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The Grizzled Prospectors of the Internet Land Rush

We spoke to Donuts.co, the internet domain version of Daniel Plainview.
February 4, 2014, 10:15am
Image via State Library of South Australia/Flickr

The “biggest internet land grab” is on! The first round of around 1,000 new generic top level domain names—the stuff after the “dot” in .com—are coming onto the open market tomorrow. If you want, say, a “.meme” address (it might be quite lucrative to cybersquat on cats.meme, or sloths.meme, or any animal really), you’ll be buying the space via a registrar like Go Daddy, who themselves will have bought the domain from a registry—in .meme’s case, the registry is Charleston Road Registry Inc., a company wholly owned by Google, in building 43 at the Googleplex.

One less familiar yet still prolific purchaser of new domains was Donuts.co in Bellevue, WA, which applied for 307 gTLDs with the Internet Corporation for Assigned Names and Numbers (ICANN) through generic-sounding company names like “Grand Hollow LLC.,” and “ Sugar Glen LLC.” Donuts was named because “they were nuts for domains.” I called them to ask about the names of their registries.

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If the “land grab” comparison is apt, Donuts.co is something like Oklahoma. They began offering the general public domains already a week ago, and are offering a second set of seven domains on Wednesday. I was curious about why a company would become a domain registrar—a process that entails raising and then spending literally millions of dollars just to apply to be a registry—all just to fight for the privilege of selling “.plumbing.” And that's at the same time as some people think the domain name might not be long for this world (though of course Google is supposed to be the one to kill it, and they’re investing, so who knows?)

I thought the company that registered more domains than Google could shed some light on this, so I called Mason Cole, Donuts.co’s VP of Communications and Industry Relations, to ask how the process works, why his company uses a bunch of different LLCs that are all so generically named, and which real estate he expects will fill the fastest.

MOTHERBOARD: So the great internet land rush is on?

Our first seven top-level domains went live for general availability last Wednesday. We’ll have another seven go live for general availability on Wednesday morning of this week. For the next several months we’ll have new TLDs admitted into the root system for availability probably on the order of four to seven per week for the next several months.

How many do you have in total?

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We applied for 307, but we’re not going to get all of them. We’re qualified for all of them but there’s a lot of intricacy in determining who gets what.

We got about half of what we applied for as a sole applicant. For example, there was only one company who applied for .bike and that was us. There are somewhere in the neighborhood of 150 of those names that we’ll definitely be operating.

The rest have competing applicants like, I think there was nine applicants for .music, for example, so that’s put into what’s called a "contention set," and that contention has to be resolved because there can only be one operator for .music—there can’t be nine. So we’re going through contention resolution on several of our TLD applications and at the end of all that we think we’re going to end up with somewhere north of 200 TLDs that we’re running.

Dan Schindler [Donuts.co co-founder]​ said that there was $100 million worth of investment put into this; is that still the case?

There was actually more than that, but the precise figure wasn’t made public, but it’s more than $100 million.

Can you tell me about how one gets a TLD?

So there’s an organization called ICANN. Their job is to coordinate the domain name system. As the authority over the domain name system, for years they’ve run .com, .net, .biz, etc.

There were rounds of new TLDs in 2000 and in 2004, but those weren’t very big, just six or seven names. So all the people that sort of comprise ICANN as an organization decided that we should have a new round of new TLDs and not only have a new round but not limit it. They sort of already demonstrated that the domain name system could handle more TLDs than currently existed.

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To make a long story short, two years ago ICANN opened an application window where you could apply for any name you wanted. And not only that; it didn’t have to be in the Latin character script. So now you’re going to see TLDs in Arabic, Chinese, and Cyrillic, etc.

So we applied for our TLDs. Basically when you put in your application, ICANN looks at it and there are certain standards you have to meet—mostly technical and financial. Like, do you have the technical ability to run a TLD; do you have the money that you’re not going to go bankrupt in the process? I’m vastly simplifying it, but you get through that period of evaluation, then there’s places where your application can be challenged. For example, if somebody objects to your application because they don’t think you’re going to run the registry in a certain way, there are mechanisms for that to happen.

So if you make it through the period where your application can be stomped down in that way, there’s a period called pre-delegation where ICANN comes into your registry and issues a bunch of commands to check.

Once you’re given a green light you’re given a date for when the TLD’s eligible to go live. You agree with ICANN on when that is. And then it’s delegated into the root system. The root system is a bunch of computers all over the world and that’s the network that makes sure the domain system resolves when you type it into your browser.

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Once it’s delegated, it’s up to you on when to open it up, but you have to make available what’s called a “sunrise process.” Sunrise is a period, 60 days in this case, where trademark holders have exclusive rights to names in your registry. So if you’re Nike that’s when you get Nike.shoes, or if you’re Domino's you get Dominos.pizza, or whatever. And then once the sunrise period is open then you can make your names available to the general public.

But the domains from last Wednesday are already through the sunrise period, right?

Yeah the ones from that day, or immediately prior to that, finished the sunrise process. Another set of names is going live next week. So it’s a rolling registration of some names going live and some going into sunrise. So some names haven’t been delegated yet, and some names are live and available for everybody.

Which ones are already out there?

.Bike, .clothing, .guru, .singles, .holdings, .ventures, and .plumbing. This Wednesday will be .camera, .equipment, .estates, .gallery, .graphics, .lighting and .photography.

Any particular domains that have sold really well already?

We’re getting a fair amount of attention. We’re pretty happy with what we’ve seen, but they’re all doing pretty well.

Do you sell them directly?

Nope. We’re a registry and there are domain name registrars. We’re sort of the wholesaler and the registrar is someone like Go Daddy or Network Solutions. That’s where you go to buy your name and they’re like the retailer. We’re not permitted to sell directly to the public, so we’re working with more than 100 registrars right now.

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There are thousands of accredited registrars around the world so we’re working with as many of them as we can. We set the wholesale price and the registrars are free to market the names at whatever price they want to.

You’ve got a pretty disparate group of domains—.diamonds, .singles, .bargains, etc. How did you decide on which words you’d make into domains?

We put of ton of research into it. We started off with 3,000 candidates for names and whittled it down to the 300. And there was a lot of data that we crunched to get to that final list. It was very intensive. It took a long time to get to our final list that we decided to apply for.

What are the criteria that make for a desirable TLD vs. one that isn’t worth your time?

There’s a fair amount of science and also an art to it. The data crunching I can’t share with you because it’s not public, but in addition to the data that we looked at, we asked if there was an addressable market for the domain. So we looked at .plumbing, which we applied for and is now live. And we said, well yeah, there’s a market for plumbers who need an address on the internet. This domain is more relevant than Franksplumbinginphoenix.com. There were data criteria of the size of the market and the ability to make the names known to that market.

A lot of times people forecast the end of the URL. This came up with the Google Chrome redesign and people were saying, “this is the beginning of the end.” Obviously you don’t buy into that. Can you speculate on the future of the URL? Why get into this now?

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I don’t know I could speculate on the future of URLs. I’m not much of an engineer so I can’t really talk about that. But we raised more than $100 million and paid roughly $58 million in application fees for 307 TLDs. We don’t think that the domain name is close to being extinct.

Do you have any upcoming names you’re expecting will have big bidding wars?

.App, .music, .film, .book, .web. I’m looking at where we’ve had contention—.love, .tech, .hotel believe it or not, has a lot of contention in it. .News, .store are going to be pretty popular.

As I was going over the ICANN website a lot of the domains are held under different LLCs that just lead back to Donuts. Why all the LLCs?

That was just a piece of business advice that we got on how to set up the corporate entities. It doesn’t really mean anything.

How did you come up with the names for the different LLCs?

This was before I got to the company, but my understanding is that one of the guys designed some kind of program that would take a series of random words together like that so there was no repetition. That’s where it came up.

Early on, Motherboard bought motherboard.tv, a country domain. There was a lot of speculation that it would be a lot more popular than it is, but it never seemed to make it.

It’s funny; I get asked this a lot. People ask me, “How can you possibly compete with .com?” But we’re not really competing with .com. They have more than 100 million registries in it. We didn’t get into this to have great big monolithic registries like that. We got into this to fulfill the idea of having new consumer choice for internet identities.

So is .tv successful even if it didn’t reach the level of .com? Yeah, in its own way. We don’t expect .plumbing to hit 100 million registries, but if it does what we think it’s going to do, it will be successful according to its own yardstick. We’ll just have to see.