Nominet Under Fire (Again)

Nominet is coming under fire again.

A group of Nominet critics, headed by Krystal hosting’s Simon Blackler are mounting a campaign to oust members of Nominet’s board including the CEO.

The campaign purports to be focussed on the “public benefit” aspect of Nominet and is using the domain PublicBenefit.uk to lay out its goals and collect support from Nominet members for an EGM.

Nominet runs the .uk domain name registry, as well as providing registry backend services for .wales and .cymru and a number of “.brand” domain extensions.

Unlike most domain registries it’s setup as a “member organisation”, so to become a registrar you also have to “join” Nominet as a member if you want to get the discounted wholesale pricing. (You can become a registrar without being a member, but you’d be paying £80 / year for domains). This means that registrars are members, but members can also include people and organisations who aren’t registrars.

So it is on the basis that the members can vote on a variety of things that this campaign is calling for an EGM and has put forward a rather explosive motion to remove multiple directors from the company and to install two new directors:

ORDINARY RESOLUTIONS
THAT the following persons be removed from their respective offices as directors of the Company with immediate effect pursuant to section 168(1) of the Act:
a. Eleanor Hester Bradley
b. Russell Adam Haworth
c. Benjamin Edwin Hill
d. Jane Elizabeth Tozer
e. Mark William Wood

THAT, subject to the passing of resolution (1) above, the following persons (who have consented to act as directors) be appointed as directors of the Company with effect from close of the meeting:
a. Sir Michael Lyons
b. Axel Pawlik

Three of the people flagged for removal are employees of Nominet. Russell Haworth is Nominet’s CEO, Eleanor Bradley runs a lot of the registry operations, while Ben Hill is the company’s finance guy. Mark Wood is the current board chair and Jane Tozer is an appointed director. It’s not clear why the other appointed directors aren’t being singled out for removal .

And the proposed new board members?

Sir Michael Lyons was the author of a report on Nominet from a few years back and is also the former Chairman of the BBC. Axel Pawlik was the head honcho of RIPE until his departure in the latter half of 2019.

It’s not really clear from the campaign’s manifesto how exactly they plan to execute their goals apart from a statement that the newly anointed directors will have a clear mandate. But there’s only two new directors being appointed, so even if the vote to remove people and appoint these two were to succeed I’m not sure how they can somehow control the board and its actions. More importantly Nominet is not simply a Board. It’s also a functioning company with employees, offices and a lot of infrastructure. Ousting the CEO and the MD of registry operations could wreak havoc on the operations of the company and staff morale.

And apart from ousting directors what exactly are they asking for?

There’s a five point plan:

• Reestablish Nominet’s Public Benefit Mission
• Immediate establishment of communication channels with members; early action to garner insight into members’ views on the organisation’s direction
• Conduct a full review of the company’s strategic direction, including diversification
• Conduct a review of remuneration
• Examine the UK Corporate Governance Code with view to commitment to follow

But is that really the issue?

Personally I don’t believe that the stated focus on public benefit is the real driver behind a lot of this.

Many of the people involved with this latest campaign have been longterm critics of Nominet.

While some of them have been pushing the public benefit angle for others one of their main issues has always been financial. I suspect that for some the wholesale pricing of .uk domain names is their real issue, as quite a few of them are holders of domain portfolios. Any increase in the wholesale price was going to have a negative impact on holders of large portfolios. In the past few years the wholesale price has gone up, but prior to the recent changes the price had been static. The UK domain and hosting market has been highly competitive for many years and a lot of the bigger players have often used below cost selling as part of their customer acquisition strategy. Krystal, for example, seem to have a distinct dislike of the large US hosting and domain companies like GoDaddy and Endurance. Other smaller UK based registrars have often questioned if Nominet was cutting special deals with the larger players. The reality is that winning market share takes deep pockets and over the past few years many of the smaller players in the hosting and domain space have merged or simply been acquired. There are always going to be a certain number of smaller players in the market, but the ones that are growing fastest are the ones with the deeper pockets.

Others would have issues with the salaries being paid to senior staff and directors of the company. This argument is one that is often had about any organisation that is either “not for profit” or has some level of “public benefit”. The rationale from critics is that these companies should keep their overheads, including payroll, very low and that this will allow more of the companies’ monies to be channeled into whatever purpose they may have. The problem with that argument however is that in the world of IT in particular if you want the best staff you need to pay commensurate salaries. While the salaries of the senior executives are often the ones under the microscope it’s highly unlikely that Nominet would be able to attract and keep the kind of staff they need to run a world class registry unless they were paying all staff in line with industry.

Another issue that is being cited is “engagement” with members. Nominet used to have mailing lists, but those were shutdown several years back. The replacement forum was closed with no notice to members during the middle of the AGM last year. While I could understand why they chose to close the forum I didn’t think the manner they did it in was appropriate. Nominet does have a team that has been organising virtual events over the past year while “in person” things have not been possible. I’ll admit I haven’t been able to attend any of them as I was got a little “zoomed out” in recent months. But what is it that members actually want? Nominet has a mixed track record when it comes to handling feedback and input from members and the broader internet community. However from what I’ve seen in various fora the main complaint from the more vocal critics is more that Nominet did not act on the feedback from them. That’s not quite the same thing as not listening to the feedback.

So what next?

With this latest debacle unfolding over a weekend with some of the media picking up the story in a couple of outlets it’ll be a couple of days before anything can happen ie. formal reactions of some kind from Nominet beyond the quotes from Russell Haworth in The Register.

On Friday Nominet announced that they were proposing a new Registry Advisory Council and were seeking input. That announcement and proposal details might merit its own post, but essentially the proposed structure would allow members to provide Nominet feedback and input via a formal structure. The timing of the announcement and the late hour of the email on a Friday night is unfortunate as it is now being spun as a reaction to the EGM campaign, even though that campaign hadn’t been announced to the public at that stage.

I suspect there’ll be multiple blog posts from various parties about this entire debacle over the coming weeks and the media will definitely pick up on the story.

My own views on this are pretty clear.

I do not support the proposal and will be voting against it if and when there is a vote on the motions.

Nominet is far from perfect. I don’t know of any organisation that does not have flaws, but I don’t think this drastic proposal will improve anything for the broader internet community and in fact could end up undermining a domain registry that has been very stable for many years. Bear in mind that Nominet’s role is operating critical infrastructure for the UK and the broader internet.