Ethos Capital, led by former ABRY Partners Managing Partner, buys .Org registry.
I thought this might happen. And now it has.
Fresh off ICANN’s blunder letting Public Interest Registry set whatever price it wants for .org domain names, Internet Society (ISOC) has sold the .org registry Public Interest Registry (PIR) to private equity company Ethos Capital.
Game. Set. Match.
This gives Internet Society a huge (as yet unkown) endowment rather than worrying about what the future of the .org domain name holds. PIR generated $101 million in revenue in 2018 and contributed nearly $50 million to Internet Society. It contributed $74 million to ISOC in 2017.
ICANN made this deal much more valuable by removing all price controls on .org.
While Internet Society might not have wanted to raise prices, a private equity company surely will try to maximize the value of the registry.
In a release about the deal, Internet Society noted:
Today’s news has tremendous benefits for both the Internet Society and PIR. The transaction will help the Internet Society to secure its future through more stable, diversified and sustainable financial resources than it has at present, allowing the organization to plan for the long term and advance its vision of an Internet for everyone on an even broader scale. It will also enable PIR to continue expanding its mission and important work under new ownership — including its goal of keeping .ORG accessible and reasonably priced — while further strengthening and deepening its commitment to the .ORG Community.
We’ll have to see what “reasonably priced” means. Certainly, the goals of Ethos Capital are very different from Internet Society.
Ethos Capital is a new private equity firm lead by Erik Brooks. Brooks was at Abry Partners until earlier this year. Abry Partners acquired Donuts and installed former ICANN President of Global Domains Akram Atallah in the top spot there.
Donuts co-founder Jon Nevett left to be CEO of Public Interest Registry.
The other person at Ethos is former ICANN Senior Vice President Abusitta-Ouri.
Ethos appears to have just been founded. It acquired the domain name EthosCapital.com at the end of October through Afternic.
[Update: The firm might be tied to former ICANN CEO Fadi Chehadé as well.]
PIR CEO Jon Nevett commented to Domain Name Wire:
Our goal has always been to make .ORG accessible and reasonably priced – and that will continue under our new ownership. PIR has made reasonable decisions on price in the past, and we will uphold this spirit going forward. We would never make dramatic price increases as we know it would harm our registrants, as well as our registrars.
ICANN watcher George Kirikos brought up the potential of a PE sale when ICANN proposed the contractual changes removing price caps:
Some have suggested that the Internet Society and/or PIR would never raise fees by a large amount. However, “hope is not a strategy.” Past performance is no guarantee of the future. Leadership can change, as can priorities/missions. It’s clear from section 7.5 of the the draft contract itself:
that ISOC/PIR could simply sell or assign the registry contract to another entity (e.g. Private Equity, just as registry operator Donuts was sold by its founders), and that new owner/entity could take the heat for future egregious fee increases. ICANN would not be able to stop such a deal. Such a sale would allow ISOC to create a huge endowment for itself worth billions of dollars, given that .org is arguably the second most desirable gTLD, after only .com.
This type of deal doesn’t happen overnight, and has likely been in the works for a while.
When ICANN decided to remove price restrictions on .org, my thought was this would be a pivitol moment in the history of ICANN. But it probably wouldn’t come back to bite it for another 5-10 years, at which point current leadership would have moved on.
But it came back to bite it now, and many more groups will call upon ICANN to justify its decision.
Public Interest Registry had operating income of $45.9 million in 2018. Any amount it increases prices falls directly to the bottom line.
I have reached out to Ethos for comment.
Update: Richard Kirkendall, CEO of Namecheap, which filed a reconsideration request with ICANN over the .org price cap removal, released this statement to DNW:
Obviously, we are disturbed by the timing of this transaction and how it reflects on the decision by ICANN to lift the price caps. While we all as registrars will be affected by this sale, the biggest losers will be our customers and all other .org holders who are sure to see their renewal prices increase over time.
The economics of .org domain names
The interesting connection between the .Org deal and ICANN
Note: this post has been updated throughout the day with more information and comments from the industry.
Rob Monster - Epik.com says
PE firms buying registries is probably inevitable. Donuts is basically PE-controlled already through Abry so this is not news.
I am still bullish on .ORG as explained here:
However, yes, the price of .ORG is likely going up.
Looking forward to reading the details. Thanks for sleuthing that out and breaking the story. More PE coming into the domain economy is not all bad.
Mark Thorpe says
Wake up and smell what you’re shoveling!
Rob Monster - Epik.com says
1. Domains are a mispriced asset class. Legacy domains without premiums are especially mispriced. The PE firms are apparently noticing this as the economy becomes increasingly digital. Blockchain is not disrupting the legacy addressing schema built around domains.
2. Even if registries start jacking up prices, registrants will have a 10 year window during which to secure their renewals. The expiry stream will also improve.
However, yes, for the poor domainers who are still playing yesterday’s hits (PPC parking) and selling for chump change, yes, I imagine that PE firms coming into the industry is heartbreaking.
As for me, I am looking at the brightside of a pie that is getting a whole lot bigger as the next billion people come online and overwhelmingly prefer .COM for enterprise and .org for non-profit.
That said, sure, you can call me what ever you like!
Monster I think maybe you’ve experienced a little too much health, wealth and happiness in your life and are a little out of touch with both spiritual and earthly common sense, the mind of God, and lack of infallibility of your own opinions.
Online Games says
You offer ‘forever registration’ Rob? How many of us will it take to bankrupt you as these prices shoot up? I smell scam…caught up playing games like other registars. Might not catch up to you till your an old man suffering from altizmers, so then you don’t have to believe all the people you tricked into promises you wont afford. Tick-tock.
Not when you own few thousand domains and this is your business renewals adds Up.
Price increase in 3, 2, 1…
This sounds like an April Fools headline, but it’s not April 1st…
Yup, price of org will rise and this will make dot com looks cheap and in high demand.
Oh, but ICANN is non-profit so we can trust everything they do. Wait, where do decision makers like Presidents and Vice Presidents go work after a while? Oh, I see, completely normal, nothing to see here.
And Ethos board is ex-ICANN. How convenient…
Dot com is going up too. Don’t fool yourself. Domain investors must stand their ground or be rolled over by the registries.
All these deals should be investigated
ICANN’s failure will allow PIR (and now Ethos Capital) to increase prices (without any restriction) on a captive base of customers –– who are held hostage to their domain name.
No substitutes exist due to the tremendously high switching costs. Consumers are locked-into their domain names and forced to pay whatever amount its operator sets. If PIR were to increase prices to $15 or to $20 or even $30 – consumers are not able to switch. Massive additional money for the operator without losing any customers.
That is a definition of a monopoly.
ICANN made a huge mistake in removing of the existing 10% pricing cap – that has been in place since the early 2000’s to protect consumers.
Now, PIR can act opportunistically and increase prices however it sees fit and extract out significantly more revenue from its captive base of users. This will allow a monopolist to charge supracompetitive prices on consumers – without having to make any justification.
ICANN has failed to follow its competition mandate. ICANN should be putting its contract out for competitive tender at the end of its terms.
Once again, ICANN only acts in the interest if its largest ratepayers. ICANN does not care if consumers are force to pay supracompetitive prices.
Look at what PIR CEO Jon Nevett said years ago:
“Just as ICANN must refer such issues to a competition authority when considering new registry services, it should have to rely on input from a competition authority when considering the surrender of its authority on the most fundamental aspect of the entire registry service – pricing.”
“One of ICANN’s core values is “to promote and sustain a competitive environment.” See ICANN Bylaws Article I, Section 2.6 (Core Values). This core value is reflected in the Memorandum of Understanding between the Commerce Department and ICANN, which outlines ICANN’s operating principles. Under the MOU, ICANN and the Commerce Department agreed to promote the management of the DNS in a way that will allow market mechanisms to support competition to “lower costs, promote
innovation and enhance user choice.””
Brad Mugford says
That is so pathetic.
.ORG get their unlimited price caps despite opposition, which was ignored.
PIR says they have no plans to raise prices, then immediately sellout.
The timing is so brazen. There is no shame to the level of corruption.
ICANN = corrupt
PIR = sellout
I am sure Vint Cerf would be so proud….
You got to love the Press Release.
“About Ethos Capital … Ethos Capital is a specialized investment firm that helps transform and grow established companies in today’s rapidly evolving digital economy.”
But when you do the research, you find a totally different answer. Public comment period closed for .org price increases on April 29, 2019. And staff made their comments on May 13, 2019. Ironically a company was incorporated in Delaware the following day, May 14, 2019 as “Ethos Capital, LLC”.
While there is no 100% direct connection to Erik Brooks and the company incorporated the day after ICANN comments closed, the dates are far too coincidental. And Erik has only been with his firm since 2019. In fact, he was Managing Partner of Abry Partners as late as early 2019.
In addition, the private equity company named here only recently acquired it’s domain from Afternic, as Andrew pointed out in the original article. How recently? On May 17, 2019 the domain was owned in Texas (according to DomainIq) and as of today, it’s owned by… “Registrant Organization: Afternic DNescrow”. So we know the domain was only purchased and site launched between May 17, 2019 and today. Andrew cited October, so that corroborates a brand new equity group formed (to my belief and research) to pilfer from .org registrants worldwide. They probably got a SCREAMING DEAL given their ability to jack prices to whatever they want going forward.
PIR previously said it has no intent on raising prices on customers. But then they went and sold to what looks to be a brand new entity, solely created to jack prices on the world. An entity without any history, without a proven track record of working in the public interest. This looks to have been such a good deal, that the Managing Partner left his post at Abry Partners to take this deal all on his own, to not share in the obscene profits he hopes to make off of all non-profits using the .org domain worldwide.
ICANN – why did you let this happen?
DOJ – how can you let this happen? This is abundantly obvious how wrong and misguided ICANN and the registries are in operating the monopoly that controls the Internet.
European Commission – you absolutely should be involved in protecting all people of Europe from this out-of-control cartel situation that is going on.
When you ask me, this is just sick. Disgusting. And despicable.
Thank you for that research Kip, and for breaking the news Andrew. After all these years it is tough to be surprised by those dates. Perhaps it is getting a little more “in our faces” as ICANN’s accountability has lessoned.
PIR has been doing a big “branding” push for .ORG recently, and it never made a lot of sense to me. Now with the sale it does.
It has seemed as if there has been some stewardship of .ORG over the years. It will be interesting to see if that changes.
I would also not discount new reg prices going down (via promotions) for a little while and then raise the price later.
I think changes to the the overall focus of .ORG, and its usage, might be the bigger issue to watch.
Andrew Allemann says
I don’t think the branding push has anything to do with it. They’ve been working on that for over a year.
The E.U. could do something about it (they have pushed Microsoft, Google and Apple before), but have they been contacted by those that are organized to fight this? No, then wait for the US Gov and then complain.
Hugh Briss says
No mention of Afilias. They have to be hiding inthere somewhere because at one point they effectively owned (pwn-ed) ISOC.
This was all planned to a T, first the limits come on, then PE buys in, and jacks the price.
.com is worth that much more today.
.org’s running around $12 annual renewal on average are way overpriced as it, for something that should cost no more than $2 per year.
There are no coincidences here.
This needs to be investigated by the federal government.
Hugh Briss says
Except that ICANN was cut loose by the Federal gummint.
This has to be be the best news for VRSN , once prices go up on .ORG , you can be sure that COM comes next .
If you think ICANN or DOJ is going to stop that you are all dreaming
Rubens Kuhl says
VRSN pricing will likely go up before .org, and will be used to justify .org price raise.
I have 12 .org’s — good names. I will let all but 2 drop next year now.
Brad Mugford says
ICANN should not allow a registry operator to just reassign a contract to whatever entity they choose without a proper vetting process.
In this case, a private equity firm with no history. What could go wrong?
ICANN board does it because they are all snarling at the greed and profit they TOO can see when they decide to leave ICANN, just like those all around them and their predecessors, whom get to learn about the industry, make policies that only help those “in the cartel”. It’s a game of greed and learning enough, jumping ship from ICANN early enough and then making millions off of it before anyone gets caught in this massive game of monopoly with no oversight and being the true cartel of the Internet. Nothing that is illegal. Because … ICANN is now beholden to nobody. This is all fair game in the matters of international politics and being a totally corrupt international organization with nobody to answer to.
No comment period?
“While Internet Society might not have wanted to raise prices”
Why else would they ask Icann to remove price gas other than for the purposes of raising prices?
Conveniently they can deflect blame for future price rises to the new owner, this is all corporate games, the Internet Society fully know the end result of this, much higher prices for registrants and hundreds of millions more in their pocket.
Andrew Allemann says
They didn’t ask. ICANN offered.
All this talk about ethics and transparency. Right. The price that was paid for PIR should be made public. And any and all connections to ICANN should be revealed and explained.
Andrew Allemann says
ISOC will eventually need to disclose it in their tax return.
I just explained the details to my wife and it sounded very bad.
Explain it to someone…..wow!
Bill Tanner says
I think you might want to re-proofread that paragraph about “Donuts co-founder Jon Nevett”. Just sayin.
Bill – I see you too are confused…..as well as I am. But if you do enough research, this all ties back to Fadi.
Jon Nevett was the co-founder of Donuts. This is the entity which was acquired by Abry partners.
Jon Nevett left Donuts and became CEO of PIR.
Ethos Capital has connections to Abry partners.
Ethos just acquired PIR and Internet Society.
Andrew Allemann says
He was referring to Unfortunate typo that is now fixed
The United States Department of Justice Antitrust Division told ICANN it should put TLD contracts out for competitive tender at the end of each term. Brazen for ICANN to ignore DOJ Antitrust recommendations and to chart their own path.
Also brazen for ICANN to make this decision on their own – not consulting with any competition authority – further proving they are engaged in regulation themselves.
By not putting a contract out for competitive bid, it excludes all forms of competition. It prevents any other registry operator from managing the namespace. This is anti-competitive. Ultimately, consumers will pay higher prices and consumers will be harmed.
Furthermore, running a competitive bidding process means all potential operators will compete for the next term of the contract, which almost certainly reduces prices consumers will pay and provides for other favorable terms. If you never put a contract out for competitive bid, how will one realize benefits through competition? Competition is good. Competition is healthy. And competition almost always results in lower prices for consumers.
One of ICANN’s mandates is to promote competition – under the MOU, ICANN and the Commerce Department agreed to promote the management of the DNS in a way that will allow market mechanisms to support competition to “lower costs, promote innovation and enhance user choice.”
ICANN is making a fatal mistake by not putting .org out for competitive bid.
Lets outline what just happened:
– ICANN renewed the .org contract without putting it to a competitive bidding process (basically ICANN is telling the world that PIR will operate .org for eternity and it will never face a competitive bidding process – ever!)
– ICANN removed 10% yearly price increase cap. Thus, going forward, PIR can charge whatever amount it wants for a new registration or renewal of a domain name. Heck, under the new terms of the contract, PIR can now charge different registration and renewal prices to consumers. It never had the ability to do this before.
Surprisingly, PIR put the back end technical functions of the registry out for bid in 2016. More than 20 companies contested for the rights to operate the registry. As a result, in 2018, PIR began to realize the benefits from competitive bidding:
Year Cost to operate the .ORG Registry
In 2018, PIR’s cost to operate .org were slashed in half. This cost reduction was achieved through a competitive bidding process.
But on the other hand – ICANN is not willing to put TLD contracts out for bid. And to add insult to injury, ICANN is deregulating and removing all pricing caps– which were specifically put in place to protect consumers.
ICANN has created and continues to facilitate total market failure in the DNS.
>ICANN is making a fatal mistake by
>not putting .org out for competitive bid.
Fatal for who?
Looks like they are being “consistent” in the sense they say they want to harmonize all the contracts. Do the nTlds have to put their TLD out to bid? So why should anybody else. Look at .web, so why should they bat an eye at .org being sold?
Seems like the writing on the wall is pretty clear at this point. ICANN moves itself into the position of doing less and less admin of registry contracts while collecting fees for doing less. At that point Patrick Byrnes “DeepCapture” theory plays out and those making the payments (note that is not the end users) get the rules and regulations they want, not to mention the governments get what they want as well. Like every government falling in line with GDPR. Every one submitting to administrative law of unelected officials.
This is really sad
It used to be that to uncover things like scandalous influence and infiltration of the media for nefarious purposes for instance you had to hold long forgotten despite how important congressional hearings. Now they don’t even try to hide it any more and just hire top “intelligence” and “deep state” figures openly in front of the entire world when such people leave their government posts. In the same way it’s quite a sign of the times how this has all been done so openly and brazenly. And despite our own national propensity toward corruption and abuse of power and overall state of general imperfection, I still say it is a virtual certainty none of this could ever have happened if people had not been duped about removing ICANN from US oversight, not even under the most pro-elite and pro-plutocracy administration on any side of the aisle possible.
More great quotes from PIR CEO Jon Nevett:
“Sound public policy requires competition before deregulation, and does not normally posit that deregulating a monopolist will lead to competition. For example, when Congress allowed local telephone companies to enter long distance markets in 1996, it required that the telephone companies first demonstrate that their own markets had become competitive. Congress did not deregulate first and hope that competition would emerge. ICANN was created to administer the DNS in a manner that furthers competition. Ignoring the fact that its insistence on registry competition for .net lowered prices, ICANN has abandoned competition with respect to .com names.
This policy of tying the status of competitive measures to deregulation has parallels worldwide. The European Union regulatory framework, for example, empowers the European Commission to oversee national regulatory measures under procedures that require national regulatory authorities to conduct consultations on planned measures, including the removal of regulations related to electronic communications networks or services. However, this framework, as provided under Article 7 of the Framework Directive, does not approach deregulation in a vacuum. For example, National Regulatory Authorities must conduct market analyses. Accordingly the Framework Directive notes that if a deficiency in competitive factors is shown based on an assessment of entities with significant market power, an authority “must impose appropriate regulatory obligations on such undertakings.””
green jobs says
Green Jobs says
This was supposed to be a face slap emoji
If it was only offered to, “available” to one buyer that could cause issue with non- profit status requirements.
Info out soon …….
Who here has not benifited from being an “insider”?
No info on ISCO’s plans for the “massive Endowment”?
China 50% net connected
India. 26% net connected
World 56% net connected
If Endowment is used to supply greater access good for all.
Without the grind of a registrar to run yet still receiving funding, the world should be connected in record time !
Sorry in advance if anyone takes offense, – makes me laugh when people who routinely adjust prices 1000%+
Have issue with inevitable price increases that have been kept low for 20+ years
“Everyone submitting to administrative law of unelected officials”
Opens the door for social law to evolve.
The extinction of the elected and unelected.
Not another strongly worded letter from the ICA! I bet ICANN halts all questionable activities immediately!
There is now a Change.org petition to suspend the dot org sale pending a formal public review process.
The url for the campaign is:
The origin article is at:
Take a moment to sign it and help ensure a fair and thorough review of this historically important transaction.
Those of you who wish to make good money with domains is interesting now to buy Ethos Trump (.com) icann trump (.com) icann ethos (.com) Ethos name very well sought after, by which to get a capital too high to live all his life.
George Weiner says
This thread clearly sees that there is a digital land grab happening by a PE firm. There is still a transition period to argue the .ORG public interest case and stop this DigitalLandGrab.org