.MUSIC Comments on the Initial Report of the Vertical Integration Working Group (VI-WG)

[Constantine Giorgio Roussos <costa@xxxxxxxx>]

As the latest economic report has indicated, “business models innovations
are difficult to predict.” ICANN’s role is to ensure that the introduction
of new gTLDs are aligned with the reasons behind launching new top-level
domains: increasing competition, giving consumers more alternatives and to
introduce unprecedented innovation in the domain space.


The Vertical Integration Working was designed not to reach consensus based
on the fact that there were polar opposite groups that were either in favor
of change or to keep the status quo, or limited variations of it. It was no
surprise that the Free Trade Model received the most support with 17 votes
(not 16 which is incorrectly stated in the report), with over 35% more votes
than the second most popular proposal.


Free Trade is consistent with the economic times of today because the
marketplace will always be the sole determinant of success. Demand and
supply are dictated by modern economics: the marketplace. With hundreds of
new gTLDs launching, new entrants will have difficulties separating
themselves apart and creating value beyond the traditional, novelty domain
name. This puts the new gTLD program at risk because new entrants will be
bound to “old” methods and constraints to doing business, which are in favor
of the existing “big” players.


No-one expects that most new gTLDs will bring innovation in the space and
use vertical integration to provide value-added services and bundles to
consumers that stretch beyond the domain space. Most new gTLDs will choose
to use the “shelf space” of established registrars and their distribution
channels to sell their domains i.e use the current system of distribution
without the need of vertical integration.


However, there will be some new entrants who have new innovative business
models which would require new technology integration and expanding
product/service offerings. This will offer added convenience, lower and
consistent pricing, product/service bundles and innovations that would
ultimately give consumers a better value proposition than ever before. This
also applies to self-distribution. Convenience, consistency and speed are
the new currencies of today’s Internet. Self-distribution adds this value
proposition to end consumers.


However, Free Trade should be reserved for only new entrants. There are
obvious risks allowing companies such as Verisign to vertically integrate
because monopoly power can be abused.


There  is  need  for  a  process  that  would  allow  new entrants to
 request  exceptions  to be allowed to vertically integrate and have  them
 considered  on  a  case-by-case  basis.  The  proposed  reasons  for
exceptions,  and  the  conditions  under  which exceptions  would  be
allowed,  varied  widely  within the Vertical Integration Group. Defining
criteria and establishing inflexible guidelines in regards to who is
eligible for exceptions is a complex task which might exclude community
applicants with specialized business models that are set up for that
purpose. For example, a community applicant might apply to have their string
in translated or IDN languages, eg .MUSIC in Arabic or the French .MUSIQUE.
One translation might have higher registration counts than others. So would
one translated string of the same business be vertically integrated, while
the other is not because one is cultural (IDN) and the other one is Latin
(.MUSIC)? How would a new applicant integrate new translated strings under
the same business model if each string is treated differently in regards to
Vertical Integration, even though it is the same translated string? This is
why case-by-case scenarios must be adopted in regards to Vertical
Integration exceptions. Also there should be no additional cost to new
applicants for requesting exceptions or for being evaluated for it.



Exceptions should not discriminate against new entrants and all new entrants
should be given the opportunity to present their case to ICANN and show
beyond reasonable doubt that vertical integration will increase competition,
bring innovation and help specialized communities. Exception consideration
must be flexible enough to go beyond the trademark (.brand) consideration.
Brands represent their specialized community. Why should community
applicants not be able to represent their specialized community as well?
Vertical Integration decisions should abide to transparency, equality,
non-discrimination, fairness and openness.


The JN2 Proposal goes against the very nature of Internet ecommerce and
business practices that rewards new entrants for expanding the value
proposition pie and success. The 15% cross-ownership interest or placing a
cap on number of registrations are both unsubstantiated measures that are
designed to punish success. New gTLD entrants will not have any chance of
becoming the size of Verisign, Afilias or Godaddy. Most consumers do not
even know the existence of .mobi, which has nearly 1 million registrations.
Even .biz and .info with their millions of registrations are considered
“inferior” goods in comparison to .com. One can corroborate this fact by
comparing sales of .com vs .biz/.info domains. Placing caps for new gTLDs
will not only undermine the very nature of launching new gTLDs and
increasing competition, it will also create an environment of unfairness. If
caps must be incorporated, those must be consistent with the company that
holds the most registration: Verisign. Even placing a 1% of Verisign cap
(nearly 1 million registrations), seems inconsistent with the very nature of
increasing competition. If ICANN would like to increase competition, price
caps and limitations on cross-ownership should be absent for new entrants.
They do not give incentives or serve any positive outcome for new entrants
that perform well in the markeplace, but only ensure that “the wealth is
spread” in an unfair manner that does not reward actual performance.


Lastly, it would be costly and time consuming for ICANN to be monitoring
such arbitrary numbers that do not really make a difference that matters.
Malicious and abusive conduct must be enforced when the issue arises.
Everyone is innocent until proven guilty. ICANN is not a governmental agency
and is a not-­‐for-­profit California corporation,  whose  business
relationships with  registries  and  registrars  are   contractual.  ICANN
does not possess governmental subpoena power to exercise its powers to run a
compliance enforcement program. ICANN should abide to common business
practices with contractual obligations. If abuse is reported, then ICANN can
investigate and take action. This is less costly, just as effective and less
complex. Enforcing arbitrary cap numbers or ownership interests is not money
well spent or an activity that is warranted in regards to new entrants.


Discussions that pertain to registry/registrar abuse that would lead to
unavailability of names and high prices should not be universally attributed
to vertical integration. For example, .MUSIC as a non-for-profit will be
reserve and develop all premium domains such as rock.music, for the best
interest of all .MUSIC registrants, who can opt-in to any premium domain
through tagging selection. All premium domains will be owned by the
community and used to best serve them for free. This scenario sorts out the
issue of high prices or unavailability of premium domains. .MUSIC not only
will allow all .MUSIC registrants to opt-in to any premium domain that
reflects their content, they will do so for free. This is an example why
exceptions and case-by-case instances should be adopted by ICANN in allowing
Vertical Integration and where the proverbial harmful “genie out of the
bottle that can’t be put back” is non-existent.


Constantine Roussos

.MUSIC

http://www.music.us