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The Internet Businesses

Company Buying .Org Offers To Sign a Contract Banning Price Hikes (theverge.com) 17

Ethos Capital, the company controversially buying the .org top-level domain, says it will sign legally binding agreements banning steep fee increases for nonprofit domain holders and establishing an independent "stewardship council" that could veto attempts at censorship or inappropriate data use. "The rules would kick in if Ethos successfully acquires Public Interest Registry (PIR), a nonprofit organization that manages .org," reports The Verge. From the report: ICANN, which oversees the internet's top-level domains, is currently scrutinizing the acquisition. President and CEO Goran Marby previously expressed discomfort with the deal, and PIR announced today that it's extending the review period until March 20th. ICANN hasn't yet taken a position on the latest proposal. "We are in the process [of] analyzing the information we have received and therefore have no comment beyond the fact that we welcome Ethos' efforts to engage with the Internet Society community and .org customers, and look forward to the outcome of those discussions," said Marby in a statement to The Verge.

PIR said it would "continue to work collaboratively" to address any outstanding issues with ICANN. In addition to the details above, Ethos and PIR committed to creating a "Community Enablement Fund" to support .org initiatives, and PIR promised to publish an annual transparency report. The price restrictions, meanwhile, would forbid Ethos from raising domain registration and renewal fees by more than 10 percent per year (on average) for the next eight years.
Ethos and PIR's press release quotes Sullivan praising the new agreements. "Ethos shows that it has been listening to the questions some have raised. Ethos has responded by embedding its commitments on pricing, censorship and data use policies in a legally-binding contract, and giving ICANN and the community the ability to hold Ethos to its commitments," says the statement.
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Company Buying .Org Offers To Sign a Contract Banning Price Hikes

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  • by rsilvergun ( 571051 ) on Friday February 21, 2020 @08:04PM (#59752658)
    not to do a bad thing then you're gonna do the bad thing first chance you get.
  • by scmcclain ( 698239 ) on Friday February 21, 2020 @08:10PM (#59752668)
    They promised ban "Steep Fee increases". But if you read the press release-- they are only promising not to raise prices more than 10% per year. Or about 5 times the rate of inflation...
    • So, what can actually be done to stop them? Inquiring domain owners want to know.

    • And only for 8 years. Then they're free to increase the fees as steeply as they want.

    • by fred911 ( 83970 )

      'raise prices more than 10% per year.'

      What it actually says is an average of 10 per year over 8 years. And that's only to nonprofit .orgs. So, everyone else is free screwing. Either way, 80% increased fees until year 9 when they're free to name the price.

      Walks like a duck to me...

  • by thatseattleguy ( 897282 ) on Friday February 21, 2020 @08:15PM (#59752678) Homepage
    Translation via basic math: 10% average each year = 1.10^8 = 2.1435x = 214+%

    .
    So basically the new owners are committing to gouge .org holders with only a 214% price increase over the next eight years. For a basic necessity that many non-profit orgs rely upon for their marketing/fundraising/services. For a commodity product whose internal cost (to the registry) should actually decrease over time, not increase.

    Forgive me if (as admin for some .org domains held by non-profits I do support for) a promise to increase prices by 214% for a few years - and then after that, the sky's the limit! - seems like cold comfort.

    But ICAAN is brainless, spineless, and toothless so I expect they'll approve it with barely a whimper.

  • Its common that good deeds done cheap mean that an org is working on 509 status but has not attained it yet; I would only be OK with this entire thing if they signed a legally binding thing that said NO PRICE INCREASES AT ALL FOR ANYBODY.
  • by fuzzyfuzzyfungus ( 1223518 ) on Friday February 21, 2020 @08:32PM (#59752706) Journal
    Even if I had some reason to trust the people involved on a personal level(not that I do); this situation seems to have a fundamental problem that no amount of hedging and promising can get away from:

    Ethos is offering to pay 1.1 billion dollars for the .org registry. Unless they are absolute .com bubble stereotypes smoking unicorn dust they are doing that because they think that they can generate a return on that investment that will make it worth their while(rather more than 1.1 billion, since the income is in the future, subject to risk, and only a good investment if it not only yields a strict arithmetic profit but outperforms other things you could invest the money in). Being a registrar is a fairly staid operation without lots of room for capital-intensive but exciting new areas of business. It's pretty much just infrastructure and maintenance, with gradual adoption of changes from the surrounding industry(things like DNSSEC support, or not operating your datacenter like it's still 2001); but being the best possible registrar is largely about maintaining the status quo: operating some nameservers, a dispute resolution policy, some sort of storefront and payment processing, then just mapping domain names to IPs. There's nothing there of the "if I had a billion dollars to invest in my factory I could revolutionize %PRODUCT% and customers and investors would both love it!" flavor.

    So that's it: if they are offering a huge pile of money they are going to want to extract a huge pile of money. The only real headroom for greater profit is exploiting pricing power. Those things being true; how can I possibly believe that their plan is benevolent? Hoping that they are astonishingly irrational seems like a very, very, tenuous option; but it's the only one where they don't have a plan to gouge a lot of money out of .org that isn't currently being extracted. Full stop.
    • Re: (Score:3, Interesting)

      by Anonymous Coward

      As of July 2019, there were about 10.5 million .org domain names.

      If they paid $1.1bn, they need to make back $1.1bn, divided amongst 10.5 million domains:

      $1,100,000,000 / 10,500,000 domains = $104.76/domain. That's a lot of money they need to recover, just to break even.

      Then, they'll want a 10% return at a minimum each year.

      ($1,100,000,000 * 0.1) / 10,500,000 domains = $10.48/domain. That's in the first year. So, assuming a market average kind of year, they'll earn $110 million in the first year. Not much o

      • by tlhIngan ( 30335 )

        They're absolutely going to fuck everyone by doing 10% rate hikes, year-on-year. Nobody waits 10 years in this industry.

        To be fair though, domain names are slightly different in that they can be held a really long time. I'd be willing to bet that the vast majority of domain names they manage will still be there 10 years later. It's not like people are camping out on .org while they wait for .net or .com to open up their desired name, and once established, they are likely to keep the old domain anyways, so r

    • by thomst ( 1640045 ) on Saturday February 22, 2020 @12:04AM (#59753258) Homepage

      fuzzyfuzzyfungus argued:

      Even if I had some reason to trust the people involved on a personal level(not that I do); this situation seems to have a fundamental problem that no amount of hedging and promising can get away from:

      Ethos is offering to pay 1.1 billion dollars for the .org registry. Unless they are absolute .com bubble stereotypes smoking unicorn dust they are doing that because they think that they can generate a return on that investment that will make it worth their while(rather more than 1.1 billion, since the income is in the future, subject to risk, and only a good investment if it not only yields a strict arithmetic profit but outperforms other things you could invest the money in).

      So that's it: if they are offering a huge pile of money they are going to want to extract a huge pile of money. The only real headroom for greater profit is exploiting pricing power. Those things being true; how can I possibly believe that their plan is benevolent? Hoping that they are astonishingly irrational seems like a very, very, tenuous option; but it's the only one where they don't have a plan to gouge a lot of money out of .org that isn't currently being extracted. Full stop.

      I don't disagree with your points, but I think it's important to note that Ethos is unlikely to be buying the .org registry with its own money. It will almost undoubtedly finance most of the purchase with commercial loans. The current interest rate on investment-grade debt is ludicrously low, but I doubt there will be a lot of enthusiasm for loaning Ethos money at 2-3%. More likely, it's going to have to lobby hard to get anything less than junk-bond rates - and, even though those rates are also at historic lows (currently only 375 basis points above investment grade), that doesn't mean there'll be a market for Ethos's bonds. (With the difference between investment grade and junk just .375%, the question will be, "Why take the risk?")

      That (compound) interest adds up over the life of the bond - and Ethos will have to pay off both the principal and that interest on $1.1 gigabucks worth of bonds before it can bank a single dime, all while paying for staff salaries, infrastructure costs, and all other manner of overhead expenses.

      10% per annum, compounded over 8 years is a non-trivial price increase. Beginning in the ninth year - well, .org domain holders had better have oxygen masks handy, because, Ethos is going to have to raise their annual fees to stratospheric heights, merely to survive as a going concern, much less allow its stockholders to pocket fat stacks of cash ...

  • ... they are buying it to make a profit. They're business people, so the bigger the profit, the better. Once they own .org legally, they can do what they want with it. For example, sell it to another entity that is not bound by any contract they may sign.

...though his invention worked superbly -- his theory was a crock of sewage from beginning to end. -- Vernor Vinge, "The Peace War"

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