Company files motion to compel Network Solutions’ parent company to provide a witness.
Verisign has filed a motion (pdf) in a Florida court to compel Web.com, parent company of Network Solutions, to provide a witness to testify about how the registrar accounted for free .xyz domain names.
Network Solutions gave away perhaps hundreds of thousands of .xyz domain names last year. They weren’t just offered for free; They were placed in customer accounts on an opt-out basis.
Verisign is suing .XYZ for false advertising. Among its arguments is that .XYZ used these free domains as evidence that there was high demand for its .com alternative.
Verisign has already deposed one Web.com employee on the matter, but he was not able to answer questions about how the registrar accounted for the registrations.
In the motion to compel, Verisign wrote:
XYZ has made public statements asserting that XYZ has received the full wholesale price for every .xyz domain name sold and has achieved $5-$6M in revenue in .xyz’s first 6 months of its general availability. Based upon information obtained in discovery, Verisign believes that Defendants made such statements knowing that they were false. Web.com’s pricing and method of accounting for the transaction will help show that the understanding between the parties was that Verisign (sic) was not earning revenue as a result of these “free” giveaways, but was actually paying Web.com to purchase .xyz domain names so it would falsely appear that users were voluntarily purchasing such domain names on their own. Consequently, this information is critical to prove Defendant’s statements were false and were knowingly made with the intention to deceive customers.
I’m not sure all of the details behind the the .XYZ/Network Solutions deal. That said, I haven’t personally seen an article that quotes Negari saying he received the “full wholesale price” or the revenue number. It’s no secret that .xyz has offered a number of promotional prices below the general wholesale price for .xyz. I’ve seen reporters make their own conclusions, though. If you have an example in which this is stated, please let me know.
It’s also interesting to see the sticky situation this lawsuit is putting Verisign in. It wants .xyz to shut up about the lack of availability of .com domains and to stop saying it’s doing so well. But Verisign is also upsetting its top customers, such as Web.com, in the process.
I remember seeing that Negari typed on a blog he got full wholesale price on every domain sold through NetSol. If I find the article I will link to it.
Quote from Daniel: “Regardless of whether a registrar charges $100, $5, or gives the domains away for free, I get paid the ENTIRE wholesale price, which is the same price that every registrar pays.”
Andrew Allemann says
The latter part of that – “that every registrar pays”, could become an issue. “the ENTIRE wholesale price” could be construed to mean the wholesale price, which is sometimes discounted.
Joseph Peterson says
That link to Daniel Negari’s interrogation by Rick Schwartz makes for an interesting re-read. I’ve been excoriating this .XYZ CEO without interruption for 14 months, beginning in the comments section there.
Back then, I really did think Negari would admit to participation in the scheme and apologize for attempting to cheat and deceive the online community. Clearly, I underestimated the gall, the brazen conceit of this skateboarding mountebank.
His answers to direct questions are all slippery evasion and artful mendacity. For instance, let’s put Negari’s quote in context. Rick Schwartz asks him point blank:
“Were you behind it?”
And what is Negari’s response? 6 paragraphs explaining to a domain industry audience the difference between “Registrars”, “Registries”, and “Registrants” – each term capitalized and in bold. As if we needed to hear this! Then, after that crude, condescending sleight of hand, Daniel Negari finally gets around to half-answering the question. He says:
“Here is what I do know:
Regardless of whether a registrar charges $100, $5, or gives the domains away for free, I get paid the ENTIRE wholesale price, which is the same price that every registrar pays.”
When someone says “here is what I DO know”, he wants us to believe that’s ALL he knows. That’s why court testimony is given after affirming to tell not just the truth but the WHOLE truth. I’m confident that Negari knew a great deal more than that drivel about the registrar stuffing. Surely a CEO would.
Negari’s intent to deceive seems clear. After all, even after the suspicious registrations were exposed, he continued to point to the numbers – fraudulently, in my opinion – as evidence that his million-domain prediction was coming true. Clearly, that prediction was itself based on the Network Solutions deal, which he knew would continue.
Only a fool believes Network Solutions would pay to register such awful .XYZ domains without prompting and recompense from the XYZ Registry. In many cases, their customer had already allowed the matching .COM to expire! So clearly the .XYZ wasn’t wanted and wouldn’t be renewed. Not all .XYZ domains are garbage, but the vast majority of these were.
Behaving rationally, Network Solutions could have given its customers opt-in freebies so as to minimize its cost, maximize its renewal percentage, and appear in a better light. Yet instead we saw them neglect their own interests, doing only what would make Negari’s prediction come true. That equation doesn’t balance without money or something similar passing from Negari’s company to Network Solutions.
I think the majority of us in the industry saw this right away over a year ago.
*milksnort* I’m sorry…what? “Skateboarding mountebank?” Are you trying to out this guy as the draintrap he is, or are you crowning him the millennial Pimpernel? Precision of language, please. Who’s helping mother? Be less entertaining.
Xyz gained on false advertising numbers imo and good for verisign, hope they get them. In my book xyz is a disgrace.
NetSol needs Verisign way more then Verisign needs NetSol.
Last year there was a listing on one of the domain blogs of some of the domains that got placed into the accounts. The domains I remember seeing were literally crap, like akjsfdsda89k.xyz or just random crap like that. I would be extremely surprised if NetSol paid .xyz for this types of domains to be placed in accounts (unless they paid them and then .xyz gave them a credit back or some kind of accounting offset) because there’s no way these types of domains are getting renewed so NetSol would have been throwing away money.
Will be interesting to see what the real story is if it comes out because there is some credibility that hangs in the balance.
imagine your tiny local grocery store-owner’s wife saying they sell
better goods than the entire chain of Walmart.
it is harmless … until Walmart actually starts paying attention to it,
next Walmart sues the local grocery and before you know it, both the owner and the wife will be national news. at such point Walmart knows better how to backoff in pro of investors, PR and their own name. the public will always crucify the big guy under national news. Walmart knows better that the local tax-free incentive is valuable and they want to renew it, for such the community needs to love them, or to the very least: not hate them.
now, imho, .. Verisign .xyz …. please tell Verisign to call Walmart.
Presumptive renewal of the dot com is very much like Walmart’s tax-free incentive on a given community: it can go sour overnight.
C.S. Watch says
Given past experience dragging domains kicking and screaming out of NetSol’s crass, mousetrappy platform, one has to assume that anyone suing NetSol for their marketing practices is doing God’s work. (Although…big picture, Verisign, big picture… http://americatopten.blogspot.com/2006/12/advertisement-war-bmw-started-it-audi.html)
There will come a day when consumers get wise to how new TLDs have gamed their buyers like dopey marks, as .xyz is doing. That should be factored into the branding long haul. (‘Whaat, the URS suspends the domain until the end of the registration—then what? A drop auction? Gorsh, who keeps the overage?)
All the new greedy TLD branding noise has collateral damage for overseas entrepreneurs that is regrettable. Country codes were important—prestige and validation via ‘local cred’…like Philly cheesesteaks. The alt TLD racket has defrayed this and hijacked their pride, which has had real consequences.
There are 4.6 QUADRILLION ten character dot-com options. Like nobody did the math at the inception of this system? Nobody ran some numbers? The argument that there aren’t enough dot-coms can only come from someone who has a cash money interest in saying so.
Cripes. .xyz? That ad lost me at Nevada plates.
As Rick Schwartz said in a DomainSherpa video: https://www.youtube.com/watch?v=IoJFH_cSevg
So what are the potential sanctions or penalties for Negari and .xyz, if evidence points to collusion and/or false advertising?
This is some serious stuff.
Network Solutions involved in shady business practices? Mind. Blown.