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What if a gTLD goes bankrupt or shuts down?

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scandiman

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Yea, I realize many folks find the whole thing morally bankrupt, especially how ICANN has behaved through it all, but setting all that aside for a moment I wanted to discuss the result of a gTLD going bankrupt, or perhaps simply shutting down because they aren't financially viable.

It's an entirely new landscape now with this mess, and up until now I think most folks have simply assumed that a TLD isn't just going to close up shop and cease to exist. Perhaps the closest example might be a country code if it were to cease to exist politically or physically, but now it may simply be a business decision, not much different than dropping a domain today or a beverage company dropping a brand that isn't selling.

I'm going into this question blind to the facts of what maintenance costs are associated with a TLD, anyone know if ICANN demands a regular fee of a registry? I know there's the per domain reg ICANN fee but its hard to imagine there not being some hefty annual fee as well. Then there's the cost of simply managing the business of it all, the registrar relations, the technical back end, or contracting all that to a vendor like afilias.

Considering some of these registry companies now have many TLDs these overhead costs are spread out over multiple TLDs. But there are also lone operators as well. In either case they are running a business, and its very hard to imagine that all TLDs will remain financially viable longterm or that not one single registry will close down.

As a business person this especially causes me concern if I'm building a website on these new TLDs, investing in development and growing a brand only for it to cease to exist for no cause of my own.

I wonder what recourse a registrant has in these types of situations, does ICANN have our backs insuring or assuring that every TLD will continue to exist from this day forward? Assuming they claim to today that is merely a vote away for them to say we're SOL and they keep counting their money.

Anyway, the point of this thread is I'm wondering if anyone has any facts they can share regarding TLD costs for a registry and if ICANN has anything to say at this time about how they would handle and respond to this eventuality. Short term speculators may not care, but a website owner needs to think about these things.
 
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This is a valid concern, given the underwhelming start of the first set of new gTLDs. No matter how much these companies spin the roll out, it has been a poor showing so far -- .guru is very odd, and the "specific" ones (.bike, .clothing, and .singles) are very niche-oriented and, therefore, limited in scope. While good for end users and web users, not so great for registries, who must depend on large registration numbers for profit.

I would guess that gTLDs like .music and .video will have broader appeal and may be more successful.

Just to apply for a gTLD, companies had to put up $185,000 (non-refundable, which later was modified for certain circumstances), with no guarantees. If more than one company applied for the string, then it went to auction -- higher buy-in costs.

If successful, the sponsoring company (registry), I believe, pays a yearly fee to ICANN. In addition, there are server and maintenance fees. Not chump change.

I wouldn't be at all surprised to see some strings to go bankrupt. My guess: another company may absorb it, ICANN will manage it, or it will simply go belly up.

Both domainers and end users will lose, I'm afraid.

To be honest, I think the most successful gTLDs will be the .brands -- .canon, .apple, etc. -- and will likely manage closed registries and use the strings for built-in advertising. They will also be the most "trusted" gTLDs, given that "Joe Domainer," "Harry End User," and "Sammy Spammer" will not be allowed to reg these.

Interesting times afoot.

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There are other concerns as well - What if the registry itself is sold to another party? The new owner can impose their own terms.

It can change the policies to seize domains, implement absurd renewal prices, etc.

Registrant's don't have many protections with the new extensions. ICANN is unlikely to step in and do anything. They just want to make money with none of the accountability.

Brad
 
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:hi:

I think continuity must be ensued for something like 3 years at least:
The Continued Operations Instrument shall (a) provide for sufficient financial
resources to ensure the continued operation of the critical registry functions related
to the TLD set forth in Section 6 of Specification 10 to this Agreement for a period of
three (3) years following any termination of this Agreement ...
See this document: http://newgtlds.icann.org/en/applicants/agb/agreement-approved-02jul13-en.pdf
SPECIFICATION 8 - CONTINUED OPERATIONS INSTRUMENT
I haven't looked at it in depth.

There is one mitigating factor though: I think the cost to set up a registry will decrease in the next few years and will become more affordable.

One thing is certain, the DNS is going to be come much less stable than it used to be, and I think it's not good. It has scaled up so well and has been so resilient even after 30 years because it was stable and reliable.
 
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I did pick up two single-letter gTLDs, but it is with the understanding that there is risk involved in regging these.

We just have to be careful not to overspend on such risks.

I learned from my debacle with .tel and am proceeding with much more caution.

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There are other concerns as well - What if the registry itself is sold to another party? The new owner can impose their own terms.

It can change the policies to seize domains, implement absurd renewal prices, etc.

That's not particularly unique to new gTLDs, the .com registry could be sold just the same.

The .travel registry is one that fell on hard times and changed hands, with some reserved name antics that went along with that ownership change as well. Policies became more laxed as well.
 
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Good point, I never considered that. I probably won't be registering and of the new gTLDs, but the next few years are going to be interesting to watch for sure.
 
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One thing is certain, the DNS is going to be come much less stable than it used to be, and I think it's not good. It has scaled up so well and has been so resilient even after 30 years because it was stable and reliable.

well, "they dont make 'em like they used to." :laugh:

i really dont know much about this portion of things but i wonder in several years how much it will actually cost an existing registry to take a defunct/not-even-profitable registry and why they'd have the incentive to do that (unless it was no cost, 1 cent, etc..)

beyond the info you posted (3 years covered) i dont think anyone actually *knows* what happens when when a registry goes to shit..
 
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well, "they dont make 'em like they used to." :laugh:

i really dont know much about this portion of things but i wonder in several years how much it will actually cost an existing registry to take a defunct/not-even-profitable registry and why they'd have the incentive to do that (unless it was no cost, 1 cent, etc..)

beyond the info you posted (3 years covered) i dont think anyone actually *knows* what happens when when a registry goes to shit..

I agree, and absent facts I'm gonna assume the worst. My guess is we'll get to witness what happens to a defunct TLD in 5 years or so, I wonder how many thousands of TLDs we'll have then. Speculators probably couldn't care less about that timeframe.
 
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seems pretty likely at least a few registries wont have things work out the way they planned (even at their lowest expectations)

whether thats from having the wrong plan from charging too much, charging too little, too narrow of a gTLD to actually gain registrants, overspending on advertising, etc... really seems like this question would have been answered by now beyond the "3 year plan." i think a lot of people are assuming an existing registry would be able to take on another gTLD for almost no additional cost - on the one hand that does seems logical but isnt guaranteed.

and if it does cost a registry something it seems like ICANN should use some of that cash to keep whatever registry alive for a while.. arnt they at a surplus right now?

i betcha depending on how this all plays out the next couple years it will have an impact on whether new gTLD's are approved or the process will change somehow. unlimited gTLD sounds neat but if their isnt some mechanism to keep "failed gTLD" at least alive in a "grandfathered" type of way that aint cool.

cept for speculators B-)
 
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Just like any business, it can be transferred.
 
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:hi:

I think continuity must be ensued for something like 3 years at least:

See this document: http://newgtlds.icann.org/en/applicants/agb/agreement-approved-02jul13-en.pdf
SPECIFICATION 8 - CONTINUED OPERATIONS INSTRUMENT

Quote:
The Continued Operations Instrument shall (a) provide for sufficient financial
resources to ensure the continued operation of the critical registry functions related
to the TLD set forth in Section 6 of Specification 10 to this Agreement for a period of
three (3) years following any termination of this Agreement ...

I doubt they have to put up some kind of bond or deposit. They're mostly risk-takers, they may just turn around and say sorry, haven't sold enough domains, haven't got the money, goodbye.

I haven't really got facts to add to this interesting discussion, but reputation counts. Has anyone asked why businesses - not domainers - would want to switch to these domains, or start up on them? And do so soon enough and in sufficient numbers to make them sustainable? And will they want to if they understand the risks or see a TLD go under and take people down with it?

When the domain dies the link juice runs down the drain so building on these is a big risk in that way too - if you have to bail out to a new domain you start over from scratch. Or maybe you pay a huge fee to a registry salvage outfit to keep your domain redirecting. Planned failure and consolidation may be a business model.
 
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I doubt they have to put up some kind of bond or deposit. They're mostly risk-takers, they may just turn around and say sorry, haven't sold enough domains, haven't got the money, goodbye.

I haven't really got facts to add to this interesting discussion, but reputation counts. Has anyone asked why businesses - not domainers - would want to switch to these domains, or start up on them? And do so soon enough and in sufficient numbers to make them sustainable? And will they want to if they understand the risks or see a TLD go under and take people down with it?

When the domain dies the link juice runs down the drain so building on these is a big risk in that way too - if you have to bail out to a new domain you start over from scratch. Or maybe you pay a huge fee to a registry salvage outfit to keep your domain redirecting. Planned failure and consolidation may be a business model.

Precisely the kinds of issues I'm thinking about. At this point I find it incredibly hard to justify building a commercial presence on these TLDs unless they are playing supportive roles for other established sites or brands (ie mountain.bike as a sales window for Cannondale.com). I doubt we'll see many (if any) companies change to these domains, the question is will a new business go there? Will the new local Ricks Bicycles store go with Ricks.Bike or RicksBicycles.com? Probably the latter more often than not, change like this comes slowly. This scenario was played out with several 'industry' predecessors, .aero, .pro, .travel... all are being adopted slowly, mainly by new ventures in spite of efforts to push the product onto established companies. .Travel is almost 10 years old now and barely gaining some traction in the travel industry and mainly by new ventures or the occasional tourism board, and it almost folded along the way. It's heftier reg fee keeps most speculators away.
 
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We're still short of facts here.

If you wanted to buy stock in a company you'd look at its performance and the market it works in, and how well run it is. What risks would you take with no information available?

So how would you know a registry is in trouble if it is privately owned? Will you be able to tell how many registrations it has and what annual fee the registrants really pay?
 
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Annual fee for registries is $25000 per gTLD. They had to have three years' costs available, but they have eaten into that money during the delays. As I understand it, nothing will keep them from pulling the plug early if they are losing money.

The large majority of new businesses - of any kind - fail in the first few years. So there will be a lot of debris in the gTLD area soon. Donuts formed a separate corporation for EACH of their 300 gTLD applications. Thus bankruptcy of one does not affect the others - it seems they plan to dump the losers, not a comforting thought if you bought into one.

If a gTLD goes down there will be an attempt to place it with another registry. I do not know if the $25K per year fee will still apply, if it does not people would transfer ownership to avoid the fee. There is no procedure to deal with gTLDs that nobody wants to take over.

I suspect that those domains will go }}}POOF!{{{

For those who think ICANN will have your back, please search "Registerfly" in Namepros search.

Another huge factor - Amazon and Google have between them applications for most of the best gTLDs. They can win any auction they choose, and will likely end up with most of the best - .Music, .Video, .Web, .Shop .....
and there is little indication what they will do with them. Rumor is that Google will offer free domains with included advertising on some of their's. Free domains may suck away a lot of the end user interest from the other TLDs. So the pathetic early sales of the lower tier could look good to later entries once Google gets going. However I think Google and Amazon will keep most of their TLDs for their own use.
 
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