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What Will ICANN Do with the $135 Million It Just Got for .WEB?

Stéphane Van Gelder

ICANN has just made USD $135 million from an auction completed today (July 29, 2016) to determine who gets to operate .WEB.

The auction was part of ICANN's last resort mechanism, when several parties applied for the same suffix but were unable to resolve this contention by themselves.

ICANN has just more than doubled its auction proceeds in one go. Up until .WEB, ICANN had netted USD 101,357,812 from auctions held from June 4, 2014 to January 27, 2016.

New record

That last auction held on January 27 of this year was the previous highest grossing, the suffix .SHOP having been won with a USD 41,501,000 bid from a Japanese company.

The .WEB auction therefore stands to bring ICANN's grand total to over USD 235 million.

A total of 7 companies applied for .WEB. Among them major domain industry players like Donuts and Afilias and Internet heavyweights like Google and Web.com. The auction also covered Visatprint's application for .WEBS, deemed to be so similar a term as to risk confusing Internet users if allowed to coexist with .WEB.

There is speculation that the winning bid was backed by .COM operator Verisign. That, and the amount of the bid itself, show how much the domain market feels that as a label synonymous with the Internet, .WEB could be even bigger than .COM.

Putting the money to (good) use

The real question now is what ICANN should do with these vast auction proceeds?

Many times, the organisation has proven woefully inept at money management. Currently, the ICANN community is reeling from the discovery that an ICANN group, put in charge of coming up with a workable plan to transition control of the Internet away from the US government, was allowed to run free and spend millions in legal fees alone.

At the same time, the domain industry is upset that despite initiating the program to greatly expand the number of Internet suffixes available, ICANN has spent next to nothing on educating users in general about the new naming options being sent their way.

And even though the fate of the auction proceeds is supposed to be determined by the ICANN community, no roadmap for how this should be done and what the funds should be used for looks likely anytime soon.

It's almost as if ICANN was content to sit on the interest payments these funds are generating, rather than putting them to good use helping strengthen the Internet's naming and addressing systems.

Surely with the incredible amount .WEB has garnered, that kind of procrastinating can no longer be tolerated by the ICANN community and maybe even Internet users in general…

By Stéphane Van Gelder, Consultant
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Currently, the ICANN community is reeling from James Gannon  –  Jul 29, 2016 2:40 AM PDT

Currently, the ICANN community is reeling from the discovery that an ICANN group, put in charge of coming up with a workable plan to transition control of the Internet away from the US government, was allowed to run free and spend millions in legal fees alone.

I have to disagree with this, as the process for legal fees in CCWG and CWG was the subject of multiple rounds of discussion that included every stakeholder group. If people are reeling from a discovery now it is because they were not giving the topic enough attention.

And run free is a totally incorrect assertion, every single piece of legal advise had to be certified by the co-chairs of the working groups as topics requiring external legal input, the co-chairs coming from in the case of the CCWG (Where most of the spend has been) the ALAC, the ccTLD community and the gTLD community.

As to the figures that the legal advice cost, I stand over it, the ICANN community at multiple stages stated strongly and firmly that they wanted a reform of the governance of ICANN due to real or perceived failures of the past. To that end ICANN underwent significant restructuring in its corporate governance, and to have cheaped out and went with the lowest cost option as opposed to taking the hit now and having a system of corporate governance that is legally robust and built on a solid foundation designed by some of the best legal teams that are out there was in my opinon a sound fiscal and prudent financial decision.

When speaking about reforming ICANN the very last thing we needed was a false economy based set of decisions. And we implemented the controls around the financial spend in a prudent manner. Was it a lot of money, most certainly, but to make light of the work that was done on ensuring that cost was justifiable is not correct.

"that kind of procrastinating" John Berryhill  –  Jul 29, 2016 6:58 AM PDT

Procrastinating?  Over proceeds which likely haven't cleared payment yet?

"Many times, the organisation has proven woefully inept at money management."

Where has this been "proven"?  Proved by whom?  Do you have a link to support the "many times" it has been "proven"?

I'm surprised to see such empty, fact-free and emotionally-laden rhetoric from you, Steph.

"Currently, the ICANN community is reeling from the discovery that an ICANN group, put in charge of coming up with a workable plan to transition control of the Internet away from the US government, was allowed to run free and spend millions in legal fees alone."

A group tasked with a complex, far-reaching set of issues spent money on legal fees?  Should they have done without any sort of expert legal advice or opinions?

The "community is reeling"?  Are you feeling faint?  Have you seen a doctor?  I know many members of the community who are feeling just fine.  Perhaps you are not getting enough rest.

This is the fundamental disconnect in your screed here:  You claim that ICANN is "procrastinating" and "content to sit on the interest payments these funds are generating" in relation to an auction conducted literally yesterday, while you are at the same time upset that ICANN spent money on something as fundamental to its mission as the framework for the IANA transition.

On the other hand, while ICANN has no platform or mechanism for "educating users in general".  I have not seen your proposal on how ICANN is to carry out this global educational program for internet users, nor have I seen your budget detailing the costs of how this is to be done.  Could you provide a link to this program which, in your view apparently, was to be started yesterday without any further "procrastinating"?

"At the same time, the domain industry is upset" - Really?  An entire industry has an emotional problem and has appointed you their spokesperson?

This is an odd one from you.

http://www.circleid.com/posts/20111221_icann_publishes_its_annual_report_reports_100_million_in_asse Charles Christopher  –  Jul 29, 2016 4:52 PM PDT

http://www.circleid.com/posts/20111221_icann_publishes_its...

"Actually ICANN could under the right circumstances be a non-profit with over $250 Million in "Unrestricted Net Assets" within 2 years.
Lets call it our 1st prediction for 2013.
June 2013."

https://www.icann.org/en/system/files/files/financial-report-fye-30jun14-en.pdf

Unrestricted Net Assets = $193,109,000

https://www.icann.org/en/system/files/files/financial-report-fye-30jun15-en.pdf

Unrestricted Net Assets = $279,110,000

Micheal, silly you, you were right.

I look forward to the 2016 numbers .... And where that money goes to with the transfer of ICANN .....

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