Re: [icann-eu] Domain Name Economics

[Jefsey Morfin <jefsey@wanadoo.fr>]

Dear Thomas,

Before going I want to address this interesting thinking.

 From what you say you position yourself on the wild wide web. i.e. no 
moral, no "collateral" law, no USG duties to make the US Constitution 
respected, no-Tauzin commission. This mean that you consider these  as 
negligible elements because on the long range the interests to the big gTLD 
will prevail?

OK. This suits me. As I believe that the market as the laws a part of the 
human space and are therefore consistent (we all - market, law and human 
beings - survive together for a few years). And that the law is just to 
make these mechanisms moving faster or to prevent them from too important 
drifts in paradoxal situations (otherwise the law would not be acceptable 
to the majority in the nominal situations).


On 21:40 07/06/01, Thomas Roessler said:
>On 2001-06-07 18:39:20 +0200, Marc Schneiders wrote:
>
>>>I wouldn't say that everyone who wants to get a new TLD with ICANN must 
>>>be of the scale of Verisign.
>
>>The application fee made it impossible for many organizations, businesses 
>>and non-profits, to apply. If you are small, you will not get in. Maybe 
>>not Verisign size is what was demanded, but in any case a few sizes too 
>>big in my view.
>
>Look at the bucks you can make with TLD operations.  And look at the 
>investments you have to make in order to make these bucks.  $50k isn't 
>that much when you put it into context.

This is only a Mike Roberts originated model. As you know, I proposed him a 
free innovative TLD (as per the Yokohama resolution) and he responded 
"money please" and "be prepared to spend much more with highly skilled 
lawyers if you consider entering the International TLD business".

I was not aware there was an International TLD business before that mail. I 
known that competition to NSI was to be fostered, that cost decreases were 
looked for and that iCANN had accepted a limited number of registrars to 
fight NSI registry/registrar monopoly. I was aware that the USG wanted to 
deregulate and privatize the Internet. I was aware of the real management 
costs of a TLD for having implemented 50 of their equivalent 20 years ago 
when this was supposed to be more expensive. I was aware that iCANN was 
looking for innovative propositions and I was aware of the RFC 
920/multiorganization making part of the legacy any cooperative TLD.

I was aware that there are 243 ccTLDs, some of them operating as gTLDs, 
ranging from 0 to 500.000 may be DNs. I was aware that I was already 
running a test TLD under my own management tools. I was aware that for the 
last 20 years I have always operated 24/365 operations with a near zero 
down time and that I had the trust of the first users gathered into the non 
profit consortium destined to own and promote the TLD. Stability: 
indefinite, Cost: $ 25.000 a year (IMHO that was of no concern to the 
iCANN, only to the associated registrants). Revenues by the 10 initial 
founders (including 4 free): $ 30.000 a year.

An impressive difference.

>>>However, look at the alternatives: Leah's .biz is going to be squashed 
>>>precisely because it is too small and too invisible to pose any serious 
>>>danger to the ICANN-sponsored one.
>
>>I fail to see what you mean in this context. Too small is bad luck? My 
>>point was, that it would be great if an organization like ICANN could 
>>help avoid smaller organizations to be crushed only and only if these 
>>same organizations had a (better) chance within the ICANN process. Since 
>>they haven't they lose either way: they are crushed or kept out.
>
>Precisely.  Without a centralized organization such as ICANN, smaller 
>players don't have the faintest chance.  With such an organization, they 
>_may_ have a chance, assuming reasonable behaviour of such an organization.

You right they have no chance. But they have more chances if there are 
several organizations like the iCANN because they may be protected by one 
against the others. If there had been several iCANNs I would have gone to 
the others telling them how bad the iCANN was. Actually I did: I created my 
own root  and I am working on making it credible enough. A long effort 
where I think I made some progress. We will see at the end of the day.

As you perfectly put it, IANAG (I am not a genius), so if I fail it will 
not mean that my strategy was wrong but that I could have been poor at it.

>>>But can you guarantee me that the pre-ICANN .biz is robust enough to 
>>>survive when a large competitor (the ICANN .biz) tries to squash it?
>
>>Of course not, but so what? Can ICANN guarentee all TLDs' survival?
>
>They should, don't you think?

No more that I can warranty you that .biz iCANN will survive. I certainly 
give some chances to the intruder, but knowing a few things about the 
issue, not that much.

IMHO they could be forced into negotiating an agreement.

>>>In order to be able to give such guarantees, you'd have to invest a lot 
>>>of money into global visibility.
>
>>A nameserver? A lot of money?
>
>Persuading all those ISPs to actually know about your TLD?

This is not the task of the TLD. This is the task of the root. Leah is 
fighting to protect her business. But the real ones who are concerned and a 
pain to the iCANN (look at the all the noise the iCANN does at them) are 
the roots. And the problem is not that much to know about the TLD than the 
roots to be reliable (stable, accurate and present) so some ISPs may use 
them. Then the propagation of their information make the colliding TLD a 
network bug with unpredictable consequences.

By then be sure that there will be a real investigation on the source of 
the problem. Let assume there is no Justice: the market and press will at 
least ask two questions:

-  what was so important about ".biz" for the iCANN to set it up as a 
collider - all the more than NSI sales ".bz" as business oriented gTLD and 
there will be a lot of confusion.

-  why has not the iCANN reported to the DoC the resulting risk?

>>>Thus, domain name holder interests need to be represented within (maybe 
>>>forced upon) the ICANN framework.  But domain name holder and end user 
>>>interests will only be extremely badly represented within the SO 
>>>framework where various other interests can easily overrule them.
>
>>>You see where this argument leads to? ;-)
>
>>No. All I see is that for economical reasons it will be impossible to get 
>>things right through mere market forces (partly because we are talking 
>>about a regulated and restricted market!). Let's act upon that then.
>
>Right.  So this argument directly leads to user representation, and 
>actually to the at large seats on the board.

For the iCANN yes. But the first concerned are the DNSO. This is why I 
motioned and documented an ML to document and propose the NC a doctrine and 
strategy oriented WG-DNS-name-space(managment. If you reread that motion 
you will see that the "foreign" roots and TLDs were not an important issue 
(they belong to the competition landscape).  Danny Young mislead every body 
on a wrong dispute much more productive for the interests he defends I suppose.

I am far more concerned in term of reliability of the network by so many 
Bind 4 and even Bind 8 machines. Any competent hacker can do a lot of harm 
or even kill the network as long as Bind 9 is not in every TLD and large 
DNS servers.

>On 2001-06-07 18:15:56 +0200, Jefsey Morfin wrote:
>
>>So from this, I gather you talk about continuity of the service rather 
>>that stability of the network
>
>Precisely.
>
>>>Both terms are referring to the "mutual assured destruction" doctrine, 
>>>and more specifically to the nuclear war analogy I gave in my original 
>>>message: I'm thinking about destructive capabilities which are suitable 
>>>to create an intolerable risk for any possible attacker, thus preventing 
>>>rational attackers from actually using their own capabilities.
>
>>This is a strange military way of thinking about business and DNS name 
>>space management. Such a praxis is certainly interesting as a kreigspiel 
>>but in a real business world I do not now which Venture Capitalist or 
>>reasonable corporation would want to invest into a colliding TLD. The 
>>case of .biz is particular: it is only a tacit agreement between NeuLevel 
>>and iCANN: you get .biz and you pay for the legal dispute with ARNInc.
>
>Why shouldn't this be repeated as long as you are sure that your opponent 
>will lose the legal dispute - if not legally, then economically?

For an obvious reason: your own partners will fear to be the next target. 
Just listen to what Noss from Tuckows says (you should not understand that 
from what he told to the BoD in Stockholm but most did...) "We are nice 
guies, we did not create our own root as we could have and we expect that 
will rewarded in being given .web".

But when .web is for consideration many ISPs will have probably their own 
TLD. So...

>>This is also I am afraid a basic misunderstanding of the issue. Many as 
>>you are trapped into a wrong understanding of the inapropriate word 
>>"alternative. This word is mostly used by some as an insult and by no one 
>>as a flag. Its only use may be to qualify the root market: there are 
>>several alternatives: between a globally free and open vision of the DNS 
>>name space management and a restricted and paying vision by the iCANN, 
>>Real Name, Name.Space, New.net, etc... between a full use of the DNS by 
>>the iCANN and the so called "alt.root" and plug-in based/http oriented 
>>like New.net, Namsliger, etc...
>
>I'm certainly _not_ caught within wrong understandings of certain 
>words.  In fact, if you read my original post, you'll notice that I 
>frequently write "the monopoly" instead of ICANN, and that I'm generally 
>just talking about players and their capabilities.

I am sorry but you use the word "alternative". Alternative can conceivably 
be used to describe the different roots you may make authoritative on your 
computer if you are not happy with the default root chosen by your ISP. But 
it is definitely absurd concerning TLDs. The whole defense of the "unique 
party" defenders is to harp on this confusion.

>>But frankly I do not know any proposition corresponding to what you 
>>fight. May be could you be so kind as to point one to me. This seems to 
>>me lefts over from an archaic dispute about the creation of the iCANN.
>
>Eh?  I'm not fighting anything.

Well de facto you are. In presenting a study which considers different 
positions but does not includes the reality. I acknowledge this reality is 
still unbalanced enough not to be yet easily observed from the end user 
point of view you adopted. IN doing that you are over supporting these 
positions (all the more when you present erroneous points [alternative 
TLDs] as the position of the supporters of the missing reality).

>I'm trying to describe a model for ICANN and the domain name market in 
>general which - I believe - can be used to better understand what happens, 
>and why it happens.

I am afraid that the above difficulty makes you overlook that the weakness 
of its defenders and the over reaction of its opponents has the usual 
flavor of the controverted right causes.

>>>Translated to the DNS, players would need what one may call "destructive 
>>>visibility": A TLD must be visible on a scale which makes it impossible 
>>>to launch a competing version of this TLD without experiencing all the 
>>>negative effects Kent Crispin's internet-draft lists.  In such a 
>>>situation, it wouldn't be economically reasonable to engage in a battle 
>>>about this TLD - the best possible outcome (from the attacker's point of 
>>>view) would be a destruction of both players.
>
>>This seems to me Kent's youth war (IANA creation). Kent is not taking 
>>about the reality, but creating a virtual reality where Vint's move about 
>>.biz would be acceptable. In the real world this is not the case.
>
>Acceptable to whom?

Oh, to every observer. Market, legal, user, etc... The position of Leah is 
right at every level as it is natural. The quality of what is right is that 
if you change something in it, it becomes wrong. So in changing the 
apparent nature of her positions it makes the whole set looking wrong, and 
Vint's position legitimate.

>Creating an ICANN-backed .biz which competes with Leah's is feasible and 
>acceptable from an economic point of view:

True if the technical consequences do not make it a business failure. What 
we will try to obtain as this "proof of concept" is only to proof us.

>- Leah's .biz doesn't have destructive visibility, so the net won't   be 
>destabilized considerably by introducing another one.   (Another way ot 
>put this is to say that the ICANN-backed .biz can   run in a fairly stable 
>manner.)

This is not necessarily true. But the real point is that the net users hate 
instability and that once instability has been identified as iCANN's .biz 
originated the trust in iCANN positions will bluntly drop.

>- Leah may not have the funding to go through an extensive lawsuit

What is the problem? Where will be the law suit? With which impact. Root 
servers are all over the world. .biz zone servers are just a file anywhere. 
This is the Internet. No one can devalidate .biz !

>- an ICANN-backed .biz will have destructive visibility

True. To the iCANN. As soon as instability will be observed from collision, 
press will give it visibility. Most will take side with she-David against 
he-Goliath... The more the .biz will continue and be unstable the more it 
will be a pain for the net. The only solution will be the sensible one: to 
negotiate or to close shop. As NeuLevel is the one spending the money and 
Leah the one making a decent small leaving with operations costs probably 
of $500 a month... If she is careful she will survive NeuLevel.

>- an ICANN-backed .biz may amount to a license to print money, so   the 
>cost created by a war with Leah can be neglected

This is true if they can stay on the network. Nobody likes its name to be 
associated with a failure or a controverted situation. So I do not see .biz 
growing a lot before they negotiate with Leah. And she will probably be not 
in a hurry to negotiate as people will subscribe to get from her the DNs 
they will had denied on the iCANN .biz.

If you cannot have yourname.biz with NeuLevel: you subscribe it with Leah. 
Giving Leah visibility you help Leah to have NewLevel negotiating. NeuLevel 
cannot accept you as a registrant however you are a legitimate one. So they 
will have to buy you back your ND at a good price or you will block the 
negotiation through a legal action against Leah. Obviously Leah warns you 
on her site, but you can legitimately claim in Justice that you believed 
Leah's position right and you trusted the US Justice. This will certainly 
be accepted.

Vint will probably have created the most important cybersquatting operation 
of the Internet. If this goes that way he will not do it again. If he is 
not to resign.

>I'm not talking about moral here.  I'm not saying it's a nice thing to 
>do.  I'm just saying that it can be done, that it's economically rea 
>sonable to do it, and that it doesn't even cause considerable collateral 
>damage.

Right. And I responded the same. Showing that it can create important 
direct damages.

>>IANAG but as said previously I never met a case, except ".biz" by Vint 
>>Cerf. But even in this case, the motivations are purely political. In 
>>this particular case you may be right: Vint may want the destruction of 
>>both players (their most sensible response would be an alliance).
>
>How should the new .biz lead to the destruction of both players when one 
>player has marginal visibility (and won't get more than that), while the 
>other one has destructive (ICANN) visibility?

The same as a single soldier is the best vector to destruct a tank. Or a 
single Kamikaze to sink a Carrier. Leah can probably last for ever in as a 
small business. She can take another job and continue  operating. Actually 
this is what she probably does while spending a lot of time defending her 
business. NeuLevel cannot survive long in not making the bucks it needs 
every months.

>>>Obviously, destructive visibility doesn't need to mean global visibility 
>>>- but, on the other hand, near-global visibility like the one ICANN can 
>>>offer to new TLDs is certainly destructive.
>
>>This seem to indicate that you consider that ".biz" like decisions could 
>>be a basic strategy for the iCANN and be repeated: the iCANN trying to 
>>destruct the existing non-iCANN TLDs. I doubt the iCANN would do that. 
>>The impact on its credibility and on the business would be too devastating.
>
>Where's the economical impact of Leah's .biz being squashed, except for Leah?

We are in a proof of concept situation. People will be looking in  detail 
what is happening with the new TLDs. The possible impact I described - 
added to the weaknesses of the NewLevel project - will make the "bis.biz" 
TLD particularly observed with a double consequence. Every difficulty will 
be shown as big problems by the press, making them more difficult to 
handle. A final failure will be understood as an iCANN failure. With the 
result that iCANN will be stiff on the matter, increasing risks. If it 
turns that way and they survive it, IMHO they will not want to do it again.

All he more than this will happen at bad times:
-  other five TLDs not signed yet to be pushed
-  additional TLDs to be considered with controversies about the denied 39 
or so
-  ccTLDs as an SO or not
-  .us and .eu entering the ccTLD area: if they do not sign the ccTLD 
undefined yet contract, no one will ever sign it, or very late.
all this making Louis Touton's life unbearable. I have no pity for the bad 
job he brilliantly carries, but the guy has some rights about sleeping and 
even relaxing from time to time.

Look, they have succeeded in blocking the innovation of the technical 
development common to the entire world for nearly one year already. This is 
a real success. They are brilliant chaps, but they cannot really do more 
without a rest. :-)

Jefsey