Even if Ethos’ ‘intentions’ are to be taken at face value, $26 is still a ridiculous price for basically no service. But these intentions are essentially worthless or they’d be put in writing.
Why would there be no non-profit willing to do this ‘work’ providing this ‘service’ for whatever price you want? You should know, your organization provides much more service for no money at all.
I wonder if he really believes this when he was typing it. I find it difficult to understand the rationale of selling ORG to private equity and the justify it as good for the internet. I hope this line of BS turns out to be true, but giving ORG over to a bunch of MBAs with experience in day trading does not a confident nerd make.
What it comes down to is the board wanted a large pile of cash so they could do more of whatever it is they like doing, which apparently is not what many of us think their core mission should be.
I look forward to reading how much the board members are being paid now, and how much they will be paid in a years time.
Most non-profit boards pay $0. The Internet Society is one of them, with Barnes taking $0 from the organization (as board members, they also have to disclose if a related organization pays them):
The simplified timeline (as I understand it, willing to be corrected if I'm wrong);
1. PIR, or someone very close, seems to have lobbied to have price restriction of .org removed. My understanding is that PIR made the argument that they're a non-profit, they have no reason to raise pricing extortionately
2. This was passed, despite a large number of comments against the idea, Ethos was incorporated the following day
3. PIR sold itself to Ethos, a for profit company
The people involved seem to be moving between ICANN, PIR and private firms.
Given all these things I don't think it's unreasonable that people are deeply sceptical. Especially with the ambiguity of "no more than 10% per year" being throw around.
You don’t need high base pricing to keep domain sharks away. Some throwaway alternatives that are less workable, but already seem fairer:
You could limit numbers of domains per entity, or increment the price for each new domain you buy.
If you try to buy a domain using a company with human directors it is 10x the price.
If you buy a domain with non-person owners (e.g. a shell company) then its 100x.
As an aside: I wish more things were taxed or priced higher based on the obscurity of the entity purchasing the item. It’s no cakewalk, but it still feels too easy for those with the resources to use company and legal structures to be able to act with a disproportionate lack of public scrutiny.
Seems about right to me, this stinks of whatever the non-profit version of regulatory capture is. I wonder how hard it would be to make a parallel ICANN.
I guess this is naiive, but how can a non profit sell itself to a for-profit, it seems all sorts of wrong.
You forgot the part where Ethos is the same people who controlled PIR. It’s just a sleazy trick to take off the non profit veil, so they can start skimming the profits. Does anyone really believe the non profit PIR and ISOC couldn’t exist on their $90 million a year .org tithes?
This is what is more properly called incestuous relations between corporations. This will only serve those companies and people be-bopping between them with shadow titles. I don't know if this guy owns part of those companies and is benefiting or one of his bros at those companies convinced him with his "for the greater good" bullshit that MBAs learn in school.
>Even in the worst case, if Ethos considers dramatically increasing prices (which, to be clear, we do not expect them to do!), the Registry Agreement for .org requires a 6-month notice period during which domain owners can lock in a 10-year registration at pre-increase rates. This should seriously discourage Ethos from doing this, because it would take 10 years for the new high rate to even take effect for existing registrants, and new registrations would likely fall off right away.
No, the worst case scenario is that they jack up prices and then run a massive campaign FUD campaign about non-profits without .org addresses. Or they start selling of Oxfam.org to competitors. Or hell, they start doing differential pricing, gouging the people they think can pay.
>We're all trying to make the Internet a better place
No we're not. Don't be an idiot. Private equity companies are making money from investments they have no interest in making anything a better place and it's insulting to expect people to believe that.
> during which domain owners can lock in a 10-year registration at pre-increase rates.
That is not what is written in the Registry Agreement.
"Registry Operator shall offer registrars the option to obtain domain name registration renewals at the current price ... for periods of one (1) to ten (10) years at the discretion of the registrar, but no greater than ten (10) years."
In practice, this says the same thing. There's no reason for registrars not to let their customers lock in the low price for 10 years. There's stiff competition among registrars and their margins on domain name sales are razor thin. They make their money by selling various add-on services. It's better for them if registry prices are low because that encourages people to buy more domains, and thus more add-on services.
The registrar can simply raise the registration price of Wikipedia.org to a million dollars a year, and keep the random ones the same price, to extract any value from .org websites that rely on their domain name. The 10% a year is not a legal commitment, just an easily breakable informal promise.
If their registrar did that, Wikipedia would change registrars to one that didn't - and they'd be able to keep their .org. There's competition among registrars, unlike registries.
Their margins on new domain sales are thin, but the cost of changing domain names for a big owner of a prestigious .org domain could be huge. So jack up the renewal price to gouge existing domain owners, then drop the prices again to entice in new registrants.
Or follow the model of banks profiting off of debit cards by charging exorbitant fees for common mistakes. They didn't need that a high percentage of their customers to pay overdraft fees before they were making billions. Forget to renew your domain on time? No problem, we've held on to it for you, just please pay this $150 "redemption fee".
If a registrar did that, the .org domain owner would change to a better registrar, and they'd be able to keep their .org domain. There's competition among registrars, unlike registries.
That's reasonable in this case, people often complain (and sometimes reasonably so) that the people in this bureaucratic entities are far removed from the "real world" and don't really understand what they're dealing with.
Too bad his credentials did not make his argument good. I bet if he actually had a good argument ... well then nobody would be complaining that his argument is bad.
The funny thing is that despite his credentials, he made such a spectacular blunder. It makes one wonder when the other shoe will drop for "Let's Encrypt".
> I would encourage people to look at what Ethos themselves have said about their intentions with regard to .org
> Make .org domain names "accessible and reasonably priced for all", including limiting price increases to no more than 10% per year
Just that statement alone means prices could double every 7 years.
>For those who might be unfamiliar with the Internet Society, our mission is as follows:
Nobody cares, that's utterly irrelevant as long as operating .org doesn't go against the Society's mission statement (which it clearly doesn't). By the author's own admission "While it's true that running .org provided a relatively steady income stream, it effectively staked most of our revenue on a single business". So you are staked so heavily in a single business that instead of using the income and stability it provides to diversify you just get rid of it altogether? Utter nonsense. That's just greed and short-term gains.
I also find it insulting that he belittles "leasing domain names" as beneath the mission of the Internet Society. Management of .org is actually extremely important to all of those who are involved in non-profits. So are we to assume that selling off .org to private equity for a quick cash grab is in line with their "mission"?
"The Internet Society supports and promotes the development of the Internet as a global technical infrastructure, a resource to enrich people’s lives, and a force for good in society.
Our work aligns with our goals for the Internet to be open, globally-connected, secure, and trustworthy. We seek collaboration with all who share these goals.
Together, we focus on:
Building and supporting the communities that make the Internet work;
Advancing the development and application of Internet infrastructure, technologies, and open standards; and
Advocating for policy that is consistent with our view of the Internet"
It's also hilarious, considering that they're only in that business because they asked to be [1]:
> ICANN circulated a request for proposals in May 2002 for a new organization to manage the .org domain. The Internet Society (ISOC) teamed with Afilias to put forth one of eleven proposals ICANN received. ISOC won an endorsement within ICANN and was recommended to the selection committee
Because he's not naive. Humans are self justification machines and he's just exercising the semi-delusional post decision making process we all frequently exercise ourselves.
> > We're all trying to make the Internet a better place
> No we're not. Don't be an idiot. Private equity companies are making money from investments they have no interest in making anything a better place and it's insulting to expect people to believe that.
I'm kind of a conservative (read classical liberal) free market kind of guy - but this is a total shit-show IMO. I simply don't see anything that will prevent market failure in this case - there is nothing I can see that incentivises good behavior.
> there is nothing I can see that incentivises good behavior.
Competition with all the other registries?
For the most cost sensitive domain owners, they typically have a presence on social media and contact with users via email. And, of course, they're usually discovered by search engine rather than domain. So the switching costs are quite low and the demand extremely elastic.
How much would it cost society as a whole if WikiPedia switched away form .org? Think of all the printed links, now defunct. Think of the value of that domain to an occupant with less scruples, once left behind. The confused people who will find themselves on a WikiPedia-esque, ad and scam ridden copy.
And that’s just WikiPedia.
This is a shitshow of historic proportions for the internet as a whole. It will be remembered as a landmark in the ever metastasising cancer of monetisation that is suffocating the World Wide Web from within.
Wikipedia sized organizations would easily absorb the relatively trivial cost, so, they wouldn't switch. Their demand is relatively inelastic to price.
The people switching are going to be the far more numerous smaller operations, who are elastic to price.
And, of course, anyone signing up for a new domain is highly elastic.
Because there are lots of people who are highly elastic, the overall demand is highly elastic.
Wikipedia could absorb a trivial cost increase so it's likely that a PE firm would target them with more steep increases. From what I've read about their price increase limiting "agreement" it isn't one, it's just a statement and isn't laid out in any binding contracts.
Maybe Wikipedia gets it's registration price bumped up to 3 million because the PE firm thinks the org can absorb the cost.
It can't be laid out in a binding contract because it's a new contract each time you renew the name. This is something every renter has dealt with since forever.
So, yes, they could absolutely start trying to shake down the biggest non-profit organizations. Those are also organizations that are highly sympathetic and have literally hundreds of millions of viewers, and thus immense political clout.
It could be laid out in a binding contract for the purchase of .org that the PE firm is prevented from reoffering a name renewal above the rate they previously offered it and the agreed adjustment - it just appears that isn't actually contractually laid out anywhere and is simply a PR statement.
Contract law certainly isn't something to trivially walk into, but there are ways this could have been done.
I think it's worse than naive. His two points are in impossible conflict. He wanted a pile of money for the Internet Society, enough to "secure that work's future". But the only way selling .org is worth a pile of money is if it gets extracted from nonprofits. With plenty of profits left over to feed the investors who put up the initial cash.
If the Internet Society wanted to secure their future, they should have raised a proper endowment. Or they could have kept .org and bumped the prices modestly so it made a profit equivalent to what an endowment would pay. Selling it to a PE company is guaranteed to be worse for .org registrants, because the amount of money extracted will be greater, and a PE firm will be way less accountable. Especially a shadowy one just created for this.
Sounds like what happens with drugs. The big name pharma companies avoid getting their names dirty by selling drugs to corps willing to bump prices past the absurd.
I sure hope the author got a kickback since his decision was not for the benefit of others. Only worse thing than corrupt board member, is a fool given authority.
Why could the Internet Society not have been the one raising prices by 10% ad infinitum. Need capital? Borrow it and pledge .org as security. There’s basically unlimited funds available in this manner because the .org cashflow stream is as reliable as anything.
Because it's harder to justify being the person who raises prices that much, while claiming to "enable the internet for all" or whatever their mission statement is. With the right PR, you can sell out and try and keep a straight face.
In the short term, sure. But in the long term, they have a pile of cash they're not giving back and somebody else (who doesn't give a shit) takes the blame.
And extracting money from nonprofits, while an easy point to communicate, is just the tip of the iceberg - there's a horrible conflict of interest between the adoption of .org and the mission of .org now.
As I've written before, what happens if a large country says "we will block .org domains, or .org DNS resolutions, if you don't suspend an activist organization's domain globally?" Beforehand, the Internet Society could say "we don't believe that precedent is in the interest of the global community overall, and your threat is empty to us."
But now, there's both a profit motive AND an obligation to shareholders to take down the domain GLOBALLY, as the value of the company would decrease if .org domains were blocked to a large market. And, while I'm not a lawyer, I believe this decision would be permitted by the new 2019 rules. This gives censors tremendous leverage to spread censorship and chilling effects around the globe. DMCA takedowns will seem like child's play.
In the face of losing a large market opportunity, if even Google, with all its market power and all its public scrutiny, is willing to build things like Dragonfly, how can we take Ethos at its word?
I'm all for the role of private equity in helping companies to grow - while there are certainly firms that operate in bad faith, the PE industry overall doesn't deserve the bad rap it gets in the media. Of all the things that the private market can do to drive innovation, the existence of PE is critical. (Not every company should IPO or be gobbled up by a strategic.)
But IMO this sale should absolutely be disallowed from a humanitarian and international security perspective. The incentives are just too badly aligned.
Help me understand what you mean by "worse than naive" here. Richard Barnes isn't going to see a dollar of this money and wouldn't need it anyways. I understand people disagreeing with him, but, despite being automatically disinclined to extend good faith to anything published at CircleID, I don't understand where anyone derives bad faith from this piece.
I thought it was tremendously useful, if only to understand what was in the minds of the people who unanimously voted to sell .ORG.
> Help me understand what you mean by "worse than naive" here
"Worse than naive" doesn't necessarily mean "bad faith" but possibly causing losses to other people without deriving a gain can still be "worse than naive". It's a quote rephrased for kindness.
> Help me understand what you mean by "worse than naive" here.
"Naive" in this context generally means they were overly trusting when there was no evidence to suggest trust was warranted. I'd interpret "worse than naive" as saying that they are actually evidence to the contrary.
The logic presented is, "We need more money, so we sold it to this private equity firm. But don't worry, they're not going to try to squeeze lots of money from it."
The starting point for any for-profit company -- no matter how ethically run -- is that they buy things because the expected value to them will be higher than the cash they paid for it. We must assume that the expected value of PIR to the equity company is higher than the amount they paid IS for it. Which means, either IS is actually getting less (or at best the same) money than they would have for keeping PIR, or it means that Ethos is going to charge significantly more than IS is. The fact that Ethos bought PIR is prima facae evidence that it's a bad deal for either IS or for the internet as a whole.
I mean, there are other possibilities, but none is really good. It's possible that someone at Ethos capital actually did want to do IS a favor, and way over-paid for PIR. But that's just a form of embezzlement; I certainly wouldn't feel any better to know that .org was bought by someone who was either incompetent or a criminal.
If you want to set up a long-term self-funding organization to do good rather than making money, you don't do private equity; you set up a foundation. Ethos, or whoever wants to make the world a better place, could provide a loan to such an organization.
And even if you do decide to buy something, you put your promises in writing in the form of a contract.
And even supposing Ethos really does mean all the things they say. Suppose something happens and they go bust and have to liquidate their assets. What happens then?
There are just so many red flags here, that "too trusting" doesn't even begin to describe it.
Your scenarios are not mutually exclusive. To maximize their expected value, you say that they could:
1. Earn less than IS would
2. Charge more than IS would
It's actually:
1. They could earn less than IS would, because they're generous, incompetent, or some other reason
2. They could earn more than IS would, because they increase the prices, run PIR more efficiently than IS would, increase the number of registrations more than IS would, or some other reason
In scenario two, which is the most interesting, they could jack up prices, but they could also run the business better, such as running the business more efficiently or driving more business through advertising. I agree with you that the former is likelier, but not necessarily the only reason why the deal would have a positive expected value for Ethos. It could be that the deal is a win-win one, where IS gets more money than they'd be able to make out of PIR, and yet, Ethos comes ahead too by running it better than IS could.
If you have some evidence that this is the case, feel free to give it. But they've already outsourced the running of the registry to somebody else, so any obvious efficiency gains have presumably already been taken. And if they haven't, there's no reason to think a fresh-minted PE company would do any better than hiring a competent manager.
I think Richard's piece leaves out everything of substance. I don't understand how this helps the ISOC mission, users of .org, the public interest of the Internet at large, or anyone at all except of course Ethos Capital.
PIR, the registrar in question generated $48 Million in support grants for ISOC in 2018 tax return. He's trying to make the case that selling this $50million revenue from grants is worth it. He think the governance of .org and the maximum possible cost increase will be fine.
What possible reasons has he given for any of that?
He vaguely indicates that it'll be fine, and instead asserts that $28/yr could be affordable? It is, but why not just jack up the price in the first place, if its a money thing? They could be getting $100-Million in ten years, why sell it off to a private capital investment firm with no track record of "Governance" and a mandate only to private shareholders and investors?
If you happen to check https://ethoscapital.mu/investments/ to read all about their clear mandate for Governance (whatever that means the the context of "Exposure to a Diversified Pool of Unlisted Assets") hopefully the irony[0][1] of their using the .mu (Mauritius) tld is not lost on you. Sorry if this last bit seems petty, but just wow. What about any of this makes anyone think this doesn't look like a gift to private equity? I would like to see the sale price.
>I thought it was tremendously useful, if only to understand what was in the minds of the people who unanimously voted to sell .ORG.
That felt more like a smokescreen than a true insight into the process. It's a lot of fluff and empty grandstanding while not really justifying the sale in any coherent way. The way I read it he's basically saying "being a registrar for .org is our biggest activity and one that gives us a steady and stable income but we also want to do other things, so we decided to get rid of that for some short-term gains".
If that's truly what was in the mind of the people who voted to sell they need to test the water supply in that building, there was clearly something messing with their reasoning skills.
If there's truly a grand master plan that makes sense behind all of that then they should share it. For now the only plan that makes any sense to me involves several thick layers of corruption.
I mean what I say: I don't think he can possibly be as naive as this piece suggests, and I don't think any of the plausible alternatives interpretations (e.g., incredibly negligent, corrupt, a fool) is better than this babe-in-the-woods confection.
If you'd like to assert that he's really this naive, feel free to make a case for it. Or if you have some interpretation that's better, I'd be glad to read that as well.
we might be better off if Oxfam's domain name was sold off to somebody else.
People who liked that "phenomenon of bullshit jobs" essay might think that "working for a nonprofit" is "meaningful", but people who work for non-profits frequently suffer from moral injury, get burned out, underpaid, and wind up questioning their values.
Back when I was involved in third-party politics and had many social entrepreneur friends I made my own decision that I don't give money to 501c(3) organizations, since they are a privileged class that doesn't have to pay taxes -- being a 501c(3) organization also means sticking to rules that ensure that you will be working on the symptoms of problems rather than the root causes.
Particularly in the developing world, people would benefit from for-profit organizations that are responsive to their needs as opposed to non-profits who work for rich donors and mindless governments.
>Particularly in the developing world, people would benefit from for-profit organizations that are responsive to their needs as opposed to non-profits who work for rich donors and mindless governments.
If there was profit to be made there would an business filling that need.
A foodbank in Detroit or non profit school in Ethiopia for girls are there because business and the like aren't.
The definition of "undeveloped" is that institutions haven't been developed to meet a need.
People an an "undeveloped" area are going to have a bad year now and then when Oxfam will come and tell everyone what an important thing they are doing.
If an area becomes "developed" then for-profit businesses have been created to fulfill people's needs and they don't need Oxfam.
If the rich tip the scales so that all the money ends up in their pockets, they give a little bit to Oxfam. In a fair system, people would create the institutions that they need and we wouldn't need Oxfam.
>This should seriously discourage Ethos from doing this, because it would take 10 years for the new high rate to even take effect for existing registrants, and new registrations would likely fall off right away.
It's the exact opposite of that. As soon as you announce a price hike, you don't get a giant loss of money, you get a giant flood of money as tons of people pre-pay for 10 years.
You even kinda get the best of both worlds, a cash infusion and more money in the long run.
The org TLD has 14 million registrations in it right now. If Ethos announces a 50% price hike (increasing the base charge from $9 to $13.50), my guess is 2% of the domains would be immediately renewed for the 10-year max at the old price.
So right off the bat, Ethos have 280,000 domains * ($9 * 10 years) = $25,200,000 in new cash. Now that means they've lost out on $37,800,000 from the price hikes but that was collected over the next ten years and assumes that all of those domains would have continued for ten years. They've no choice now; the money is paid.
If Ethos lose another 10% of org registrations because people don't want to pay the increased cost, that leaves 12,348,000 domains left. Assume another 10% of those either don't renew for some other reason or renewed for more than one year but less than ten. Now you're at 11,113,200 remaining domains that, in the year after the announcement, bring in an additional $50,009,400.
So just by announcing a price hike and not-so-subtly encouraging domain owners to "take advantage to lock in today's price for years to come," Ethos bring in $75,209,400 with two-thirds of that being new recurring revenue and the remaining third suitable for distribution as bonuses to all of the executives who made such a clever scheme what it is.
I have three org domains I really care about and have already bumped them out as long as currently-PIR will let me. Sucks to have to but two of these domains are so old, I have no idea what all would break if I let them go.
Also keeping in mind that if one locks in the domain for 10 years, they are going to be much more likely to renew at whatever the ungodly sum is when the 10 year period is over.
Without explicit agreements/laws in place I have to sadly agree, and any natural monopoly will get abused at some point if owned by profit-seeking companies. That's just how it is. Doesn't matter if they are now sweet-talking you into doing this deal, the fact is that once they are in the position of power, they can do whatever they want. Of course there are some limits what the customers can take, but when their end-goal is maximizing profit extraction it's just dumb to assume it will be all butterflies and rainbows.
As an example if you even need any, the government of Finland decided to let government-majority owned electricity company (Fortum) to sell off their electricity distribution (Caruna) to some private investors. I don't know what the investors promised but quickly after the deal was made, the prices started to rise, the company structure was made that the company in Finland is paying ridiculously high interest rates (8.5%) on loans to some Dutch holding company, with an effective tax rate of couple %.
And even in general, why do they have to sell .org? I don't see any concrete benefits whatsoever for the normal user.
Yes unless it's regulated, any monopoly that is "for profit" will want to maximize profits. So they will walk the balance beam between raising prices and buying lawyers and lobbyists to insure congress critters don't regulate them.
Something like: Oxfam is a fundraising organisation that just does enough charity work to generate photos for their marketing. It’s a long way from what most people believe a charity is - volunteers doing good works and raising money to directly buy the supplies and equipment.
I agree the author seems very naive and you're right to zone in on the only substantive thing he did say. However I'm still unclear about some points. For example can they sell oxfam.org from under Oxfam's nose? How does that work?
They can't "sell it from under their nose", they just can demand any renewal price for it they like, and delete the domain if that price is not being paid.
So this is "we need the money to survive, and we completely trust these private equity guys to do the right thing"
10%/year should be reaping quite some profit after a while. I wouldn't be surprised if this is a pump-and-dump kind of deal, where PE substantially raise prices and then sell the entity at a big profit, given the effectively locked-in forward profits.
> Make .org domain names "accessible and reasonably priced for all", including limiting price increases to no more than 10% per year
This immediately stuck out to me as a really bad deal.
Rising with inflation, somewhere between 1 and 4% per year, would essentially keep prices stable. This is tricky when selling internationally, but roughly possible.
Rising by 10% each year is significantly faster than inflation, and would result in a $20 domain name doubling in price in 7 years, or 6x in 20 years.
This is the internet we're talking about, 20 year time horizons are important and yet still short sighted. In 100 years we're talking $275,000 rather than the $400 that inflation would get us to.
> Ethos has said that their plan is to "live within the spirit of historic practice,"
This is not what Private Equity does. It cuts costs and quality, raises prices, strips assets, and seeks to significantly increase profits. I think it's naive and short-sighted to take them at their word, as this article admits they are doing.
Not sure why OP tosses out 10% price hikes per year as reassuring. Maybe he’s too rich to make sense of small amounts of money like this. Even $10 is a nontrivial sum in some underdeveloped countries as is.
Also, this is just “what Ethos themselves have said about their intentions with regard to .org”, and we all know how good for-profit entities are at keeping promises that affect their bottom line.
1: The Internet Society does great work protecting the Internet
2: Ethos is a worthy successor to the Internet Society as the steward of .org.
This is incoherent. THis blog post can be summed up in one sentence: "I reckon its fine."
Thanks for voting to sell .ORG Richard Barnes. I know he thinks its fine, I think jacking the prices up 10% year over year is nonsense. What do the financials look like and what's the internet getting out of this?
.org registry was already a pretty good cash cow. According to their tax return[1], in 2018 they grossed ~$93m over ~$33m registry administration expense, ~$7m employee compensation (interestingly there's a 30% year over year increase here), and some other smaller expenses. They raised $48.7m for Internet Society. Note that out of registry administration expense, $18.1m went to Afilias[2] (this should also be in the tax return), a for-profit technical registry provider. So every time you paid your $10 .org registration fee, at least $5 went to Internet Society as a mandatory donation, somewhere between $0-2 went to Afilias the for-profit contractor, some small amount went to GoDaddy for marketing, etc. Anyway, a non-profit printing $50m/yr without begging for donations is certainly nothing to sneer at, and under the control of a for-profit entity they should expect more even if the price stays the same. And you bet the price won't stay the same.
As you said, according to the 2018 tax return revenues from PIR running .org resulted in $48,000,000.00 in cash grants handed over to the Internet Society.
How much is the sale worth? That $48M Grant was worth more than Internet Society's total revenue in 2016 according to wkipedia. ISOC just sold a sustainable $50Million revenue stream.
If LetsEncrypt copped a $0.10 fee per certificate, how much would it cost for Richard to rubber stamp a Symantec acquisition of LetsEncrypt?
Don't worry, they have your best interest at heart. With this extra money, we can fund our certificate mission for our own personal gain forever. It's very good for everyone.
Of course, the previous CEO Brian Cute of PIR (the non-profit) was previously "Vice President of Discovery Services" at Affilias, the for-profit that they are paying to do PIRs job.
Basically, everywhere you look, you see a bunch of blood-leeching ticks on the internets backside.
There's no argument. Everything in that post has been designed to be indexed online and published as some kind of counter-argument against criticisms but that's it.
It's all bogus and he knows it. He is to busy counting money to care.
Except that the way trademark law works in the US you have to "defend" your marks or they can be considered abandoned. This means as long as renewing your domain is cheaper than the cost of hiring an attorney to send a Cease and Desist letter to the squatter who grabs it after you're better off paying. I'm guessing that horizon is more like 30-40 years off.
I do not know if anyone has lost a trademark over this, but in a practical sense you still need to be proactive--there is no trademark police force that will ensure nobody uses the domain inappropriately. Consider a donation-solicitation business that takes over abandoned .org domains to collect donations in your organization's name and then keep a percentage. You probably don't want that to happen, you certainly could make a reasonable trademark infringement case, but unless you take steps like sending them a C&D there's nothing stopping them. Even if all they did was put a CNAME for your old .org in that redirects to their own domain they could have a meaningful impact on your operations.
The costs of a .org domain should be proportional to the cost of providing a .org domain. What costs are there for running a registry that require a huge price-tag?
There are wholesale registrars that will provide white-label service for a couple of bucks a domain per year. The costs can't be that high.
"Costs" doesn't mean real operational costs and so on. It is used as an accounting/business concept. Simply any .org customer has a yearly associated cost for having/leasing that .org domain.
OP's comment doesn't distinguish between different sources of that cost. (Sure, it has many components, the cost for the network, servers, development, security, backup, payroll, legal, accounting, some sales, marketing, audits/compliance, insurance, whatever risk premium, maybe off site backups, disaster recovery, outreach, bonus projects, 20% time, blablabla. Plus profits.)
Obviously everyone knows that the profits is the part that will now grow much larger. And eventually the .org customers will ditch .org because of that. But OP is right, from .org customers' standpoint, it doesn't matter why, it just matters that their costs will rise and as soon as it crosses a point (cost of switching becomes less than the cost for remaining on .org) folks will leave.
PE companies are very much in the business of valuing a revenue stream that goes up 10% per year highly. This article doesn't show thinking beyond 10-20 years, but most of the economic value comes even farther in the future. In 50 years, it could be 14000x the current price!
If you plug a 10%-growing revenue stream into a net-present-value formula with a discount rate less than 10%, you get infinity. The future revenue stream has infinite value. Even under reasonable economic uncertainty, you might be able to justify a P/E ratio of 100.
It is a bad deal. No way a for-profit company bought rights to .org without having an intention to make a profit on it. I have confidence in capitalism and it always, always seeks to maximize profit.
I suspect if you ran the .org domain for profit, and you raised the price to $275000 a year, you would find you'd rapidly lose all your customers. There are lots of other TLDs that are cheap, there's healthy competition, and .org stands to earn a lot more money by being competitive than by raising the prices into the stratosphere.
> Make .org domain names "accessible and reasonably priced for all", including limiting price increases to no more than 10% per year
There is nothing reasonable about the current prices. It’s literally a few hundred bytes of data mostly static data.
“10% per year” means it will double every seven years. “Up to” means they will be doing it at the maximum. And unless this is legally codified I doubt they would adhere to that either.
In which a patsy sets out the arguments by which he was manipulated.
A large part of his motivation appears to be delusions of grandeur within an organization, the Internet Society, which, up to now, has been of no relevance whatsoever, and which has only now achieved a degree of prominence through an act of apparently naive stupidity.
Good point. They claim they need the money to further in their mission to improve the internet, but they’re throwing out the one good thing they’re well-known for doing (and I’m doing so, trashing their reputation amongst the public) in order to (so they claim) bankroll other things that most people have never heard of in relation to them. That’s an incredibly shortsighted gamble and reeks of excuses.
> So if we take Ethos at their word, they should be just as good a steward for .org as the Internet Society has been
Sigh.. I'm guessing the author is/was not aware of the serious conflict of interest among the decision-makers and private stake holders who passed through the revolving doors of IS, ICANN, PIR, Ethos.
Voting with such naivete, especially underestimating the greed of a for-profit organization, is not being a good steward. They've let down the public in this decision.
It is unfortunate that we have a business culture where to take someone at their word is not only naive but so reckless that the duped gets most of the blame rather than the duper.
And yet, here we are. This is the reality. Taking a private equity firm "at their word" is so foolish that it's hard to believe the author isn't being disingenuous.
Any lawyer in the world would have said, "No, Dickie, we don't just take companies at their word once the money changes hands. That's what contracts are for." At best this guy is incompetent, assuming his technical skills magically transfer to being business skills. But like you, I have a hard time thinking he believes any of this.
Businesses cannot self-regulate. The profit motive supersedes all else.
The US flatly does not have the regulatory environment to ensure internet infrastructure is accessible and affordable. Net neutrality is the cardinal example in which regulatory capture by business interests immediately led to deregulation. This is a similar story but instead it was a nonprofit organization being captured by business interests.
> This transaction will put that bigger mission on a solid footing
I don't understand how that should be true. Either Ethos would have too pay too much or Ethos would have to be able to run this business more cost effective. Both sounds questionable.
> While it's true that running .org provided a relatively steady income stream, ...
> Establishing a more diverse portfolio of investments will allow us to have more predictable revenue over time.
Relatively steady sound pretty predictable to me. It will be interesting to see who from the inner circle will benefit from those future "investments".
> Even in the worst case, ... the Registry Agreement for .org requires a 6-month notice period during which domain owners can lock in a 10-year registration at pre-increase rates.
That is wrong: "Registry Operator shall offer registrars the option to obtain domain name registration renewals at the current price ... for periods of one (1) to ten (10) years at the discretion of the registrar, but no greater than ten (10) years."
"(...) what Ethos themselves have said about their intentions (...)" means nothing. They can change their mind, put new directors in a month that will have different opinions etc. What's important is what they can legally do and how incentives are structured. Giving monopoly to private equity and expecting good things to happen is a joke.
So...how much does it cost to run gTLD these days? Perhaps the time is right to set up a non-profit to run one at actually affordable prices, instead of the current ripoff and the future .org price increases.
I'm a .org domain user. My email is a .org, my website is a .org. It's [my name].org. I've registered through 2029 now. Hopefully by then this whole nonsense has passed. Honestly domain names have been handled very poorly over the past 10 years, between this and the ridiculous gTLD system. They are just becoming super-expensive vanity items for corporations to get nice redirects.
I did the same. If things go to hell I'll do global 301 redirects starting around 2026-2027, and work to get every link possible updated across the internet, to drain every last possible cent of value from my .org, and then I'll abandon it if the prices have gone up extortionately.
1. No, 26$ is obviously not a sane, let alone a reasonable price for a domain registration. For comparison, you can register .de for < 4 EUR/year, so at a price of 26$ this is redirecting 220 million dollars of funds that were donated for charitable work to definitely not charitable profit for these investors--or 160 million more than right now.
2. The price increase is capped at only 10% per year? Are you fucking kidding me? Do you seriously not have a clue how exponential growth works? .org has existed for 34 years, if you add another 34 years of increases of "only" 10%, you are at 255$ per year. Or, as he himself calculated, it's more than doubling the price in ten years, which would be just crazy.
3. "They promised they'd be good!" ... seriously? You seriously can not see the problem with a transaction where a profit-seeking entity obviously explicitly avoids actually promising anything (that is: making any of those "promises" legally binding)? After all, it is possible to actually promise all those things in a meaningful way, that's what the legal system is for.
4. "Give back to the .org community through a Community Enablement Fund" ... or in other words: Appropriate charitable donations where the donors have already decided what causes they should go to and redistribute them to their liking. Can anyone really be too stupid to see through this and be in a position to make such a decision?
5. "While it's true that running .org provided a relatively steady income stream, it effectively staked most of our revenue on a single business, and required a certain amount of our resources to be spent managing that business, distracting from the broader mission." ... WTF? And running it in the future will not require any resources? Does this guy not understand basic financial math either? Like, if you buy a business, you pay for expected profits, i.e., after you you have subtracted expected expenses, i.e., if you sell a business, you still "pay" for all the future expenses? Selling a business does not magically create money, it only shifts the cash flow to the present day. The only way selling a business can increase your cash flow is if the buyer increases prices or reduces costs.
It's all so obviously from the bullshitting playbook you can hardly believe anyone would actually believe any of these "arguments" to be of any value, when the path to actually guaranteeing all of these things that we are supposed to just believe is so obvious.
Is the 10% increase for individual domains or on average? If it's on average, that means those with the most valuable domain names can expect increases of 300% or more soon...
Sell to a private equity firm that tries to maximize profit from those assets. Yeah, what couldn’t go wrong with that. At least this individual has admitted liability for his part in this TLD’s forthcoming downfall.
If this was supposed to reassure people then I want to meet those people as I have something to sell them. 10% per year price increases are insane! You can’t exactly just change domain names to a cheaper option either, like say insurance. Your whole identity is locked to it.
This only makes me more convinced that it’s a bad move.
Always remember that theese are the people in charge of running the internet.
I really hope he didn't have too much say in the important things at Let's Encrypt. Because statements like this really damage the little trust I have left in companys.
So much bullshit and so littke valid argument in this big post. But don't worry
'Make .org domain names "accessible and reasonably priced for all", including limiting price increases to no more than 10% per year'
It can ONLY increase of 10% per year. Like if it is a low number...
1. We know that there's no limit in the contract, because if there was, they would just say that.
2. The reason there isn't a limit in the contract is because Ethos don't actually intend to limit themselves to 10% yearly. If they did, they would have agreed to write it into the contract, which would have let them pay less for .org
315 comments
[ 0.21 ms ] story [ 318 ms ] threadWhy would there be no non-profit willing to do this ‘work’ providing this ‘service’ for whatever price you want? You should know, your organization provides much more service for no money at all.
Oh, well. That's okay then.
I look forward to reading how much the board members are being paid now, and how much they will be paid in a years time.
https://projects.propublica.org/nonprofits/display_990/54165...
There are a few exceptions to the boards-get-paid-$0, but they're rare and doubt personal financial motivations are part of the decision.
https://projects.propublica.org/nonprofits/organizations/331...
1. PIR, or someone very close, seems to have lobbied to have price restriction of .org removed. My understanding is that PIR made the argument that they're a non-profit, they have no reason to raise pricing extortionately
2. This was passed, despite a large number of comments against the idea, Ethos was incorporated the following day
3. PIR sold itself to Ethos, a for profit company
The people involved seem to be moving between ICANN, PIR and private firms.
Given all these things I don't think it's unreasonable that people are deeply sceptical. Especially with the ambiguity of "no more than 10% per year" being throw around.
Higher prices cost you money, but keeps the domain sharks a little further away.
Keeping domain sharks away is nice.
You could limit numbers of domains per entity, or increment the price for each new domain you buy.
If you try to buy a domain using a company with human directors it is 10x the price.
If you buy a domain with non-person owners (e.g. a shell company) then its 100x.
As an aside: I wish more things were taxed or priced higher based on the obscurity of the entity purchasing the item. It’s no cakewalk, but it still feels too easy for those with the resources to use company and legal structures to be able to act with a disproportionate lack of public scrutiny.
I guess this is naiive, but how can a non profit sell itself to a for-profit, it seems all sorts of wrong.
Despite virtually ALL comments being against the idea.
This is corruption plain and simple. I hope OpenNIC forks the .org registry and lobbies DNS to accept their records instead.
>Even in the worst case, if Ethos considers dramatically increasing prices (which, to be clear, we do not expect them to do!), the Registry Agreement for .org requires a 6-month notice period during which domain owners can lock in a 10-year registration at pre-increase rates. This should seriously discourage Ethos from doing this, because it would take 10 years for the new high rate to even take effect for existing registrants, and new registrations would likely fall off right away.
No, the worst case scenario is that they jack up prices and then run a massive campaign FUD campaign about non-profits without .org addresses. Or they start selling of Oxfam.org to competitors. Or hell, they start doing differential pricing, gouging the people they think can pay.
>We're all trying to make the Internet a better place
No we're not. Don't be an idiot. Private equity companies are making money from investments they have no interest in making anything a better place and it's insulting to expect people to believe that.
10 is pretty small compared to forever.
I'll take the guaranteed 10% nest egg until retirement, please.
That is not what is written in the Registry Agreement.
"Registry Operator shall offer registrars the option to obtain domain name registration renewals at the current price ... for periods of one (1) to ten (10) years at the discretion of the registrar, but no greater than ten (10) years."
For example, Namecheap came out strongly against removing .org price caps: https://www.namecheap.com/blog/ensuring-icann-keep-domain-pr...
Just that statement alone means prices could double every 7 years.
>For those who might be unfamiliar with the Internet Society, our mission is as follows:
Nobody cares, that's utterly irrelevant as long as operating .org doesn't go against the Society's mission statement (which it clearly doesn't). By the author's own admission "While it's true that running .org provided a relatively steady income stream, it effectively staked most of our revenue on a single business". So you are staked so heavily in a single business that instead of using the income and stability it provides to diversify you just get rid of it altogether? Utter nonsense. That's just greed and short-term gains.
I hope this is naivety and not pure gaslighting.
"The Internet Society supports and promotes the development of the Internet as a global technical infrastructure, a resource to enrich people’s lives, and a force for good in society.
Our work aligns with our goals for the Internet to be open, globally-connected, secure, and trustworthy. We seek collaboration with all who share these goals.
Together, we focus on:
Building and supporting the communities that make the Internet work; Advancing the development and application of Internet infrastructure, technologies, and open standards; and Advocating for policy that is consistent with our view of the Internet"
https://www.internetsociety.org/mission/
> ICANN circulated a request for proposals in May 2002 for a new organization to manage the .org domain. The Internet Society (ISOC) teamed with Afilias to put forth one of eleven proposals ICANN received. ISOC won an endorsement within ICANN and was recommended to the selection committee
[1] https://en.wikipedia.org/wiki/Public_Interest_Registry
> No we're not. Don't be an idiot. Private equity companies are making money from investments they have no interest in making anything a better place and it's insulting to expect people to believe that.
I'm kind of a conservative (read classical liberal) free market kind of guy - but this is a total shit-show IMO. I simply don't see anything that will prevent market failure in this case - there is nothing I can see that incentivises good behavior.
Competition with all the other registries?
For the most cost sensitive domain owners, they typically have a presence on social media and contact with users via email. And, of course, they're usually discovered by search engine rather than domain. So the switching costs are quite low and the demand extremely elastic.
And that’s just WikiPedia.
This is a shitshow of historic proportions for the internet as a whole. It will be remembered as a landmark in the ever metastasising cancer of monetisation that is suffocating the World Wide Web from within.
Wikipedia sized organizations would easily absorb the relatively trivial cost, so, they wouldn't switch. Their demand is relatively inelastic to price.
The people switching are going to be the far more numerous smaller operations, who are elastic to price.
And, of course, anyone signing up for a new domain is highly elastic.
Because there are lots of people who are highly elastic, the overall demand is highly elastic.
Maybe Wikipedia gets it's registration price bumped up to 3 million because the PE firm thinks the org can absorb the cost.
So, yes, they could absolutely start trying to shake down the biggest non-profit organizations. Those are also organizations that are highly sympathetic and have literally hundreds of millions of viewers, and thus immense political clout.
Contract law certainly isn't something to trivially walk into, but there are ways this could have been done.
If the Internet Society wanted to secure their future, they should have raised a proper endowment. Or they could have kept .org and bumped the prices modestly so it made a profit equivalent to what an endowment would pay. Selling it to a PE company is guaranteed to be worse for .org registrants, because the amount of money extracted will be greater, and a PE firm will be way less accountable. Especially a shadowy one just created for this.
And for those not familiar with the horrors of PE, I recommend reading about what happened to Simmons Mattress once the financial engineers got a hold of it: https://www.nytimes.com/2009/10/05/business/economy/05simmon...
I sure hope the author got a kickback since his decision was not for the benefit of others. Only worse thing than corrupt board member, is a fool given authority.
How naive indeed. What a shame.
As I've written before, what happens if a large country says "we will block .org domains, or .org DNS resolutions, if you don't suspend an activist organization's domain globally?" Beforehand, the Internet Society could say "we don't believe that precedent is in the interest of the global community overall, and your threat is empty to us."
But now, there's both a profit motive AND an obligation to shareholders to take down the domain GLOBALLY, as the value of the company would decrease if .org domains were blocked to a large market. And, while I'm not a lawyer, I believe this decision would be permitted by the new 2019 rules. This gives censors tremendous leverage to spread censorship and chilling effects around the globe. DMCA takedowns will seem like child's play.
In the face of losing a large market opportunity, if even Google, with all its market power and all its public scrutiny, is willing to build things like Dragonfly, how can we take Ethos at its word?
I'm all for the role of private equity in helping companies to grow - while there are certainly firms that operate in bad faith, the PE industry overall doesn't deserve the bad rap it gets in the media. Of all the things that the private market can do to drive innovation, the existence of PE is critical. (Not every company should IPO or be gobbled up by a strategic.)
But IMO this sale should absolutely be disallowed from a humanitarian and international security perspective. The incentives are just too badly aligned.
https://www.privateinternetaccess.com/blog/2019/11/isoc-pir-...
It stinks.
I thought it was tremendously useful, if only to understand what was in the minds of the people who unanimously voted to sell .ORG.
"Worse than naive" doesn't necessarily mean "bad faith" but possibly causing losses to other people without deriving a gain can still be "worse than naive". It's a quote rephrased for kindness.
"Naive" in this context generally means they were overly trusting when there was no evidence to suggest trust was warranted. I'd interpret "worse than naive" as saying that they are actually evidence to the contrary.
The logic presented is, "We need more money, so we sold it to this private equity firm. But don't worry, they're not going to try to squeeze lots of money from it."
The starting point for any for-profit company -- no matter how ethically run -- is that they buy things because the expected value to them will be higher than the cash they paid for it. We must assume that the expected value of PIR to the equity company is higher than the amount they paid IS for it. Which means, either IS is actually getting less (or at best the same) money than they would have for keeping PIR, or it means that Ethos is going to charge significantly more than IS is. The fact that Ethos bought PIR is prima facae evidence that it's a bad deal for either IS or for the internet as a whole.
I mean, there are other possibilities, but none is really good. It's possible that someone at Ethos capital actually did want to do IS a favor, and way over-paid for PIR. But that's just a form of embezzlement; I certainly wouldn't feel any better to know that .org was bought by someone who was either incompetent or a criminal.
If you want to set up a long-term self-funding organization to do good rather than making money, you don't do private equity; you set up a foundation. Ethos, or whoever wants to make the world a better place, could provide a loan to such an organization.
And even if you do decide to buy something, you put your promises in writing in the form of a contract.
And even supposing Ethos really does mean all the things they say. Suppose something happens and they go bust and have to liquidate their assets. What happens then?
There are just so many red flags here, that "too trusting" doesn't even begin to describe it.
1. Earn less than IS would
2. Charge more than IS would
It's actually:
1. They could earn less than IS would, because they're generous, incompetent, or some other reason
2. They could earn more than IS would, because they increase the prices, run PIR more efficiently than IS would, increase the number of registrations more than IS would, or some other reason
In scenario two, which is the most interesting, they could jack up prices, but they could also run the business better, such as running the business more efficiently or driving more business through advertising. I agree with you that the former is likelier, but not necessarily the only reason why the deal would have a positive expected value for Ethos. It could be that the deal is a win-win one, where IS gets more money than they'd be able to make out of PIR, and yet, Ethos comes ahead too by running it better than IS could.
PIR, the registrar in question generated $48 Million in support grants for ISOC in 2018 tax return. He's trying to make the case that selling this $50million revenue from grants is worth it. He think the governance of .org and the maximum possible cost increase will be fine.
What possible reasons has he given for any of that?
He vaguely indicates that it'll be fine, and instead asserts that $28/yr could be affordable? It is, but why not just jack up the price in the first place, if its a money thing? They could be getting $100-Million in ten years, why sell it off to a private capital investment firm with no track record of "Governance" and a mandate only to private shareholders and investors?
If you happen to check https://ethoscapital.mu/investments/ to read all about their clear mandate for Governance (whatever that means the the context of "Exposure to a Diversified Pool of Unlisted Assets") hopefully the irony[0][1] of their using the .mu (Mauritius) tld is not lost on you. Sorry if this last bit seems petty, but just wow. What about any of this makes anyone think this doesn't look like a gift to private equity? I would like to see the sale price.
[0] https://business.mega.mu/2013/07/29/internet-210-government-...
[1] https://web.archive.org/web/20141110042124/http://news.islan...
That felt more like a smokescreen than a true insight into the process. It's a lot of fluff and empty grandstanding while not really justifying the sale in any coherent way. The way I read it he's basically saying "being a registrar for .org is our biggest activity and one that gives us a steady and stable income but we also want to do other things, so we decided to get rid of that for some short-term gains".
If that's truly what was in the mind of the people who voted to sell they need to test the water supply in that building, there was clearly something messing with their reasoning skills.
If there's truly a grand master plan that makes sense behind all of that then they should share it. For now the only plan that makes any sense to me involves several thick layers of corruption.
If you'd like to assert that he's really this naive, feel free to make a case for it. Or if you have some interpretation that's better, I'd be glad to read that as well.
See
https://newint.org/features/2005/10/01/keynote/
we might be better off if Oxfam's domain name was sold off to somebody else.
People who liked that "phenomenon of bullshit jobs" essay might think that "working for a nonprofit" is "meaningful", but people who work for non-profits frequently suffer from moral injury, get burned out, underpaid, and wind up questioning their values.
Back when I was involved in third-party politics and had many social entrepreneur friends I made my own decision that I don't give money to 501c(3) organizations, since they are a privileged class that doesn't have to pay taxes -- being a 501c(3) organization also means sticking to rules that ensure that you will be working on the symptoms of problems rather than the root causes.
Particularly in the developing world, people would benefit from for-profit organizations that are responsive to their needs as opposed to non-profits who work for rich donors and mindless governments.
If there was profit to be made there would an business filling that need.
A foodbank in Detroit or non profit school in Ethiopia for girls are there because business and the like aren't.
People an an "undeveloped" area are going to have a bad year now and then when Oxfam will come and tell everyone what an important thing they are doing.
If an area becomes "developed" then for-profit businesses have been created to fulfill people's needs and they don't need Oxfam.
If the rich tip the scales so that all the money ends up in their pockets, they give a little bit to Oxfam. In a fair system, people would create the institutions that they need and we wouldn't need Oxfam.
It's the exact opposite of that. As soon as you announce a price hike, you don't get a giant loss of money, you get a giant flood of money as tons of people pre-pay for 10 years.
The org TLD has 14 million registrations in it right now. If Ethos announces a 50% price hike (increasing the base charge from $9 to $13.50), my guess is 2% of the domains would be immediately renewed for the 10-year max at the old price.
So right off the bat, Ethos have 280,000 domains * ($9 * 10 years) = $25,200,000 in new cash. Now that means they've lost out on $37,800,000 from the price hikes but that was collected over the next ten years and assumes that all of those domains would have continued for ten years. They've no choice now; the money is paid.
If Ethos lose another 10% of org registrations because people don't want to pay the increased cost, that leaves 12,348,000 domains left. Assume another 10% of those either don't renew for some other reason or renewed for more than one year but less than ten. Now you're at 11,113,200 remaining domains that, in the year after the announcement, bring in an additional $50,009,400.
So just by announcing a price hike and not-so-subtly encouraging domain owners to "take advantage to lock in today's price for years to come," Ethos bring in $75,209,400 with two-thirds of that being new recurring revenue and the remaining third suitable for distribution as bonuses to all of the executives who made such a clever scheme what it is.
As an example if you even need any, the government of Finland decided to let government-majority owned electricity company (Fortum) to sell off their electricity distribution (Caruna) to some private investors. I don't know what the investors promised but quickly after the deal was made, the prices started to rise, the company structure was made that the company in Finland is paying ridiculously high interest rates (8.5%) on loans to some Dutch holding company, with an effective tax rate of couple %.
And even in general, why do they have to sell .org? I don't see any concrete benefits whatsoever for the normal user.
At the time I worked for one of the bidders Poptel, so I got to hear a lot of the inside stories
Something like: Oxfam is a fundraising organisation that just does enough charity work to generate photos for their marketing. It’s a long way from what most people believe a charity is - volunteers doing good works and raising money to directly buy the supplies and equipment.
No, it's you who is being naive. The author is a sly fucker who adeptly spins his atrocious sell-out.
https://news.ycombinator.com/newsguidelines.html
10%/year should be reaping quite some profit after a while. I wouldn't be surprised if this is a pump-and-dump kind of deal, where PE substantially raise prices and then sell the entity at a big profit, given the effectively locked-in forward profits.
Ethos will squeeze every last drop out of this opportunity.
This immediately stuck out to me as a really bad deal.
Rising with inflation, somewhere between 1 and 4% per year, would essentially keep prices stable. This is tricky when selling internationally, but roughly possible.
Rising by 10% each year is significantly faster than inflation, and would result in a $20 domain name doubling in price in 7 years, or 6x in 20 years.
This is the internet we're talking about, 20 year time horizons are important and yet still short sighted. In 100 years we're talking $275,000 rather than the $400 that inflation would get us to.
> Ethos has said that their plan is to "live within the spirit of historic practice,"
This is not what Private Equity does. It cuts costs and quality, raises prices, strips assets, and seeks to significantly increase profits. I think it's naive and short-sighted to take them at their word, as this article admits they are doing.
Also, this is just “what Ethos themselves have said about their intentions with regard to .org”, and we all know how good for-profit entities are at keeping promises that affect their bottom line.
1: The Internet Society does great work protecting the Internet 2: Ethos is a worthy successor to the Internet Society as the steward of .org.
This is incoherent. THis blog post can be summed up in one sentence: "I reckon its fine."
Thanks for voting to sell .ORG Richard Barnes. I know he thinks its fine, I think jacking the prices up 10% year over year is nonsense. What do the financials look like and what's the internet getting out of this?
A money grab looks like a money grab.
[1] https://thenew.org/app/uploads/2019/09/PIR-2017_2018-990.zip
[2] https://domainnamewire.com/2019/10/28/pir-org-slashes-regist...
How much is the sale worth? That $48M Grant was worth more than Internet Society's total revenue in 2016 according to wkipedia. ISOC just sold a sustainable $50Million revenue stream.
If LetsEncrypt copped a $0.10 fee per certificate, how much would it cost for Richard to rubber stamp a Symantec acquisition of LetsEncrypt?
Easy now, don't give him ideas.
Basically, everywhere you look, you see a bunch of blood-leeching ticks on the internets backside.
It's all bogus and he knows it. He is to busy counting money to care.
This isn't rocket fusion, this is something every country, no matter how tiny, manages to deal with for their own national domain.
If they're in way over their heads maybe they should out-source components of it, but retain control over things like pricing.
Or, sure, sell it off. I'm sure nothing bad will happen like when .com went evil.
OP meant that current .org clients can ditch .org if/when costs for them (profits for .org) gets too high.
> ...
Many countries just contract some registrar/registry/regperson to provide the service.
But of course, it's dead simple. (The complications arise if you are .com and thousands of squatters try to catch dropping domains, etc.)
There are wholesale registrars that will provide white-label service for a couple of bucks a domain per year. The costs can't be that high.
OP's comment doesn't distinguish between different sources of that cost. (Sure, it has many components, the cost for the network, servers, development, security, backup, payroll, legal, accounting, some sales, marketing, audits/compliance, insurance, whatever risk premium, maybe off site backups, disaster recovery, outreach, bonus projects, 20% time, blablabla. Plus profits.)
Obviously everyone knows that the profits is the part that will now grow much larger. And eventually the .org customers will ditch .org because of that. But OP is right, from .org customers' standpoint, it doesn't matter why, it just matters that their costs will rise and as soon as it crosses a point (cost of switching becomes less than the cost for remaining on .org) folks will leave.
If you plug a 10%-growing revenue stream into a net-present-value formula with a discount rate less than 10%, you get infinity. The future revenue stream has infinite value. Even under reasonable economic uncertainty, you might be able to justify a P/E ratio of 100.
That hedge fund got a sweet deal.
2. The domain name market would probably not bear a 14000x increase.
That's way above the rate of inflation.
There is nothing reasonable about the current prices. It’s literally a few hundred bytes of data mostly static data.
“10% per year” means it will double every seven years. “Up to” means they will be doing it at the maximum. And unless this is legally codified I doubt they would adhere to that either.
A large part of his motivation appears to be delusions of grandeur within an organization, the Internet Society, which, up to now, has been of no relevance whatsoever, and which has only now achieved a degree of prominence through an act of apparently naive stupidity.
It stinks and his justification was cringeworthy to read.
Sigh.. I'm guessing the author is/was not aware of the serious conflict of interest among the decision-makers and private stake holders who passed through the revolving doors of IS, ICANN, PIR, Ethos.
Voting with such naivete, especially underestimating the greed of a for-profit organization, is not being a good steward. They've let down the public in this decision.
It is unfortunate that we have a business culture where to take someone at their word is not only naive but so reckless that the duped gets most of the blame rather than the duper.
And yet, here we are. This is the reality. Taking a private equity firm "at their word" is so foolish that it's hard to believe the author isn't being disingenuous.
Edison literally sent thugs to tear down competitors' film equipment...
The US flatly does not have the regulatory environment to ensure internet infrastructure is accessible and affordable. Net neutrality is the cardinal example in which regulatory capture by business interests immediately led to deregulation. This is a similar story but instead it was a nonprofit organization being captured by business interests.
Is there nothing the free market can't ruin?
I don't understand how that should be true. Either Ethos would have too pay too much or Ethos would have to be able to run this business more cost effective. Both sounds questionable.
> While it's true that running .org provided a relatively steady income stream, ... > Establishing a more diverse portfolio of investments will allow us to have more predictable revenue over time.
Relatively steady sound pretty predictable to me. It will be interesting to see who from the inner circle will benefit from those future "investments".
> Even in the worst case, ... the Registry Agreement for .org requires a 6-month notice period during which domain owners can lock in a 10-year registration at pre-increase rates.
That is wrong: "Registry Operator shall offer registrars the option to obtain domain name registration renewals at the current price ... for periods of one (1) to ten (10) years at the discretion of the registrar, but no greater than ten (10) years."
1. No, 26$ is obviously not a sane, let alone a reasonable price for a domain registration. For comparison, you can register .de for < 4 EUR/year, so at a price of 26$ this is redirecting 220 million dollars of funds that were donated for charitable work to definitely not charitable profit for these investors--or 160 million more than right now.
2. The price increase is capped at only 10% per year? Are you fucking kidding me? Do you seriously not have a clue how exponential growth works? .org has existed for 34 years, if you add another 34 years of increases of "only" 10%, you are at 255$ per year. Or, as he himself calculated, it's more than doubling the price in ten years, which would be just crazy.
3. "They promised they'd be good!" ... seriously? You seriously can not see the problem with a transaction where a profit-seeking entity obviously explicitly avoids actually promising anything (that is: making any of those "promises" legally binding)? After all, it is possible to actually promise all those things in a meaningful way, that's what the legal system is for.
4. "Give back to the .org community through a Community Enablement Fund" ... or in other words: Appropriate charitable donations where the donors have already decided what causes they should go to and redistribute them to their liking. Can anyone really be too stupid to see through this and be in a position to make such a decision?
5. "While it's true that running .org provided a relatively steady income stream, it effectively staked most of our revenue on a single business, and required a certain amount of our resources to be spent managing that business, distracting from the broader mission." ... WTF? And running it in the future will not require any resources? Does this guy not understand basic financial math either? Like, if you buy a business, you pay for expected profits, i.e., after you you have subtracted expected expenses, i.e., if you sell a business, you still "pay" for all the future expenses? Selling a business does not magically create money, it only shifts the cash flow to the present day. The only way selling a business can increase your cash flow is if the buyer increases prices or reduces costs.
It's all so obviously from the bullshitting playbook you can hardly believe anyone would actually believe any of these "arguments" to be of any value, when the path to actually guaranteeing all of these things that we are supposed to just believe is so obvious.
This only makes me more convinced that it’s a bad move.
I really hope he didn't have too much say in the important things at Let's Encrypt. Because statements like this really damage the little trust I have left in companys.
2. The reason there isn't a limit in the contract is because Ethos don't actually intend to limit themselves to 10% yearly. If they did, they would have agreed to write it into the contract, which would have let them pay less for .org