An unnamed organization just paid $135m for the rights to sell ".web" domain names. This is three times the previous record of $45m for .shop, and seven times the average auction price for top-level domains.
The massive price tag has raised eyebrows in the domain name industry, not least because one of the companies taking part in the bidding last week sued the non-profit running it, ICANN, in an effort to prevent the auction from going ahead.
Under the auction rules, all $135m will now go into ICANN's coffers, to be added to the $105m it has made from the auction of 15 other top-level domains. ICANN's total budget for 2016 stands at $113m.
Although we know the identities of the seven bidders in the auction, the results have yet to be made public and industry insiders suspect that a company called Nu Dot Co, which has been accused of being a shell company, paid the extraordinary fee for control of .web.
The other bidders included Google and several large internet registry companies: Afilias, Donuts and Radix, as well as Schlund and Web.com.
Notably, Nu Dot Co was the only one of the seven to refuse to agree to a private auction where the proceeds would have been split between all the bidders, rather than go to an ICANN auction where the non-profit company receives all the money.
Donuts suspects something untoward is going on and used ICANN's appeal procedures in an effort to postpone the auction, without luck. Even more unusually, the ICANN board's governance committee took just four days to reject Donuts' request, when normally it takes over a month to make a decision.
When ICANN decided to push ahead with the auction, Donuts then sued the organization, asking for a temporary restraining order on the grounds that it wasn't clear who owned Nu Dot Co and ICANN had failed in its duty to identify who was in control of the company.
Just three days later, Nu Dot Co's CFO and COO filed affidavits alongside two from ICANN senior executives claiming that nothing had changed since the company first made its application.
Industry speculation is that the owner of the dot-com registry, Verisign, is secretly behind Nu Dot Co and plans to purchase .web in order to remove what could be a serious competitor to its dot-com crown.
Earlier this week, in paperwork submitted to US financial watchdogs, VeriSign declared it will "pay approximately $130.0 million for the future assignment of contractual rights, which are subject to third-party consent. The payment is expected to occur during the third quarter of 2016."
That suggests VeriSign coughed up $130m for .web, and Nu Dot Co added $5m to retain a stake.
Another slated possibility is that publicly listed company Neustar – which previously bought the .co top-level registry from the Nu Dot Co executive team – is behind the company.
Whoever bought .web will be listed on this ICANN page, when the DNS overseer gets round to updating it.
Whatever is going on behind the scenes, few in the industry can make sense of the $135m price tag. With domain names averaging between $10 and $50, the company would have to become one of the largest registries on the internet, selling millions of domains under .web, in order to make a profit.
Across the 1,000 top-level domains that have been added to the internet in the past year, the average registration figure is just 21,000 names. Whichever way you look at it, paying $135m for .web does not make obvious financial sense – so there has to be a significant element of corporate strategy and very deep pockets for the auction price to make sense. ®