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In the case where multiple entities apply for a single ICANN [[new gTLD]], two main models -- '''ICANN Auctions''' and '''Private Auctions''' -- will be used to determine the winner of each contention set. Exceptions are made in the case of geographic and community-based applicants, who receive preferential treatment over other applicants.

In the case where multiple entities apply for a single ICANN [[new gTLD]], two main models -- '''ICANN Auctions''' and '''Private Auctions''' -- will be used to determine the winner of each contention set. Exceptions are made in the case of geographic and community-based applicants, who receive preferential treatment over other applicants.

==ICANN Auctions==

==ICANN Auctions==

ICANN condones private auctions, as it has encouraged applicants to resolve contention themselves, presumably through buy-outs, partnerships, and auctions. ICANN offers its own auction model as a last resort. All proceeds from gTLDs auctioned off under ICANN's auction model will go to ICANN as "excess funds" that will be redistributed at a later date, in ways that are yet to be determined.<ref>[http://www.slate.com/articles/technology/future_tense/2012/11/icann_s_gtld_auction_proceeds_should_be_used_to_bring_mesh_technologies.html ICANN, Make a Difference], Slate.com. Published 27 November 2012. Retrieved 6 December 2012.</ref>

ICANN condones private auctions, as it has encouraged applicants to resolve contention themselves, presumably through buy-outs, partnerships, and auctions. ICANN offers its own auction model as a last resort. All proceeds from gTLDs auctioned off under ICANN's auction model will go to ICANN as "excess funds" that will be redistributed at a later date, in ways that are yet to be determined.<ref>[http://www.slate.com/articles/technology/future_tense/2012/11/icann_s_gtld_auction_proceeds_should_be_used_to_bring_mesh_technologies.html ICANN, Make a Difference], Slate.com. Published 27 November 2012. Retrieved 6 December 2012.</ref>

==Private Auctions==

==Private Auctions==

===Innovative Auctions===

===Innovative Auctions===

Innovative Auctions (IAL) is offering gTLD auction services to applicants in contention in ICANN's New gTLD Program. Their Applicant Auction was designed by Dr. [[Peter Cramton]], a leading expert on auction design and strategy.

[[Innovative Auctions]] (IAL) is offering gTLD auction services to applicants in contention in ICANN's New gTLD Program. Their [[Applicant Auction]] was designed by Dr. [[Peter Cramton]], a leading expert on auction design and strategy.

 

 

[[Innovative Auctions]]' model is preferred by many applicants, including the largest [[TLD]] applicant, [[Donuts]].<ref>[http://domainincite.com/10828-heres-how-donuts-wants-to-resolve-its-158-new-gtld-contention-fights Here's How Donuts Wants To Resolve its 158 Contention Fights, DomainIncite.com]Published 23 Oct 2012, Retrieved 8 Jan 2013</ref> [[Raymond King]], applicant for 10 TLDs with [[Top Level Design]] expressed his favor for Private Auctions in general, and Innovative Auctions specifically, in an [http://www.circleid.com/posts/20130102_private_vs_icann_auction_of_last_resort/ opinion piece on CircleID]. The Applicant Auction was featured in a recent article [http://www.newyorker.com/online/blogs/elements/2013/08/web-domains-great-internet-land-grab.html in The New Yorker].

During [[ICANN 45]] in Toronto, auction expert Dr. Cramton outlined an "ascending clock" model, where a price is increased by the auctioneer at each stage; bidders and sellers can then either drop out or bid on the increased amount.<ref name="domainincite">[http://domainincite.com/10828-heres-how-donuts-wants-to-resolve-its-158-new-gtld-contention-fights Here's how Donuts wants to resolve its 158 new gTLD contention fights]. Domain Incite. Published 2012 October 23. Retrieved 2012 November 13.</ref>  ICANN has identified the same style of auction for its own Auction of Last Resort.<ref>[http://www.cramton.umd.edu/aa/cramton-applicant-auction-in-brief.pdf Applicant Auction in Brief, Cramton.umd.edu]Published 21 Nov 2012, retrieved Jan 7 2013</ref> At his presentation following the ICANN Draw in December 2012, Dr. Cramton also also addressed a sequential first-price sealed bid, noting that the ascending clock model is still preferred given that it involves: better price discovery, better deposit management, reduced tendency to overbid, and is more consistent with the ICANN Auction of Last Resort.<ref name="Cramton Draw Proposal">[http://www.cramton.umd.edu/aa/cramton-applicant-auction-conference-slides.pdf Cramton Applicant Auction Conference Slides, Cramton.umd.edu]Retrieved Jan 7 2013]</ref>  

During [[ICANN 45]] in Toronto, auction expert Dr. Cramton outlined an "ascending clock" model, where a price is increased by the auctioneer at each stage; bidders and sellers can then either drop out or bid on the increased amount.<ref name="domainincite">[http://domainincite.com/10828-heres-how-donuts-wants-to-resolve-its-158-new-gtld-contention-fights Here's how Donuts wants to resolve its 158 new gTLD contention fights]. Domain Incite. Published 2012 October 23. Retrieved 2012 November 13.</ref>  ICANN has identified the same style of auction for its own Auction of Last Resort.<ref>[http://www.cramton.umd.edu/aa/cramton-applicant-auction-in-brief.pdf Applicant Auction in Brief, Cramton.umd.edu]Published 21 Nov 2012, retrieved Jan 7 2013</ref> At his presentation following the ICANN Draw in December 2012, Dr. Cramton also also addressed a sequential first-price sealed bid, noting that the ascending clock model is still preferred given that it involves: better price discovery, better deposit management, reduced tendency to overbid, and is more consistent with the ICANN Auction of Last Resort.<ref name="Cramton Draw Proposal">[http://www.cramton.umd.edu/aa/cramton-applicant-auction-conference-slides.pdf Cramton Applicant Auction Conference Slides, Cramton.umd.edu]Retrieved Jan 7 2013]</ref>  

Cramton's original model proposed to run auctions during the first quarter of 2013, before ICANN announced the results of their Initial Evaluation. Such a model would allow losing bidders to receive 70% back from their ICANN application fee, but would pose difficulties if winning applicants later discovered their applications were rejected as other applicants would have withdrawn already, and the new gTLD would be left without an owner. The former model also lumped all TLDs that an individual applicant had applied for in one package. Criticisms stating that such a model would benefit larger companies led to a change, so that auctions will now proceed on a TLD-by-TLD basis, with all auctions being simultaneously resolved at the same time.<ref name="domainincite"></ref>  

Cramton's original model proposed to run auctions during the first quarter of 2013, before ICANN announced the results of their Initial Evaluation. Such a model would allow losing bidders to receive 70% back from their ICANN application fee, but would pose difficulties if winning applicants later discovered their applications were rejected as other applicants would have withdrawn already, and the new gTLD would be left without an owner. The former model also lumped all TLDs that an individual applicant had applied for in one package. Criticisms stating that such a model would benefit larger companies led to a change, so that auctions will now proceed on a TLD-by-TLD basis, with all auctions being simultaneously resolved at the same time.<ref name="domainincite"></ref>  

===Right of the Dot===

===Right of the Dot===

[[Right of the Dot]] suggests three models, though it stresses that it is a flexible consultancy with experience to work out unique remediation processes as well. The three auction models are an ascending clock model, a sealed bid, and a live auction. An ascending clock model, is they type to be used by [[ICANN]] in its last resort auctions and the only model offered by competitive provider [[Cramton Associates]]. Right of the Dot recommends the sealed bid auction, which sees each applicant submitting a sealed bid, the highest bidder wins and pays the amount of the second highest bid. It also recommends that the proceeds are not distributed evenly but proportionate with the bid made by each loser.<ref name="CircleID Article">[http://www.circleid.com/posts/20130122_contention_is_best_settled_by_those_who_know_the_players_industry/ Contention is Best Settle By Those Who Know the Players Industry, CircleID.com] Published Jan 22, Retrieved Jan 24</ref> Live auctions are held in real time as bidders shout out or submit electronic bids. One of Right of the Dot's overall goals is to offer applicants "flexibility", and cater to the "desires of the participants".<ref name="CircleID Comments">[http://www.circleid.com/posts/20130102_private_vs_icann_auction_of_last_resort/ Comments by Mike Berkens, Private vs. ICANN Auction of Last Resort, CircleID.com]Posted jan 2 2013, Retrieved Jan 7 2013</ref> In comments on a [http://www.circleid.com/posts/20130102_private_vs_icann_auction_of_last_resort/ CircleID Post] by [[New gTLD Program|new gTLD applicant]] [[Raymond King]], Mike Berkens of Right of the Dot claims that their main opponent, [[Cramton Associates]], is restrictive, writing: "the other auction solution is offered only during highly restricted time frames, and in a highly restricted manner, which we think was designed in mind with the those with largest number of applications." He goes on to say: "We believe that other auction solutions are overly complex and overbearing [which] we believe is more subject to game playing and over paying by winning bidders. We think each auction should stand on its own; each participant should know what their fees will be based on their own auction(s) not be based off auctions they are not participating in; and most importantly should be held at the time and in the manner in which the applicants to each string desire." Their flexibility is extended to the point that Right of the Dot offers to design unique auctions if requested by the applicants.<ref name="ROTD About">[http://rightofthedot.com/gtld-contention/ gTLD Contention RightOfTheDot.com]Retrieved 7 Jan 2013</ref>

[[Right of the Dot]] suggests three models, though it stresses that it is a flexible consultancy with experience to work out unique remediation processes as well. The three auction models are an ascending clock model, a sealed bid, and a live auction. An ascending clock model, is they type to be used by [[ICANN]] in its last resort auctions and the only model offered by competitive provider [[Innovative Auctions]]. Right of the Dot recommends the sealed bid auction, which sees each applicant submitting a sealed bid, the highest bidder wins and pays the amount of the second highest bid. It also recommends that the proceeds are not distributed evenly but proportionate with the bid made by each loser.<ref name="CircleID Article">[http://www.circleid.com/posts/20130122_contention_is_best_settled_by_those_who_know_the_players_industry/ Contention is Best Settle By Those Who Know the Players Industry, CircleID.com] Published Jan 22, Retrieved Jan 24</ref> Live auctions are held in real time as bidders shout out or submit electronic bids. One of Right of the Dot's overall goals is to offer applicants "flexibility", and cater to the "desires of the participants".<ref name="CircleID Comments">[http://www.circleid.com/posts/20130102_private_vs_icann_auction_of_last_resort/ Comments by Mike Berkens, Private vs. ICANN Auction of Last Resort, CircleID.com]Posted jan 2 2013, Retrieved Jan 7 2013</ref> In comments on a [http://www.circleid.com/posts/20130102_private_vs_icann_auction_of_last_resort/ CircleID Post] by [[New gTLD Program|new gTLD applicant]] [[Raymond King]], Mike Berkens of Right of the Dot claims that their main opponent, [[Innovative Auctions]] (formerly Cramton Associates), is restrictive, writing: "the other auction solution is offered only during highly restricted time frames, and in a highly restricted manner, which we think was designed in mind with the those with largest number of applications." He goes on to say: "We believe that other auction solutions are overly complex and overbearing [which] we believe is more subject to game playing and over paying by winning bidders. We think each auction should stand on its own; each participant should know what their fees will be based on their own auction(s) not be based off auctions they are not participating in; and most importantly should be held at the time and in the manner in which the applicants to each string desire." Their flexibility is extended to the point that Right of the Dot offers to design unique auctions if requested by the applicants.<ref name="ROTD About">[http://rightofthedot.com/gtld-contention/ gTLD Contention RightOfTheDot.com]Retrieved 7 Jan 2013</ref>

Further options that the team will facilitate include giving the proceeds of the auction to a third party charity.<ref name="CircleID Article"></ref>

Further options that the team will facilitate include giving the proceeds of the auction to a third party charity.<ref name="CircleID Article"></ref>

Right of the Dot has partnered with [[Escrow.com]] to facilitate their auctions. The auction fees begin at 4% and depend on the auction model selected.<ref name="ROTD About"></ref>

Right of the Dot has partnered with [[Escrow.com]] to facilitate their auctions. The auction fees begin at 4% and depend on the auction model selected.<ref name="ROTD About"></ref>

The company is led by [[Monte Cahn]] and [[Mike Berkens]], two very well-known [[domainer]]s and industry veterans. They note that they have 17 years of domain auction knowledge and experience and have conducted tens of thousands of auctions. They emphasize their industry knowledge and personal connections are a unique asset that they bring to bear, and believe it will empower them to bring more applicants to the table compared to non-industry service providers.<ref name="CircleID Comments"></ref> Right Of The Dot has received an Auction Business License for Contention Resolution Services by the State of Florida Department of Business and Professional Regulation for the exact purpose of:  New TLD Contention Resolution and Consulting Services including Private Auction Services for competing applicants, Internet Domain Name Auctions, Sales, Brokerage, and Management Services.<ref name="ROTD About"></ref> [[Right of the Dot]] is not only offering auction services, but an entire full-service gTLD consultancy, from positioning the domain pre-launch to guiding it through managed and unique launch programs, identifying premium names for auction, later traffic and domain monetization, and beyond. They have secured a number of high-profile partners, such as [[Architelos]], to assist them in their work.<ref>[http://rightofthedot.com/about/ About, RightOfTheDot.com]Retrieved 7 Jan 2013</ref>

The company is led by [[Monte Cahn]] and [[Mike Berkens]], two very well-known [[domainer]]s and industry veterans. They note that they have 17 years of domain auction knowledge and experience and have conducted tens of thousands of auctions. They emphasize their industry knowledge and personal connections are a unique asset that they bring to bear, and believe it will empower them to bring more applicants to the table compared to non-industry service providers.<ref name="CircleID Comments"></ref> Right Of The Dot has received an Auction Business License for Contention Resolution Services by the State of Florida Department of Business and Professional Regulation for the exact purpose of:  New TLD Contention Resolution and Consulting Services including Private Auction Services for competing applicants, Internet Domain Name Auctions, Sales, Brokerage, and Management Services.<ref name="ROTD About"></ref> [[Right of the Dot]] is not only offering auction services, but an entire full-service gTLD consultancy, from positioning the domain pre-launch to guiding it through managed and unique launch programs, identifying premium names for auction, later traffic and domain monetization, and beyond. They have secured a number of high-profile partners, such as [[Architelos]], to assist them in their work.<ref>[http://rightofthedot.com/about/ About, RightOfTheDot.com]Retrieved 7 Jan 2013</ref> To date, Right of the Dot has not held any private auction events.

===Sedo===

===Sedo===

There does not appear to be any direct information on the types of auctions preferred by Sedo available at this time, January 2013.

There does not appear to be any direct information on the types of auctions preferred by Sedo available at this time, January 2013.

==Auctions as Illegal?==

==Legality of Private Auctions==

In March 2013, the [[ICANN]] community and its new gTLD applicants and their representatives responded to news that prominent portfolio new TLD applicant, [[Uniregistry]], had learned from the U.S. Department of Justice that Private gTLD Auctions would be potentially illegal and could be prosecuted as "bid-rigging." The practice in question is illegal in various countries and largely related to government contracts, when bidders for multiple contracts may collude to each submit one high-ball bid for different jobs, thereby guaranteeing that they will each receive the project where they were able to submit the lower bid. The practice inflates the price paid for work obtained via bidding processes. The ICANN process is notably different in the fact that ICANN has expressly noted that it prefers not to receive funds via auction and prefers applicants to reach agreements among themselves. However, it is not up to ICANN whether or not charges are pressed, and the Department of Justice (DOJ) apparently has declined to issue a business review of various private gTLD contention resolution mechanisms. [[ Uniregistry]] has concluded that because the DOJ declined to issue a business review, that, "no private party, including ICANN, has the authority to grant to any other party exemptions to, or immunity from, the antitrust laws. The decision means that the Department of Justice reserves its right to prosecute and/or seek civil penalties from persons or companies that participate in anti-competitive schemes in violation of applicable antitrust laws."  

In March 2013, the [[ICANN]] community and its new gTLD applicants and their representatives responded to news that prominent portfolio new TLD applicant, [[Uniregistry]], had learned from the U.S. Department of Justice that Private gTLD Auctions would be potentially illegal and could be prosecuted as "bid-rigging." The practice in question is illegal in various countries and largely related to government contracts, when bidders for multiple contracts may collude to each submit one high-ball bid for different jobs, thereby guaranteeing that they will each receive the project where they were able to submit the lower bid. The practice inflates the price paid for work obtained via bidding processes. The ICANN process is notably different in the fact that ICANN has expressly noted that it prefers not to receive funds via auction and prefers applicants to reach agreements among themselves. However, it is not up to ICANN whether or not charges are pressed, and the Department of Justice (DOJ) apparently has declined to issue a business review of various private gTLD contention resolution mechanisms. [[ Uniregistry]] has concluded that because the DOJ declined to issue a business review, that, "no private party, including ICANN, has the authority to grant to any other party exemptions to, or immunity from, the antitrust laws. The decision means that the Department of Justice reserves its right to prosecute and/or seek civil penalties from persons or companies that participate in anti-competitive schemes in violation of applicable antitrust laws."  

Commentators have noted that the DOJ could just as easily prosecute the ICANN Auctions of Last resort, though ICANN would have significant funds obtained via these auctions and the application process to defend itself via legal proceedings.<ref>[http://domainincite.com/12316-did-uniregistry-over-sell-the-auction-antitrust-risk Did Uniregistry Over Sell the Auction Antirust Risk, DomainIncite.com]Published 20 March 2013, Retrieved 29 march 2013</ref>

Commentators have noted that the DOJ could just as easily prosecute the ICANN Auctions of Last resort, though ICANN would have significant funds obtained via these auctions and the application process to defend itself via legal proceedings.<ref>[http://domainincite.com/12316-did-uniregistry-over-sell-the-auction-antitrust-risk Did Uniregistry Over Sell the Auction Antirust Risk, DomainIncite.com]Published 20 March 2013, Retrieved 29 march 2013</ref>

==References==

==References==

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