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Comment by lancewiggs | Hacker News Reader

I wrote about this too - linked in the article. https://lancewiggs.com/2019/12/01/did-isoc-leave-1-billion-o...

The travesty is that ISOC has given up a sure-fire stream of $55+ million/year in tax-free income, along with the ability to easily grow that to over $100m/year with price increases - all for just over $1.1 billion.

As any r/personalfinance reader can tell you a rule of thumb for endowments is to spend a maximum of 4% of your assets each year. This means $44m from the $1.1bn, which means ISOC is immediately worse off than they were forecasting for this year (~$55m). Alternatively use the Yale method, which in today's low-return market will yield similar or worse results.

Moreover it's clear that ISOC are not behaving as the sharpest of investors, so we can imagine that the endowment might be be poorly managed or over-spent.

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The bigger issue is that org was given to PIR to manage in the public interest. It was not supposed to even be a moneymaker for ISOC, they were just supposed to be the stewards of .org in the public interest. The fact that it’s worth even $1 billion shows that they’re operating it in the interest of the ISOC and not the public interest. ICANN should simply create a new entity that will charge break-even fees for registrations and stop trying to tax .org registrants with mandatory charitable donations to a dubious charity.

It's worth noting that the former ICANN CEO, Fadi Chehadé is highly involved in this sale. This timeline also seems to suggest that current members of ICANN are also biased towards the sale of the .org domain, ICANN may not be interested in the views of the people who currently have .org domains.

From https://www.privateinternetaccess.com/blog/2019/11/isoc-pir-.... :

"March 2019:

ICANN receives 3,300 comments uniformly opposed to the change and 6 in favor of removing price caps, and sides with the 0.2% minority.

May 2019:

PIR responded to the comments with an open letter that said,

“We are a mission-based non-profit, and would never betray the trust that you have put into .ORG and us.”

On 7 May, Chehadé registered the domain for EthosCapital.com.

On 13 May, ICANN decided to lift the price caps anyway.

On 14 May, Ethos Capital was incorporated as a new investment firm founded by Brooks. Ethos Capital has two staff: Brooks and Nora Abusitta-Ouri, a former ICANN SVP who later worked for Chehadé and was also a classmate of Chehadé."

So basically ICANN itself is corrupt and must be replaced wholesale with a proper public interest steward?

Maybe people are protesting the wrong thing. The sale of .org is a symptom, the underlying cause is a bad regulatory framework for internet names.

Exactly. Internet naming is a situation where artificial value is assigned to a nearly valueless resource for the purpose of collecting rent.

There's no technical reason we can't have multiple systems for translating names into addresses. There's no longer any technical reason for having neatly organized dot separated addresses based on TLDs.

Allowing the translation of any text string into an address is entirely possible with present day computing power, and a truly distributed system similar to the global routing table would work to organize different providers announcing their own name domains.

Maintaining the old DNS TLD domains is stupid and subject to manipulation by corporations and corrupt politicians.

Like this sale.

I heard this argument a few times now. But are domain names not important for internet security? Https certs prove that the entity you expect communicates with you, given that you know the domain name of that entity.

It's one way to do that... but the present format and management of the domain name system isn't important. You can create a security certificate for any form of text string and use it to validate the other end of the connection.

The certificates are essentially a trusted authority saying cryptographically "we have verified this is really the person you think this name is" and that can be done for any identifier. Also, this system was set up before public key encryption became common, and there are plenty of other ways to accomplish the same function with PK crypto.

Ok, but how is a domain name essentially different from 'any form of text string'? There needs to be some central registry, unless you are ok with such long strings that nobody will effectively double check, that they are correct.

I'd recommend going to https://savedotorg.org and sharing it if possible. There will be a public call through this campaign for people interested in learning more about this sale on December 5th at 12pm pacific time.

Further, the sale of the asset to a third party is essentially laundering the extraction of maximum value.

The buyer pays the NPV when operated as a profit focused enterprise, then insulates the ISOC from blowback when it actually does this.

The ISOC can then turn around and feign betrayal with the rest of us, its pockets full of money.

This is the internet. We don't forget things like this. People's names have been attached to it, like Andrew Sullivan (CEO) and Richard Barnes (board member defending it). We know exactly who fucked over everyone here, they admit it publicly. There's no pretending about it, Andrew was more than happy to sell out the non profit space. Just read the interview: https://www.theregister.co.uk/2019/11/29/isoc_ceo_dot_org_sa...

This is the Internet. Everyone will have forgotten this besides, like, five people before this time 2020.

This is Hacker News, pretty much everyone will have forgotten about this relatively soon but whenever anything even remotely related to the event is posted about one of the people who has not forgotten will say about how they are still annoyed with X and that X is immoral, which will then cause someone to say what is wrong with X, and then someone else will go into excruciating detail on what is wrong with X and lots of people will chime in to say they hate X too.

Which I think is pretty much things working as intended. And as a result, no they won't exactly be remembered forever but they don't get to go down the memory hole either.

I’ll have a reminder each time the website I created for volunteers helping a non-profit is up for renewal.

2020/tomorrow. FTFY

"laundering" is the fundamental purpose of incorporation. The various forms of corporations are various ways to detach responsibilities normally required of natural persons.

Break-even pricing was my first thought, too. But I think the .org registry has to be priced at least modestly higher than business-y domains (e.g., .com), because otherwise you'll find people using it for all sorts of for-profit stuff, reducing its signalling value.

But there's no reason that money can't go right back into basic infrastructure. For example, after the Heartbleed bug we learned that OpenSSL was receiving about $2k/year in donations. Surely there are obvious core open-source projects that could use reliable funding: https://arstechnica.com/information-technology/2014/04/tech-...

Why does "signalling value" matter at all? If a business gets value by masquerading as an "org", then that value is sure worth more than $10 or whatever, and surely the commercial entities are better able to pay than non-profit orgs, so making org cost more only hurts orgs, not businesses.

Depends on which business. You're correct for businesses who invest heavily in their brand and have just one domain. But you're very wrong for businesses that have a lot of domains and use the domain for credibility. E.g., spammers, typo-squatters, fraudsters, fly-by-night retailers, etc. And it's those that will really bring down the value of the TLD.

Operating .org in the public interest in the past doesn't mean that it has zero value today. "The fact that it’s worth even $1 billion shows" not so much that "[ISOC is] operating it in the interest of the ISOC" but that PIR may not be interested in operating .org in the public interest.

How is ISOC a dubious charity?

Someone dug into their expenses, 69% overhead. https://twitter.com/ferdeline/status/1199380702233612288

Do you know what ISOC does? It's a non-profit, yes, but it's not a charity. It exists to make things like the IETF and IRTF, and related administrative groups run. That's it. Of course its expenses are going to be mostly overhead -- what else would they be given their mission?

"mission-related" work is a separate category from "staff travel" aka vacations.

The staff travels because they host conferences around the world several times a year. Conferences I've attended many times, and which are more than full work days for the attendees and the staff. Typically a day at an IETF meeting starts at 9AM, officially ends at 5PM, but then side meetings, bar BoFs, impromptu hackathons, and so on, will take you to near midnight almost every day -- it's exhausting (the staff probably doesn't work such long days, but ISOC officers probably do). There is no time left for sight-seeing, except maybe on the one night where there is a social event.

They host conferences around the world because attendees to the conferences in question are from around the world, and because ISOC wants to attract more of them.

I'm prepared to listen to real arguments about why ISOC sucks. But yours are either uninformed or you're not explaining them well enough. My bet is on the former. ISOC is not a charity, just a non-profit, and they've done quite well at keeping the IETF/IRTF and related groups going for decades.

Another thing you need to understand is that most SDOs (standards developing organizations) are pay-to-play. ANSI, OASIS, IEEE, Unicode Consortium, ... -- all pay-to-play. IETF? Free to participate. You don't even have to go to the meetings. Sure, participation == time == money, but being so accessible is a wonderful thing, and it takes an ISOC to keep it so.

>but that PIR may not be interested in operating .org in the public interest.

Oh who did this organization with a duty to steward .org for public interest sell it to? How can you separate that duty from the action of selling it to a third party without that duty?

It's an interesting hair to split.

That's fair, but it's not proof that ISOC wasn't running .org in the public interest, only that if they had been, they stopped when they sold it to a party that looks set not to. "They were so good right until the point where they stopped being so good."

>but it's not proof that ISOC wasn't running .org in the public interest, only that if they had been, they stopped

The action selling it to another org without that duty is abdication of that duty and they should not have had authority to sell it.

The specific circumstances only make it worse.

Talk about not responsive. All you did here is restate your previous point.

All you did was state that their previous actions aren't proof of the future, when we are talking about them having sold .org already.

Their abdicating stewardship to a group that doesn't have a duty to steward is evidence enough and saying "well they used to" is off topic and not interesting. No need for new arguments when you have none.

Previous to selling it.

Who cares? The act of selling it to someone without the obligation to steward is an abdication of that obligation.

and talking about precious years is just off topic and unrelated to the issue at hand.

I appreciate your excellent write up. When I read the allegations in the original article I kinda wanted more detail. You break it down very well with great attention to detail.

I'd like to place this here for those who only read comments:

.org registry rights belong to a non-profit - the rights were sold to a private equity group - somewhere between 50% and 90% below market rate. It was based on self dealing of the people given stewardship of the non-profit that manages .org

Basically, this is privatization Russian style. Not good. Even if you like privatization, no-bid stuff is just wrong.

Want to help support the democratic institutions which hopefully won't fail us? Look here: https://drewdevault.com/2019/11/29/dotorg.html

I don’t know if it’s fair to say they could have easily doubled but your point about not acting like investors is fair. In contrast, AAA, USAA, and AARP have chosen to leverage their assets to enter new lines of business while Isoc simply sold their’s off. I am not familiar with what governance issues might be in play here but the simpleton like me would ask, what alternatives did ISOC evaluate before taking a buyout offer from a insider-linked entity that ironically calls itself “ethos”...

I feel like you're missing some capital recovery factors and alternatives analysis to be so strong with your statement.

It’s a pretty simple analysis - but there is clearly, to me, enormous value left on the table.

>> is to spend a maximum of 4% of your assets each year.

OT. Isn't 4% also the rule of early retirement, that is if you can live of 4% of your savings you can retire?

Can anyone clarify if this rule applies for both individual and corporate? If so, how would be even more interesting to know?

4% works out for retirement, with the expectation that you will eventually die and no longer need the income. The assumption there is that if the market underperforms for the next 35 years in a row, you run out of money just after you die.

An immortal, such as a corporation, has to use a safer number, such as 3%, or 2.5% for operations and 0.5% in fees for the fiduciary management. So the permanent endowment needs to be 40x annual operating costs, and the fiduciary needs to grow it by 3% better than (price) inflation per year. That's relatively easy to do when most of the principal won't be touched within the next 30 years: buy all the publicly-traded stocks that have historically paid regular dividends, and reinvest whatever isn't paid out. On a long enough time scale, that's probably 7% better than inflation.

So the fiduciary could possibly be replaced by a robot that only needs 0.05% annually for maintenance, and then you'd only need to endow 34x annual operating costs to run forever.

Yes. Generally and for the purposes of this discussion, individuals and corporations can both buy investments in the public markets with similar risk/return profiles. Hence the spending ratio works out similar.

The 4% spending ratio theoretically varies with market performance but evens out over time. 7-8% typical returns for a total market index/etf, minus a couple % to account for inflation.

The % is lower for corporations than for humans, because corporations intend to outlive humans.

Exchanging 10 to 20 years of potential revenue for a flat check seems like a pretty good deal.

Agreed. A p/e of 20 isn't bad. S̶t̶o̶c̶k̶ ̶m̶a̶r̶k̶e̶t̶ ̶i̶s̶ ̶1̶5̶ ̶r̶i̶g̶h̶t̶ ̶n̶o̶w̶,̶ ̶a̶n̶d̶ ̶t̶h̶a̶t̶'̶s̶ ̶f̶a̶r̶ ̶m̶o̶r̶e̶ ̶d̶i̶v̶e̶r̶s̶i̶f̶i̶e̶d̶.̶ Oops, stock market is 20-25 right now.

There's so many TLDs today, the ability to raise prices isn't what it was.

Though they could 5x prices and even if they lost 60% of their business, they'll come out ahead. I could understand the worries of .org holders.

.org is .org, and they have a lot more pricing power than almost all of the gTLDs (generic top level domains).

Their customers, if you think about it, are perhaps more likely to value what the domain stands for. Meanwhile the annual price is currently absolutely trivial versus the expenses of most organisations from higher GDP countries.

Their customers, if you think about it, are perhaps more likely to value what the domain stands for.

Some of their customers perhaps. If you go back and look at what companies were doing with domains 20 years ago most medium and large enterprises bought <company name>.com, .org, .net and some country code tld domain because that's what everyone recommended "in case someone cybersquatted". I think behaviour has stopped now there are hundreds of gTLDs available. Consequently .org is much less likely to sell to businesses, and will find it very difficult to grow.

.org customers are not businesses, it's the non-profit

20 years ago businesses bought the .org for whatever trademarks they owned to stop someone else grabbing it. Same for .com (which they used) and .net. They usually pointed all three domains to the same place. That activity has stopped. There will be far fewer .org domains sold today because businesses have stopped doing that.

As someone who owns .org domain names. That might be what it's for like .com is for commercial and .net is for networks. However that is not at all how they're used.

Perhaps by some percentage of them are registered non-profits. However not the majority.

Ask craigslist.org about that.

The same people that are involved in this shady set of dealings are closely financially intermingled with the owners of donuts.com, the largest owner of TLDs by far. Expect to see large price increases across the board.

Even if they push 60% of domains off of .org that business will mostly go to other TLDs owned by the same people..

There is a chance that the fire sale price will help keep .org prices from skyrocketing. Maybe they did .org domains a favor.

As always, non-profit services cost less than for-profit services for a reason. ISOC could have implemented any price hikes they wanted without the need to pay out a profit as will be necessary for the new owners.

This will be a net cost increase, likely a big one (since there are no actual controls), for .org owners.

In what universe is that the case? Prices are going to raise by at least 10% per year from now until the end of time.

that is doubling every 7 years thereabouts, far far far higher than inflation or cost bais increases would demand

Any investment firm wants to maximise returns for their investors. The incentive is to find the (monopoly) price that maximises income from sales numbers x dollars.

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