June 2006                    DNJournal.com               The Domain Industry News Magazine

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Controversial ICANN-Verisign .Com Agreement Comes Under Congressional Scrutiny

The fight over ICANN's highly controversial proposed .com agreement with Verisign moved into the halls of the U.S. Congress June 7 when a hearing on the issue was held by the House Committee on Small Business. This is an issue that will affect everyone who owns domain names, so it is well worth paying attention to. 

John Berard, spokesman for the Coalition for ICANN Transparency (CFIT), an industry group devoted to derailing ratification of the agreement by the U.S. Department of Commerce, said the hearing was another critical step in preventing the damage the deal would do to small business and consumers. The congressional session was labeled "Contracting the Internet: Does ICANN create a Barrier to Small Business?

U.S. Capitol Building
Washington, D.C.
(Photo by Kevin McCoy)

Berard said "Ever since the ICANN board cast its vote on the proposed .com agreement the Internet community has voiced continued opposition on the matter." Berard added, "This hearing is yet more evidence that the .com deal is wrong for the community and is wrong for small business. By granting VeriSign a perpetual monopoly to the .com registry, the Internet community will be faced with unjust price increases and a continued erosion of the check-and balances."

Marc Ostrofsky
InternetREIT.com

Other registries that would like to compete for the .com contract have stated they would lower costs rather than raise them but the ICANN-Verisign deal has left potential competitors out inthe cold. For large portfolio owners, the additional costs could run into 7 figures. Marc Ostrofsky, President of Internet REIT, said if the deal is allowed to go through it would cost his company $1 million a year in additional registration fees. 

Ostrofsky was among those who submitted testimony to the Committee June 7. He said "it will raise significantly the cost of doing business without sufficient justification, it ignores and shuts the door to alternatives which could decrease these costs by a significant amount, and it opens the door to unfair competition by VeriSign. The full text of Ostrofsky's statement to the Committee and a series of questions he asked the Congressmen to consider can be read here.

Muinish Krishan of Netsphere also submitted a letter to the Committee detailing how he thinks the deal will negatively impact small business. Krishan said that the small business community is “asking for a market where small business can invest and grow in a market without fear that a corporation in a monopoly position, protected by ICANN, will attempt to hijack successful business models to the exclusion of competitors.”  

“The proposed agreement provides for VeriSign to have exclusive access to [traffic] data for its own commercial benefit," Krishan said. "Currently, we obtain this data through other sources, and it is essential to our business; without it, we would no longer order new domain name registrations. This poses a threat to our existence without providing any benefit to marketers or consumers.” Furthermore, Krishan urges the committee to prohibit ICANN from asking small business to “play by one set of rules and allow VeriSign to play by an entirely different, and less restrictive, set of rules.”  You can read his full testimony here.

Champ Mitchell, CEO
Network Solutions 

One of the more interesting comments at the hearing came from Network Solutions CEO Champ Mitchell whose company was owned by Verisign until 2003. Mitchell said  the .com deal "shocks the conscience." He added that there was no need to rush to a bad judgment as discussions on the future of the Memorandum of Understanding, the document that governs the relationship between ICANN and their overseer, the U.S. Department of Commerce, is underway and the current .com contract is not scheduled to end until next fall. Committee members apparently agreed with the go slow approach, deciding to accept written public comments on the proposed agreement for the next two weeks. 
As of this writing (just hours after the hearing ended), the procedure for sending comments to the House Committee had not been outlined, but the CFIT site will likely post that information soon. Another good synopsis of what happened in the hearing June 7 has been posted at Silicon.com.


Weekend in the Midwest


We hear the 3rd Annual GeoDomain Expo held at the Hyatt Regency in Chicago last weekend (June 2 & 3) was a big success. More than 100 owners of prime city domains like NewYorkCity.com, Chicago.com and LosAngeles.com were on hand along with representatives from more than a dozen sponsoring companies. The event was staged by Associated Cities, a fast growing network that has drawn the various city domain owners together to help advance each other's mutual interests. 

 

I wasn't able to attend the event personally due to a long-scheduled family vacation that had me visiting another part of the Midwest while the GeoDomain Expo was underway. That trip took me to Delaware, Ohio (a small college town just north of Columbus) where I grew up. My wife, daughter and I flew in from Florida to visit my mother who is still going strong at 87 years of age! You know how hard it is to explain the domain business to people outside the industry but my mom seems to grasp it pretty well - or maybe she was just nodding her head to humor me :-)

The GeoDomain Expo is another example of the phenomenal growth in this business. Now, in addition to the mega conferences like T.R.A.F.F.I.C. and Domain Roundtable, we are seeing more specialized events devoted to specific sectors of the industry growing into high value meetings as well. 

My daughter with her grandmother
last weekend in Central Ohio

 

This year with Roundtable in April, T.R.A.F.F.I.C. West in May and GeoDomain Expo in June, a lot of domainers were living out of their suitcases - but we didn't hear anyone complaining. It's great to get together, share ideas and help each other keep moving forward in one of the world's most exciting businesses. 


DN Journal's June Cover Story: How Ari Goldberger Beat the Odds and Found Domain Fame

Our June Cover Story will be out in a couple of days and for those who enjoy the kind of personal entrepreneurial stories we love to do, this is an article you won't want to miss. Today Ari Goldberger is one of the world's best-known domain attorneys. He is also a successful businessman who heads a highly regarded PPC parking company at SmartName.com. Ari's rise to the top defied all of the odds. His parents were both survivors of the Holocaust who immigrated from Poland to Israel to America with little but hope that the "land of opportunity" would give them and their children a shot at a new beginning. 

Goldberger began a business career almost as soon as he could walk when he started collecting pop bottles at the beach and turning them in for a penny or two each. He never stopped working, in or out of the classroom, and wound up graduating from high school in New Jersey with honors. That earned him a place at the prestigious University of Pennsylvania in Philadelphia (an Ivy League oasis that U.S. News & World Report ranks as one of the top four colleges in America, along with Harvard, Princeton and Yale). 

Ari started out as a pre-med student, but switched to Penn's famous Wharton School of Business (generally regarded as America's best business school) after his sophomore year. While still in college he also returned to his entrepreneurial roots, running a variety of ventures from his dorm room that you will have to read about to believe. 

A couple of years after graduation Ari developed a fascination with the legal profession after watching the Senate confirmation hearings on President Reagan's nomination of Robert Bork for the Supreme Court. After the brutality his parents had experienced, Goldberger always tried to help people who couldn't help themselves and practicing law looked like a good way to do that.

Goldberger wound up going to Law School at Rutgers where he earned his law degree and began a journey that took an unexpected turn into the domain business after he became embroiled in a legal battle with the giant Hearst Corporation

Ari Goldberger
ESQWire.com & SmartName.com

Hearst thought that his business domain, ESQWire.com, was too close to the name of their Esquire Magazine. When they locked horns, Goldberger got a crash course in intellectual property law and a lot of domainers are still benefiting from his experience today. He went on to notch landmark victories involving disputes over domains like NewZealand.com and Mexico.com to become one of the industry's most familiar faces. He has traveled a long, fascinating road and we will take you along as we relive the ride. Our newsletter subscribers will receive an email alert when the story has been posted.

 

Internet's Spectacular Growth Rate Continues 

We all know the domain market has been booming for more than two years now, but Internet growth is also being reflected in an explosion of new live sites. Netcraft.com reports that the Internet enjoyed it's largest month of site growth ever in May with new blogs and free web sites fueling the fire. Netcraft said 3.96 million new sites came on line last month, surpassing the highest previous gain they had recorded in March 2003 when 3.3 million new sites appeared.  

Blogging services enjoyed strong growth, paced by Google's Blogger, which added more than 660,000 hostnames. The global nature of the blogging phenomenon was seen in large increases in blogs hosted at Germany's Intergenia AG and Japan's Excite.co.jp.

While some areas of the economy are slowing, particularly housing and job growth, those of us in the domain industry are fortunate to be in the center of an industry that is continuing to enjoy a phenomenal expansion. This is the right place at the right time and we believe that the ride is just beginning!

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Ron Jackson
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