  –  Oct 05, 2014 10:17 AM PDT

There's always the option to make a few minor retroactive changes to the application and sell it to Johnson's Wax for their shoe polish.

Tim,totally agree here. ICANN's fee needs to Phil Buckingham  –  Oct 06, 2014 10:39 PM PDT

Tim,totally agree here. ICANN's fee needs to be a variable fee cost per registration not a fixed quarterly fee that applies to all nTLDs irrespective of registration volume up 50K. The step up fixed cost needs to be increased to start at the 100K registration level p.a so will exclude niche/ low budget TLDs. Lets discuss with ICANN in LA.

Very Well Stated Bill Doshier  –  Oct 09, 2014 8:48 AM PDT

Thanks Tim,
To me the main thrust of the article is to encourage regular reviews of what is the most appropriate policy. Policies should address the present and the future, they should not be based on past assumptions to deal with what we *thought* might happen. We have the benefit of new data and understandings, so why not put it to good use?  I don't see how a more appropriate fee structure hurts anyone?"

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