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With private resolution out, applicants should still be able to recover some of their costs if they lose a contention set.
A contention set means that more than one company applies for the same top level domain.
In the last round, ICANN encouraged those in a contention set to choose a winner amongst themselves. If they couldn’t, then there would be an ICANN-orchestrated auction with the top bidder getting the domain.
There were many ways for parties to settle a contention set without using ICANN’s auction. But the majority were settled via private auctions. In private auctions, the losers split the proceeds that the winning bidder paid.
Some people didn’t like this model. They believe it distorted the prices paid for top level domains as companies used the proceeds from losses to bid in other content set auctions.
Furthermore, now that people have seen how much they can make from losing auctions, there are worries that people will apply in the next round with the goal of losing auctions rather than operating top level domains.
It’s a fair point and I can see the concern. However, I believe the community and ICANN’s board have swung too far in the other direction for this round.
After nixing the idea of joint ventures, the board settled on an “alternate string” plan.
The idea is that upon seeing that their domain is in a contention set, an applicant could submit an alternative top level domain that is not in contention rather than proceed with its original application. If they choose to proceed with the original string, the contention set will be settled in an ICANN auction. The loser won’t get money back from the auction.
It will be interesting to see how alternative strings play out in practice. There will likely be a dance in which those in contention sets feel each other out. Will Party A choose an alternative string so Party B doesn’t have to? Will the parties coordinate with each other even though they can’t pay each other off? What if both parties choose an alternative string? And then what about contention sets created by alternate strings?
I’m sure many of these scenarios can be settled with further planning, but it’s important to think through this.
While alternate strings might make sense for portfolio applicants, it’s a raw deal for single applicants.
I don’t recall who it was, but during the Board open mic at the ICANN meeting in Istanbul last November, a person representing non-profits mentioned how this doesn’t really help his constituents.
He’s right. Consider a non-profit focused on diabetes that applies for .diabetes. What kind of alternative would it choose if there’s a contention set?
Or perhaps a company applies for a dot-brand and lands in a contention set. There aren’t good alternatives for that.
So here’s my idea: a partial recovery mechanism if you lose an ICANN auction.
Losing auctions wouldn’t be profitable, but applicants could at least recover up to their application fee of $227,000. I’d argue they should be able to recoup a bit more to cover some of their other expenses, too.
Auction losers would split the proceeds up to $227,000 or another fixed number set by ICANN, say $350,000.
This at least softens the blow for applicants who don’t get the domain they apply for.
I’m curious what others think about this.
Categories: Policy & Law
Andrew Allemann has been registering domains for over 25 years and publishing Domain Name Wire since 2005. He has been quoted about his expertise in domain names by The Wall Street Journal, New York Times, and NPR. Connect with Andrew: LinkedIn – Twitter/X – Facebook
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I like the idea, but I believe this is water under the bridge at this point. A small tweak to the numbers is that all applicants not signing a registry contract are entitled to a bit of a refund, like 20%. So the refund from losing auction could be the nominal application fee, and those 20% could cover other expenses.
Domain Name Wire is a trade publication for the domain name industry covering topics relevant to domain investors, brand owners, policy makers, domain registrars and registries, and more. Founded in 2005, Domain Name Wire has been cited by Wall Street Journal, New York Times, NPR, and Washington Post. Read More About DNW.
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