Architelos & Industry News

The Association of National Advertisers Blinders on New TLDsPublished on CircleID, September 19, 2011 by Architelos CEO Alexa Raad

I read with interest the piece by the Chairman of the ANA, Garry Elliot, in Advertising Age, which was partly prompted by my commentary in the same publication describing why new gTLDs could be an opportunity for some brands.

He says: “From all I’ve seen, no matter how one tries to justify ICANN’s process or the benefits it speculates will occur, it is simply impossible to defend the economics of the ICANN proposal. That is the Achilles’ heel of this entire exercise. To paraphrase an old saying, “It’s the economics, stupid.”

Leaving the issue of potential benefits or costs to brands for now, I take issue with the process the ANA is employing. First of all, “ICANN’s process” is based on a multi-stakeholder model, which means various stakeholders and interested parties, often with diametrically opposed views, meet, discuss, join working groups, debate and finally hammer out a compromise, with ICANN’s board acting when consensus is achieved. The “process” for determining if, when and how new gTLDs could be rolled out, has taken almost six years. It has involved the trademark community, the business constituency, existing gTLD registries and governments, including the active participation of the US government, among others. So if in fact the ANA finds the outcome unsavory, where was the ANA’s voice during all the discussions and debates? ANA did submit five specific proposals to ICANN on December 15, 2008, according to a letter dated August 11, 2011, by Rod Beckstrom, CEO of ICANN.

The letter quotes the ANA:

“Although ANA would have preferred ICANN to have decided against introducing the gTLD proposal, we urge, at a minimum, that ICANN move cautiously and consider points carefully before embarking on this potentially seismic shift in domain availability.”

So as far back as 2008 ANA knew ICANN was working on new gTLDs and instead of railing against it, they submitted five proposals for improving the new gTLD application process. Beckstrom, in that same letter, acknowledges:

“All of these comments were considered, responded to, and, as is clear from the above, largely accepted. This is indicative of the process (that this letter merely scratches the surface in describing) that was followed with all stakeholder comment to arrive at a balanced outcome.”

So now we have established ANA knew about the program at least as far back as 2008, and that they corresponded with ICANN, submitting proposals to the process. Since 2008, there has been no participation by the ANA. So, why the three-year absence? Either they were happy with the process and outcome, or they abandoned it. Either way, it is far too late for them to complain in the face of an existing multi-stakeholder consensus.

The second issue I have with his article is its unsupported claims. Mr. Elliot says:
“Even with the protections offered under the program, the costs are staggering. The protections offered are like putting a Band-Aid on a severed limb. “

Where are the references to studies by ANA or others that quantify “staggering”? Although he does not cite any studies, there are some; however they have been criticized by peers.

For example, Ben Edelman of Harvard’s Berkman Center for the Internet & Society studied registrations in .cc. .tv and .ws as a potential indicator of registrations in unrestricted (new) gTLDs. He concluded:

“…this research suggests that new unrestricted gTLDs are likely to include significant defensive registrations as well as significant speculative registrations”

But he did not quantify the cost to brand owners. Economist Dr. Milton Mueller of Syracuse University, however, criticizes both the methodology and the conclusion. He writes:

“The implicit conclusion is that if web content providers ‘see little need’ for additional TLDs, then ICANN shouldn’t permit them. But that’s a non sequitur: there is no reason at all for ICANN to decide what providers of web content need or don’t need. Web content providers can make this decision for themselves by patronizing or failing to patronize new TLD services.”

As for the “hundreds of thousands of dollars” Mr. Elliot claims companies will need to spend to protect their trademarks, I ask, to protect them from what? How many are there? If for example, eBay is worried that a speculator will apply for .ebay, they can rest assured the ICANN rules will not allow it. The speculator will lose his money. No cost to eBay. The other concern expressed is that brand owners will need to apply at the second level in new TLDs to protect their brand, i.e., ebay.cats, ebay.movie, or ebay.gay. Aside from the fact that these registrations hardly make any sense for the brand owner, Mr. Elliot cites no study to support his claim that brand owners will behave in this way.

Paul Stahura, founder of the registrar eNom, researched the issue in 2009. His study looked at same name registrations in seven established gTLDs (com/net/org/info/biz/us/mobi). If the same name is registered in various gTLDs, it is a sound heuristic rule that some of them will be defensive registrations by brand owners. He found only 194,325 domain names were registered across all seven of the most popular gTLDs. Therefore, some but not all of the registrations could be assumed to be defensive registrations by brand owners. Keep in mind at that there were more than 100 million domain names in these seven gTLDs. So the registrations represented less than 0.2% of the total registrations. His conclusions are:

“The vast majority of trademark holders are not registering their trademarks in all the current generic TLDs, let alone all the TLDs. Therefore, we do not expect them, in general, to register their trademarks in new gTLDs.”

Assuming an average cost per domain name of $8 a year, he estimates the entire trademark community was spending about $48,000 per year per TLD or about $336,000 per year worldwide on these seven gTLDs. So let’s assume the Fortune 500 brands as the universe of brand owners, then the cost per brand owner would be $672 per year.
The conclusion I draw from the various analyses is that brand owners do not register their names in all gTLDs and are unlikely to change their pattern with new and un-established gTLDs. Rather, they make a registration decision based on cost/need/risk/benefits.
The industry is deregulating, and that by definition means change and greater choice. Consumers have proven over and over again in other cases of deregulation that they make the decision as to what should succeed or not, and they do not need a central authority to preemptively make that decision for them. (And by the way, that is not ICANN’s role.)
The ANA’s voice and resources would have been better spent actively participating and providing/citing facts and studies behind their positions. Given the facts now, their voice and resources are best utilized educating their members on understanding the new gTLDs, how they ought to approach a decision, and to explore if and how new gTLDs can enable innovation to their advertising and business models.

The clock is ticking.

By Alexa Raad, CEO of Architelos. Architelos provides consulting and managed registry services for clients applying for new top-level domains, ranging from new TLD application support to launch and turnkey front-end management of a new TLD. She can be reached directly at [email protected].



Why ICANN’s New Domain-Name System Could Benefit Brands. A Domain-Name Consultant Offers Her TakePublished in AdAge, August 16, 2011, by Architelos CEO Alexa Raad

When the Internet Corp. of Assigned Names and Numbers approved in June the new top-level domain program, virtually every major media organization covered it.

Unfortunately, few understood it.

They are not alone. Even veterans of the domain name system are mulling the potential for new TLDs. Do they portend a revolution in internet marketing, or are they much ado about nothing?

The Association of National Advertisers doesn’t like it. Last week, it fired a shot at ICANN, claiming new TLDs would cost advertisers millions to protect their brand names. ICANN counters that their approval process will block anyone from launching a TLD under a trademarked name they don’t own. That includes, for example, not only .Microsoft, but the owner of .software can’t sell Microsoft.software to anyone but Microsoft.

The uncertainty in the press about the viability of new TLDs, I think, revolves around a misinterpretation of what new TLDs are. They’re not just another way to name a website. If that’s all they were, then yes, Home.Coke has little advantage over Coke.com.

Others say that a domain name is not that important in the age of search, apps and Facebook. But these arguments are overstated. Google has been accused of putting its partners and services at the top of search results. Apps are great but limited in what they offer compared to websites. And as for Facebook, according to a recent Datamation report, for businesses “with more than a million ‘fans,’ fewer than 3% see the companies’ daily updates.” For smaller companies it’s about 10%. So “likes” and keywords don’t guarantee regular communication with your customers or top search positioning, much less a deeper relationship.

To understand the possibilities of new TLDs, think of an apartment building. A website (i.e., a domain name) is like an apartment. You rent it, conduct a good portion of your life there, entertain folks and get an address so people can find you and send things. You can paint the walls, but you can’t upgrade the plumbing or replace the cabinets.
The owner of the apartment building is the TLD. She decides who can live there, charges rent, makes the rules and determines whether you’ll have granite tops or laminates in the kitchen, burpee or shag carpet in the den.

Think of what eBay might do. With .eBay, the company becomes a registry that, like an apartment building owner, decides who gets an .eBay address and manages all the website names it signs up. Maybe that’s anyone who wants to sell occasionally on the site. So instead of a convoluted website address such as http://myworld.ebay.com/abestshop4u/?_trksid=p4340.l2569, which only a mental contortionist could remember and would be useless to use in print material, you get OldBooks.eBay. Not only can you put it on printed material, but it can appear where those who might see it can still remember it, say, the side of a bus.

Or perhaps eBay offers names to only its top sellers, so that http://stores.ebay.com/brookstoneco becomes Brookstone.eBay.

But we’re still talking about a name, a more marketable name, but a name nonetheless.

Now imagine eBay developing auctioning software and payment systems geared specifically for power sellers. By requiring they have a .eBay website, eBay would know exactly who all its most valuable customers are.

And what if the American Medical Association had the TLD .doctor and offered every member a free domain name — for example, MarcusWelby.doctor? Even if he declines a domain name, the AMA might give him a free email address that would be [email protected] The association might also dictate that all communications from them would be only to those .doctor e-mail addresses, thus encouraging all doctors to check that account regularly.

Now you have a powerful, marketable list to sell. Anything sent to that list, perhaps information from a drug company, would be reviewed and approved by the AMA, making the organization both a gatekeeper and a seal of approval.
The AMA’s .doctor could build into that TLD — and offer to every member who launches a .doctor website — all the patient security, functionality and medical records warehousing a doctor might need, including methods for securely transferring records among doctors and hospitals and disseminating updated protocols and the latest medical research.
A commercial operation may have similar opportunities. An automobile company could exploit its own TLD to build a communication or logistical network with its suppliers, partners, dealers and customers. The policies, functionality and security built into the TLD are advantages to anyone owning a domain name under that TLD.

Currently, TLDs are so generic and large that functionality is an add-on and must be designed for the lowest common denominator. And registries don’t verify the credentials of domain-name buyers, and in some cases have either erroneous or no information on the actual registrant. But new TLDs will have that information and can also enforce other rules, including verification.

Some argue that previous generic TLDs, such as .biz and .info, didn’t catch on. But they didn’t have a clear targeted market. They were too generic. But .mac? There is certainly a community for Apple users who are now dispersed under various forums, blogs and other sites.

Meanwhile, the American Bankers Association has indicated an interest in a TLD. Whether it is a .bank or other TLD, the industry could be poised to sell domain names to financial institutions with the security, authorization and functionality they require.

There will be challenges, no doubt. While the American Medical Association may chose to operate .doctor, other groups might obtain .health or .wellness. The victor might be the one with the best business plan and marketing chops. And keep in mind that the application fee alone is $185,000, with another $400,000 to $500,000 to develop the necessary technology and systems to operate a registry. That should limit speculators, cyber squatters and the faint of heart. And then there is the ICANN requirement that applicants prove they have the technical and financial resources to run a registry.

And what if two or more applicants want the same TLD such as .love? Under proposed ICANN rules, an auction would ensue if more than one applicant passes ICANN’s evaluation process.

Lastly, larger possible pools of website buyers raise questions about how they will be reviewed, verified and approved.
As I said, there will be challenges — and not all who apply for a TLD will or should be granted one. And not all those launched will succeed.

Yet, for those willing to face these challenges, the rewards could be great. The problem is that with so few understanding the potential of TLDs, advertisers, brand managers and all forms of marketers are left scratching their heads. As with every new tool available to them, however, the savvy ones will figure out how to make TLDs expand brand awareness and develop deeper customer relationships.

ABOUT THE AUTHOR
Alexa Raad is CEO of Architelos, a consultant for top-level-domain applicants, and the former CEO of the Public Interest Registry for .org domain names. She can be reached at [email protected]



Right of the Dot and Architelos Join Forces to Offer Comprehensive Marketing, Valuation and Management Services for New TLD Applications

Deerfield Beach, FL, Aug. 10, 2011RIGHT OF THE DOT, a domain name strategy consulting group for new generic top-level domain (gTLD) applicants and existing TLDs, announced today that it has entered into a cooperative arrangement with Architelos, a consulting and managed services company serving the same market.  Under the arrangement, Architelos will refer gTLD applicants seeking premium domain name consulting services to RIGHT OF THE DOT, and RIGHT OF THE DOT will refer to Architelos clients looking for new TLD feasibility, financial modeling and TLD application services, as well as a managed solution for running the front office functions of a TLD registry.

The internet name space is expected to expand into potentially hundreds of new TLDs, as companies are permitted to apply for generic names and even their own brand name in the form of a TLD, to generate greater brand awareness and control. However, achieving the benefits  requires a comprehensive set of strategic services leveraging the best of several providers. The cooperative agreement between the two companies provides a complementary set of services targeted at generics and brand applicants.

RIGHT OF THE DOT specializes in new and existing gTLD strategy, board advisement, premium domain strategy, market positioning and sales. The company is offering its expertise to assist new gTLD applicants in developing and executing premium domain name strategies including financial planning.

Architelos’ executives have run registries and launched new TLDs. They provide the rigorous analysis and creative ideas for helping brands and businesses intelligently identify opportunities within the TLD industry. The company has also pioneered tools such as the Business Case Builder, which enables an applicant to easily create the cost and revenue projections for its TLD, as well as the customized report required by ICANN as part of the TLD application.

“The Right of the Dot team is a great complement to the Architelos team in terms of industry experience and track record,” said Alexa Raad, CEO of Architelos.

“Architelos is unique in what it offers our clients—a hands-on team of executives with a successful track record of building registries and launching TLDs and its Business Case Builder that helps brands and generic TLDs create a strong and defensible application for their desired TLD,” said Michael H. Berkens, Managing Director for RIGHT OF THE DOT.

“Interest in new gTLDs continues to increase among entrepreneurs, investors and corporations. And rightly so,” said Monte Cahn, President of RIGHT OF THE DOT. “We are on the verge of a true paradigm shift in the domain industry, and forward-thinking businesses are aggressively planning around new gTLDs. With Architelos and RIGHT OF THE DOT in your court, you’ll have the business intelligence, valuation and sales support you need to ensure your next move is a success.”

About Right Of the Dot LLC
RIGHT OF THE DOT is an Internet consulting and advisement firm specializing in new and existing TLD strategy, board advisement, premium domain and market positioning, sales and services. The venture is the brainchild of two successful domain and Internet industry veterans, Monte Cahn and Michael H. Berkens, Esq., who posses a unique combination of vision, leadership and domain expertise. Cahn was the original founder of Moniker.com, a top 7 ICANN Accredited Registrar, who went on to head the Aftermarket and Sales Division of Oversee.net. Among other pioneering services, Cahn introduced the concept of Live Domain Auctions to the industry. Berkens, a domain investor with more than 75,000 domains, owns WorldwideMedia Inc., including the retail site MostWantedDomains.com. He founded and contributes to the widely read blog, TheDomains.com. Both principals of RIGHT OF THE DOT are members of the prestigious Domain Hall Of Fame, and are two of only 10 members. This highly qualified consulting group gives you access to the most experienced domain sales and marketing strategists in the industry. They are the only domain industry firm specializing in the many of the critical service offerings required to be successful in the ever-expanding domain industry.

About Architelos
Architelos, Inc. provides consulting and managed services for clients in the internet and domain name industry. The TMS service provides outsourced professional services and SaaS-based registry “front-office” solutions for both new TLD contract winners and existing small registries. TMS services range from new TLD application support to launch and turnkey management of a new TLD. The consulting practice focuses on innovative growth strategies and boasts both industry leaders as well as new entrants as clients. Architelos operates as an independent and trusted third party with no financial interest in or plans to apply for any new TLDs. Architelos has an “open source” ethos, thus ensuring integration with all back-end processors. With an executive team comprised of leading industry veterans who have successfully launched, built and managed new and existing TLDs, Architelos is uniquely positioned to offer a turnkey solution for registry launch and management. Founded by Alexa Raad, former CEO of PIR, the .ORG  registry, and John Matson, a veteran management consultant to Fortune 500 companies, Architelos brings wisdom and experience to turn rapid market change into innovation and success for its clients.



Six Key Issues About Operating a TLD RegistryPublished in CircleID, July 26, 2011, by Architelos CTO Michael Young

Brand owners unfamiliar with the domain name system (DNS) are hearing that their first step in registering a top level domain (TLD) is to select a back-end TLD registry provider. The fear instilled in them is that if they don’t act quickly, all available service providers will have reached their capacity. Given ICANN’s tight and inflexible application submission schedule, brands don’t want to be left at the starting gate.

That’s a little bit of FUD — fear, uncertainty and doubt — marketing. My years of experience in the back-end TLD registry industry tell me that no matter how busy a market may be, service providers will always compete for high quality customers, especially in the months to come as intense competition impacts the contracts signed. More important, as my colleague John Matson has pointed out, selecting a back-end registry provider is not a decision to take lightly. Today, contracts are typically for 3-5 years, so you will live with your choice for a long time. So pause and plan your selection process carefully. Your choice is going to form the functional core of your registry offering, and it must be right for your registry model and your company culture and maximize the return on your opportunity.

DNS, DNSSEC and more

Most TLD registry providers will promote their DNS infrastructure and capacities first. Indeed, your domain registrations would suffer without solid DNS capability. Not only would you experience embarrassing outages that damage your reputation, but you could lose your registry entirely (more on that below). DNS is the workhorse of your registry, matching those real world registration names to numerical computer addresses in real time. This seemingly simple system is actually one of the most challenging elements to maintain in the registry operational environs because it must be on 100% of the time, respond reliably in mere milliseconds, and answer every anonymous public DNS query it receives. DNSSEC is also required for new TLDs and adds significant complexity and potential overhead to operating your DNS. Some TLD models could try to heavily leverage DNSSEC, resulting in an overhead as much as 4-6 times traditional TLD DNS traffic.

The Actual Registry

The TLD registry, also commonly known as the Shared Registration System (SRS), is where all the controls lie. Your registrations, policies, billing, the relevant DNS records that are updated to your DNS infrastructure, and business controls all reside here. Add to that some Internationalized Domain Name (IDN) logic surrounding your IDN polices and variants, as well add-on systems such as data journaling, deferred revenue systems, reporting and report distribution, and you can understand how important this core component is. This is the heart and mind of the entire system. It’s where the registration process happens, and it’s where existing registrations are managed. Without the SRS, the DNS simply has no work to do.

Whois: the Registration Data Distribution System (RDDS)

Your TLD registry has many interested stakeholders. RDDS allows those stakeholders to find and contact domain names registrants. It’s required, and there are a few tricks and turns to making it work in the real world, including rate-limiting, web Whois and IDN issues that I will explain in later posts.

Escrow

Again, this is a required and generally a straight-forward element in registry operations. But more than that, it’s essential. Get this wrong and it’s again grounds to potentially lose your registry on ICANN compliance issues. I’ll go into more detail in a later post, including how to pick an Escrow provider.

Service and Support

Many back-end TLD registry providers handle a variety of support functions for their customers. You need to be thinking about your needs. Among many points of consideration: Call center tech support; registry system certification testing for your registrars; registrar accreditation and sign-up support; technical support documents such as FAQs; and registry manuals. Even more important, how do you want your registry back-end provider to represent this very public face of their service on your behalf? Company culture (yours and the provider’s) and registry model expectation become important here.

ICANN Compliance

With the right to operate your registry comes many commitments about how you operate your registry. Some of these are challenging, and some of them are absolute requirements. Fail them, and ICANN can take your registry away in very quick order. Your back-end registry provider is vital to your success in meeting most of these compliance elements.

I look forward to writing about these issues in more detail over the next weeks and hope these topics help you choose the right back-end registry provider. It’s a choice that can alter the success or failure of your registry opportunity. Take the time to make the right one.

By Michael Young, Chief Technology Officer at Architelos. He built the first modern EPP Top Level Domain registry in 2001 (.info) and subsequently built and operated the backend systems for numerous gTLDs, ccTLDs, IDN enabled registries and sponsored TLDs such as .org, .mobi, .in, .me and others. Architelos provides Top-Level Domain (TLD) application guidance and front-office services for clients in the DNS and IP industry. Mr. Young can be reached directly at [email protected].



New TLDs: Finance Dept. Role, Part 2Published in CircleID, July 14, 2011, by Architelos CFO Norbert Grey

Last week I wrote about accounting, reporting and promotions. This week, I want to focus on the financial department’s role in launching services, renewals and foreign exchange risk management.

LAUNCH OF SERVICES
In most businesses, the finance team usually takes a back seat during launch of services as business activity slowly increases in the months that follow. However, in the domain industry, with up to 30 percent of lifetime sales earned in the first three months of launch, it’s essential that finance takes a hands-on role from the start. In the ramp up to launch, finance professionals need to work very closely with the IT team to ensure registrar accreditation and integration is going as planned.

The financial group should be involved in testing. At launch times, it should monitor registrar balances very closely to avoid their running out of credit. It’s important to be ready to react at soon as necessary. The first day of each launch phase is integral to maximizing sales. The finance team must take the lead in oiling the machine that facilitates domain sales.

RENEWALS
For the most part, the success or failure of any TLD is decided by the health of their renewal rates. If you can achieve a good rate, your TLD then reaches a critical inflection point in its business life.

Finance has a business critical role to play in understanding renewals. This should be a priority from four to six months before the first renewal date. Deep analysis of renewal projections will be required for management. Promotions can be very effective at improving renewal rates, but the upmost care must be adopted in planning, executing and reviewing each renewal promotion.

A key challenge is getting true visibility on real renewal rates, as one cannot fully determine the actual rate until the 45-day auto-renew grace period is complete. Handling renewal reporting and providing meaningful reporting and forecasting can be one of most overlooked areas by a new entrant. For long-term financial planning purposes, accurately estimating renewal rates can be tough – benchmarking against established gTLDs might be a start, but be careful, as their name base is mature, and a new gTLD cannot hope to match their 72% renewal rate in early years.

FOREIGN EXCHANGE RISK MANAGEMENT
If registry operations are based outside the United States, and consequently your business operations cost base, consider selling forward your net dollar exposure. Accurate financial planning should enable you to estimate what your likely net U.S. dollar exposure is for the year ahead. You should consider hedging this foreign exchange (fx)  transaction exposure by entering into a fx forward contract to sell this U.S. dollar amount  and then use the agreed forward rate as your budget fx rate. Otherwise, you leave your business exposed to oscillating U.S. dollar/home currency exchange rates, which could be a reason why you miss your commercial targets. Smart policies around this means that you can be agnostic of U.S. dollar fx changes going forward.

Finally, you will have to face decisions about which registrars receive credit advances from day one of the your launch. Registrars, in the vast majority, conduct business in an honorable fashion, but some registrars go bust. A key skill is learning which registrars are safe bets and which will string out the credit.

I have found the domain industry to be an exciting, ever-changing one for the financial professional. Detailed budgeting and forecasting is an absolute must if you are to cope with its idiosyncrasies. The most successful registry operators are the ones whose management teams value the importance of business intelligence, detailed operational reporting and managing business performance through informed decision making. To do that, they need timely and relevant financial  and operational information.

By Norbert Grey, CFO of Architelos. Mr. Grey has served in senior financial roles in both the domain name system (DNS) industry and in the technology and mobile telecommunications industries. Architelos provides Top-Level Domain (TLD) application guidance and front-office services for clients in the DNS and IP industry. Mr. Grey can be reached directly at [email protected].



The ICANN New gTLD Program is Approved: Now What? How to Submit a Quality Application in 6 MonthsPublished in CircleID, July 11, 2011, by Architelos COO John Matson

On January 12, 2012, the application window opens. Any corporation or organization can submit a request to own a piece of the Internet — their own top-level domain (TLD). Many reporters are confusing a TLD with a domain name. But the difference is like renting a single apartment (a domain name) versus owning the entire real estate complex (with a potentially unlimited number of domain names). And most important, when you own it, you set the rules.

But with less than six months between now and when an application can first be submitted, many are wondering if there’s enough time to do it right.

There is. There have been four or five years of preparation and community input, which means you get the benefit of all the prior work. Perhaps just as important, there is a defined, methodical process that all applicants are expected to follow. That should minimize confusion and rework, especially if you get started now.

At Architelos we see three phases to submitting an application. Below are the recommended steps to preparing and submitting a new gTLD application to ICANN:

  1. Determine what you want to do (July - August)
  2. Select your partners (September - October)
  3. Prepare you application (November - December)

Phase 1: Determine what you want to do (July - August)

First, of course, you must decide if you are going to apply, for what string and most important, for what purpose. These are not easy questions to answer, but ICANN will be reading them closely. And if you are a brand, it may require a crash course of executive education to make your marketing, branding, IT and C-level executives aware of the opportunity. While there is time, every minute must be used wisely.

The first step is to educate. The ICANN application requires a detailed description of your mission and vision for your gTLD registry and the benefits to Internet users, along with the broader social costs and benefits. Evaluating, understanding and defining these elements for your potential string(s) is the place to start.

If you are a brand, you need to start with a clear understanding of your long-term brand and marketing strategy. You’ll need to assess where your plans are being thwarted, and/or where competitive pressures (globalization, competition, technical trends) are challenging your expectations. Based on these calculations, consider how a new gTLD can be used as a platform to achieve your goals. If your application is successful, your new TLD will not likely be available until 2013, so this is long-range Internet property planning, not short-term thinking. Also, it’s unclear when the next round will open; therefore, it could be several more years until the opportunity comes around again.

Most likely, your legal department has been monitoring the new gTLD program, but it’s now time to get sales, marketing and the executive suite spun up. This is the long pole in the tent as they say.

Phase 2: Select your partners (September - October)

Some will be advised to first select your “back-end” or registry services provider. We disagree. We think you need first to ask yourself a key question: What do you want your back-end provider to do? Until you determine what your string is and the purpose of your registry, how can you effectively select a registry services provider?

Also, there are other partners to select: internet intellectual property and legal support, premium names program support, policy management support and front-office registry services, among others. Indeed, one of the first tasks is to determine the legal structure under which you will be submitting your application.

All of these service providers are ready, willing and able to assist you, but at the very start, it would be wise to have experienced eyes review your RFPs, especially if this is your first registry application.

Phase 3: Prepare you application (November - December)

Once you’ve done your homework and read the Applicant Guidebook thoroughly to become familiar with the questions, focus first on Question 18. It’s the most important answer you will write. Question 18, which asks for an explanation of the mission and purpose of your TLD, sets up the entire context of your application. The ICANN panel evaluators will rely on that question to provide background while they consider your technical and financial responses.

Moreover, communities and governments will be reviewing this answer to understand the purpose of your TLD — and to determine if they will file an objection. Around May 1, 2012, that is two weeks after the application window closes, ICANN will publish all the public portions of the applications. At that time, your mission and purpose will be public and can be looked upon as a “soft launch” of your TLD. Your answer will provide the media and your target market information on what value proposition your TLD will offer. And it will be compared against other applicants and current TLDs.

ICANN will be reviewing the answer to Question 18 to gather information on the social costs and benefits of your TLD. Although the question is not “scored” like the technical and financial questions, your answer will be evaluated for completeness.

Again, we want to emphasize that the time for writing will come, but first you need to determine what you want to do and who will be your partners. Complete phases one and two first. Once these decisions have been made, the answers to the questions will either be written by your newly selected and talented partner, or you will be prepared to confidently write these answers yourself.

Yes, six months does not seem like a lot of time to get all of this done. But if you break the process down in the sequence we recommend, you have a good shot at submitting a quality application that will secure your new gTLD.



Role of Finance Leaders is Specialized in TLD LaunchesPublished in CircleID, June 29, 2011, by Architelos CFO Norbert Grey

When I first entered the domain industry as head of finance and operations at .MOBI, the company had  just acquired its licence from ICANN. I did a quick overview of the business environment  through a financial lens.

My first impressions were predominantly positive. Sales were generated up front on a cash basis, which put registry operators in an enviable operational cash flow position. Also, there were no accounts receivable concerns due to the top-up nature of funding by registrars. Outsourcing the back-end registry operations meant that we could tie cost of goods sold (COGS) to activity.

But I had a steep learning curve before grasping the minutia of recognizing deferred revenue. Also, there was foreign exchange risk exposure because business operations were partly in the Euro zone while the domain business, like oil, was traded in U.S. dollars.

However, there are more subtle nuances that need to be grasped by the new entrant financial professionals. If they are to provide effective financial leadership to the business and support the management team, they’ll need quality information for decision making in six key areas.  I’ll discuss three of them today and the other three in a subsequent post.

CASH SALES & ACCOUNTING SALES
While sales and COGS are generated on a cash invoiced basis, it’s vital that the finance professional understand how to recognize the revenue /cost  over the life of the domain term. Accounting rules can be complex. Dealing with multiple registrars and domain terms, not to mention numerous price points, will require time and patience for the new TLD financial leader to master. Simple excel spreadsheets won’t do it if you want to have accurate budgets/forecasts—and that’s before the added complexity of renewals kicks in.

PERIODIC REPORTING ON A DUAL BASIS
From the outset, management reports should be presented on a cash sales and accounting revenue basis. Accounting revenue basis is initially more conservative as revenue is recognised over the life of the domains and not in the month invoiced. However, note the dangers of only reporting under accounting revenue basis. Table 1 illustrates the cash sales vs. accounting sales of a sample TLD launched in Jan 2011.

Cash sales dwarf accounting sales during the Sunrise, Landrush  and early General Registration phases. However, as the business becomes more run rate, accounting sales exceed cash sales due to the “slow burner” effect of recognizing revenue of the Sunrise & Landrush periods over the domain’s life. For example, reporting only on an accounting basis in  December 2011 might give a distorted view of business performance for the month.

PROMOTIONS
Implementing sales promotion campaigns is a key way of increasing domain sales volumes, especially after the initial high volume launch activity passes. A good sales and marketing manager will put pressure on the management team to run regular promotions. It’s vital that the finance team measure the success of each campaign and understand which tactics work and which don’t. Otherwise, you could be throwing money away. The finance team must take a hands-on role in designing the numerical aspect to the promotion and rigorously perform post-event analysis for management. Your back-end registry provider will report volumes, but this will need to be supplemented by strong business intelligence reporting by finance.

In my next post, I’ll discuss why finance departments must have a hands-on role in a TLD launch, forecasting renewal projections and foreign exchange risk management.

By Norbert Grey, CFO of Architelos. Mr. Grey has served in senior financial roles in both the domain name system (DNS) industry and in the technology and mobile telecommunications industries. Architelos provides TLD application guidance and front-office services for clients in the DNS and IP industry. Mr. Grey can be reached directly at [email protected].



Outsourcing & Registry Operations Present Challenges to New TLD ApplicantsPublished in CircleID, June 27, 2011, by Architelos CEO Alexa Raad

After ICANN announced in Singapore approval of the new TLD program, we heard many prospective applicants say they would start asking registry infrastructure providers to break down their costs into registration and resolution components. The last few TLD launches have shown that although you can achieve some respectable registration volumes for new TLDs, chances are it will take some time for content to be associated with the domain names, and hence, resolutions to pick up. So applicants are considering new business models and re-thinking outsourcing relationships.

Part of the reason may be that it takes time to educate registrants that the TLD is available and then more time to incent end-users to navigate to and otherwise use the new domain extension. The other issue may be what I covered in a previous CircleID post: the user experience with new TLDs will be sub-par, unless applications (email and web related issues such as form fill, etc.) recognize them in time.

So some applicants who’ve studied the last set of TLD launches now figure that if registrations outweigh resolutions for some time, why not price the two components separately, so they pay only for the resources they’ll actually use?  If this becomes the predominant thinking among applicants, it could mean new and more flexible pricing structures from the infrastructure providers.

Meanwhile, the focus now is on the application process for the new TLD program and perhaps the evaluation process. Few applicants are thinking about what happens if and when they get their TLD. I’m not talking about launch plans, awareness etc., but something far more fundamental. All of the launch, sunrise, etc. assumes the applicant has hired a knowledgeable team, set up operations, licensed and configured the various systems they need and that everyone and everything is ramped up in time to  implement the business plan.

Unfortunately, the realities of the domain name system industry present challenges. Have you noticed the recent departures of staff from many well known players? Expect to see a lot more moves as the bidding war for good talent heats up.  Now that the program is underway, competition will be on for resources. Because of the relatively small size of the industry, the few existing knowledgeable resources, and the potential onslaught of new entrants, new TLD operators should expect a costlier and lengthy hiring process.

Setting up the registry involves, amongst other things, the evaluation, purchase, configuration and customization of various software and then staff training so that the implementation is smooth from the start. Examples include the mundane such as such as office productivity and contact management systems to the critical financial systems and compliance management, to name a few. In addition, the policies described in the TLD Application Guide would now need to be codified into procedures and quite possibly integrated into the software and staff training.

New TLD operators could look to their registry infrastructure providers to assist, but the reality is that they will already have their hands full with more TLDs than they’ve ever managed at one time, so their resources will be strained.

Hence, it’s important to set expectations now and encourage TLD applicants to think beyond the evaluation period. What will happen once some finally get their wish? Will they be ready in time?

Alexa Raad



ARCHITELOS ANNOUNCES TLD “FRONT-OFFICE” MANAGEMENT SERVICES

RESTON, VA, June 20, 2011—Architelos, Inc. today announced its Top level domain (TLD) Management Services (TMS) for registry “front-office” operations it will offer new TLD contract winners. TMS is an outsourced solution for new TLDs as well as small registries, so they can quickly launch and/or manage their business operations, while off-loading much of the costs and risks.

TMS: Front-End Support, Back-End Connectivity
TMS provides ICANN compliant, secure, pre-configured software systems, with the option to outsource operational personnel and/or executive management. TMS is designed to work with most registry infrastructure providers, thus protecting the TLD applicant’s freedom of choice. The software systems are SaaS-based and include the business-critical functions required in a registry that are not provided by a back-end registry operator.

These core systems include:

  • Automated contracts management and compliance work flows
  • Automated registrar/channel sign-up
  • Registrar ramp-up and management
  • Sales and marketing portals
  • General Ledger integration tools for registration financial data and forecasting
  • Industry specific customer relationship management features
  • Business intelligence reporting and dashboard tools
  • Management escalation alert systems

“There will be a real need for solutions tailored for the business operations of a TLD,” Architelos CEO Alexa Raad said. “Given the scarcity of expert talent and the potential launch of many TLDs at once, many applicants should plan now for how they will staff, resource and manage their registries should they be awarded a new TLD.”

Outsourcing a registry’s back-end is only half the needed solution, according to Architelos COO John Matson, who has developed new business models for the TLD marketplace and authored a study benchmarking new TLD launches. “Applicants still need a suite of front-office systems and talent to successfully win, launch and operate a new TLD,” Matson said.

Architelos will selectively launch and manage a portfolio of TLDs but will offer all new TLDs the option to outsource the operational personnel.

“We are defining a market, one that we are well positioned to address,” said Raad, who has both launched a new TLD, .MOBI, and led a major registry, PIR, the .ORG registry.

Architelos, Inc. provides consulting and managed services for clients in the internet and domain name industry. The TMS service provides outsourced professional services and SaaS-based registry “front-office” solutions for both new TLD contract winners and existing small registries. TMS services range from new TLD application support to launch and turnkey management of a new TLD. The consulting practice focuses on innovative growth strategies and boasts both industry leaders as well as new entrants as clients. Architelos operates as an independent and trusted third party with no financial interest in or plans to apply for any new TLDs. Architelos has an “open source” ethos, thus ensuring integration with all back-end processors. With an executive team comprised of leading industry veterans who have successfully launched, built and managed new and existing TLDs, Architelos is uniquely positioned to offer a turnkey solution for registry launch and management. Founded by Alexa Raad, former CEO of PIR, the .ORG registry, and John Matson, a veteran management consultant to Fortune 500 companies, Architelos brings wisdom and experience to turn rapid market change into innovation and success for its clients.

Media Contact:
Robert Griendling
Griendling Communications
703.978.4686, 703.362.4686 (c)
[email protected]



Internet Governing Body Makes Major ChangeMonday, June 20, 2011, on National Public Radio’s “All Things Considered.”

The world’s main Internet governing body Monday approved what may be the biggest change in the online world for many years. Soon, we may see website addresses that end with almost any word. It won’t be just dot-com or dot-org or dot-net. We could have dot-NewYork or dot-Toyota. Companies, cities, even individuals, could have Web addresses all to themselves.

Click here to listen to the broadcast or read the transcript.