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Time to Spread the Muck, ICANN

“Money is like muck, not good except it be spread”, according to English philosopher Francis Bacon. In these times when everyone is busy with the big questions surrounding the IANA transition and ICANN accountability, I thought we could quickly solve some simple questions. One of them is: What should ICANN do with all that money?

What money, you might ask? Already about a year ago, I wrote about the expected effects of the auctions that ICANN holds to solve those problems that arise when multiple parties want to have the same top-level domain and cannot resolve things on their own. These days I can read blogs that wonder what ICANN will do with the current situation of 33 million U.S. dollars (USD). We can anticipate demands and requests from registries and registrars that think ICANN should give back “their” money. It is not their money; it is ICANN’s money.

Proceeds from the current gtld process

In addition to the auction’s money, ICANN’s balance sheet starts out as happy summer reading. The item “investments on the balance” is great (285 million USD), and just revenue from the investment starts to be significant ($10 million) in the latest annual report. It’s easy for one to say this doesn’t mean it’s ICANN’s money, but over two years, their capital grew by around 100 million USD.

What will be interesting is what ICANN does with the money left over after all of the top-level domains are launched. My guess is that ICANN will have a substantial sum “left over” even if the principle of the applications was that ICANN works on a cost recovery basis. Are the new top-level domains expecting dividends? Do the old generic top-level domains expect a payout? We can expect the same discussion, and again it is ICANN’s money, not the registries or registrars’ money.

Revenue growth from all new top-level domains

After the launch of the new top-level domains are done, the organization’s costs will be reduced and the revenue will increase thanks to more than 1,000 new customers. And think if there are more rounds of new top-level domains! By the way, I think that the “cost recovery principle” is completely wrong for future rounds of new top-level domains. The costs for new top-level domains may simply be too low. It can become too cheap to get a top-level domain. After all, there are several parameters to take into consideration.

My assessment is that ICANN is on its way to becoming a rich, rich organization. But is this a problem? Not as I see it. No, it’s more of a possibility in my eyes.

One possibility is to start ICANN’s third area (or third face, to refer to my old blog post).

I previously called the first area the registry of registries—an operational organization to manage customer relations with registries and registrars.

The second area is what I call Policy and Governance. Here are ICANN’s activities in pursuit of a stable ecosystem for the internet. The ICANN meetings incidentally are starting to become more of a meeting place for area 2 than area 1.

Then what is area three? This area is ICANN’s ability to promote internet development globally. It is here where the future community projects lay, the stimulation of open-source software, support to certain parts of the world for a stable internet infrastructure, education, etc. Earlier studies (Zooknic for CENTR) have shown that there is a strong correlation between internet penetration and domain growth. Therefore, those projects that promote internet penetration are highly interesting as community projects.

I have wondered a bit over how ICANN can start their community role and I think it’s going to be hard to do with the current organization. To combine the governance role with the registry role provides enough challenges. To add another large area actually becomes asking for too much. There is not enough required time for board and management.

There are some interesting solutions in the cctld world such as Nominet with Nominet Trust and SIDN with SIDN Fonds. In both cases, a large sum is sent once a year to an independent fund or foundation for internet development efforts.

This solution could work for ICANN as well. One step in the direction of the globalization of ICANN can be the set up a trust, foundation or independent fund. We can call it The NetMundial Development Foundation and therefore give it the problematic NetMundial Initiative, a necessary positive twist. And of course it can be in Switzerland if they like. ICANN could start with donating 50-75 million USD to launch it, and other organizations like .SE could also contribute thereafter. It could be a home for a global internet initiative. It could be an engine and catalyst for internet development.

By Danny Aerts, CEO of IIS

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Comments

Holy mission creep John Levine  –  Jan 10, 2015 11:56 PM

While I agree that the auction money is ICANN’s to play with, the new GTLD overcharges aren’t. ICANN is a non-profit whose charter covers three specific areas, domain names, IP addresses, and Internet protocol parameters. Despite a lot of wishful thinking, they are not a generic all purpose Internet charity.

They made it quite clear that the new GTLD program was supposed to be self financing, and they set the (very high) price to cover anticipated expenses. A large chunk of those expenses were lawsuits that never happened, and pretty clearly will never happen. Assuming ICANN has some interest in doing what they said they were doing, when this round of new TLDs is done, they need to give the extra money back, since they shouldn’t have collected it in the first place.

I wouldn’t mind if they offered the applicants the option to donate the option to a charity, and I expect that some of the applicants would take them up on it, either for political reasons or because in a large company, dealing with the refund of an amount already expensed is a hassle. But that’s up to the applicants, not to ICANN.

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