Shocking; ICANN May Make Money Off The New gTLD Program

ICANN released its 1st  quarterly financial statement, as Domainincite.com,  pointed out, ICANN has spent $119.2 million of its original $344.9 million program budget (which comprises application fees net of refunds).”

“As of September 30, it still had $225.7 million in cash dedicated to the program, which is accounted for separate to ICANN’s regular operating budget.”

ICANN completed the  initial evaluations of  (IE) of the 1930 applications in August.

One can argue that ICANN therefore has completed the heavy lifting, its work in opening the programing and processing the applications.

Objections are a separate matter which carry separate fees.

ICANN does have a $108.9 million “risk reserve”, for lawsuits and other potential legal liabilities but as of publication I’m not aware of any lawsuit filed against ICANN over the new gTLD program by applicants or non-applicants.

There maybe a lawsuit filed one day or 10 suits or 100 lawsuits, but as of now there are none and with ICANN completing much of its work, barring lawsuits it looks like ICANN  maybe in for a huge windfall from the new gTLD program and that is not even counting revenue from ICANN last resort auctions that are scheduled to start in March.

You might remember that the $185,000 fee charged by ICANN to apply for a new gTLD was a “cost recovery fee”.

ICANN was not suppose to “make money” off the applications but pay for the cost of program from the fees.

ICANN has said the last resort auction fees will be segregated and accounted for separately but have never committed on how they would be spent this amount which will be in the hundreds of million in my opinion.

How the money from the last resort auction should be spent and who should be in charge of it, was the subject of many comments at the public forum at the last ICANN meeting in Argentina.

Despite huge pressure from the community, ICANN has refused to commit how these funds will be spent.

ICANN also has not to my knowledge disclosed anywhere how Power Auctions, who will be conducting the ICANN last resort auctions will be compensated.

While private auction companies such as ApplicantAuction.com and RightoftheDot.com have a rack rate of around 4% of the winning bid, ICANN has not disclosed what percentage they are paying Power Auctions, or if its a flat rate, what that rate is.

ICANN opened up a comment period on the last resort auctions a few weeks ago.  The comment period closes on January 14th, 2014.

As of publication there have been two comments submitted.

I know its the holidays and people traditionally wait until the last couple of days before commenting but if you have any interest in how this auction is to be run or the funds used now is the time to comment which you can do by sending an email to ICANN at comments-new-gtld-auction-rules-16dec13@icann.org

Comments

  1. Grim says

    @google_user_32[...]

    The Philadelphia Museum’s website is PhilaMuseum[dot]org. It’s odd to see a museum using a .COM like the one you mentioned that’s asking $20K… most use ORG or EDU. Just Google ‘museum’ and see how many .COMs you run across. There are a few, but not many.

  2. says

    I don’t think it is wise to assume gTLD pricing was too high.

    ICANN brought in more than expected. Who would have predicted that Donuts, Google, and Amazon would have emerge with so many applications. That will not be the case if there is a next round soon.

    Donuts alone was 307 applications at $185,000 a pop. That $56 million!

    This round just had pent up demand and processing was really efficient because volume was so high.

  3. says

    Jay

    “I don’t think it is wise to assume gTLD pricing was too high.”

    I didn’t say that gTLD pricing was too high.

    I am saying that ICANN said it was a cost recovery fee and it should not be allowed to benefit or profit from its missed estimation.

    So ICANN should have agreed to return the excess funds to the applicants.

    Or they could have just said this is the fee and we make what we will make from it.

    So the fee could have been $100K or $1,000,000 per, at the end of the day the same theory should have applied.

    and of course the use for the auction proceeds which we all knew would run into the hundreds of million should have been estimated as well.

    I don’t see how they can pick a number out of the air for a reserve for lawsuits and at the same time refuse to pick a number for receipts from auctions when the auction by design is going to be used to settle a majority of diputes

  4. Louise says

    Cruised over to Power Auctions to find out what sort of company ICANN handed the responsibility to, and – from the looks of PowerAuctions.com – can’t find fault. PowerAuctions looks established in the business of running high-stakes, high risk auctions, and is helmed by a professer of economics at the University of Maryland.

    That said, noone likely has more insider knowledge of the domain industry than Michael Berkens and Right of the Dot. Why not contact PowerAuctions and offer to sub-contract on the auctions? The people behind PowerAuctions might appreciate working with someone knowledgeable in the domain space. Though, PowerAuctions is no slouch, as far as branding on the highly brandable dot com, PowerAuctions.com.

    Domaining from my observation is an industry particularly repleat with making $$ off other people’s ideas or experiences. Just from the perspective of taking over expired domains, individuals make $$ off of other people’s reputations, so RightoftheDot should be no stranger to handing off credit in order to engage in business. It will be good in the long run.

  5. Louise says

    What I mean is, even though you didn’t get the big enchilada, the contract and the sole credit, you could probably help PowerAuctions, and at least take part in the process and make some $$.

  6. Louise says

    You don’t think Power is in for the big shock? The sooner you accept the status quo and offer your candidacy to Power, the faster you fulfill RightoftheDot’s mission to help new gTLDs, “get it right.” You can be a voice in the ear of Power’s legal counsel to sidestep the mines. From the first comment, looks like ICANN has planted many.

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