Guidelines for new registries doesn’t make sense; but therein lies a business opportunity.
If you want to apply for a new top level domain from ICANN, you need to provide lots of financial documentation about your ability to run the TLD. ICANN is mum on how much money you need on the balance sheet, but that’s not all. The new TLD guidebook states that your company must provide:
documentary evidence of ability to fund ongoing basic registry operations for registrants for a period of three to five years in the event of a registry failure or default until a successor operator can be designated.
Generally, the registry fails when it runs out of money. So how will you have enough money on hand to run operations for another 3-5 years? ICANN suggests the following (section 5.2.2):
This obligation can be met by securing a financial instrument such as a bond or letter of credit (i.e., evidence of ability to provide financial security guaranteed by a creditworthy financial institution); contracting with and funding a services provider to extend services; segregating funding; or other means.
Hmm. I don’t know many people who would provide a loan or a guarantee to cover your business for several years IF you fail. In fact, most would include a covenant that voids any line of credit in the event of failure.
So that leaves two options:
1. Segregate funding, i.e. keep a separate escrow account of 3-5 years baseline cash in case of failure.
2. Enter into a contractual agreement with another registry that it will take over operations in the event of your failure.
Both of these create a business opportunity: registry financial escrow services and registry failure insurance. Since some of the existing registries including VeriSign (NASDAQ: VRSN) and Afilias will probably serve as white lable registries, they may be able to sell an insurance policy as part of their agreement to attract new TLD operators.
But ICANN should rethink this loosely-defined guideline anyway. Why not just make part of the fees contributed toward a sort of FDIC insurance for registries? If they fail, the fund will be used to prop them up until a new registry is found.
I’ll be submitting this as a comment on the latest guidebook.