[At-Large] DomainIncite : Is this why WhatsApp hates some TLDs but not others?

[John McCormac]

On 17/09/2023 01:37, Barry Shein via At-Large wrote:
> 
> ICANN is if nothing else a network of contracts with various provisions.
> 
> The general term of art used within the ICANN context for registries,
> registrars etc is the "contracted parties".
> 
> ICANN has acted previously to curtail the mass use of throw-away
> domains by putting restrictions on refunds.

This was Domain Tasting in the 2000s where the five day Add Grace Period 
was exploited. The AGP was intended to allow registrars to deleted 
domain names without cost where bad payment details had been used or the 
domain name had been registered in error. Domain names were registered 
for less than the five day period, tested with PPC advertising and held 
if they made advertising revenue. Those that did not generate money from 
clicks were dropped. The process went on for a number of years and over 
1,000,000,000 .COM domain names were registered and deleted.

Domain Tasting is quite different to the Bulk Registrations issue (2014 
to present) in that Domain Tasting was driven by a small number of 
registrars. Bulk registrations are driven by a combination of 
registries, registrars and end-users.

ICANN eventually got around to dealing with the Domain Tasting problem 
when it had become so bad that more domain names were being registered 
and deleted each month than were active in the gTLD zones.

The problem was discussed and discussed in ICANN groups. There was even 
a report drafted. It was Google's decision not to monetise these AGP 
domain names and legal action by Dell against some of the registrars 
involved in Domain Tasting who were targeting trademarks and other 
Intellectual Property that changed things. ICANN brought in the 
"restocking fee" and the combination effectively destroyed large-scale 
registration patterns by 2009. ICANN hasn't done anything, as far as I 
know, about Bulk Registrations because it may be business issue for the 
registries rather than a regulatory issue.

> So for example they believe they can put requirements on identity of
> the purchaser. Imperfectly implemented but no one questions ICANN's
> ability to contractually require the registrar to attempt to gather
> accurate information at registration.
> 
> And the notion of disallowing the use of their product (domains) for
> likely illegal or fraudulent purposes is hardly unique to ICANN.

Domain Tasting stopped domain names that would have naturally gone 
through the deletion process becoming available for reregistration. That 
created an artificial demand for new gTLDs and drove a lot of the 
enthusiasm for the new gTLD round of 2012.

ICANN's introduction of the "restocking fee" had the unintended effect 
of channging the demand for new gTLDs. People could reregister deleting 
domain names (those that weren't shifted to sales and auction sites by 
the registrars) and outside the US, a lot of new registration activity 
shifted to the ccTLDs. ICANN expected tens of millions of new gTLD 
registrations for the first year of their operation. It didn't happen.

What did happen was Bulk Registrations as a mainstream business model 
when registries saw demand for their new gTLDs was not commercially 
viable for their continued existence as a registry.

Bulk Registrations are the heavily discounted registrations that flooded 
some of the new gTLDs. ICANN got its fee and some of the registries 
using bulk registrations to inflate their zones appeared, for a while, 
to be successful. Rather than the smooth growth curve of a healthy gTLD, 
the growth curve for gTLDs using heavy discounting as a business model 
took on a kind of sawtooth shape with the spikes of large numbers of 
discounted registrations being followed by a trough of deletions just 
over a year later.

These registrations were used for advertising, affiliated landing pages, 
phishing and search engine manipulation (backlinks from fake websites 
using scraped content etc). The economic model meant that it was cheaper 
to register a new domain name than pay the full renewal fee. The 
non-renewal rate for some of these gTLDs was over 95%. One of the 
largest of these new gTLDs peaked at over 2 million registrations and 
within five years, approximately 2,000 of those domain names were still 
in the zone. The rest were deleted.

The .INFO had used a similar approach to inflate its zone but that was a 
long time before the new gTLDs and it was different and there was no 
"restocking fee" back then.) When it comes to adding conditions to the 
registry and registrar contracts, the line between DNS Abuse (phishing, 
spam and malware) and Content Abuse (intellectual property and trademark 
infringement etc) is blurred.

> Anyhow the point is that registrars can be contractually bound to not
> engage in behaviors known to be of advantage to micreants.

Would some of these new gTLDs be commercially viable if such a policy 
was part of the contract? No. Heavy discounting is a business model that 
has kept some of these registries in business. While 95% of some gTLD 
registrations may not renew on their first renewal, a small percentage 
will renew at full fee. If a registry continues this process, it builds 
up a core of domain names that will continue to renew at full fee.

There was a study by SIDN Labs (2017) that indicated that a lot of the 
bad activity in the legacy gTLDs had switched to these heavily 
discounted new gTLDs because the heavy discounting model had changed the 
economics of DNS Abuse.

ICANN's big problem is that it is a reactive, rather than pro-active, 
organisation. Worse still, it often relies on studies that do not 
accurately represent the market or its dynamics.

The domain name market is a continually changing one. The delivery date 
for some of these studies is often a year or so after the RFP. By then, 
the market has changed because the circumstances that applied to 
registrations made a year ago may have changed and this can affect 
renewals. To put this into some perspective, the first renewal rate for 
.COM hovers between 50% and 54%. That means that up to half of the new 
.COM registrations in 2022 will not renew. Some gTLDs are better and 
some are much worse.

Changing registry or registrar contracts involves a lot of discussion 
and takes years. The problem for ICANN, and the registries, with the 
link between heavily discounted registrations and DNS Abuse is that 
ICANN setting a minimum price for a registration or restricting the 
abilities of registries and registrars to engage in discounting would 
create a lot of legal problems for ICANN's almost hands-off approach 
with the operation of registries and gTLDs. ICANN is damned if it does 
and damned if it doesn't.

Regards...jmcc
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