[NA-Discuss] [ALAC] Under COVID pressure, info providers choose QR codes over domain names

Jonathan Zuck JZuck at innovatorsnetwork.org
Wed Sep 2 12:38:38 UTC 2020

Lets figure out how to fund it

Jonathan Zuck
Innovators Network Foundation

From: ALAC <alac-bounces at atlarge-lists.icann.org> on behalf of Evan Leibovitch <evan at telly.org>
Sent: Wednesday, September 2, 2020 3:50:00 AM
To: claudio di gangi <ipcdigangi at gmail.com>
Cc: ICANN ALAC list <alac at atlarge-lists.icann.org>; NARALO Discussion List <na-discuss at atlarge-lists.icann.org>
Subject: Re: [ALAC] [NA-Discuss] Under COVID pressure, info providers choose QR codes over domain names

Hi Claudio,

Thanks for your detailed response.

I note with agreement your indication of  ICANN's clear conflict of interest in this issue. Were domaining to be eliminated (by regulating or eliminating secondary-market price markup), the amount of revenue coming to ICANN (for acquisition and renewals of squatted domains) could be severely diminished. It is in ICANN's interest to maximize the number of Internet domains in circulation whether or not they are actually used. ICANN makes the same money whether a domain is used actively by a registrant, squatted or purely defensive. So if domain investors can be fooled into buying large portfolios of domains in the hopes that a few will strike it rich, that serves ICANN's interest and it has no incentive to do anything to reduce the revenue from speculation.

If ICANN is disincentivized from reducing speculative domain purchase, its contracted parties (registrars and registries) are outright hostile to the idea because (a) their financial hit from action would be greater than ICANN's and (b) unlike ICANN they don't have to even pretend to care about the public interest beyond contractual obligation.

Personally I would love it if ALAC (or even a third party such as Citizen Lab) could be resourced to do research in the consequences of domaining:

  *   The size of the problem
  *   Its negative added-value
  *   Elimination of "memorable domains" as a primary identification for Internet-based businesses
  *   The numbers of domains that should be useful to both consumers and providers of Internet services that are needlessly locked away
  *   Reduction of trust (assuming there ever was any) in domains

That last one on trust has been attempted by ICANN (Hi Jonathan!) but IMO its whole emphasis was trust on issues that domain sellers and domainers care about, such as level of competition among resellers. Broader questions that I wanted addressed -- which address the original topic which is why QR codes are preferred over domain names -- were IMO glossed over and deemed out of scope by the conflicted, er contracted, parties.

ICANN doesn't want real, independent research done because it knows the results won't reflect well on its stewardship. OTOH, if research demonstrates this is a non-issue I will happily drop it.

Evan Leibovitch, Toronto Canada
@evanleibovitch / @el56

On Mon, 31 Aug 2020 at 17:28, claudio di gangi <ipcdigangi at gmail.com<mailto:ipcdigangi at gmail.com>> wrote:

Thank you for these comments.

As one point of reference, a marketplace provider of domain services appears to have a very limited data on a small subset of resale domains sold in 2018, available on its website: https://sedo.com/us/about-us/news-press/newsroom/the-most-expensive-domains-in-2018/. From an initial glance, it appears this data set does not contain the information necessary to inform your comments.

Your note also tangentially reminded me of an old economic report (commissioned by ICANN org in 2010), see: https://archive.icann.org/en/topics/new-gtlds/economic-analysis-of-new-gtlds-16jun10-en.pdf

I referred to this document as a "report" because a study would normally include developing some form of a hypothesis, conducting observations and testing the hypothesis, which could lead to a conclusion or additional lines of inquiry. In other words, the way we would normally seek truth through the scientific method, which unfortunately becomes quite complex in the field of social sciences.

On page 52 of the above linked report, the authors describe a proposed study on resale domains in order to assess the competitive effects of new gTLDs. The study is described as follows:

"A more direct approach would examine sale prices in different gTLDs of a matched sample of second-level domain names. Examination of the same second-level domain name in each gTLD should control for many factors that influence the value of a domain name and isolate the value of the gTLD itself. Thus the study would shed light on the substitutability or relative value of domain names on different gTLDs and on the extent of competition between gTLDs."

I could be mistaken, but I do not believe that the study described above (or any of the proposed studies described in the economic reports) were conducted because of the manner in which the overall policy development and implementation process unfolded in practice.

Without getting too deep into the weeds, the Board passed a resolution in 2006 calling for a study regarding "...the concerns relating to the changing domain marketplace and specific concerns....regarding potential abuses of ICANN rules as it relates to consumer interests". For additional details, see Board minutes here: https://www.icann.org/resources/board-material/minutes-2006-10-18-en

This study was not conducted, and in terms of the new gTLD program, in taking a quick search online, one can see how convoluted things became as described in this article, written by former-Board member Mike Palage, available at: http://www.pff.org/issues-pubs/ps/2009/ps5.4icanns-economic-reports.html

I believe there are a few important complicating factors that arise in this context. One factor relates to the notion that ICANN org (including in some circumstances, its contracted business partners) may have an interest in a study's outcome, or in the outcome of legal analysis, that may diverge from the interests of the public and community at large.

Correlated to this dynamic is the fact that when one party compensates another party, one can see the proverb of "he who pays the piper calls the tune" becoming relevant.

Of course, this doesn't happen through any type of informal agreement between the parties, but arises because there are implied causes and/or effects that are inherent as an offspring of the relationship between the parties.

To provide an illustrative example, the ePDP team on the Temp Spec retained legal counsel who were compensated by ICANN org. On these types of complex issues of law and fact, where there are no easy answers - and if all else being equal - a law firm, consultant, or economist may have an incentive to err on the side of its "client's" interests or worldview. Of course, in these cases, the client is ICANN org.

So on that basis, if a study were to be ever performed on ICANN's coordination performance, the domain marketplace and consumers, I would recommend that ICANN org not commission the work, but that a group such as at-large take the helm, if there was adequate interest, justification and resources to do so.

Finally, in an attempt to bring more color to your line of inquiry, I think some gTLDs have registration requirements regarding the use of domain names which may discourage or prevent the primary use being for resale purposes. For example, I believe <.biz> has (or had) this type of requirement within its domain registration agreement with registrants, although I'm not sure to what extent the provision is monitored, enforced, or can be effective. Of course, the issue comes full circle back to ICANN's contract with the registry. So perhaps depending on the form of the registry agreement with ICANN, and the provisions contained therein, the relevant parties' interests, it is conceivable that other (perhaps legacy) registries could apply restrictions on the use of domains which may affect their resale value and/or potential.

Just food for thought...


On Sun, Aug 30, 2020 at 3:56 PM Evan Leibovitch <evan at telly.org<mailto:evan at telly.org>> wrote:

No surprise to some of us.

BTW, is anyone in ALAC -- or the broader community -- checking whether the average price of resale domains is going up or down? Hard to believe it's going up. With all the new gTLDs onboard, is domaining still seen as a worthwhile investment? Was it ever?

Over the last few years I've been involved with numerous domain name acquisitions by companies and individuals. A number of patterns have emerged.

In almost every case:

  *   The dozen most logical names were taken by squatters and otherwise unused.

  *   The would-be registrant did not buy any of the squatted names.

  *   In some cases they enquired about the price, which was often more than an order of magnitude beyond what they were willing to pay, and they had a good laugh.

  *   In some cases their choice to bypass the squatted name would ensure that the name would forever stay unsold. They had registrations and/or trademarks that would immediately have any subsequent buyer subject to a UDRP complaint.

  *   Nobody even made an effort to negotiate the price down, determined to be not worth the bother

  *   There's no fear anymore using hyphens within domain names. The introduction of hyphens always yields a usable registry-fresh domain. This discovery usually increases the entertainment value of the original squatter's price.

I've always had the opinion that domain resale was a massive scam, and that the practise was long-term harmful to ICANN and broader use of domains as identification. Indeed the practise of one of the few that extracts value from (rather than add value to) the Internet. Furthermore, it has led to many of the most potentially-useful names being unused. As a result, "memorable" Internet domains have slipped from "need to have" to "nice to have" to "I'll take anything moderately close because it's not a primary source of identification".

I look forward to the day when domainer portfolios inevitably achieve the same value as postage-stamp collections have now.

Evan Leibovitch, Toronto Canada
@evanleibovitch / @el56
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