GAC Workshop. TLDs and Domain Name Market Overview. Alexa Raad, CEO. John Matson, COO Architelos and/or its affiliates. All rights reserved.

Enabling wisdom in the service of the Internet Strategy Consulting New gtld Services TLD Managed Services - Business Case Builder - NameSentry - Registry Financial Sys. Alexa Raad, CEO John Matson, COO Michael Young, CTO Norbert Grey, CFO PIR KPMG LLP Afilias.mobi.mobi CapGemini Grocery Gateway VeriSign Ernst & Young AT&T General Dynamics 2012 Architelos and/or its affiliates. All rights reserved. 2

2012-2013 Total Market cctld vs. gtld 250 Total DUM (M) as of Mar 31 250M names 160 Total DUM (M) as of Mar 31 Both grew strong 200 140 120 150 100 80 100 60 50 40 20 0 2007 2008 2009 2010 2011 2012 2013 (e) gtld 81.2 99 108.9 116.7 128.1 138.1 141.9 cctld 47.4 63 74.1 76.3 81.7 94.9 105.7 0 2007 2008 2009 2010 2011 2012 2013 (e) gtld 81.2 99 108.9 116.7 128.1 138.1 141.9 cctld 47.4 63 74.1 76.3 81.7 94.9 105.7 100% 90% 80% 70% 60% 50% 40% 30% 20% Global Market Share as of Mar 31 cctlds taking market share from gtlds 10% 0% 2007 2008 2009 2010 2011 2012 2013 (e) gtld 63% 61% 60% 60% 61% 59% 57% cctld 37% 39% 40% 40% 39% 41% 43% 35% 30% 25% 20% 15% 10% 5% 0% Growth per Year as of Mar 31 Uneven growth between mature and developing markets 2008 2009 2010 2011 2012 2013 (e) cctld 33% 18% 3% 7% 16% 11% gtld 22% 10% 7% 10% 8% 3% Total 26% 13% 5% 9% 11% 6% Source: Architelos analysis of Verisign Quarterly Domain Name 2013 estimate based upon doubling of Oct 2012 report 6 month data 2012 Architelos and/or its affiliates. All rights reserved. 4

But by Sept. 2012 changes were evident Year over Year % change in DUMS - 2012 versus 2011 12.0% gtlds 10.0% 8.0% 6.0% 4.0% Verisign: Renewals holding, new-adds dropping 2.0% 0.0% Jan Feb Mar Apr May Jun Jul Aug Sep.com.net.org 2011 Architelos and/or its affiliates. All rights reserved. 5

and growth has been declining into 2013 20.0% Top 10 European TLDs by Total Domain Names Jan 2012 - Apr 2013 Growth Percent Year/Year by Month 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr.de.uk.nl.eu.fr.it.pl.es.be.se 2012 Architelos and/or its affiliates. All rights reserved. 6

But what is a Domain Name? Really An ASCII label on an IP address Label = Human recognizable and memorable hence some names more valuable that others Basic utility of a domain name is the same regardless if its a cctld or a gtld Pointer to a resource on the Internet Necessary for routing traffic (because linked to IP address) Used for identity and communication The market value of a domain name has less to do with its functional utility and more to do with its perceived or created value Ultimately it the DNS and IP that matters! 2012 Architelos and/or its affiliates. All rights reserved. 7

Domain name growth Whereas the Web s Business Models Have Web 1.0 Web 2.0 Web 3.0 Domain Tasting & Adwords Brands use facebook.com/brand On ads Mobile apps take off Google applies for 101 and Amazon for 76 new gtlds 200M+ Large Brands Adopt & Enforce IP Community Has value Highest secondary market sale in 2012 is $1M personalloan.com Names Have value Traffic has value Gambling.com sells for $20M Targeted traffic to Pre-existing user Gambling.com sells for $2.5M Mobile /Social computing begins PC dominated world ends 1999 2002 2005 2008 2009 2010 2011 Directories Google Rises Google as Ad platform Twitter Facebook & User Generated Content Mobile FB eclipses Google as Most popular site 10B apps D/L from Apple 2012 2013? 1930 new gtld Apps FB IPO 46B apps D/L from Apple Beyond 2012 Architelos and/or its affiliates. All rights reserved. 8

So Why Wouldn t the Domain Name Industry Change? Need: Identify Then 250+ million names mapped to a few Top Level Domains.com is a morass of content Inefficiencies and artificial scarcity created alternative markets (speculation and secondary market) Now Alternatives & short-cuts Search engines = traffic control SEO used to help search engines drive traffic Advertising spend out of sync with online usage 2011 Architelos and/or its affiliates. All rights reserved. 9

What is happening in the DNS Market? Reduced barriers to entry Unanticipated new players More choice/supply for consumers But also more confusion, chaos Incumbents tend to: React slower, focus on protecting the status quo Resist or deny change Underestimate the upstart competitors High risk, high reward business models Integration along the value chain (up to supplier or down to retailer) Balance of power shifts Shifting price points and profit margins along the chain One big success can change everything 2011 Architelos and/or its affiliates. All rights reserved. 10

Stack of Industry Participants Registrants & End Users Advertisers Stage 3 Future Market Dynamic Demand and Supply Models Support Services Registrars & Resellers Contract Holders Stage 2 New gtld Market Increased Supply & Uncertain Adoption Registries Registrars & Resellers Regulatory Authority Stage 1 Current Market Controlled Supply & Artificial Scarcity 2012 Architelos and/or its affiliates. All rights reserved. 11

Will they? Or Won t They? Debate on whether new gtlds will increase abuse on the Internet But without a benchmark, how can you tell? How safe is it today? Namespace Quality Index (NQI) Values Range is Abuses per million domain names Levels of Abuse Concern Colors Results The namespace quality conditions are As symbolized by this color Percent Abuse less than 100 Excellent Green 0% - 0.01% 100-1,000 Good Yellow 0.01% - 0.1% 1,000-10,000 Exercise Caution Orange 0.1% - 1% over 10,000 Surf at your own risk Red Over 1% 2011 Architelos and/or its affiliates. All rights reserved. 12

What is the NQI Distribution of the Internet Namespace Quality Index Rating of Total Domains (257M) Excellent 4% At Risk 9% Good 26% Exercise Caution 61% 2012 Architelos and/or its affiliates. All rights reserved. 13

NameSentry 2013 Abuse Trend Analysis 1,200,000 Total Abusive Domains Increased over 25% from Dec 2012 to May 2013 4,000 PPM @ 250M Names 1,000,000 800,000 600,000 400,000 200,000 0 Dec 2012 Jan 2013 Feb 2013 Mar 2013 Apr 2013 May 2013 New Domains Found Domains Removed Domains Listed 2011 Architelos and/or its affiliates. All rights reserved. 14

The Internet as a whole? exercise caution (NQI of 4,000) Namespace Quality Index Excellent Good Exercise Caution At Risk TLD APM TLD APM TLD APM TLD APM TLD APM tel 0 hk 102 id 250 me 1,011 info 12,085 no 17 tw 108 nu 260 at 1,066 us 14,932 xxx 27 gr 111 mx 264 eu 1,309 ru 25,079 ie 33 sg 114 ro 266 uk 1,451 asia 25,327 nz 39 nl 116 de 270 ua 1,947 in 27,111 cz 46 kr 132 cl 297 be 2,235 pw 30,151 ch 48 il 139 ir 301 ar 2,362 cn 30,406 dk 53 ae 140 lv 303 org 2,596 sk 62 ve 149 cc 316 com 4,260 Namespace Quality Index au 66 se 151 tr 419 su 7,010 Scale APM fi 81 vn 156 es 449 net 7,121 Excellent less than 100 lt 82 co 172 br 451 biz 7,495 Good 100-1,000 hu 83 my 198 PO 462 pro 7,941 Caution 1,000-10,000 si 92 za 198 jp 556 mobi 9,349 At Risk over 10,000 pt 93 ca 206 tv 600 ws 222 pl 660 All TLDs > 100,000 domains APM- Abuse per million domains Date: as of May 31, 2013 tk 224 name 958 Source: www.namesentry.com it 239 fr 980 2011 Architelos and/or its affiliates. All rights reserved. 15

NameSentry implements GAC recommendations Enables TLD registry to detect Step 1 abusive registrations right away Step 2 And get as much info about it as soon as possible 2012 Architelos and/or its affiliates. All rights reserved. 16

NameSentry keeps audit records of all security threats identified and actions taken by the registry as a result NameSentry automates mitigation workflows including and up to take down 2012 Architelos and/or its affiliates. All rights reserved. 18

Key Messages Overall market slowing before new gtlds Registry, Registrar & Contract Holder business models changing DNS value chain economics shifting One major success can change the industry Abuse on the Internet benchmarked with NQI GAC safeguards can be implemented 2012 Architelos and/or its affiliates. All rights reserved. 19