Controls Over and Revenues From .nyc Generic Top-Level Domains

Issued Date
October 25, 2021
Agency/Authority
Information Technology and Telecommunications, New York City Department of

Objectives

To determine whether the New York City Department of Information Technology & Telecommunications (DoITT) has collected all the revenues due from the .nyc generic top-level domain program, and whether the contract’s operating requirements were met. The audit covered the period from March 30, 2012 through January 8, 2021.

About the Program

A top-level domain (TLD) is the last part of an Internet address, such as .com, .net, or .org. In March 2012, DoITT entered into a franchise agreement with a vendor to apply for the “.nyc” generic TLD (gTLD) and to operate, manage, maintain, and market the .nyc gTLD program. New York City’s contract with the vendor identifies four revenue sources: domain sales, click-thru fees, advertising sales, and other promotions.

The mission of the .nyc gTLD program is to improve global visibility and generate revenue for the City. According to DoITT, New Yorkers may use the program to establish their business or personal websites on one of the largest geographic TLDs in the world. As of June 8, 2020, 66,783 .nyc domains were registered.

Key Findings

  • DoITT collected only one of the four agreed-upon revenue sources (domain sales) in the City’s contract with the vendor during our audit scope.
  • DoITT amended the contract several times with no supporting documentation explaining why, including one amendment that resulted in a decrease in revenues.
  • DoITT’s Franchise Administration Team (Franchise Team), tasked with managing the contract and collecting the revenue from the vendor, did not monitor or require the registry operator’s compliance with the contract. Specifically, the Franchise Team:
    • Does not keep its own records or analyze performance under the contract. It relies solely on the vendor, leading to undetected errors in the sales reports and potential lost revenue to the City.
    • Accepts the required minimum annual guarantee amount from domain sales with no recalculation using information from supporting reports, creating the risk that the City is not receiving all monies it is owed.
    • Does not verify that the annual marketing budget is spent per the contract; nor does it review the expense reports.
    • Does not adequately monitor domain names for words considered to be indecent that were disallowed by the contract. We identified 65 domains containing one of seven words disallowed by the contract terms.

Key Recommendations

  • Establish monitoring controls and contract oversight to ensure that:
    • All revenue streams listed in the contract are accounted for;
    • The registry operator submits reports and details about the following sources of revenue: click-thru fees, advertising sales, and other promotions from inception of the program to present; and
    • Monthly and annual sales reports are reviewed for errors or discrepancies and any issues are followed up on until they are resolved.
  • Develop and document procedures for contract amendment review and approval. Maintain contracts in compliance with New York City contract procedures.

Carmen Maldonado

State Government Accountability Contact Information:
Audit Director: Carmen Maldonado
Phone: (212) 417-5200; Email: [email protected]
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236