Why I Voted to Sell .ORG
circleid.com
circleid.com
PIR is a legal 501(c)3 nonprofit. You can’t really sell a nonprofit to a for-profit company except in unusual and rare circumstances.
In California, I know you need a letter from the state Attorney General to do so.
There are also federal restrictions on sales like this, particularly around self-dealing transactions. This transaction was obviously self dealing.
Someone seriously needs to dig into this. The PIR board members could be in big legal trouble. And also ICANN, which is a 501(c)3 nonprofit as well and is subject to self-dealing restrictions.
This is obvious, plain as day corruption. In the business world, not much can be done. But these are two nonprofits (PIR and ICANN), so something can and should be done. These kind of transactions aren’t normally legal.
Like, just read the examples of what an illegal self dealing transaction is in the eyes of the IRS:
https://boardsource.org/resources/private-benefit-private-in...
“Keep Our City Beautiful, a membership organization, plants a city alley with elaborate flowering bushes. The alley is not heavily traveled but the decorations increase the attractiveness of the city’s main restaurant whose owner is a member of the organization.”
ICANN clearly engaged in an illegal self dealing transaction by allowing their former CEO to enrich himself with a deal that would otherwise not be possible.
Edit: please see https://news.ycombinator.com/item?id=21658324 for a “what you can do right now”
What stops people from getting together, agreeing that a private equity firm would be a poor steward of the .org TLD, choosing somebody else to operate it instead, and pointing the NS records there instead?
Nobody really owns the DNS. It's a thing that works because there is a broad consensus on how it should work. If the consensus is that this is a dumb idea then what's stopping people from choosing not to go along with it?
And staging a coup over this would set a good precedent that these types of flagrant money grabs are not to be tolerated.
The DNS really does operate on consensus. There is nobody forcing everybody to do it a particular way. We get real consensus because everybody has a strong interest in not creating global namespace conflicts through forks. But that doesn't mean you can't make a change to fix a mistake, it only means you need to get enough support behind it for it to become the consensus position.
Property is absolutely based on consensus, property beyond anything you control with your direct person is very much one of those polite fictions society collectively agrees to, like money and laws.
If the large majority of people, for whatever reason, decided to stop agreeing, such fictions would cease to exist.
This isn't true of things like property rights which could be sustained even with only minority support provided the minority had a sufficient military advantage.
It is true of DNS because consensus is inherently required to prevent it from fragmenting and ceasing to exist as a single global namespace.
If the same thing happened with Bezos's wealth, it would cease existing, or at least the concept of him owning it would cease existing.
That's the difference. Ownership of property is entirely within people's minds.
If so much as one person still remembers and can prove it to everyone else, or it's documented somewhere on paper, then it would still exist. Likewise all Bezos would need is that documentation. Which is really how it works in practice. There are only a handful of people and documents concerned with exactly what someone owns. The large majority of people have no idea who owns an arbitrary piece of land or share of stock. The information comes from an authority, not a consensus.
Whereas if we're talking about the concept of property rights in general rather than specific ownership records then we're back to them being enforced by a government which it is in principle possible for them to do via superior force independent of popular support.
the ruling will be enforced if there is a consensus that it is a just ruling
The Supreme Court regularly makes rulings that are contrary to popular opinion. I see no evidence that the rulings are not being enforced despite the lack of consensus that they were just. They also regularly make rulings that align with the slight popular majority but the popular opinion is still about evenly split with no clear consensus one way or the other, and those rulings are enforced as well.
But most people don't think that. They wish they had as much money as him, maybe they think society is unfair to allow someone to have so much money. But you'd be hard pressed to find anyone who supports arbitrarily stripping someone of their (current) property.
Isn’t that what the Warren wealth tax is?
...
If you want to fix this by direct action on the root servers, rather than ORG’s nameservers, the it doesn’t matter who owns the current root servers.
Their config is baked into your resolver’s installation files or source code, and my naive understanding is that it takes only one patch to change each one:
https://gitlab.isc.org/isc-projects/bind9/blob/master/lib/dn...
...though the changes would be fragmented until the patch had been rolled out to 100% of resolver codebases and all instances of each resolver updated and restarted. Not an easy solution without coordinating people as well as software.
If I recall correctly it was OpenNIC which established some TLDs independent of ICANN. ICANN stomped on one of them, and ultimately won, with OpenNIC conceding control of the TLD. (Everyone peered the ICANN data and no one the OpenNIC, and OpenNIC stopped registering or serving the conflicting domain themselves.)
They could decide to fork .org and lobby ISPs and DNS to use their register instead.
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.
If you read carefully -- despite the title, he works hard to obscure it -- the "why" is he just wants the money.
His argument about why it's OK -- "Trust me, Ethos is totally trustworthy" -- is absurd and incoherent.
First of all, the point and purpose of private equity is to make money. To misconstrue the issue as distrust of private equity is backwards. I trust them 100% -- to fulfill their purpose to make money. They will extract money from this investment as effectively and efficiently as they can. Raising prices quickly is just one thing they might do, by the way. If they can find an opportunity to make a nice and quick profit that devastates .org they won't hesitate to take take it if it meets their current investment goals.
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"
> 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
> 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://yukari.sr.ht/dotorg-form-13909.pdf
Alternatively, this file can be opened with LibreOffice Draw to make edits and prepare your document digitally:
https://yukari.sr.ht/dotorg-form-13909.odg
lodraw crash course: F2 + click drag to make a new text box, Ctrl+[ to reduce the font size to something reasonable, red icon in the toolbar along the top to export as PDF. You can send the document by email to eoclass@irs.gov.
Please see my other comment on this thread. It is likely this “sale” could be considered illegal.
Here is the information for ICANN which can be used for the above form as well:
https://www.icann.org/en/system/files/files/fy18-irs-tax-for...
Remember that the founder of this PE firm was at ICANN, so this transaction is self-dealing on ICANN’s end as well.
https://www.privateinternetaccess.com/blog/2019/11/isoc-pir-...
ICANN, by lifting the price restriction, was likely “in” on this deal.
When a nonprofit does something to greatly enrich a former CEO, that’s likely self dealing and illegal in the IRS’ eyes. The CA attorney general should also take action (ICANN is CA based).
It was ICANN which approved contract removing price limits, not Internet Society. (of course probably all of ICANN/ISOC/PIR/Ethos were involved in the deal, but anyway this statement is incorrect)
I wonder how effective these copy-pasted mass complaints to organizations/politicians/etc. are. It seems to be just waste of time, it's not that receiving same mail X times gives additional information?
Also becoming a B corp is different from getting the certification. the latter is just a reporting standard.
Additionally, it might be beneficial for folks to file complaints with the Washington, D.C. Department of Consumer and Regulatory Affairs [1], since the Internet Society is incorporated in D.C., and with the Virginia Department of Agriculture and Consumer Services [2], since its principle place of business is Virginia and is registered as a foreign corporation there.
[1] https://dcra.dc.gov/ [2] http://www.vdacs.virginia.gov/about-agency-directory.shtml
[1] https://www.internetsociety.org/board-of-trustees/ [2] https://tools.ietf.org/html/bcp77 [3] https://www.internetsociety.org/board-of-trustees/elections/...
> On May 13, 2019, ICANN announced that they would remove the price cap on .org registrations (despite 98% disapproval in public comments [2])
> On May 14, 2019, the private equity firm Ethos Capital was founded by former ICANN chief executive Fadi Chehadé and investor Erik Brooks.
> On November 13, 2019, it was announced that the Public Interest Registry (that manages .org) had agreed to be acquired by Ethos Capital, as its first investment.
> Subsequently, PIR announced it would abandon its non-profit status to become a B Corporation.
Is the author unaware of this, in on the deal, or just remarkably naive?
[1] https://en.wikipedia.org/wiki/Public_Interest_Registry [2] https://www.theregister.co.uk/2019/11/20/org_registry_sale_s...
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.
Except, unless I am misunderstanding something there, they had outsourced running the registry to Afilias anyway? So it's not even that ...
If anything, this has been a good wakeup call that fees for .org could and should be slashed by some 80%.
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.
Why provide a service ( like .org ) when you can 'raise awareness'? Or raise funds for others to do stuff.
The great thing about being the fund raising or awareness part is it's
1. where the money is
2. where the exposure is
3. and you have no responsibility for actually delivering stuff!!!
So you can justify higher salaries for the people running the charity....
So, now they don't have any significant income stream anymore? Great! So once they run out of money from the sell, they're closing down? That is, unless they find some other way to generate a profit to burn on non-profitable-but-good things (like they're doing now). For which .org was the perfect fit?
I mean, if THEY would have increased prices by 10% per-year for the next few years, well, I think people would have been mad, too. But not as much as now, since at least the money would have flown to some "good use"(tm). But now? Cash flows to private investors, who expect (surprise!) to EARN money on that deal.
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...
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.
>If we take Ethos at their word
What a child
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."
But the issue people have with it in the Internet Policy Community is not the terms, which we no nothing about.
It is that the way it was done is a radical departure from how decisions are normally made.
Usually you start by saying "I have a problem". In this case it would be "We don't want to run .ORG anymore."
And then you engage the community in an open bottom-up consultative process to come up with the optimal solution.
ISOC applied to run .ORG in 2002. They won a competition to run it against 10 other groups. Here is the original application they submitted to ICANN:
https://archive.icann.org/en/tlds/org/applications/isoc/
They said things like:
"PIR will institute mechanisms for promoting the registry's operation in a manner that is responsive to the needs, concerns, and views of the non-commercial Internet user community."
And:
".ORG is the home of non-commercial entities on the Internet"
https://archive.icann.org/en/tlds/org/applications/isoc/sect...
After running .ORG since 2002, and growing it to over 10 million domains under management under this promise, ISOC's Board suddenly and with no prior consultation, decided to privatize it. They took that decision in a private negotiation over less than 3 months.
That decision making process is not how the Internet maintains a stable and secure infrastructure. It needs careful decision making to ensure reliable, stable, and resilient operations.
This only makes me more convinced that it’s a bad move.
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
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.
We believe that the 2019 decision of ISOC Global to sell PIR to private equity firm Ethos Capital is not in line with ICANN’s criteria from 2002 and the subsequent promise from ISOC Global. Despite ISOC Global’s assurances to the contrary, we share the misgivings of the international community about giving a single privately owned entity the power to raise tariffs, implement rights protection mechanisms possibly leading to censorship, and suspend domains at the request of local governments. We also fear that ISOC Global’s reputation has been severely harmed by even contemplating this transaction.
We therefore call on ISOC Global’s leadership to reverse this decision immediately, and do its utmost to restore faith in ISOC as the one global organisation that through its many professionals and dedicated volunteers sincerely strives for an internet for everyone.
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.
It’s extra sad because they had a commercial vehicle with which to further their mission, which could have been a huge asset to the ecosystem, and instead of finding a way to have it be a source of sustainability, they threw it away for a one time cash infusion.
The rest of the post is just this guy trying to make himself feel better for an awful decision.
No, they are based on the fact that it was clearly a backroom deal with no due process that would've NEVER happened if the seller wasn't closely associated with the buyer.
This man is a fool.
Worse, 10%/year isn’t a contractual limitation; it is but a statement of “intent”. It is nothing short of malfeasance to have sold a non-profit’s operations without sufficient safeguards. And to a private equity firm? Outrageous incompetence if not criminal in action.
His article doesn’t justify the transaction or allay reasonable concerns. In fact, he seems to be presenting the case for why this transaction is crooked if not criminal!
Perhaps private equity could also take control of oxygen supply? If prices get out of control, perhaps the market will make other respirable gases available?
I’m sure I’ll regret writing something so emotive, but I really resent being backed into what feels like could easily be labeled a loony-left corner on this debate. Is this .org sell off an exercise in driving those who lean even slightly towards moderately left economics into insanity, incapacitating them?
What happens if Google or Facebook or whatever suddenly wants to control .org? They just have to shell out a few millions?
Ethos will squeeze every last drop out of this opportunity.
You would think that "A World-Renowned Source for Internet Developments" would be on top of that.
Richard, maybe you could suggest such a place? /s
Considering "the lady doth protest too much, methinks" tone of the post, the inner conspiracy theorist in me starts to wonder if "Let's Encrypt" is as benign in the long run as it seems.
Oh, well. That's okay then.
I mean, escusatio non petita, accusatio manifesta:
https://en.wikipedia.org/wiki/List_of_Latin_phrases_(E)
or "he who excuses himself, accuses himself"
Or the could announce a massive increase to get all the .org owners to register for 10 years to give them a massive influx of capital right away, then divest that capital in to some other venture, then sell PIR to someone else. I am sure Verisign would love to buy it, or Donuts
the Internet Society can not stop them from off loading it in a couple of years after they extract their money from the .org space.
If you want to use HN in its intended spirit, you're welcome to! That's described at https://news.ycombinator.com/newsguidelines.html is summed up by the phrase intellectual curiosity.
brb, i'll make one. i promise not to hike prices too much (in the first year).
It's really not cool when the target is a person. Receiving dozens of people angrily accusing you of evil is upsetting, and can lead to fear, anxiety, depression, and suicidal thoughts. I've seen people experience it. You may not care about this person's welfare, but you should, if you want to be an ethical human being.
It also doesn't help any idea you think you have, but it reinforces you emotionally to believe it, even on the really rare chance that you might not have expert information, and are just reacting to your limited understanding of a subject.
And it galvanizes opinions (your own, and of others) because of how the emotion and anger is shared by so many people. It makes you believe all the things people are saying, and you don't even stop to think critically. I know, because I too have decided to agree with the crowd here before when they dog-piled on others, only to find out the opinion everyone had (including my own) was pitifully inaccurate. I later wanted to provide some correction, but good luck fighting a mob when it wants to feel right.
Also, I have not seen anyone advocating for hurting him, which would obviously be out of place, but you can not take on the responsibility for a public good worth billions and then expect exceedingly friendly treatment when you completely fuck it up because you didn't care to exercise even a minimal amount of diligence, in the best case.
And while "idiot" or "fool" might not be neutral terms, they are still terms that at their core describe his actions in this case (assuming it wasn't corruption), it's not just random name calling to degrade a person.
Now, if there really is an explanation how all of this is in the public interest, sure, bring it forward, and push it to the front page of HN, I certainly would want to know. But the mere fact that even the best-founded judgement could always turn out to be completely wrong after all based on new evidence is not a reason to hold back criticism when there is solid evidence supporting that criticism, because the theoretical possibility does not mean it is actually likely or common.
Ethos Capital paid $1.135 billion for total, unconditional, purchase of the PIR from ISOC.
ISOC just "grabbed the opportunity when Ethos presented it,"
ISOC have reviewed Ethos’s governance plans and approved them, but will have no means to enforce compliance with those plans.
The deal must be approved by the end of the 1st Quarter 2021 or it fails. The exact date is still confidential.
It must be approved by two bodies – ICANN and the Pennsylvania Orphans Court, which is a specialist court for estates and trusts.
The PIR is incorporated in Pennsylvania and this court must approve changes in the PIR charter in order for Ethos Capital to take ownership.
This is because “the Orphans’ Court judge is the ultimate defender and protector of the fund in question, and the Orphans’ Court will protect that fund and ensure that the fund is distributed to the correct beneficiary”
There is a good introduction to this court at https://www.skhlaw.com/pennsylvania-orphans-court-101-all-th...
This means that if the Pennsylvania Orphans Court has not reached a determination by 1st April next year, or if that decision is being challenged in a manner which delays implementation, the deal fails.
> Richard Barnes is Chief Security Architect for Collaboration at Cisco
Cisco has had backdoored equipment and far too many security vulnerabilities. They supply equipment to suppressive regimes like China, allowing these countries to block, filter, and monitor internet traffic in an effort to suppress human rights.
Someone who works for a company like that should not be trusted with important decisions related to fundamental parts of the internet.
So let me get this straight; you typed out all these words to hide your real intentions (you want money) and we're now supposed to trust you vouching for a private equity firm? Please. Get the hell out of here. Put some more effort into your schemes.
And yes, as someone stated, privaty equity companies want to make money from their investments, believing anything else as their "goal" is utter foolish.
In the end it sounds like whoever was doing the voting ended up putting the wrong people in charge.
Would be useful to have a public reference listing the names of those who made this vote so future non-profits don't make the same mistake.
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.
I cannot believe someone actually wrote that down.
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.
The registries do not allow a domain to be registered for more than 10 years in the future, so the way NS implements this is by initially registering it for 10 years for you, and then automatically registering an additional year each year.
That only works out for NS if prices don't rise too much over the next 100 years.
I haven't read their terms to see if they have some sort of escape clause to get out of the 100 year deal if prices rise too much.
The 100 year domain: legal or not? https://www.tnl.net/blog/2004/03/23/the-100-year-domain-lega...
100-Year Domain Renewals? https://yro.slashdot.org/story/04/03/23/0235244/100-year-dom...
Guess he was feeling left out when it came to all the lobbying money and croney corruption.
Strange he never addressed the fact that a new non-profit wasn't set up to control the domain.
Also, what's the justification for 10% annual increases? Their costs aren't going up faster than inflation.
I worked for one of the other bidders for .org as did Ivan Pope.
Don't suppose Billg or some altruistic rich people want to fund us to get the Band back on the road :-)
Only Half Joking I am sure that Ivan And some of the Poptel team would be up for it
if this battle is lost, what greedy move can they make next? how can we get ahead of that now?
I wonder if he'd have the same lack of qualms about selling that to a private equity firm...
This seriously falls in the "I didn't know you could do that category" for me.
Let that sink in for a minute. In only 10 years, it’s going to cost 10x what it does today to register A NAME.
Technology was supposed to prevent things like this, not enable it.
-- new .org registry owners, next year, probably
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?
AKA doubling every 8 years.
This guy must be new to this whole Crony Capitalism thing.
I’m glad there’s no recorded instances in history where that turned out to be a patent lie.
Is “lease” the understanding others have regarding the relationship among a registrar and registrant?
Isn’t the registrar intended to operate the supporting infrastructure and no more? Where does the concept of a “lease” enter the transaction?
So it's correct to say registrars lease domain names to registrants.
So it could be done, it might even be a better scheme, but I think it would be expensive and messy.
[1]: You could obviously pay someone to negotiate on your behalf, but you're still initiating the action.
At least in India, I've seen most people doing this on their smartphones. Nobody likes to type in the address bar anymore.
I don't get how anyone actually cares about a top level domain. There are so many. Pick another.
Do you even email, bro?
My kids school can't use a .edu domain because everyone insists on typing in variations on whatever.edu.com and its just too much of a headache.
My home town can't use a .gov domain because everyone insists on typing in variations on cityname.gov.com and its just too much of a headache. Even more hilariously my city name is my county name so there's a turf battle over name.gov. At least my hometown city name is rare, there are supposedly 88 cities named "Springfield" in the USA. They heavily market a .com domain for my city although it redirects to a ridiculous variation of city-name.gov. I honestly don't know the marketing domain for my county, but its probably a .com also.
I can think of insider sites on .org for IT and technical people; debian.org for example. The death of .org would hit IT and tech people kinda hard. I can't think of a popular general public site on the .org TLD, and even if there is one, well, it can just move to .com where the end users already assume it is anyway.
In short, if .org is squeezed, a couple insiders and IT people will angrily leave to .com, and the general public will not notice, other than its a little easier to find them, because "all domains end in dot com" as I've been told many times over the years. Insider sites will go to specialty TLDs that the general public do not realize exists and are thus quite cheap, .mobi or .name or .biz or similar.
Presumably the private equity firm figured this out during due diligence. By analogy, they MUST know they did not buy the one monopoly cable modem provider for a region which they could squeeze for all its worth ... they knowingly bought the equivalent of one food truck in a highly competitive market. If they destroy .org for fun or whatever, well, its not really a big deal to switch, so knowing they won't make much money off the destruction, why bother destroying .org? By analogy you can make a lot of money by destroying Iraq, so there was intense corporate media pressure to destroy Iraq, and Iraq was destroyed. However, you can't make a lot of money destroying Clipperton Island, and as such there is not much big corporate media pressure to invade or bomb Clipperton, and its unlikely it'll ever be destroyed (at least, not for profit, LOL).
Your kids' school can't use a .edu domain because this is reserved for use by higher education bodies. If your kids were university students, they'd be using .edu, I guarantee it. Every reputable institution in the US uses .edu. (Outside the US, universities all follow various national systems.)
Local government is a terrible example because these are approximately the worst organizations ever when it comes to domain choice and the like (government and all).
In any case, people are typing whatever.com, not whatever.edu.com or whatever.gov.com, if they are indeed typing whatever.com.
Have you ever heard of wikipedia.org? That's a pretty popular site on a .org domain. And no, not everybody assumes it's a .com.
If .org were squeezed, thousands upon thousands of us would have to painfully change our email addresses, our organizations' domains, etc., making things both significantly harder to find and interrupting years of continuity in most cases.
Sorry to say so, but that is not a particularly valid point, since https://www.wikipedia.com/ redirects to https://www.wikipedia.org/ and actually both are registered to Wikimedia Foundation, Inc.