affinity                                                               101 Continental Boulevard, 3rd Floor

El Segundo, CA 90245

Tel (310) 524-3000

Fax (310) 388-1335












Registry Operator’s Proposal






October 2, 2000




D2. Legal Name, Principal Address and Other Information on Registry Operator


Affinity Internet, Inc. (hereinafter “Affinity”)

101 Continental Boulevard, 3rd Floor

El Segundo, CA  90245

United States of America

Telephone:  310-524-3000

Facsimile:  310-388-1335



D3. Other Business Locations. 


          16607 South Vermont Avenue

          Gardena, CA  90247

          Telephone:  310-630-2878

          Facsimile:  310-354-1592



3500 Boston Street, Suite 231

Baltimore, MD 21224

County of Baltimore

Telephone:  410-563-6384

            Facsimile:  410-563-5457



13200 Crossroads Parkway North, Suite 360

City of Industry, CA  91746

Los Angeles County

Telephone:  562-699-3195

            Facsimile:  562-699-1891



8432 Veterans Highway, Suite C

Millersville, MD  21108

County of Baltimore

Telephone:  410-729-1005

Facsimile:  410-729-1001


D4. Jurisdiction of Organization


Delaware Corporation


D5. URL of Registry Operator's Principal WWW site.




D6. Dun & Bradstreet D‑U‑N‑S Number (if any) of registry operator.




D7. Number of employees.


Approximately 150


D8. Registry operator's total revenue (in US dollars) in the last‑ended fiscal year.


Affinity operated for only two months in fiscal year 1999, which was the year of its start-up.  Revenues for that year were $300,493.  Revenues through July 2000 were $4,544,806.  A set of un-audited financials through July 2000 is set forth in Item D13.4.3.  


D9. Directors, officers, relevant managers and 5% owners. 


(i)                 Directors


Harry Hopper, Columbia Capital LLC, director


John McIntyre, Affinity Internet, Inc., chairman


Scott Perper, First Union Capital Partners Inc., director


John Van Hooser, J.P. Morgan Capital Corporation, director


John Watkins, J.P. Morgan Capital Corporation, director


John Zdanowski, Affinity Internet, Inc., director


(ii)               Officers


John McIntyre, Chief Executive Officer


John Zdanowski, Chief Operating Officer


                        Von Cameron, Vice President, Corporate Development                       


Robert Murray, Vice President, General Counsel


Christopher Woodward, Controller


(iii)             Relevant Managers


Elaine Matthews, Director, Customer and Technical Support


Eric Lissoy, Director Systems


(iv)              5% Owners of Common Stock


J.P. Morgan Investment Corporation


Sixty Wall Street SBIC Fund, L.P. (Managed by J.P. Morgan)


First Union Capital Partners, Inc.


Columbia eBiz Partners, LLC


D10. Contacts for This Application. 


Philip J. Berent

181 Hudson Street, Suite 7c

New York, NY 10013

Tel. 212 274 8655




D11. Sub-Contractors Information (See Item d15.3) 


Information about our Sub-contractor, 7Ways.com, who will manage the technical aspects of the Registry Operation and who were responsible for compiling Section III, the Technical Capabilities and Plan, of this document may be found both in Section III and in the attachment 7Ways Corporate Information.





D13.1.1. Company information.


Legal and Organizational Overview


Affinity was found in 1999 with approximately $60 million in venture capital funding from the investors (and others) listed in Item D.9.  Affinity’s original name was eBiz.net. eBiz.net Inc. changed its name to Affinity Internet, Inc. in May 2000.


Affinity was formed for the purpose of establishing a dominant web-hosting platform for small-and medium-size businesses.  Soon after organization and initial capitalization, Affinity acquired the three operating companies that form the core of its present revenue stream:  Affinity Web Hosting, Inc.; ProWebSite; and Dynatek Info World, Inc. (d/b/a Sitehosting.net).   Through its operating companies, Affinity has been operating since 1996. 


Affinity and its related companies employ approximately 150 persons. 


Key Infrastructure and Supply Partners


Affinity has developed supply-based partnerships with selected infrastructure vendors and service-providers believing that long-term relationships provide the most efficient supply to Affinity and allow us to provide better service to our customers. The following firms are infrastructure members of Affinity: 


·        Cisco Systems is the worldwide leader in networking for the Internet. Affinity uses Cisco equipment in its network.


·        Cobalt Networks allows Affinity to offer powerful, yet simple, dedicated Web and application hosting solutions. Affinity is a Cobalt TrueBlue partner.


·        eGain Communications Corp. is a leading provider of integrated, multi-channel customer  communications solutions. The eGain solution allows Affinity to deliver world class customer care.


·        EMC Corporation is the world's leading provider of enterprise storage systems, software and services. EMC Enterprise Storage (intelligent disk arrays, software products and services) is the information storage and management solution that Affinity employs to offer world class Web and application hosting.


·        Intel, the world's largest chip maker, is also a leading manufacturer of computer, networking and communications products. Affinity is a participant in the Intel ISP program.


·        Affinity uses advanced Lucent technology to manage our Customer Care Call Center.


·        Oracle Corporation is a leading provider of eCommerce and Web-based business practices, with database, development tools and business applications that help Affinity deliver state-of-the-art hosted business solutions.


·        Portal is the leading provider of customer management and billing software for Internet and emerging, next-generation communications services. Affinity uses Portal as our billing management solution.


·        Sprint is a global communications company and one of the world's largest carriers of Internet traffic.


·        Affinity is a member of the Sun Developer Connection program.


In addition to its infrastructure partners, Affinity has the following product and service relationships:


·        Allaire is the industry's leading Web platform vendor. The company's products, including ColdFusion and HomeSite, are used by developers to build and deploy interactive Web applications and sites. Affinity is an Allaire Alliance Premium Partner.


·        Affinity supports CyberCash, the world's leading provider of secure electronic payment solutions.


·        Mercantec® is the world's premiere provider of software and services for the fastest growing segment of the eCommerce market - small and medium sized businesses.  Through strategic partnerships, Mercantec delivers eCommerce solutions that are simple to use yet very powerful.


·        Affinity is a Microsoft Certified Solution Provider.


·        Affinity uses RealNetworks technology to deliver media on the Internet.


·        Award-winning TrellixWeb software is now used by thousands of small businesses, organizations and individuals all over the world to create and publish great looking Web Sites.


·        NetMechanic's Web site enhancement and promotion tools are designed to keep Web sites in top shape - and the help businesses ensure that their visitors experiences on their sites are good ones.


Industry Associations


Affinity is a Certified Charter Member of the Web Host Guild (WHG). The WHG is dedicated to raising the standards of the Web hosting industry. The WHG has established a set of objective, verifiable criteria for certifying Web host companies. To become a WHG member, a host company must pass a strenuous certification evaluation. 


(1)   References


Ms. Julie Robertson

Silicon Valley Bank

38 Technology Drive, #150

Irvine, CA  92618

Telephone:  949-789-1928


Sun MicroSystems

File 53640

Los Angeles, CA  90074

Telephone:  800-990-0269

Facsimile:  319-841-6284


EMC Corp.

Dept. CH10648

Palatine, IL  60055

Telephone:  508-435-1000

Facsimile:  508-435-8334


Business Account Solutions

333 South Grand Avenue

Los Angeles, CA  90071

Telephone:  213-613-5020

            Facsimile:  213-613-5040



D13.1.2. Current Business Operations.


            Affinity offers small and medium-sized businesses a full suite of web-hosting and web-related infrastructure services, including e-commerce solutions.  Affinity has more than 35,000 customer accounts. 


D13.1.3. Company History.


Affinity, the parent company and managing entity for the Affinity group of companies, was formed in 1999, and is a Delaware corporation. Affinity seeks to become the preferred web hosting provider for small- and medium-sized businesses. 


Affinity’s strategy consists of the following key elements:


·        Acquire hosting providers to quickly establish major presence – build service offerings, deliver benefits of scale, and create major financial leverage.

·        Build operations to deliver world-class service – integrate “best-in-class” operations and create unique business model to continuously reduce costs and improve service delivery.

·        Develop new services to address customer needs – acquire, develop, or resell services that meet the needs of customers as they continue migrating to more complex, higher value-added services.

·        Build brand recognition and sales channels to drive significant organic growth – generate strong demand by creating unique brand, effective sales channels and strategic partnerships.


Affinity began its mission after raising $60 million in October 1999.  Soon after its organization, it acquired three companies, SkyNetWEB Ltd., ProWebSite Hosting Corporation and Dynatek Info World, Inc. (dba SiteHosting.net) to enhance its capacity to offer a full range of eBusiness hosting services.


·        SkyNetWEB is a leading provider of completely customizable dedicated servers.  It offers a full range of UNIX and Windows NT ®-based dedicated server options including fully customizable eCommerce solutions.


·        ProWebSite brings an outstanding international focus and network of resellers to Affinity.


·        SiteHosting.net utilizes a dedicated team of experienced and certified professional staff members who are experts in the Microsoft Windows NT platform.


D13.1.4. Internet Related Experience.


Affinity’s services are delivered on a flexible, low margin infrastructure that allows Afinity to provide small- and medium-sized businesses cost-efficient and easy use of the internet for marketing, sales, payments/billing, customer service, relationship data mining, and production/delivery optimization.  Affinity also has an active resale program, whereby small- and medium-sized web-hosting and web design-related businesses can “private label” their services to their customers using Affinities infrastructure. 


            Affinity offers the following services:


·        Web Hosting – Affinity offers several hosting packages providing various levels of memory, data transfer capacity, email accounts and site registration features.  Affinity offers both “dedicated servers” to its customers (where Affinity provides the hardware, software and server, but where the customer manages the applications on the server), and “virtual hosting,” where all server and system management responsibilities are provided by Affinity.  Affinity provides 24-hour customer service to its clients, and through alliances with various partners. 


In May 2000, Affinity acquired SkyNetWEB, Ltd. SkyNetWEB provides dedicated servers to hundreds of business customers all over the world. SkyNetWEB specializes in customized solutions to customer requirements and server operations.


·        E-Commerce – Clients of Affinity can choose between a variety of e-Commerce functionality packages, each priced on a monthly basis.  Payment processing can be off-line, or realtime/on-line.  Product page capacity can be customized to accommodate very small to very large offerings. 


·        Affinity’s systems are supported by technology from Sun, Cisco, EMC, Oracle and Intel. The company has developed a proprietary next generation hosting architecture that utilizes the newest switching and storage technology, database software and server hardware.


·        Web Design -- Affinity supports a variety of development tools for its customers.  Trelix Web software is provided free to customers that purchase hosting services from Affinity. Affinity is also a Registered Web Presence provider for Microsoft® FrontPage® 2000. Affinity also provides a variety of third-party and proprietary Web site development resources within its enhanced Web site Control Center, my.affinity.com. These services include automatic html and cgi script generators, plus cgi and Java applet libraries. Affinity is an Allaire Alliance Premier Hosting Partner, permitting its clients to run ColdFusion technology. 





D13.1.5. Affinity’s Corporate Mission.


Affinity is dedicated to guiding small and medium sized businesses seeking to build a successful eBusiness.  Affinity pursues its objective by offering a wide range of turn-key Internet solutions, including Web hosting, eCommerce, dedicated servers, and advanced hosting services, to business customers in more than 100 countries. Its professional staff is committed to setting new standards in proactive customer support, and providing ongoing training and education to our customers and sales channel partners.


Affinity guides business transformation by helping customers make strategic decisions about how to best leverage the Internet. We use a customer-centric approach to identify the services that meet the current needs of the individual business. As customers' needs evolve, we move them through various stages, from Domain Name registration, to a basic Web site, to one that is eCommerce enabled, to advanced Web and business application services.


The operation of the registry for the “.biz” and related domains would be a natural and logical outgrowth of Affinity’s mission to foster efficient internet usage to small- and medium-size businesses. We believe that many of our existing customers will be very attracted to the proposed new TLD and our existing presence as a major provider of hosting solutions will assist in creating confidence in the new .biz TLD.


            D13.1.6. Senior Management Biographies. 


John McIntyre, co-founder, chairman and chief executive officer. Mr. McIntyre brings more than 8 years of management experience in the Internet and telecommunications industries to Affinity. John is an experienced marketing strategist, overseeing corporate development, sales and marketing, operations and venture fund raising for the company.  Prior to co-founding Affinity, John was a critical part of the original management team for Interliant, Inc. During his tenure, the company grew from a start-up to one generating more than $25 million in revenue in 12 months. While there, he led the design and launch of more than 25 hosting services, created and implemented the company's marketing strategy, and negotiated and managed several strategic partnerships.  John earned his MBA from Harvard Business School and received a BS in industrial engineering from Kansas State University.


John Zdanowski, co-founder and chief operating officer. Mr. Zdanowski has extensive technological experience and oversees all operational aspects of the company, including network operations, customer operations and integration, support systems and Web site development.  Before co-founding Affinity, John was director of mergers and acquisitions and a senior integration operating manager for Interliant, Inc. There, he managed all aspects of the acquisition process from target identification to acquisition integration.  John earned his MBA from Harvard Business School and holds a BS in electrical engineering from Clarkson University and an MS in electrical and computer engineering from Syracuse University.


Von Cameron, vice president, corporate development.  Von Cameron has more than 10 years of management experience developing and delivering technology-based solutions. Von oversees Affinity's corporate development, including global business development, business development for products and marketing, sales and distribution, mergers and acquisitions, and business planning.  Prior to joining Affinity, Von was vice president of business development for Oracle Business Online. There, he successfully negotiated key worldwide revenue-generating partnerships with data center, network, software and service providers. Von has held senior positions with leading consulting firms, including Cambridge Research Associates and Booz Allen & Hamilton.  Von earned his MBA from Golden Gate University and received a BS in math from the United States Air Force Academy.


Robert Murray, vice president, general counsel.  Robert Murray is an experienced lawyer who brings a broad understanding of the law and Internet services to Affinity. He oversees all aspects of the company's legal needs.  Prior to joining Affinity, Robert was vice president, general counsel and secretary for Newstar Media Inc. (formerly Dove Entertainment), a diversified entertainment company. There, he was responsible for all of the company's legal activities, including negotiating and drafting contracts; acquisitions; regulatory compliance; coordinating all litigation; supervising all outside counsel; and supervising the business affairs department for all publishing, television and film production and distribution matters.  Robert is admitted to the California Bar. He earned his JD from Stanford Law School, where he was a member of the Law Review. He also holds a Ph.D. in inorganic/organometallic chemistry from MIT and a BS in political science and chemistry, summa cum laude, from the University of Washington.


            D13.1.7. Staff/employees.


            Affinity employs approximately 150 people at 5 major business sites in the United States.  Affinity maintains employment and hiring policies designed to foster awareness and compliance with EEOC and  applicable local equal opportunity laws.  Affinity outsources many of its human resource administration functions to Trinet, a leader in employee administration services. 


            Affinity has training facilities and requires all new employees to undergoe extensive training during an initiation process.  Further, Affinity requires employee training for any significant new system initiative or product.


            D13.1.8. Insurance.


Affinity maintains Commercial General Liability coverage and Intellectual Property & Casualty Insurance with Federal Insurance Co., and Chubb Custom Insurance Company, respectively.


Affinity’s Commercial General Liability covers up to $1,000,000 for each property or casualty occurrence, including fire, and an aggregate of $2,000,000 (including legal defence costs) or each occurrence.  Affinity’s Intellectual Property & Casualty Insurance covers risks not covered by the general liability insurance that are specific to internet, multi-media and similar businesses.  This policy covers $2,000,000 for each occurrence, with an aggregate limit for each occurrence of $2,000,000. 


Affinity’s Board of Directors intends to review the insurance coverage of Affinity periodically and increase its coverage in a prudent and professional way as the business of Affinity expands. 


 D13.2 Business Plan for New Registry Operations


The role of the Registry Operator is to fulfill the policies mandated by the Sponsoring Organization  “.biz TLD Regulatory and Advisory Council”  (henceforth in this document known as bizTRAC).


In this section D13.2 we will first give a detailed explanation of our approach and then, in the light of this summary specifically answer the Application form questions D13.2.1 – D.13.2.15. Our explanation section will be divided into sections numbered D13.2.0.1, D13.2.0.2, etc. Note that throughout this section 13.2 we will be referring to the “.biz” TLD. We are also applying under the same Description of TLD Policies submitted with this application to manage any or all of the following strings: “.firm”, “.ebiz”, “.real”, “.inc”, “.ebz “. It should be understood that all of the policies to which we refer in this document are intended to apply equally to any of these TLD strings.


D13.2.0.1 The TLD Management Group


We are proposing a Restricted TLD, managed according to the policies detailed in the “Description of TLD Policies”. The specified policies require that each application be thoroughly scrutinized by individuals specifically employed to perform this function. This means that successful management of the TLD will involve three tasks


The tasks are:


(2)   Management of Computational Operations. These operations include actually running the registry computers, updating the registry database, automated interaction with registrars, management of Whois and data escrow, and so on.

(3)   Extensive manual assessment of submitted application materials to determine whether to accept or deny a Registration Request using the policies and procedures specified in the Description of TLD Policies.

(4)   Marketing and non technical administration


In order to successfully manage these functions we will establish a group which we will call the “TLD Management Group” in this document and throughout the application materials.  This section 13.2 and all sub sections will therefore refer to the activities of the TLD Management Group unless otherwise specified.


The first of the three tasks given above, the Management of Computational Operations, will be outsourced to 7Ways.com and carried out as described in section III of this document. This group, as shown, in the organizational chart in section D13.2.0.9 will report to the TLD Management Group through the Technical Operations Officer.


The second function, the assessment of applications, is a major role that is not carried out to the extent that we propose by any existing registry operation. This will be supervised by in-house staff but mainly carried out on an outsourcing basis by major accounting, law and consulting firms as described below in section D13.2.0.10


The development and monitoring of polices under which this group operates will be carried out by  our Sponsoring Organization bizTRAC as described in the Sponsoring Organization Proposal Submitted with this document.


D13.2.0.2 Summary of The New TLD


If our application is successful, our objective will be to establish the “.biz” (to be pronounced “Dot Biz” ) top-level domain in the public mind as a prestigious Internet designation that signifies that any company with a .biz name extension is a “real business.”  By limiting the availability of the .biz designation, we will also very significantly reduce the problem of  “cyberhoarders” for genuine Internet entrepreneurs and business people.


We define cyberhoarders as those that buy up Internet names with no intention of using them for any real business purpose. Rather, they hold the names hostage until a genuine entrepreneur that wants the name for a legitimate business is prepared to pay the ransom – which in most cases is many thousands of dollars. Most “.com” names which are a single word, a recognizable phrase in common use, or a three or four letter acronym, have been purchased. Less than 30% point to an active web site. In other words the large majority have been abducted by cyberhoarders.


This is a big problem for new Internet entrepreneurs. On the Internet name is everything. In many cases the entrepreneur has no choice but to settle for a second-best name or to pay off a cyberhoarder. The .biz designation will give the entrepreneur an alternative.


Each application for a .biz designation will be assessed according to various accounting and business criteria and only approved if the applicant is a real business. The assessment criteria will probably including current revenues for an operation that is up and running, or specifically assigned capital and a credible business plan in the case of a start up.

We will support the “.biz” designation with an aggressive print and street billboard advertising campaign telling people that “.biz means you are in BUSINESS!”

A real business or an entrepreneur will pay $2,000 for an approved “.biz” designation. The business can therefore get the domain name that they want (as long as its not owned by another real business) and the added prestige of being a “.biz” for a less than the price of paying off a cyberhoarder.


D13.2.0.3  Allocation of SLDs under the .biz designation (All practices of the TLD Management Group will be in accordance with the policies described in  “Description of TLD Policies”  established and from time to time amended by the Sponsoring Organization bizTRAC). These policies are briefly summarized in this section.


Those wanting a “biz name will have to apply.  The name will be awarded if and only if it is determined that the applicant is a “real business.” The following is a summary of our policies as specified in the Description of TLD Policies.


(a)   Each application will be assessed according to various simple accounting and business criteria.

(b)   A start up operation is able to place a Reservation on a name for a limited period of time. (see Description of TLD Policies section E16.3).

(c)   A .biz name application will only be approved if it does not infringe trademarks of the country in which the registrant wishes to do business. If the registrant specifies a “worldwide” market location the specified SLD must not infringe on US or EU existing trademarks. (See Description of TLD Policies section E5.0.3)

(d)   Each SLD applied for will be publicly posted on a Listing of Names Applied For (see Description of TLD Policies section E5.0.4) and those believing their Intellectual Property Rights would be infringed will be given an opportunity to lodge protest.

(e)   Each business will only be able to purchase one “Business Name” .biz SLD and a limited number of  “Product Line” SLDs. (See Description of TLD Policies section E5.0.5). Business Names and Product Line Names will be referred to in this application as Primary Names. The fee for the registration of a Primary Name will be $2,000.

(f)     We will not sell “Substantially Similar Names” to different companies. If you buy dogfood.biz, we will not sell dogsfood.biz or even dogs-food.biz to anyone else. Substantially Similar names can be names which differ from a Primary Name by a hyphen or by a regular plural or possessive (in English or another language) of one or more of the constituent words in the name (See Description of TLD Policies section E5.0.5). Substantially Similar Names are referred to as Active if the name points to the same web-site as the registrants primary name, or inactive it the registrant registers the name to prevent other registrants from registering or reserving the name. A Substantially Similar name can not point to a different site than the Primary Name.

(g)   .biz names must be renewed on an annual basis. Renewal will however be granted only if there is evidence of significant business activity over the previous year. (See Description of TLD Policies section E16.9, E16.10 and E16.17.1).

(h)   In the start up phase we will use a one-time special practice of a Name Lottery to award the .biz designation to competing entities. Those winning the Name Lottery will not be granted the automatic right to an SLD. Rather winners will be given the right to be first in line for the regular Application process, and may or may not be awarded the SLD depending on the result of that process. The Name Lottery will also be used as a de facto “sunrise period” to give priority to those with Major Marks (defined in the Description of TLD Policies document E11.12), existing trademarks or other prior name rights.

(i)     SLDs can only be transferred on a very limited basis if it is clear that both the transferring business and the transferee are a real business at the time of the transfer and that the transfer itself constitutes a transfer of real business operations rather than just the transfer of the domain name. (See Description of TLD Policies  Sections E16.11 and E16.15)


D13.2.0.4  The Market


According to a report from Network Solutions, over 5 million .com, .org and .net names were registered in the first quarter of 2000.  This was an increase of 446 percent over the first quarter of 1999, and of 120 percent over the previous quarter.  Our target market segment, however, consists only of those domain name registrations that are made with the intention of establishing a business presence on the net.  An article released by CyberAtlas on May 17, 2000 cites a report by Access Market International (AMI) Partners and Inc. Magazine.  The report estimated 600,000 small businesses were selling their products and services via e-commerce sites in 1999, up from 400,000 small businesses in 1998.  The value of such transactions rose from $14 billion (1998) to $25 billion (1999), representing an increase of 79 percent.


An article released by CyberAtlas on May 31, 2000 cites a report by International Data Corporation.  The report estimates that the number of small businesses selling on line will rise to 2.8 million by 2003.  If we assume that small business registrations continue to accelerate at the same rate for at least the next five years, we can estimate that there will be at least 5 million new small businesses selling online by the end of this period. We would also expect at least double this number of start-up businesses to establish an Internet presence over this period. In other words, probably less than half of the businesses that set up a web page will ultimately successfully end up doing business over the Internet.


We also expect that many new larger businesses as well and  existing businesses will buy .biz domains.


D13.2.0.5 Marketing the .biz Top Level Domain



Our marketing objective is to sign up at least 10,000 .biz names within the first year of operations after a start-up period of six months. We will achieve this through a combination of brand development advertising strategic partnerships, viral marketing and other promotional strategies.


Brand Development Advertising

We will develop brand awareness through an aggressive print and street billboard advertising campaign telling people that “.biz means you are in BUSINESS!”.  We will also place Internet banner advertising on selected business oriented web sites. We estimate that we can effectively pursue this campaign for a cost of approximately $5,000,000 per year.


Strategic Partnerships

We will aim to form strategic partnerships with several top registrars. We have already had extensive discussions with Bulkregister.com and Alldomains.com. We will also aim to form relationships with those sites that are not actually registrars but direct business to registrars such as DomainRegister.com or MyDomain.com or even a major ISP such as Earthlink. We will offer to pay these partners $100 for each .biz registration that we obtain by referral from their site This is considerably higher than the fees paid to registrars for registering .com names. We therefore expect the cooperation of these businesses and believe that our relationships with them will greatly assist us in marketing and promoting the .biz TLD.

We will also aim to form a relationship, possibly by giving up some company equity, with one of the major Internet portals or search engines with the aim of promoting the .biz designation.


We will aim to form strategic partnerships with newspapers and magazines and “web publications” which will offer first year free subscriptions or services to .biz designation companies.  Among others we will target traditional business print publications such as the Wall Street Journal, Business Week and Forbes Magazine.


Finally we will aim to form strategic partnerships with third party providers such as accounting firms to provide services to .biz members.  For example, we could aim to find an accounting firm that would prepare tax returns for .biz companies for significantly reduced costs, say for $150, for the first year. The accounting firm might be prepared to do this in order to capture .biz customers. Generally second tier or third tier accounting firms charge $300 - $500 for small business tax accounts. We could possibly subsidize some of their costs from our sign up charges. We could then modify our advertising campaign to publicize: “Guess who’s getting their taxes done for $150? - .biz means you are in business!”


Viral Marketing

We will pay a $100 commission to any .biz business who is quoted as a “referring business” by someone signing up for a new .biz name. If someone successfully refers six other businesses we will refund their entire sign-up cost.


Other Promotional Strategies

We will spend $200,000 on public relations in our first year of operations. Our objective will be to maximize favorable coverage of the .biz domain on all branches of the media. We will also aggressively promote the .biz top-level domain to all of the search engines and browser companies with the objective of persuading them to give high priority on their search lists to .biz designation companies.


D13.2.0.6 Competition

As a result of this application process and subsequent open calls for those wishing to manage new TLDs, it is possible that many new TLDs will be created. Discussions by the ICANN Working Group C has estimated that ultimately more than 100 new TLDs may be added.  “.flowers”,  “.cars”, “.news” and “.paper” are given, among others, as examples of the of new TLDs which might be created. We expect ICANN this application process to result in the issue of 6-10 new TLDs this year and probably a similar number next year. We do not believe that the issuance of new open TLD designations will solve the problem of cyberhoarders for the following reasons:

(1)   There will be relatively few good names within each new designation and these will once again be purchased by cybersquatters. (eg. flowers.flowers, prettyflowers.flowers, roses.flowers and blooms.flowers will be purchased by someone within a few minutes of the launch of a “.flowers” TLD.

(2)   If the new designations become popular, the fact that there are relatively few good names in each one will tend to even further inflate the prices of these names in the secondary market. “cars.cars” and “wines.wines”, for example, will probably change hands for very high prices.


We also believe that there will be many businesses that will want a general designation rather than one of the more product specific new TLDs. In addition we expect that there will be a gradual introduction of new TLDs. It is likely therefore that for the next couple of years at least there will be many business areas that are not covered by the new designations.


For these reasons, we believe that “.biz” names restricted to those who are actually in business, and sold at a price of $2,000 will be an attractive alternative to many businesses.


No other existing top-level domain says “business” like .biz. No other top-level domain is currently restricted to those actually doing business on the Internet. If we manage to obtain the rights to manage the .biz TLD, we will have created a service which is very valuable to the worldwide business community and which we believe will create a very powerful market presence.


D13.2.0.7 Business Risks

The greatest challenges that we will face, once we have obtained the rights to manage the “.biz” TLD, is that of building the brand image of the “.biz” Top Level Domain. We feel we can do this successfully because (a) “.biz” will offers a low price alternative to paying off a cybersquatters. (b) It fills a gap in the market (i.e. a top level domain for real businesses) (c) we will pursue an aggressive advertising campaign (d) We will find web based strategic partners that will assist us in marketing this idea.


As stated above, this and subsequent application procedures will result in the launch of a number of new top-level domains. This may reduce the pressure on available names and therefore reduce the demand for our heavily promoted .biz designation. We expect however that if the new designations show signs of becoming popular, once again cybersquatters will jump in and quickly buy up the most desirable properties.


D13.2.0.8 Management Team

The Management team of the TLD Management Group currently consists of the three principals these are Phil Berent, and Josh Kyle and Margot Lee.


Phil Berent has 15 years experience in the financial industry as a quantitative analyst and derivative specialist. Mr. Berent is the is the originator of the .biz idea to create a restricted TLD available only to companies that are actively in business. Prior to launching this project Mr. Berent was President of Berent Capital, a money management firm managing a $600 million interest rate swap portfolio for European institutional clients. Mr. Berent Established the firm, raised start-up capital and marketed world wide to institutional investors. He was also responsible for developing the firm’s investment philosophy and technology.   Mr. Berent also lectures on derivatives. (Lecturing assignments have included the executive programs of Carnegie Mellon and Lausanne University in Switzerland). Before founding Berent Capital he worked for Merrill Lynch as a Director in the fixed income derivative area. In this role he ran structuring and marketing teams in Frankfurt and New York and played a large part in building that firms derivative structuring and distribution capability in Europe and the Middle East. During this employment he was a frequent contributor to the firm’s internal publications and wrote papers covering various areas of financial quantitative research. His final title was that of Director.  Mr. Berent obtained an MBA from Columbia University in 1986 with a concentration in Finance and Management Science.


Mr. Berent will be Head of the TLD Management Group.


Josh Kyle has 13 years experience as a senior executive in management of several companies including start-up operations.  He has special expertise in business enterprises with international interests in the fields of insurance, venture capital, manufacturing and real estate.  Most recently, he was CEO of Film Bond International, a division of Frontier Insurance marketing completion bonding to the film industry. In this position he developed, staffed and oversaw marketing and operating plans.  Previously, he served as Vice President for a venture capital firm, Credit China Corp “CCC” focused on Asian investments. In this capacity he carried out, investment evaluation, preparation of business plans, and oversaw the due diligence process for numerous projects. Prior to this role Mr. Kyle was the co-founder of World Impact Trading Corporation, a US-China manufacturing organization, where he served as CEO for six years from 1989 to 1996.  During this period he succeeded in raising annual revenues from $60,000 to $6,000,000.


As an undergraduate, Mr. Kyle attended Yale University, and TSOA New York University for film.  He obtained an MBA from Columbia University in 1994 with a concentration in management.  He has dual US-UK citizenship and speaks Mandarin Chinese.


Mr. Kyle will be head of Administrative operations for the TLD Management Group.


Margot Lee brings a diverse background in marketing, finance, media, and  technology to the TLD Management Group.  After working on the trading floors of JP Morgan and Merrill Lynch, Margot created Vox Populi Communications, a financial and business development consulting firm for new media companies.  In 1998, she became a producer and Field Host for MoneyHunt, a national Public Television program spotlighting the country’s hottest entrepreneurs.  As Senior Programming Producer at HBO’s Volume.com, she oversees the creative operations and strategy for the content/community portal for urban youth online.


A graduate of the University of Virginia, Margot was an Echols Scholar and received a BS degree in Finance with extensive coursework in French. She was featured in Doing It For Ourselves: Success Stories of African-American Women in Business (Berkeley Books, 1996) and in 1997 completed the Chartered Financial Analyst (CFA) series of examinations.


She currently serves on the Board of Directors of The Learning Project, a non-profit organization dedicated to creating and managing outstanding public schools in low-income areas, and is on the board of the John A. Reisenbach Charter School, the very first charter school approved to operate in New York State.  She is also a competitive triathlete and cyclist.


Ms. Lee will be Head of Marketing for the TLD management group.


D13.2.0.9 Organizational Structure and Staffing


The chart below illustrates the structure that would be required in the first year to achieve all of the development and administrative objectives of the TLD Management Group described above for systems, marketing, and business development. We also expect to retain two contract programmers on a full time basis over the first year. Further hires would probably be necessary after the end of one year.






Phil Berent, Head of TLD Management Group:

Develops and maintains the vision of the group. Represents TLD Management Group on board of Sponsoring Organization bizTRAC. Establishes relationships with strategic partners including domain name registrars, ISPs, and third-party service providers. Develops relationships with external providers to whom much of the work of assessing registration applications will be outsourced. Works with Head of Operations to develop policy proposals to the Sponsoring Organization bizTRAC for amendments to procedures for assessing and processing applications for .biz registrations. Recruits other members of team.


Josh Kyle, Head of Operations:

Works with Head of TLD Management Group to develop procedures for assessing and processing applications for .biz registrations. Oversees development of the “.biz” web site. Oversees development of registrations team and customer Service function.


Margot Lee, Director of Marketing:

Works with each of our strategic partners to develop a marketing approach. Works with advertising agencies contractors to develop advertising campaign. Develops relationships and joint marketing approaches with those that might provide services to .biz designation businesses.


Group Finance Officer:

Directs financial affairs of TLD Management Group. In charge of determining group’s financing requirements and managing the group’s investments. Prepares financial analysis of operations for guidance of management. Directs preparation of budgets and financial forecasts. Arranges for audits of group’s accounts.


Manager of Human Resources and Administration

Develops policies for Human Resources and administrative issues. Reports directly to Head of TLD Management Group.


Chief Web-Site Programmer

Works under direction of Head of Operations to develop .biz Registry web site and software necessary for the domain name registration process.


Head of Registrations

Responsible for overseeing the application process for every applicant for a .biz domain name registration. Will work extensively with external service providers to ensure that registrations are quickly and effectively processed.


Head of Customer Support

Responsible for implementing telephone and e-mail customer support for TLD Management Group. Will work extensively with the Head of Registrations.


Technical Operations Officer

Will provide liaison between the management of the TLD Management Group  and 7Ways.com who will manage technical operations of the registry as described in section III of this document.


D13. Building the Management Team


In the first year we need to hire 15 people for the TLD Management Group. Affinity Internet has effectively built a team of approximately 150 people since of October of last year when the company was formed. We will use the same methods and resources that we used for this effort to build the team of the TLD Management Group. We employ one full time recruiter who will direct her efforts to find and screen individuals able to fulfill the required functions. We have also used good relationships with Corn Ferry International and Heidrich and Struggles.


The Corporation will be an equal opportunity employer, seeking qualified individuals that represent the interests of its broad diversity of customers.  As an employer the Corporation will honor all legal obligations arising from legislation and regulation at the federal and state levels.  Compensation of Staff will be negotiated with each individual.  All compensation packages will be designed to comply with relevant state and federal legislation.


D13.2.0.10 Outsourcing of Computational Operations to 7Ways.com


The establishment and installation of computer systems, the running of those systems and all computational aspects of the running and maintenance of the Registry will be run by 7ways.com

7Ways.com will be paid a fee of a royalty of 5% of revenues in return for providing this service. Contracts between us and 7ways are currently in preparation but have not as yet been signed.


D13.2.0.11 Outsourcing of Application Processing and Trade Mark Searches


We believe that each registration will take average of somewhere between 1 and 2 hours of work. This work will involve the analysis of the firm’s bank and other financial statements, auditor’s reports, and trademark registration certificates. In many cases it will involve interacting with the Applicant to request further appropriate information such as invoices or receipts. The individuals assigned to this task therefore need to possess intelligence, initiative and good analytical and communication skills. We envisage that in the first year of Registrations, (the first 18 months of overall operations) we will register somewhere between 10,000 and 50,000 SLDs.  This will therefore require somewhere between 5 and 52 people working full time to process applications. As we grow, we will certainly aim to do more and more of this work in house. Initially, however, we will outsource much of this work to major accounting and legal firms. We expect to pay fees of approximately $150 per hour.


We are currently in discussions with Cap Gemini Ernst and Young about either providing these services or assisting us to find appropriate providers.


In order to ensure consistency, one of the first tasks of the Head of Operations will be to work with the Head of Registrations to prepare a comprehensive procedures manual which will be used by both internal and external staff in processing applications.


Trade mark searches will also be outsourced. We are currently in discussions with Net Names based in the United Kingdom, who are experts in this area, about fulfilling this function for us.


D13.2.0.12 Full Listing of Service to be Provided and Pricing of Each


Details of each of the services provided are given in the accompanying document “Description of TLD Policies”.  Our role as the Registry Operator is to fulfill and implement these policies. A listing of the services and the pricing of each service is given in section E9 of this document. This section is reproduced here – all references in this section refer to sections in the Description of TLD Policies:


Section E9 Description of TLD Policies  (Reproduced):


The following services will be offered under the New TLD:

(1)   Registration:  Price for application $2,000.  Full fee retained if application is successful. $1,500 returned if application is unsuccessful. (see section E16.3)

(2)   Registration of Substantially Similar Names. Price per SLD $25 if the SLD  points to the registrars primary site or $5 if the registrar just wishes to block others from  registering or reserving the Substantially Similar Name. (see section E16.5)

(3)   Renewal: Price for annual renewal $150 for primary name. Substantially Similar Names are renewed at the initial purchase cost ($5 or $25) (see section E16.9)

(4)   Registration Transfer: If a Registration Transfer is approved the charge will be $2,500. If Registration Transfer is rejected $1,500 of the fee will be returned.

(5)   SLD Reservation: SLDs can be reserved for a period of 6 months at a cost of $500. At the end of this period the reservation can be renewed for$500 for an additional 3 months. If the Reservation is not converted to a Registration these fees are forfeit. If the Registration is converted $350 of each Reservation fee is allowable towards the Registration application fee. (see section E16.14 (11))

(6)   Initial Lottery Entrance Fee: This fee is $100 per lottery entry which is returned in full at the end of the 60 day lottery period to losers.  The fee is allowable against the cost of Reservation or Registration application to winners of the lottery. If a lottery winner does not exercise their right to file an application for Registration or Reservation within 1 week of winning the lottery the $100 lottery entrance fee is forfeited. (see section E11.2)

(7)   Waiting List Fee: Those wishing to join the Waiting List for and SLD pay a fee of $20. If another party registers the name, the fee is returned in full. The Waiting List fee is allowable against the fees for Reservation or Registration for those reaching the top of the list. If a company reaching the top of the Waiting List fails to apply for Registration or Reservation of the SLD within one week then the Waiting List fee is forfeited (see section E16.4 ).

(8)   Appeal fees:  An Applicant can appeal if an Application for Registration is rejected. If the appeal is rejected, $1,250 of the application fee is returned. This compares to an amount of $1,500 that would be returned of the application fee of a rejected Application if the Applicant did not appeal. Therefore, there is an additional charge of $250 for filing and losing an appeal. (see section E16.16)


End of Description of TLD Policies (Reproduced).


In addition to the services above we will also provide Registrar Services as described in E4.1 of the Description of TLD Policies document.  We will make no explicit charge for registration services.


D13.2.0.13 Financial Analysis


Pro-Forma Financial statement are included in the attachment to this document entitled Financial Projections in the pages numbered F1 - F19.


D13. Scenarios Examined


Pessimistic, Expected, and Optimistic Revenue Scenarios

For each report we will present financial projections under three scenarios: the Pessimistic Scenario (90% probability), the Expected Scenario (50% probability) and the Optimistic Scenario (10% probability). In all cases we assume that there will be no Registrations during the first 6-month start-up period. In the pessimistic case we assume that we register 5,000 Primary SLDs during the first year of operations (18 months from the start date). In the expected scenario we assume that we register 10,000 names during the first year of operations. In the Optimistic scenario we register 100,000 names in the first year.


In each case we assume that registrations will double in the second year and then increase at 30% per year in years 3,4, and 5.


Costs Scenarios (Growth and No-Growth):


In our cost projections given on pages F7-F9 we examine two different scenarios. The first of these the “Growth Scenario” details the planned level of expenditures that will be made if our realized revenues in the first year correspond to either those of our 50% probability “Expected Scenario” or the 10% likelihood “Optimistic Scenario” detailed above. The other cost scenario examined will be called the “No Growth Scenario” and details the planned level of expenditures if our realized revenues in the first year correspond to those of our 90% likelihood pessimistic scenario.  The Growth and the No-Growth cost scenarios apply only to fixed costs. Variable costs are the same across both scenarios.


The level of expenditures is the same in the first year for both the Growth Scenario and for the No-Growth Scenario. Expenditures differ in the second year and thereafter for these two scenarios are as described in the sections below.  Under both scenarios, however it is assumed that costs grow at the same rate. It should be noted therefore that “no-growth” only applies to the level of increase in expenditure in year 2.



D13. Pricing of Services


The following table on shows a break down of the price of each service offered by the registry.



For an explanation of each of these services see section D13.2.0.12.


D13. Marketing Projections


The tables on pages   F1-F3   show the sales of each of these services on a quarterly basis over the first five years on a quarterly basis of operations under the 10%, 50%, and 90% scenarios. The following assumptions were made in these projections:

(a)   Registration of primary names as given above.

(b)   It is assumed that each registrant registers 1 Active Substantially Similar Name and 1 Inactive Substantially Similar Name per Primary Name Registration.

(c)   It is assumed that 75% of existing primary and secondary names will be renewed each year.

(d)   It is assumed that 2% of names are transferred each year.



This following table summarizes this data, showing the expected number of Primary Registration at the end of each year under each scenario.




D13. Revenue Projections


The tables on pages  F4-F6  show a break down of revenue over the first five years of operations under the 10%, 50%, and 90% scenarios.


The following table summarizes this information by showing revenues on an annual basis under each scenario.





D13. Variable Costs


Variable costs of each service provided are given in the following table



The following notes refer to the above table:


(1)   In house staff will carry out some of the work of processing application materials for registration or renewal. The majority, however, will be outsourced, to major accounting or law firms who will be instructed to work according to our policies. We estimate the cost of such work to be $150 per hour.

(2)   Primary Reg.- Refers to the registration of the main or “Primary Name” registered.

a.      The cost of the “Trade Mark Check” is based on a survey of companies providing this service, for a check of a specific trade mark and a few similar spellings to the requested name in the United States and the E.U. As specified in  the Description of TLD Policies, section E5.0.3 this is the search that will be carried out if a “worldwide” Market Location is specified. Otherwise, a trade mark search will be carried out in the specific country specified as the primary market.

b.      Business Status Check. In the U.S. this is a check to determine that the “business is in good standing”. In other countries this is a check to determine that the status of the business is still current with the relevant administrative authority.

c.      Application Processing. This refers to the check of company accounts for eligibility criteria as described in section E16.7.1 or E16.7.2 of the Description of TLD Policies. We estimate that the processing of each application will take an average of 1 1/2 hours of work.

d.      Other administrative costs include telephone, postage, copying and documents storage and other miscellaneous costs.

e.      A fee of $100 will be paid to registrars for each Registration. We estimate that during the first year our registrar services will carry our 50% of registrations but that this will reduce to an a level of 25% for later years. In case where our own registrar registers SLDs there will be not need to pay any commission. (This estimate is fully taken into account in our pro-forma projections).

f.        Although Insurance is not truly a variable cost, our requirements for liability insurance will certainly increase with the volume of registrations. Our preliminary estimate, based on discussion with those in the industry, is that we can expect to pay 2% of gross revenues as an insurance cost.


(3)   Primary Renewal - refers to the annual renewal of a primary name

a.      Application Processing. As described in Description of TLD Policies 16.9, in order to qualify for renewal a registrant will be required to send a statement confirming that they meet the specified renewal criteria. We estimate an average time of 10 minutes of processing time for each renewal.

b.      Active Web Site Check. The web site of each registrant will be checked a number of times during the year to check that the site is active as described in Description of TLD Policies  E16.7.1 We estimate an annual time of approximately 20 minutes per registrant.

c.      Registrars will be paid a $5 fee for each Registration Renewal

(4)   Sub. Similar Names - refers to Active Substantially Similar Names as referred to in section E5.0.5 where the SLDs points to the same web site as that designated by the registrant’s Primary Name. Inactive Substantially Similar Names are those where the registrant blocks the use by others of that SLD but where the SLD does not point to the registrant’s web site. Substantially Similar Names can only differ by hyphens or by regular plurals or possessives in English or in some other language from the registrants Primary Name SLD.

a.      The Application processing costs for Substantially Similar Names are the costs incurred in checking whether those submitted names are actually regular plurals or possessives and responding to the applicant informing them which Substantially Similar Names have been accepted and which have been rejected.

b.      There are no significant additional processing costs for the renewal of Substantially Similar Names.


(5)   Reg. Transfer – Refers to the transfers of registrations from one registrant to another as referred to Description of TLD Policies in section E16.11 and E16.15.

a.      Business Status Check and Application Processing are estimated at entailing costs double those of Registration as the same elements must be checked for two companies instead of one.

b.      There are costs associated with checking for trademark infringement as the name has already been registered.

c.      A $150 fee is paid to the registrar for Registration Transfer.


(6)   Reservation. Details of the Reservation process are given in sections E16.8 and E16.14 of the Description of TLD Policies document. Reservation is not listed in the above table because the margin is variable. There are no significant costs associated with processing a request for Reservation as most of the process is carried out automatically. The cost of Reservation to the Applicant is $500. If the Reservation is converted to a Registration $350 of the Reservation cost is allowable against the cost of Registration. The additional profit from Reservation of a name is therefore $150. If a reservation is extended then and additional $500 is charged. If an extended Reservation is converted to a Registration $700 of fees is allowable against the Registration cost. The additional profit from an extended Reservation is therefore $300 – ($1,000 paid less $700 allowable against Registration). A $50 commission will be paid to the registrar when a reservation is made. An additional $25 will be paid to the registrar if the Reservation is extended. An additional fee of $50 will be paid to the registrar if and when a Reservation is converted to a Registration.


D13. Fixed Costs


Full projections of costs are given for the first five years of operations  in F7-F9  Projections show the first two years on a monthly basis and years 3-5 on a quarterly basis. Projections are shown for both the Growth and for the No-Growth Scenario. The following table shows summarizes these expenses on an annual basis:




The following notes apply to these tables.




(a) The following table shows the salaries of each employee and the number of months worked by each in the first year.



(b) These operations do not include the cost of running the computational operations of the Registry. These operations will be run by 7Ways.com in return for a payment of 5% of gross revenues of the TLD Management Group. These costs therefore appear as a variable cost as “7Ways.com royalty” in the listing given above in section D13.

(c) Payroll taxes and benefits are estimated to be 25% of salary costs.

(d) In the Growth Scenario it is assumed that salary costs double over the course of the second year (increasing by 1/12 of the end of first year value each month.) 

(e) In the No-Growth Scenario it is assumed that salary costs remain constant during the second year at the same monthly rate as at the end of year 1.
(f) In both the Growth and No-Growth cost scenarios it is assumed that salary costs grow at an annual rate of 25% per year in years 3 through 5.


Contract Programmers
(a) It is assumed that one contract programmer is retained for the first year and works 40 hours a week each for 48 weeks at a cost of $100 per hour.

(b) In the Growth Scenario one contract programmer is retained for the second year and works 40 hours a week each for 48 weeks at a cost of $100 per hour.
(c) In the No-Growth Scenario No Contract Programmers are retained in the Second Year.


(a) Initial rental cost is assumed to be $10,000 per month. In the Growth Scenario rent is assumed to double in the 18th month. In the No-Growth Scenario rent is assumed to remain constant in the second year.


Office equipment:
The expected cost initial cost is $185,000. This includes $28,500 for fixtures and fittings ($1,500 for each of 19 employees) and the remainder of equipment. Equipment includes 19 desktop computers and 5 laptops, 10 printers, 5 fax machines and three high volume photocopiers (we will be a paper intensive business) and an office telephone system. Further expenditure of $42,750 is expected after six months. In the Growth Scenario we expect to spend an additional $42,750 for fixtures and fittings one year after that (month 18 of operations). In the No-Growth Scenario no further fixtures and fittings are added in the second year. We will capitalize fixtures and fittings so they are not reflected in our statement of expenses (pages F7-F9). These expenditures are however reflected in our cash flow statements (pages F16-F18) .


Computer Equipment for Registry:


We will supply all initial computer equipment to be used by 7Ways in running the Registry operation. Further details of the uses and requirements of this equipment are given is section III of this document. The initially required computer equipment is listed in the following table.





 We will capitalize this equipment so it is not reflected in our statement of expenses (page F7-F9). These expenditures are however reflected in our cash flow statements (pages F16-F18).


Travel and entertainment:
Expenses assume 50 trips within the United States, 16 to Europe, and 6 to the Far East during the first year.  The following breakdown of expenses is assumed:

Total Travel and Entertainment: $122,600

In the Growth Scenario Travel and Entertainment expenses are assumed to double during the second year (increasing by 1/12 of the end of first year value each month). In the No-Growth scenario Travel and Entertainment Expenses are assumed to remain constant during the second year.


Telephone expenses:
Telephone expenses are estimated at $9,000 per month in the first year. This includes domestic and international calls. In the Growth Scenario telephone expenses are assumed to double during the second year (increasing by 1/12 of the end of first year value each month). In the No-Growth scenario telephone expenses are assumed to remain constant during the second year.


Marketing and Promotion
A budget of $2,500,000 been allocated for promotion in the last 6 months of the first year which will be the first 6 months of operations.  In either the Growth or the No-Growth scenario we intend to spend 5 Million on advertising in the second year. This will allow us to pursue an aggressive outdoor billboard, print and Internet based advertising campaign and to allocate $200,000 to public relations in our first year of operations.


Accounting and Legal Expenses

Accounting and Legal expenses are estimated at $35,000 per month in the first year. In the Growth Scenario these expenses are assumed to double during the second year (increasing by 1/12 of the end of first year value each month). In the No-Growth scenario Accounting and Legal expenses are assumed to remain constant during the second year.


Industry Organizational Fees

We estimate that we will be paying $500,000 per year in Industry Organizational Fees. $300,000 will go to our Sponsoring Organization bizTRAC and we estimate that we will be making an annual payment of $200,000 to ICANN.


Increase in fixed costs years 3 - 5:
All fixed costs are expected to increase at 25% per year from the end of the second year onwards in either the Growth or the No-Growth Scenario. It should be noted therefore that “no-growth” only applies to the level of increase in expenditure in year 2.


D13. Profit and Loss


Profit and Loss is shown for each scenario on a monthly basis for years one and two and on a quarterly basis for years three to five on pages F10-F15 As stated in above, in the Expected (50%) and the Optimistic (10%) scenario it is assumed that expenses follow the Growth Scenario. In the Pessimistic 10% scenario it is assumed that expenses are pared back to follow the No-Growth Scenario.


The interest rate on cash balances is assumed to be 5.5%.


The following table summarizes these figures on an annual basis.




D13. Cash-Flow Projections


Cash flow projections are given on pages F16-F18 for the first three years of operations assuming that all cash is left in the company.  Projections are shown for each of the three specified scenarios. In each case we assume an initial capital injection of $5,000,000.



D13. Capital Requirements


We will initially allocate $5,000,000 to this project, as this is the amount that ensures even under the 10% Pessimistic Scenario cash allocated to the project does not drop below $750,000


At the time of its organization Affinity Internet, Inc. (then known as Ebiznet, Inc.) had commitments form its initial investors who are J.P. Morgan Investment Corporation, Sixty Wall Street, SBIC Fund, L.P. (an affiliate of J.P. Morgan Investment Corporation), First Union Capital Partners, Inc, Columbia eBiz Partners L.L.C. ( an affiliate of Columbia Capital), Affinity’s two founders John Zdanowski, and John McIntyre and Building C Partners (an affiliate of Morrison and Foerster).


The initial capitalization was $23,100,000 (see Section 2.2 and Schedule 2.2 of the Shareholder’s Agreement attached hereto as part of section D13.4). The initial investors are obligated to fund the remaining $36,900,000 as further set forth in section 2.2 of the Shareholder’s Agreement. As of the date hereof, the initial investors have funded approximately $45,000,000 from such $60,000,000 commitment.


The following sections give answers to the specific questions posed in the ICANN application in the light of the business plan for new operations presented in sections D13.2.0.1 – D13.


D13.2.1 Services to be provided

The services to be provided by the Registry are given in full in sections


D13.2.2 Revenue  Model

A listing of the revenues of each service are given in section D13.2.0.12. A chart is presented in section D13. giving a full breakdown of the anticipated revenues and direct costs associated with each service. Quarterly pro-forma revenue projections for the first five years in the 90% (Pessimistic Scenario), 50% Expected Scenario, and the 10% Optimistic Scenario are given in the attachment in pages F4-F7.


D13.2.4. Marketing Plan

The marketing plan is described in section D13.2.0.5.


D13.2.5 Estimated Demand for Registry Services in The New TLD

Our estimates of 90% (Pessimistic Scenario), 50% Expected Scenario, and the 10% Optimistic Scenario are given in the Financial Projections attachment in pages F1-F3. Revenue and P&L projections relating to each of these scenarios are given respectively in pages F4-F6 and pages F10-F15. These projections are based on our analysis of the market as given is section D13.2.0.4


D13.2.6 Resources Required to Meet Demand

In the Financial Projections Attachment we and two potential cost scenarios. The first of these the “Growth Scenario” details the planned level of expenditures that will be made if our realized revenues in the first year correspond to either those of our 50% probability “Expected Scenario” or the 10% likelihood “Optimistic Scenario” detailed above. The other cost scenario examined will be called the “No Growth Scenario” and details the planned level of expenditures if our realized revenues in the first year correspond to those of our 90% likelihood pessimistic scenario.  The Growth and the No-Growth cost scenarios apply only to fixed costs. Variable costs are the same across both scenarios. We feel that it is reasonable to use only two fixed cost scenarios as a very large proportion of our costs are variable as we will outsource the majority of the work involved with application processing.


D13.2.7 Plans for Acquiring Necessary Systems and Facilities

Plans for outsourcing our Application Processing and trade mark search functions are given in D13.2.0.11.


D.13.2.8 Availability of additional management personnel

Plans for building the management team are given above in section D13.


D13.2.10 Term of Registry Agreement

In this proposal we request a five year term for the Registry Agreement. The establishment of operations is considerably more complex than for the .com/.net/.org registries. We expect that the registry will therefore only be able to become active after approximately six months of initial start-up operations. For this reason we request a period slightly longer that the NSI agreement with ICANN.


D13.2.12 Expected revenue associated with the operation of the proposed registry

A break down of marketing projections in each scenario is given in D13. and the referenced tables, and the resulting revenues are given in D13. and the referenced tables. The resulting profit and loss in each scenario is given in D13. and in the referenced tables.


D13.2.13 Capital Requirement

Capital required will be $5,000,000 as specified and explained in section D13. This will be drawn from existing commitments from our investors as detailed in section D13.4.4


D13.2.14 Business Risks

Business risks are discussed in section D13.2.0.7. The break-even analysis shown on page F-19 shows that we break even at very low levels of obtaining only 5,879 registrations in the second year of operations and 5,521 in the third year. As a result we believe that the probability of non-profitability under the proposed plan is very low.


D13.2.15 Registry Failure Provisions

Technical failure of the Registry is addressed in the Technical Capabilities and Plan Section III of this document.


The break even charts on the attachment for page F-19 show that an  extremely low number of registrations is necessary to make our operation a viable concern. We therefore believe that it is extremely unlikely that the .biz registry will fail as a business.


In addition, Affinity Internet Inc established a capital fund of $60,000,000 of which only $9,000,000 has been drawn. We therefore have ample funds to support the Registry even in the case that the world shows almost no interest in the .biz TLD.


Minimum Maintenance Scenario

In the worst case, our Sponsoring Organization bizTRAC has agreed that if in any given year there are less than 1,000 registrations under the new TLD that our fees payable to that organization would be reduced from $300,000 to $100,000. Under these circumstances we would also request ICANN to reduce our annual payment to them from $200,000 to $50,000. We would expect that this request would be granted in the interests of Internet Stability. Under these circumstances we could also dramatically reduce other costs  by discontinuing all marketing, cutting back staff and employing only a small number of people (possibly just one or two) to process applications in house. Our minimum annual maintenance budget is given in the following table:


In order to support this budget we would need only 397 registrations in the .biz TLD. If this was not achieved we could certainly make up the short fall from our existing capital.


For all of these reasons we feel that the business failure of the “.biz” domain during the term of our contract is close to impossible.


D13.4 Supporting Documentation

The following documentation is included with this submission



III. Technical Capabilities and Plan.


As all of the technical operations of the new Registry will be carried out by 7Ways.com, the remainder of this section III of this document as far as section D15.2.14 was prepared by 7Ways and relates to their personnel, and proposed methods of running the new TLD Registry.  This plan forms part of our submission and we fully support and intend to have them implement the systems described herein if our application is approved. This material is enclosed separately at the end of this the document and entitled Registry Operator’s Proposal Section III Technical Capabilities and Plan.


D15.3 Subcontractors


Details of the operations of our subcontractor 7Ways.com are given in an attachment to this document 7Ways Corporate Information. Further details are also given as part of their technical analysis in Section III Technical Capabilities and Plan. 


Although an agreement has not yet been signed we are in agreement on the general terms which are:


(1)   7Ways.com will establish and run all computational operations of the new Registry.

(2)   We will provide the computer equipment necessary for them to start the Registry.

(3)   We will pay the an annual fee of $500,000 or 5% of revenues from registrations, whichever is greater.

(4)   The will bear all ongoing costs, including staffing, of running the computational aspects of the Registry

(5)   The contract term will be 5 years.









This proposal is consistent with the continued expansion of the TLD name space, and a globally unique public name space.  This proposal would not create an alternative root structure, but rather seeks to be included. in the root managed by ICANN.  Please see the remainder of the proposal. For details of how the particular implementation plan would address issues such as security, redundancy, and reliability, and the escrow of data to protect the interests of the domain holders and the sponsors. As the technology for the Internet and the DNS change over time, the applicants anticipate continued attention to deployment of new technologies and new protocols that will improve the functionality and reliability of the DNS.


This last conclusion section answers fully the concerns of ICANN as the first criteria for assesing TLD proposals


Provisions to minimize unscheduled outages of registry or registration systems due to technical failures or malicious activity of others;

Key points are:


Provisions to ensure consistent compliance with technical requirements in operation of the TLD;

Key points are:


Effects of the new TLD on the operation and performance of the DNS in general and the root-server system in particular;


The small volume of new domains (30,000/year) comparing to others gTLDs will have no effect on the root servers.


Measures to promote rapid correction of any technical difficulties that occur (whether or not due to the TLD's operation), such as availability of accurate, consistent, and helpful Whois information;



The protection of domain-name holders from the effects of registry or registration-system failure, such as procedures for rapid restoration of services from escrowed data in the event of a system outage or failure;


Protection of domain-name holders is done by the following ways:

 Provisions for orderly and reliable assignment of domain names during the initial period of the TLD's operation.


The live operation of the TLD’s operation will be preceded by an extensive test phase, with a complete simulation on an intranet of the elements of the network, thus including registry, TLD name servers, whois servers and “pseudo” root root-servers.


Analyses of the DNS request for the new gTLD on this intranet should match the DNS requests on the internet using the existing TLD (.com,.net,.org). This test phase passed, we will be confident of the compatibility of our architecture with the existing DNS system.






[1] Affinity is the parent corporation and ultimate owner of several operating companies.  Since the operating companies conduct most of the substantive business of Affinity, they are listed here even though they are separate legal entities.