Hottest New Idea Out Of ICANN Meeting, Private Auctions Where Losing Applicants, Not ICANN Gets The Money

So as we discussed over at CircleID.com today, over the last week arguably best idea coming out of the ICANN meeting is the concept that applicants for new gTLD strings with more than one application, hold a private auction amongst themselves with the winning amount going to the other losing applicants instead of to ICANN.

As a backdrop, under the Guidebook multiple applicants for a new gTLD extension are encouraged to work together and come to an agreement to resolve the conflict.

Under the Guidebook, if the parties can’t work anything out, the winner of the string will be determined by an ICANN auction where the highest bidder will get the extension, the losing bidders get nothing.

If the losing applicant of an ICANN auction doesn’t withdraw their application along the way, they even lose their entire $185,000 filing fee.

Under the Guidebook the proceeds of an ICANN auction would all go to ICANN, which as outgoing Rod Beckstrom pointed out this week, has almost 1/2 of billion in cash already.

The alternative would be that the applicants for a contested string, hold a private auction where the highest bidder coming out of the auction will be the agreed upon winner, with the proceeds of the auction not going to ICANN, but to the losing applicants in the auction, in the same ratio of the losers bid to highest bid.

The auctions would be conducted by an independent party, one having no interest, direct or indirect in the particular string, whom, would collect a small percentage of the fee for handling the auction.

Of course in world of he domain auctions, no one has held more auctions in terms of volume or sheer number of auctions than my partner in RightoftheDot.com Monte Cahn, so you could expect RightoftheDot.com would be one of the auctioneers for these types of auctions for strings in which we were not representing clients.

Beyond the facts that the funds from the auction would go to the other applicants rather than ICANN, there are other benefits to private auctions over ICANN auctions.

For one, parties can hold private auctions at anytime, rather than waiting for whenever ICANN is ready to hold them, thereby giving clarity on many strings which are in contention to all applicants.

As we know there are 751 applications out of 1,931 applications in contention.

ICANN is starting to go through the process of vetting applications which as we learned this week may take up to anywhere from one year to 15 months to get through them all.

No ICANN auction could be held until all applications in that particular string are vetted, the objection period which lasts 7 months ends with no objections for any applicant to that string and until all applicants passed the evaluation period.

Private auctions with the proceeds being placed into escrow subject to successful application evaluations, no objection and a few other factors theoretically can be held at any time assuming all parties agreed.

So applicants, especially those with multiple applications, could start to get clarity.

As all applicants know time is money and the sooner contented strings are decided some of the bleeding of time and money would stop.

As for the possible negatives, all of the applicants for each string would have to agree to participate and be bound by the outcome of the auction.

Applicants are from jurisdictions from around the world and this agreement between the parties may not be as enforceable in some of those jurisdiction if a loser of a private auction wants to later complain.

A bigger negative could possibly be that the winning bidder of the private auction, in many cases will be in other auctions against one or more of the same parties for other extensions, would be indirectly financing the losing applicant of one string by giving them a share of the winning bidders funds.

Many applicants have multiple applications and will face one or more of the same applicants in several contested strings and possible auctions.

I can see that some applicants would feel that they would be helping their competition by providing cash in the form of their winning big to help the losers bid higher in the next private auction, giving the losers of one auction a better chance to win the next auction or pushing the winning bidder even higher in the next private auction.

Yet at the end of the day, having the opportunity to resolve strings with multiple applicants, months and even possibly years ahead of what it would otherwise take waiting for an ICANN auction, coupled with not giving the money to ICANN, money that could total well into the tens and possibly hundreds of millions of dollars, to the other applicants who could then use those funds to market and run the extensions they do win, seems irresistible.

Comments

  1. says

    “Under the Guidebook, if the parties can’t work anything out…”

    1. The Guidebook seems to be out the window at this point. Too many rules have been changed. The Free Market Forces are now in play.

    2. At this point, “the parties” [that matter] seem to be organizations smart enough to understand the benefits of moving forward NOW, without ICANN.

    3. The plan above would likely attract U.S. FTC and SEC attention. ICANN (or ISOC) could secretly fan those flames into a frenzy. Be careful. [[They]] are deadly, when people touch their non-profit gravy-boats.

    4. There are other solutions coming and some of “the Strings” will be prime targets. It was surprising the ICANN Applicants avoided so many key strings.
    Nevertheless, .INC .WEB .ONLINE .NET .BOX should be ready to roll soon, real soon.

  2. Uzoma says

    Michael,

    This is the lousiest headline I have ever read.

    If you are going to continue winning the domain industry’s blogger awards, you have to take your writing a little more seriously. I’m just saying…

  3. says

    It was surprising the ICANN Applicants avoided so many key strings.
    ===
    It was REFRESHING the ICANN Applicants avoided so many key strings.

    Clearly, some of the Applicants did their homework and did not play games.
    Maybe the $185,000 fee was high enough to prevent intentional collisions with what is happening outside of The.ICANN.Process. Waiting 2 years may have also
    helped to reduce the collisions.

    Another thing to consider in the auction scheme above is that Applicants can now keep their contention inside The.ICANN.Process and also step outside and participate in the Free Markets the U.S. Government requires by law. In other words, they can hedge their bets. They can claim some nebulous superior rights via The.ICANN.Process in the Free Market.

    They can use their revenues from the Free Market to outbid anyone in The.ICANN.Process. As an example, it is easy to identify the 50,000 .INC Registrants who may be willing to “invest” in the .INC name-space. It would be interesting to see the U.S. SEC approve a stock issue where every .INC owner was a shareholder in the Registry.

  4. says

    ICANN “will be as relevant as AM radio”

    Yes, it is a little hard to take anything-ICANN seriously, when one considers what is rolling out in eCurrency, TV, FM and U.S. Government FirstNET.

    The U.S. Government has also passed some new laws for broadband Internet on Federal highways, lands and in 10,000+ buildings. They are not going to wait for The.ICANN.Process or the ISOC/IETF which seems focused on third-world countries and 1980s technology.

    After this past week, it should be clear to Applicants that their “investments” may now be just “donations” or “Funds Under Management”, which sounds like some Venture Capital Fund.

    Applicants will soon have to face whether to expense those fees or show them as “Assets” in the ICANN Fund.

  5. says

    “Why would ICANN ever bring that “concept” in?”

    The Applicants are now public and their “Strings” are Open.Kimona :-)

    ICANN has served their limited purpose – to pull some players into the Arena.

    In the USA the players are not only FREE to make deals they are encouraged to make deals to avoid breaking the laws.

    The ICANN game (Guide) may still prove to be illegal in the USA. People do not want to waste time and money proving that when you have the US FTC, SEC and NTIA breathing down ICANN’s necks.

    Soon it will be the State of California. Applicants are not happy their money has been taken. The Attorney General of the State of California has the first shot to get people their money back.

    The smartest thing ICANN could do is delegate all of the non-colliding Strings to the Applicants in a week or two to defuse the situation. Steve Crocker the Chairman of ICANN has said nothing will be done fast. He comes from the Jon Postel and Vinton Cerf school of carrot and stick Artificial Scarcity.

    The Free Markets in the USA are ready for ICANN this round. They will route around ICANN.

  6. Dean says

    Funny what schemes people will dream up to try and make a buck. Trying to make this all about the money, with no regard to creating a better and safer infrastructure for the internet is a completely wrong approach. Companies and individuals vying for the same names should be vetted on what they are bringing to the table, how they plan on using that particular string, how it will enhance a users experience on the internet, etc,. The internet is the last bastion of democracy, freedom, and intellectual accessibility, it’s a tool for the betterment of humanity and should be treated with a certain regard, not just commodification.

  7. says

    “Trying to make this all about the money, with no regard to creating a better and safer infrastructure for the internet is a completely wrong approach”

    ICANN has made it all about the .CASH – look at their fee schedules

    You may be missing the comments about a “better and safer infrastructure”.
    This is likely not the forum to be discussing those topics – which are likely censored.

  8. Cartoonz says

    Was this an “official” idea from ICANN itself or one that the applicants have thought up?

    I can’t see ICANN not salivating over the idea of receiving another $100M from their original auction plan but I don’t see how they could do a damned thing about it if the applicants themselves went this route.

  9. Bazzco says

    Thankfully, ICANN ditched the Digital Archery. My understanding is that most- if not all of the former digital archery companies/providers are retooling their processes to offer expanded and more consumer oriented services. More like in the gaming/app/lotto/sporting areas. The Digital Archery has massive potential just not in the constraints of ICANN. ICANN may have accidentally created a whole new cottage industry of Digital Archery applicatons and they dont even have any vested interest in that process anymore. There are some very intriguing applications in the skilled lottery areas. How big is the lottery market?

  10. says

    You seriously have to wonder how many of the applicants of the contested strings are actually in it just for these kind of ‘schemes’.

    @Dean – it used to be “the last bastion of democracy, freedom, and intellectual accessibility, it’s a tool for the betterment of humanity” – now it’s just about the money.

    Though I agree, new gTLDs should be run for the greater good by the most capable company, but according to ICANN that’s the one with the most money.

  11. Bazzco says

    Digital archery has to do with timing and target. Shouldnt someone create an APP where the winner (of each contest) is rewarded ($$). That would be a skilled lottery and someone could make billions.

  12. KD says

    If I’m Google and I’m going after .search – I am not going to agree to this private auction. I am going to let ICANN hold the auction (so you do not have an opportunity to play games and make money from the auction) and thus the money will go to ICANN, not to you for trying to drive my bids up.

    I do see the benefit in some situations where there are 3 people that don’t know how to size one another up – and they say “great, if we lose, we want money back.” Big brands and large corporations don’t care as much.

    Very interesting though. I had not thought of this happening before this week.

  13. says

    “seemed to get a lot of interest amongst some of the applicants”

    The Applicants (with a clue) no longer need ICANN

    The new ICANN time-lines now have another year to survey “The Community” for new solutions.

    Imagine that !!! Applicants now will be put on hold – PENDING – just like the 2000 and 1995 Applicants

    Eventually – Applicants will stop saying they are in line – their money is gone

  14. says

    @ MHB

    You deserve some credit for trying to come up with a solution, but when decisions are based only on money, there is no guaranty that the outcome is going to be in the interest and for the good of the Internet community. There has to be an additional element in determining the best applicants that should not depend on how much money they have, but rather on how much good they are going to do for the general public if they are awarded a certain gTLD.

    Perhaps we need to come up with some kind of a voting system, which the applicants submit a short proposal explaining as to how what they are planning to do with a certain gTLD is going to be in the interest and for the good of the Internet community, and then people (either at large or as a selected group) can vote as to whom they think is the best candidate to run a certain gTLD. Off course this is after the applicants have passed through all the other steps. (just my opinion)

    -

  15. says

    “Perhaps we need to come up with some kind of a voting system”

    +1

    The system you describe is available – but it was not developed by ISOC-IETF-ICANN

    ICANN now has to spend years re-inventing what exists – that is their way

    They claim it is “for the good of the Internet community” – Applicants are not part of that “Internet community” – Applicants are players to be fleeced

  16. dumdumb says

    “reinventing what exists”

    Isn’t this largely how the ISOC/IETF operates? That is, they observe what the internet is doing _on its own_ and then try to “codify it”.

    But because these RFC’s only describe what is alredy in practice, one wonders what really drives the course of the internet. How can anyone think it is the ISOC/IETF?

    They are reactionary, not proactive.

    In another comment you suggested people might be better off working with the FCC or IEEE.

    Have you every considered that the IEEE runs its own numbers authority (for OUI’s, i.e. what form the basis for MAC addresses and inpart for IPv6 addresses) and they seem to have no trouble providing access to anyone, charging flat fees and ensuring an ample supply of these identifiers. There are no silly ideas about having to justify usage (which has proven a failure anyway, since the major address space holders have proven they don’t make use of but a small fraction of what they’re allocated), and there’s no silly complaints about running out of numbers (e.g., IPv4 addresses).

    The worst thing anyone can do for the internet is to assume the ISOC/IETF know what they are doing and act to shape the future. They create and sustain problems that they then proclaim that they aim to solve, in a strange sort of self-validation and justification of their existence.

    Give every user a unique ID, let that be their network address, and let’s move on. Once you have an address, names can be added for convenience. Indeed, ICANN is wholly unnecessary.

    Ever considered that every email is given a unique ID? (check your email headers and see for yourself) How many emails do you think are sent every day? That’s a lot of unique ID’s. Yet we don’t see anyone writing about running out of email ID’s.

    Again, the worst thing anyone can do for the internet is to fail to question what the heck ICANN/ISOC/ARIN/IETF are doing.

    Apathy, cluelessness, ignorance. FUD. That’s what protects their operation. Certainly not sound engineering. They’re lucky that generally things seem to work which make it ostensibly seem like they know what they’re doing.

    Note: There are some good people who participate in the IETF and ISOC, but alas they are not the ones running the show.

  17. DIGITO says

    Digital Archery is going to be the next billion dollar industry! Just not involving ICANN. There are too many consumer applications that could bring in $$$$. Try the gaming industry to start. Both video games and legal gambling.

  18. says

    “Again, the worst thing anyone can do for the internet is to fail to question what the heck ICANN/ISOC/ARIN/IETF are doing.”

    The whole thing can be modeled on some simple spread-sheets.

    The top echelon do largely nothing and bank $600,000+ per year plus unlimited travel and other perks.

    The middle echelon “work from home” and bank $300,000+ per year, holding some fancy title which defines some vacuous role.

    All of the heavy-lifting is out-sourced. That allows blame to be shifted away from the not-involved. The big names show up in all the right venues where they are showcased with their big vacuous titles.

    Registrants and ISPs are taxed as money enters the Eco-System. Excess capital continues to grow each year and is stock-piled in war-chests labeled “reserve funds”.

    A growing number of people and companies continue to work to dilute the I* crowd and move the general public to safe places away from the Eco.System.
    The I* crowd continues to make policies to lock-in their incumbent cash flow.

    “Apathy, cluelessness, ignorance. FUD. That’s what protects their operation.”

Comment Policy:

TheDomains.com welcomes reader comments. Please follow these simple rules:

  • Stay on topic
  • Refrain from personal attacks
  • Avoid profanity
  • Links should be related to the topic of the post
  • No spamming. Listing domains, products, or services will get the comment deleted

To report spelling errors or other mistakes, please email raymond@thedomains.com instead of adding a comment. We thank you for the heads up, but want to keep the discussion on topic.

We reserve the right to remove comments if we deem it necessary.

Join the Discussion