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Will the ICANN Auctions Kill off New gTLD Innovation?

As the launch of the first of the new gTLDs draws ever closer, more and more applicants are beginning to publicise their business models and ideas for putting the Domain Name System (DNS) to good use. By doing so, they are also shedding light on what promises to be a far less uniform Top Level for the Internet than might have previously been feared.

A schism is appearing in the type of applicant/TLD model being enacted. Up until now, Donuts, Google et al have tended to hold the spotlight, and for good reason. They’ve taken ICANN at its word and doubled down on the idea that, as an information superhighway, the Internet deserved more signposts. Big money and volume portfolios have meant that these new gTLD behemoths have become ubiquitous in the domain media landscape.

But apart from the actual amounts of money they’ve put on the table, the big boys have not been too adventurous in their new gTLD approach. Nor should anyone really expect them to be. These large volume applicants have to spread their costs over a high number of applications and the easiest way to do that is to make their portfolios a one-model affair. And even when companies like Google or Amazon have attempted to do things differently, for example by planning to close off generic terms to the rest of the world (something which the program’s rules never included any provision against by the way), the community shot them down and pushed them back into the fold.

So whilst wholesale TLD operators are working to a one-size-fits-all theme, that is hardly the case for the many boutique initiatives out there. One such niche TLD is Dotpay SA’s bid for Dot PAY. Like most would-be next-gen TLD operators, the Swiss-based company has been working for years to turn an idea into a viable project capable of both meeting ICANN’s necessarily stringent approval processes and their investors’ need for a sound business enterprise.

A different use of the DNS

Dotpay SA’s basic idea is to put traditional DNS technology to a different kind of use. “The set thinking has always been that the domain name and IP address that is mapped to that name both “belong” to the registrant,” says Dotpay SA’s Oleg Serebrennikov. “We have stepped away from that logic. With our system, yes the name still “belongs” to the registrant, but the IP address has to be managed by a financial institution that is authenticated by us to serve the account which the domain name identifies.”

In essence, Dotpay SA wants to turn the protocols and technologies traditionally used for Internet naming into instruments of financial transactions. A bold idea which may never see the light of day as Dotpay SA is up against Amazon, both having applied for Dot PAY. Some may feel that by virtue of its different take on DNS use alone, Dotpay SA’s Dot PAY should win the day. But that’s just not how the new gTLD program has been designed.

There is no premium for innovation or TLDs that deviate from the standard “Dot COM era” use of the DNS. There is no special treatment for entities that have only applied for one TLD (as Dotpay SA have done) when they face entities that have so many applications it’s hard to really imagine not getting them all would be a traumatic event for them.

Dot PAY versus Dot PAY

Amazon has more than 70 pending applications. Its goals for Dot PAY are clear: to serve Amazon only. The company actually says so in its application to ICANN, arguing that getting Dot PAY will “provide Amazon with additional controls over its technical architecture, offering a stable and secure foundation for online communication and interaction.” Amazon’s application also says that “Amazon intends to initially provision a relatively small number of domains in the .PAY registry to support the business goals of Amazon” and that ”.PAY domains may not be delegated or assigned to third party organizations, institutions, or individuals.”

The difference with Dotpay SA’s intended use could not be greater. The company’s opening description of its business model in answer to ICANN application question 18(a) leaves little doubt that it has chosen a path that contrasts directly with Amazon,‘s. “The proposed .pay TLD is an open Top Level Domain, globally commercialized to provide an identity associated with internet-based payment services,” says Dotpay SA.

“Our TLD is designed as a complete next generation payment solution using the DNS to connect buyers and sellers in a way that is both practical and secure,” boasts Serebrennikov. “Our system uses domains to secure payments between buyers and sellers of any goods or services. This works through a network of pre-approved agents which provide the infrastructure needed for the buyer to pay and the seller to receive that payment.”

The concept works by identifying two basic types of parties, buyers (or “customers” as Dot PAY calls them) and sellers (“merchants” in Dot PAY speak). Buyers can get per-transaction domains which they register for free with a Dot PAY approved Customer Service Provider, who also securely stores the buyer’s financial data. Because these domains are free registrations, they can be executed instantly as part of any Internet-based transaction, so the buyer doesn’t need any special affiliation with Dot PAY to proceed.

So at check-out, the buyer would basically be given several payment options, including Dot PAY. If this is the chosen option, the domain is used to make a payment in a way that would feel just like making a credit card payment. Except that the buyer only has to type a domain name rather than cumbersome credit card data. And by going through a secure third party service provider, the buyer enjoys the added security of not supplying his confidential financial information to the seller directly.

Merchants are also able to obtain domains, but they go through a much more rigorous process to ensure the merchant information is valid. The merchant also has an independent assistant, the Merchant Service Provider, to accept customer payments on behalf of the merchant and transfer them to the merchant’s account. So whilst a buyer might get a domain like john_smith.pay, a seller domain might look something like abc_store.pay.

“We’ve basically looked at the DNS on purely technical grounds,” adds Serebrennikov. “If you strip away all the history and what domains have become today in their own right, you can just think of the DNS as a system which connects two points. Where traditionally domains are used to connect to websites, with our system, those two points are the buyer and seller in a transaction of any nature. If you type a name like john_smith.pay into a browser, you would simply end up at a financial server for John Smith’s account. A server that is used to process transactions, and secure them.”

Having third-party service providers that have to be accredited by Dot PAY handle the actual transactions in this way means every participant in the Dot PAY process keeps to his own area of expertise. The registry provides the technical infrastructure, but leaves the actual handling of money to financial professionals (the service providers), whilst the buyer knows that the seller will not be in direct contact with his money until the transaction has been verified.

In addition, all Dot PAY domains must use approved DNS servers from a Dot PAY accredited Secure DNS Provider. All accredited parties will undergo periodic checks by the registry to ensure they remain compliant with the standards of safety and good practice imposed by Dot PAY.

Should one size really fit all?

Is Dotpay SA’s idea a good one? Does the TLD model it has developed make sense? At this stage, what’s important are not the questions themselves, but that Internet users be given an opportunity to answer them by trying out this novel application of the DNS to a real every-day problem: securing e-commerce transactions.

That will not happen if Amazon’s closed Dot PAY prevails over Dotpay SA’s open forward-looking ambitious plan to use the DNS to give consumers a new way of paying for their online purchases.

So far, the luck of the draw has gone Dotpay SA’s way, with their application getting priority number 541 whilst Amazon’s Dot PAY was assigned number 1255 in ICANN’s December 2012 draw. But beyond the symbol, this will of course not mean anything once both applicants go head-to-head in ICANN’s last-resort auctions. At that stage, it’s hard to imagine Dotpay SA having the financial muscle to outbid Amazon.

It may never come to that though. First of all, both applicants may have begun negotiating directly, something which ICANN actively encourages applicants to do in its guidebook (and which Serebrennikov would neither deny nor confirm when I asked him). It may also be that Amazon will see the light and decide to give free passage to a one-TLD applicant with a novel plan to serve the Internet community as a whole.

Or it may even be that some of the ideas put forward by other small applicants such as Stable Tone, which recommended ICANN’s auctions afford special provisions to smaller applicants in a position paper sent to ICANN this week, might actually gain traction.

Whatever happens, one of the measures of success for the new gTLD program will doubtless be the fact that it fosters many different business models and ideas. In this, one-size-fits-all operational models run by big player registries leveraging their infrastructures across a large number of TLDs have a place. But so do boutique applicants aiming for out-of-the-box TLD applications.

New era

It is the coexistence of different types of applicants, models and approaches that will make ICANN’s new gTLD program truly diverse and an effective vehicle for ushering in a new era of user-enhancing TLD applications.

One which recognizes the pioneering spirit that sees people mature bold ideas for years. Dotpay SA’s instinct for using the DNS to make online payments work better wasn’t born yesterday. In fact, it even predates the new gTLD program which the ICANN Board approved in 2008 after the GNSO had finalised its recommendations for opening up the Internet’s Top Level the year before.

Two years before that, in May 2005, Serebrennikov had applied for patents (USSN 10/927460 and RU2464637 (C1)) with a detailed description of his initiative. Even back then, he recognised that it would be better served through a TLD.

“Since both present Internet URLs and telephone numbers are widely in use (occupied) it seems impossible to build hierarchical namespace for clearing infrastructure using existing www domains and telephone numbers country and area codes,” the patent says. “Therefore it seems useful to implement clearing infrastructure using new namespace URN:<NID><NSS> (RFC 2276, and RFC 3401-3406), or new Global Top Level Domains such as PAY for example…”

So it’s ironic that despite having thought of the idea and patented the technology, Serebrennikov may never actually be able to apply it through Dot PAY. Who knows, other e-commerce related TLD applicants like .BUY or .SELL may even reach out to buy Serebrennikov’s technology, leaving Amazon, and Internet users, with an empty shell of a TLD where a good idea once stood.

By Stéphane Van Gelder, Consultant

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Of course .... John Levine  –  Nov 15, 2013 4:43 PM

There is no reason that the dotpay people couldn’t use a 2LD like, say, pay.gg and get on with it, rather than wasting hundreds of thousands of dollars on a bid for a vanity TLD.

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