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The latest ICANN domain auction brought the auction proceeds piggy bank to about $240 million. The application fees for the new gTLD round were $361 million of which, at the end of March, they’d spent $227 million, and their very conservative estimate is that at the end of the process they’ll have spent $289 million. If you add the numbers from the private auctions to the ones for the ICANN auctions, it’s as much or more than the application costs. These suggest a much better way to pay for the next round.

In the current round the application fees had to cover all the expenses, so they set the price high enough that they’ll have $72 million or more left over. In a future round, it should be somewhat cheaper to evaluate the applications, using what we learned this time around. For example, nearly everyone uses the same five back end providers, all of whom are technically competent, so there is no need to check things like DNSSEC separately for everyone using the same back end.

My plan is simple: next time the application fee is nominal, say $1000. But if there are several applications for the same name, they all go to auction, and the auction income pays for the rest of the program.

If you apply for a name that nobody else wants, because it’s your company name or it’s just obscure, you can get it cheap. If you want a name that a lot of other people want, which at that price is quite likely, it goes to auction to find out who wants it the most. While I have my doubts whether any second round auctions would go to the crazy prices that .SHOP and .WEB did, they’ll make up in quantity what they lack in craziness.

If several applicants for the same name want to negotiate a winner some other way, that’s fine. They can feel free to collude at auction so the winner bids $2 and everyone else bids $1. But if one of the losers cheats and bids $5, that’s not our problem.

If an applicant believes that someone else has applied for his proprietary name, they can slug it out in court and let us know who won. Or maybe it’d be cheaper to go the auction and pay the competitors to go away. (Nobody said defending a trademark was supposed to be free.)

There are some obvious details left to work out, like how to figure the ongoing fees once a domain is delegated, but those shouldn’t be hard, particularly once it’s clear what the actual ongoing revenue from the current round is.

This approach may seem cynical and venal. It is. But in practice is it any more so than the current approach? It may be cynical, but it’s a lot simpler and a lot more transparent.

By John Levine, Author, Consultant & Speaker

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>It may be cynical, but it's a Charles Christopher  –  Aug 2, 2016 5:35 PM

>It may be cynical, but it’s a lot simpler and a lot more transparent.

I like, and embrace, your cynicism.

Since when do supranational (soon to come) justify their existence through simplicity and transparency? That only brings their doom, and is thus to be avoided AT ALL EXPENSE ....

And for further pondering I will add:

http://www.circleid.com/posts/splitting_the_root_its_too_late (Dec 2, 2005)

ICANN's contrived expenses Karl Auerbach  –  Aug 2, 2016 7:28 PM

I helped write dozens upon dozens upon dozens of new TLD applications for the last round.  They were nearly identical; the differences were largely limited to sections on marketing (which ought to have been irrelevant to ICANN).

But the full application fee of $185,000 was levied on each one.

ICANN paid to have those identical parts reviewed dozens upon dozens upon dozens of times - I imaging that the eyes of the contractor were beyond glazed over, but there was a smile on his/her/its face when thinking of how thick the wallet had become from the consulting fee revenue.

And don’t forget the costs of ICANN’s utterly stupid “Digital Archery” and its amazingly brain-dead system through which the applicants had to submit their applications.  That was applicant money, a lot of applicant money, simply wasted.

ICANN does not find these inflated costs objectionable.  ICANN isn’t bearing the costs.  And, moreover, ICANN has a Narcissistic view of itself in which it measures its own self worth through its ability to hire expensive consultants, construct a huge org chart, and excessively pay its senior executives.

Way back in 2007 I proposed a rather more streamlined method: http://www.cavebear.com/old_cbblog/000324.html

Pay it all back. Phil Buckingham  –  Aug 3, 2016 10:51 AM

You are forgetting the Annual Fixed Fees $25K that every TLD Registry pays plus the 25cents for every registration over the first 50K.  XYZ has now 6M alone. There 22M regs now. Do your maths. ICANN, a non profit, is sitting on ~ $500M of other companies money.
They need to pay it all back or at least give away to every .brand (closed) applicant in Round 2 @ NO COST to them.
Simple really, assuming of course there will ever be/ should be a Round 2 @2025,or they haven’t spent it on litigating the mess of Round 1.

Other companies money? John Levine  –  Aug 3, 2016 2:37 PM

This appears to be a new definition. The $25K+25c has nothing to do with the application process, it's what gTLDs including old ones like .ORG and .BIZ pay to fund ICANN. You can argue that ICANN's overall budget should be smaller (I would) but that's a separate issue. In the meantime, I would prefer that ICANN spend less money on offices in exotic places and more on compliance. XYZ is an excellent example. If you give away domains for free or close to it as XYZ has, your main "customers" are crooks who want vast numbers of domains for affiliate spam, malware seeding pages, and the like. Who needs that? Perhaps if we bumped up the fee to $25/domain, that would force registries to think about who they're selling their domains to.

>Perhaps if we bumped up the fee Charles Christopher  –  Aug 3, 2016 4:06 PM

>Perhaps if we bumped up the fee to $25/domain, that would force registries >to think about who they're selling their domains to. Ouch. So ICANN is allowed the exercise of free choice, but the market is not? And yet again ENDUSERS of the "ICANN service" are a don't care, they can be violated (not "force") to pay increased fees? The illusion of "saving the world from bad people" still has an effect on those that are honest and did nothing to warrant the increased prices. Good folks still vastly outnumber bad folks and yet good folks will shoulder most of the needless costs you suggest, unless they buy Verisign stock before the fee increase announcement. >but that's a separate issue. Why? Your argument is not compelling. ICANN is a not-for-profit because when organizations are handed legal monopolies, in this case the scope being planet earth, accountability is required. Perhaps ICANN should face some competition, to force them to rethink the services they offer .... Back to Dec 2, 2005: http://www.circleid.com/posts/splitting_the_root_its_too_late

So ICANN is allowed the exercise of John Levine  –  Aug 3, 2016 5:35 PM

So ICANN is allowed the exercise of free choice, but the market is not?

The assertion that the domain business is a market rather than a bunch of competing rent extraction models is amusing. It’s worth another blog post.

>The assertion that the domain businessIs that Charles Christopher  –  Aug 3, 2016 6:31 PM

>The assertion that the domain business Is that what I said? Your words again reject the fact that most domain names are a tool used to manifest a website without interest in buying or selling the domain name itself. CircleID.com is one such domain name which is allowing us to converse at this moment. Registrants do matter. If you choose to focus only on the secondary market, registrars and registries, then I can see how there would be no care applied when stating "bumped up the fee to $25/domain". To me personally this perfectly circles back to Sydney when a number of us, hearing ICANN's various comments, asked the question: "How does ICANN serve the registrant enduser community?" The response was indignation that the question would even be asked, and so the question was rejected. Well with near 1/2 billion in the bank I feel the question should be asked more often. I don't know what your unit standard model is that shapes your views of the internet but let me share mine. I am not saying this admitted "thought experiment view" is realistic or not it simply reflects my ideal that motives me to stay in this industry. I look at the internet as being one of the few tools that a smart motivated single mother might be able to use her limited free time to start a business, compete with the largest corporations on the planet, and provide for her family. Maybe as extra income, maybe as primary income. Not saying all can do that, but the opportunity is always there, to take very little capital and convert to to a profitable business. I can think of no other opportunity where very few dollars gains you access to a world of potential customers on a level playing field with all other businesses. Yes, my focus on this industry is always on the registrant and how THEIR needs are being met or not. At the end of the day it is not the registries, or the registrars that paid that 1/2 billion in ICANN's bank account, it is the people who kept those entities in business: REGISTRANTS. Who does everyone seem to ignore that very simple fact ..... An enormous part of the worlds economy derives directly from internet commerce. That has NOTHING to do with ICANN, Registries or Registrars .... It has everything to do with REGISTRANTS and their use of domain names.

Yet more rentiers John Levine  –  Aug 3, 2016 6:57 PM

"How does ICANN serve the registrant enduser community?"
That's not a very interesting question. A much better one is: "How does ICANN serve Internet users, of whom the overwhelming majority have never bought a domain name and never will?" Given that most newly registered names are registered by crooks (yes, we have data), the answer has to be not very well. If it were much harder to get a new name, like back in the old days when it was $100 for two years and took a week, the effect on legitimate users would be trivial.

>That's not a very interesting question. I Charles Christopher  –  Aug 3, 2016 8:20 PM

>That's not a very interesting question. I feel it is, and so do others as I mentioned. It remains my focus of this discussion. How website users are served is of concern of the creators of those sites. ICANN, registries and registrars get their money from registrants, and registrants are directly served but those entities not the website users. Again, with nearly 1/2 billion in ICANN's bank account the question of service to registrants deserves an answer and should justify that account holding. But such a question brings accountability, so it is not likely to receive a direct answer. >Given that most newly registered names are registered by crooks (yes, we have data) As a registrant of newly registered domains am I on your list? Do you consider me a crook? My name is clearly stated in my posts. > the effect on legitimate users would be trivial Domain "Crooks" and domain "legitimate users". In my 17 years in this business I have never experience anything I would consider agreement on the definition of those terms. And yet such terms are often use with the perception that there is agreement, when there is none. How do YOU define "crook" and how do YOU define "legitimate user"?

As a registrant of newly registered domains John Levine  –  Aug 3, 2016 8:59 PM

As a registrant of newly registered domains am I on your list? Do you consider me a crook? My name is clearly stated in my posts.
No, you and I are rounding errors. I'm talking among other things about the thousands of obviously fraudulent registrations large registrars turn off every day.

>No, you and I are rounding errorsSo Charles Christopher  –  Aug 3, 2016 9:19 PM

>No, you and I are rounding errors So I am a crook, just that I am a flea fart in a hurricane .... So therefore I am not a crook? I do personally control thousands of domain name registrations. >fraudulent registrations large registrars turn off every day. You have changed the discussion yet again, now from crooks to fraudulent registrations. I still await your definition of "crook" and "legitimate user".

I agree - ICANN does not serve domain name registrants Karl Auerbach  –  Aug 3, 2016 8:03 PM

I agree with you that ICANN has not served the needs of domain name registrants, or what I call the community of internet users. I do not believe that this is an accident. First of all, ICANN denies domain name registrants a thing called "third party beneficiary rights". These rights would allow registrants to enforce the provisions of ICANN's registry and registrar agreements when ICANN does not. ICANN has been steadfast in this refusal for decades. Second, ICANN does not allow the community of internet users to name members to ICANN's board of directors. ICANN's so-called ALAC is a highly controlled hierarchy that is essentially a "company union" [it's useful to look-up that term] that is about as democratic and reflective of bottom-up governance as the old soviet systems. I know that John L. will assert something like "most domain name registrations are frauds". Maybe that is true, maybe it is not. His solution seem to be to kill the system or price it out of the range of casual users. Well, when my telephone at home rings there is about a 90% chance that it is a scam call. If we follow John's logic we would price the phone system and calls so high that nobody would use it except in extremis. To me that would be a case of "throwing the baby out with the bathwater" or "using s shotgun to kill a fly", i.e. a response that creates more damage then the harm it is trying to repair. There is some hope, but it is an odd hope: domain names are slowly sinking to become merely internal machinery of the internet - much like IP and MAC addresses and ASN numbers - and will become increasingly invisible to users as the net shifts to be a world of "apps" that use their own naming systems. That would reduce the trademark pressure on domain names and largely obviate ICANN.

>These rights would allow registrants to enforce Charles Christopher  –  Aug 3, 2016 9:12 PM

>These rights would allow registrants to enforce the provisions of ICANN's registry and registrar >agreements when ICANN does not. ICANN has been steadfast in this refusal for decades. Precisely why I became my own registrar. And I feel the solution should be a separate lower cost registrar accreditation for "self registrars". But ICANN has made it clear it wants as few registrars as possible, the current yearly and quarterly fee structure is a tool to assure this. And just to make the point perfectly clear it was at the point when registrar terms of service all contained similar wording that I recognized the need to become a registrar and that ICANN was not serving registrants needs: "We reserve the right to change these terms at anytime without notice." Once a line like that appear, everything else is meaningless. At that point I realized I was not even safe from registrars. And I was one of the folks RegFly tried to steal domains from but detected it and alerted others at the time. >"most domain name registrations are frauds". In life you will notice people typically elect one of two world views: 1) Most everyone is evil, except me 2) Most everyone is good, but there is evil in the world Taking view 1 naturally leads to increased "mans authority", which would be the correct action if it were true. But the fact that it is not true is the problem .... But people too easily buy into it in large numbers. It's an ancient priest-craft view to obtain income, to build government and other such organizational structures. Its why movies have "a bad guy" from which to build from. Taking view 2 naturally leads to a very different result. Get out of our way leave us alone, and when evil shows up at the door it will wish it picked another door .... But that requires the rare trait of accepting responsibility for SELF. Since that takes work, many people lazily fall back to world view (1) and the cycle repeats when the authority becomes so repressive that it becomes easier to accept self responsibility. Things then get better, laziness sets in, and back to world view (1) "let someone else deal with it" as if that could ever happen. The never ending cycle repeats and the bureaucracy laughs all the way to the bank, literally!

There are alternatives to the ICANN mandatory business model Karl Auerbach  –  Aug 3, 2016 6:03 PM

I agree with John L. that the ICANN model of renting domain names is utterly contrived for the benefit of a few insiders.  Verisign alone reaps roughly a $BILLION a year from registry fees that have never been subject to an accounting to justify them, to show that show that they are not based on inflated costs, and that those costs have never been audited by ICANN.  And the trademark protection industry has used ICANN to impose a law of trademarks, with accompanying judicial system, without he aide of any legislature on the planet.

ICANN’s one-to-ten year rental requirement is arbitrary.  It was pulled out of thin air when ICANN was newly minted.  And that policy is now becoming recognized as a grave threat to the preservation of the digital web heritage of the internet as people age, die, and fail to renew the domain names that cover their digital creations.

The ICANN system is about as imaginative and flexible as the 5-Year plans of the USSR in the 1950’s.

I do not agree with John L. on the assertion that most domain name use is for nefarious purposes.  I do agree, however, that there is a large amount of scamming, or worse, out there.  But I perceive the road to reducing that to be to introduce much better end-to-end mutual identification and authentication machinery into the net.

There are alternatives to ICANN’s methods.

First, they could be regulating and allocating “slots” - rights to operate a TLD but with the choice of non-conflicting name being left as a private matter for the operator.

Second, they could all permanent registrations.  I do this in my proposed .ewe registry.  That system uses digital certificates to represent control and the fees are generated by services, such as updating NS records, rather than on yearly rent.

Third they could recognize that their role is technical oversight, not the imposition of social or economic policies.  The mantra of ICANN ought to be that they shall do nothing but assure that DNS query packets at the top levels of DNS are efficiently, accurately, and quickly turned into DNS response packets without prejudice or bias against any “question” that those DNS queries may contain.

Back in 2008 I did a thought piece on how things might have evolved had ICANN never been created.  What would the internet be like had there been no ICANN? (Go to the part headed “The Alternative History”.)

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