ICANN responds to Congress.

ICANN CEO Rod Beckstrom has responded to Lamar Smith and Howard Coble’s letter and questions. A copy of Beckstrom’s response is available here.

Here are some highlights:

Implementation Recommendation Team proposals: “The Board has not yet formally considered the proposals from the IRT…

“After this extensive consultation, ICANN is recommending the implementation of versions of the IRT’s recommendations, such as a post-delegation dispute resolution procedure and a “thick Whois” requirement…

“…ICANN will, to the extent possible, protect trademark holders from abusive registrations and from the need for defensive registration in new gTLDs, but no final decision has been made yet on the exact mechanisms that will be employed.”

Economic studies: “In the end, calling for a delay in the entry of new gTLDs only serves to perpetuate existing market conditions: concentration within some existing registries, with most short generic strings unavailable, and those that trade on the value of the current marketplace, holding portfolios based upon the value of current .COM names…

“Even with what appears to be compelling benefits of competition, ICANN’s commitment to open and transparent processes requires further action on ICANN’s part to address the questions that have been raised surrounding the sufficiency of the economic studies commissioned to date. Accordingly, ICANN will retain economists to review and summarize work to date regarding the costs and benefits of new gTLDs, putting that work into the context of the questions some have said remain open, and then evaluate whether additional study is required.”

Expiration of JPA: “I am in discussions with the NTIA to establish a long-standing relationship to accommodate principles including the beliefs that ICANN should remain a nonprofit corporation based in the United States, and should retain and ongoing focus on accountability and transparency.

“…Accordingly, ICANN seeks to have a long term, formal relationship with the United States Government and also seeks to build long-term relationships with other countries and contractual partners as well.”

A preview with links to testimony for Wednesday’s hearing.

Wednesday morning, the House Committee on the Judiciary will hold a hearing on the expansion of top level domain names. Four witnesses will testify: Doug Brent, Chief Operating Officer of ICANN, Richard Heath
President of International Trademark Association, Paul Stahura, Chief Executive Officer/President
eNOM, Inc., and Steve DelBianco, Executive Director of NetChoice.

Here’s a preview of their testimony:

Doug Brent (ICANN): …any resultant delay of the launch of the New gTLD Program will inhibit competition in the use of generic, non‐trademarked terms, and runs counter to the generally accepted view that market entry benefits consumers by expanding output and lowering price. The potential innovations and uses for the new gTLD namespace will be stifled if limitations to entry are imposed.

…Similarly, delaying the introduction of new gTLDs for unsubstantiated fears of price gouging by way of forcing defensive registrations – based upon the omission of price caps in registry contracts – is not a sufficient reason to delay the benefits of introducing competition into the DNS. GTLDs without price caps exist today, yet the registry operators of those gTLDs have not been the subjects of complaints of opportunistic behavior.

While the New gTLD Program already included several protections for intellectual property concerns, and even more protections are under consideration right now, those requesting additional economic studies to take into account the costs to trademark holders fail to provide any specific evidence to support why entry into an entire market should be delayed.

Heath (INTA): The correct time for the introduction of new gTLDs is when it can be clearly demonstrated that the introduction will not cause instability to the domain name system, and will produce improvements in consumer welfare that outweight the cost and harm that will affect Internet users and other stakeholders, including owners of intellectual property. INTA believes ICANN’s new gTLD program has not yet made this showing.

Stahura (eNOM): …despite the fact that as the introduction of competition through new gTLDs is part of ICANN’s charter and is called for in the Joint Project Agreement between ICANN and the U.S. Department of Commerce, true competition in top level domains has not occurred. Yes, there are some more TLDs then there were 10 years ago, but the doors have essentially remained closed for entrepreneurs like me who have ideas for generic top level domains and are willing to risk significant capital and time in starting new businesses that can not only create jobs, but benefit consumers in many ways…

…For generic names, a wireless company cannot get clear.com except by paying hundreds of thousands of dollars on the “after market” (the non-Registry market) but they may be able to get clear.phones, clear.wire or clear.web for $50 or less when new gTLDs launch. That is a 10,000 fold price reduction, and for a better, more meaningful, name.

DelBianco (NetChoice): While we are grateful for your attention to this issue, we regret that Congress has been drawn into this contentious debate. If ICANN were properly accountable to users and other stakeholders, we would have been able to address our concerns and resolve our differences. As it happened, however, we need Congress and the Commerce Department to focus ICANN on its core mission and hold it accountable to stakeholders.

…ICANN’s planned expansion of top-level domains would make it even less efficient to guess at domains. As the goliath in search, Google will be the big winner form an expansion of TLDs, along with the companies earning fees for defensive registrations. Likely losers in the planned TLD expansion would be website owners who would buy defensive registrations to reduce the risks and costs to fight cybersquatting and attempts to defraud their customers. These concerns have not yet been adequately addressed by ICANN…

In advance of the hearing, Coalition Against Domain Name Abuse released a call for a full scale audit of ICANN, citing ten major problems.

800.com goes for $250,000 because no one knows about the auction.

You might call it Toy Story, part 2. It goes like this: domain sells at bankruptcy auction, few people know about the auction, more buyers emerge after news of auction gets out, potential buyers challenge sale in court, auction is repeated.

That’s what happened with Toys.com, which ended up selling for about 4 times the initial “winning bid”.

And it almost happened with 800.com, which was sold in a Circuit City auction. The winning bidder picked it up for a song, at only $250,000.

Here’s the setup. The auction for 800.com is planned, but no one reaches out to the domain community to let them know. Therefore, only a few bidders participate. One is Loren Stocker, who filed a claim with the court that he had a first right of refusal agreement with Circuit City. Another is Bill Quimby of TollFreeNumbers.com, who claims he’s “bidding seriously”, although he couldn’t muster up much more than a couple hundred thousand dollars.

Then there was QuamTel, which ended up winning the bidding with an opening bid of $250,000.

Then news gets out and real serious bidders come out of the woodwork. In this case, another company petitioned the court to throw out the sale and offered $500,000 for the domain.

But unlike with Toys.com, the court denied the request.

So QuamTel walks away with a sweet deal on a killer domain. And it’s putting it to good use.

Concord Private Jets buys Jets.com for $375,000.

When I asked Damian Klinger for the name of his company, he promptly answered “Jets.com”.

“OK, I mean what’s your old company name,” I asked.

Klinger is co-founder and president of Concord Private Jets, which just forked over $375,000 to buy Jets.com. And he’s excited about it. So don’t expect him to refer to his company as Concord Private Jets anymore.

When the domain name became available, Concord — er, Jets.com — saw a huge opportunity. (The deal was brokered by Sedo Senior Broker Jeff Gabriel.)

“We felt as a company that jets.com was tremendously powerful for our industry and the product that we’re selling,” said Klinger. “We figured that anyone who’s going to search for private jets is likely to go to jets.com.”

Justifying the $375,000 price tag for the domain wasn’t too difficult. The previous owners were getting 48,000 unique visitors a month, Klinger explained. “If we took 1% of that, that’s 480 people that would possibly fly private,” he said. That may be an unrealistic conversion rate, so he keeps dividing it in half. “If we can get 30 clients a month by having jets.com as a domain name, the ROI would pay us back in a month or two.”

But beyond the web leads, Klinger and his team see other benefits.

“Now when we tell people in general on the phone or in a meeting that we’re Jets.com, the credibility alone by saying Jets.com is worth it,” said Klinger.

That credibility is important in an industry with a lot of fly-by-night operators.

“If we said we’re Concord Private Jets, they start asking how long we’ve been in business and for our financials,” said Klinger. “Jets.com — hey, how can you question it?” he asked, only half-jokingly. “We sell a high end product, and people are sending us a lot of money. They need to trust the people they’re dealing with.”

With a name like Jets.com, the company thinks sales are ready for take-off.

Company to launch new e-commerce store for area rugs.

A group of investors in Iowa have purchased the domain name AreaRugs.com for $405,000 and plan to create an e-commerce store to sell rugs online. It was an all cash transaction.

Lee Weber, head of marketing for AreaRugs.com, said he had to be patient to get the domain name. “It was a name I had on my radar for a long time,” he explained to Domain Name Wire. “I had reached out to [the owner] a long time ago and he didn’t want to sell it.”

The seller works at a flooring company in Dallas, Texas.

The key investors are already in the rug business, which lends credibility to the venture.

In a press release, the company explained its rationale for spending the money on a domain name:

Even in the desolate economy, Ward and his team are confident that the domain will thrive and will eventually become a big success. The team considers the endeavor less risky than most from the outside would and is very optimistic in regards to is expected return on its investment. “It is very rare to have the opportunity to buy a premium ‘.com’ domain name in a proven online consumer category,” said Lee Weber, Head of Marketing, AreaRugs.com. “In economic times like this you have to think outside the box for ways to get the most out of money and our investors feel that we should have no problem getting a decent, if not exceptional, return out of this investment.”