Ethos Capital just bought a license to print money.
Yesterday, Internet Society announced it was selling the .Org registry to a private equity company. The price has not yet been disclosed, but it was surely a very high figure, as I will explain.
.Org is the second most valuable namespace behind .com. As of the end of July, there were 10.5 million .org domains registered.
Although many associate the name with non-profits, anyone can register a .org domain for just about any purpose. Some groups even register .org domains instead of .com.
Let’s look at the economics of the .org namespace.
To start, round down to 10 million domains. At $9.93 per domain, it brings in about $100 million in revenue at today’s wholesale price.
Costs are minimal. About $18 million to backend registry Afilias (which will be negotiated down again in the future), a few million to ICANN, some marketing budget to registrars and staff to help push the name. Call the staffing element about $3-4 million, but it could be lowered. Especially if you fold it into Donuts or another registry.
But Ethos Capital wasn’t paying just for this $100 million a year. ICANN has removed pricing caps on .org, so the company can charge whatever it wants for .org domains.
To maximize profits, it should wait a year until things quiet down and then implement an increase. Raise it 50% to $15? Double it to $20?
Let’s go with the $20 price tag. This would have only a slight impact on total .org registrations. A company using a .org isn’t going to switch domains over five or ten bucks a year. It’s too much work. Some people will drop excess domains and domainers will think twice. But I believe .org would lose no more than 10% of registrations.
So 9 million domains x 20 each = $180 million revenue. And the costs barely budge.
There’d be some uproar. But Ethos could offer free .org domains to non-profits that apply. “Hey, fill out this application that takes an hour telling us about the good work you do and you get your name for free.” Very few non-profits will take them up on this. They can do more with their hour than fill out an application to save twenty bucks.
Also, registrants can renew for up to 10 years in advance at today’s prices. Not bad for Ethos if people want to pay ten years’ worth of registrations in advance. Most won’t.
To keep the top of the funnel moving, the registry should offer discounted first-year registrations, as is typical these days. Maybe keep the retail price around $10-$15 for first-year registrations through rebates to registrars.
The registry can also hold back expiring .org domains and apply premium pricing tiers to them. This isn’t as effective as it once was because expired domain services transfer domains before they delete, but there’s still value here.
And the initial price increase is just the first one. They can easily raise prices from there, even if only a modest 10% per year.
Start adding this up and I’d be shocked if this wasn’t a solid ten-figure deal. Verisign, which runs .com, is valued in the stock market at $22 billion and it doesn’t have carte blanche to raise prices.
Any entity could have purchased dot org and raised prices on millions of nonprofits. Seems like no one wanted to suffer the PR blowback and be the bad guy, that is until Ethos Capital stepped up for the dubious honor.
Since Brooks himself is involved in nonprofits, maybe he will see keeping dot org prices constant as the decent thing to do for his fellow nonprofit community.
However, when it comes to money and greed, private equity does not have a reputation for doing the honorable thing. Will Brooks and Nevett be men of honor? Or scrooges who milk the nonprofit community of their funds?
I think we also need to move out of the fixed price mentality, and accept the future of variable pricing.
Show them a 501(c)(3), or equivalent, and you get a discount. Otherwise you pay full price.
Once price caps come off, there will be lots of “creative” changes.
Raising costs $10 or $50 / year for the majority of non-profits who own a domain or two is negligible. Blowback is from the domain investing community.
Are you Rob monster by chance? Where are the usual trolls and liars that always happen to post first on many of these blogs?
We need pay particular attention to namepros.com and their sponsors! A lot of ‘pros’ have been accused of spreading lies and slandering lately, while those that speak up get maximum restrictions.
Particularly lately, posters like Rob and others have been promoting . Org :https://www.namepros.com/threads/org-sales-picking-up.1160400/
IM NOT DONE. Say more good about org or badmouth ntld and I will expose more of the circle jerk. Ya, keep playing games when you’re supposed to be administering honest businesses and see.
I think the cost of a organization’s domain name could be raised to at least what they pay for phone service for one month without them recoiling. That is much more than $20, probably at least $100.
And what do they pay for electricity or heat? Or perhaps a monthly staff gathering or party.
“Start adding this up and I’d be shocked if this wasn’t a solid ten-figure deal“
So who funded Ethos? Who gave them the money for this deal and how are they connected to ICANN? How come PIR didn’t put .org out for bids. I’m sure a lot of PE funds would have loved a piece of that operation. Why was is a closed door deal?
It is pretty clear that .org is a test case. The .com operation is the grand prize. They’re testing how much opposition and backlash they get. If it‘s an epic shitstorm and the DOJ gets involved, that might save .com from heavy price hikes and premium renewals – at least for a certain period of time.
If nothing happens and they get away with it, watch your .com renewals double in no time. ICANN won’t protect your rights as a registrant. You have the right to PAY and shut up.
My hope is that .org will lose 3-4 million registrations after price hikes. That will make any future registry deal less attractive for those ex-ICANN staffers disguised as PE funds…
Maybe $50 or $100+ like Frank shilling did to ntlds holders. Where was the outcry on that? Now after stripping 100k domains he is lowering prices again. You all been letting this crap slide for some time now!
There was outcry on that, but not as much because hardly anyone had registered those domains. Even fewer were using them.
Indeed there’s a lot to say. Bringing up websites is kind of irrelevant. The subject is domains and registries. Just means more $ to practically extort, principle is the same. Registries can play pricing games. They can claim losses while grouping their ntld together in order to target whatever one they want. They can build their own registers, put out press releases to buy more domains for themselves and claim to be losing money on a few dogs then screw the little guy.
I’d like to know what other investments this company has. When will they own dozens of other failed ntld and use the loss of profits from those to justify a .org $100 fee to ‘stay afloat’?
You need to add one word to the post, right at the end talking about VeriSign
“Yet”
Yes Charles, these nonprofit organizations have spent years building up the brand equity of the Dot Org extension and now it seems PIR and its new owners are going to use it against those organizations by exorbitantly raising their rent.
PIR renounced its nonprofit status. Unbelievable.
Big business capturing the riches while average people and organizations suffer.
It is a tale for our troubled times.
>PIR renounced its nonprofit status.
To me, that is like .BIZ going from “sponsored” to non-sponsored when they removed their requirements and became a gTLD. As I recall there was an element of ICANN approval to this change at the time, so it appears such review is no longer needed …. OK ….
So the pricing is probably the tip of the iceberg at this point. Likely other operational limits (are there really any left?) are likely to fall as well.
If root splitting were still a viable option, I think the shakeup this could cause would be a good thing over the long term, but not the short term. But with ICANN bookending any possibility of outside TLD additions (pay us $185,000 and we will get it in there), this is all just anti competitive.
ICANN is moving to the position that, in effect, registries don’t need to be managed anymore so lets accept that as true …. The logical end then being ICANN is not needed either. So lets take ICANN’s position to prove ICANN is not needed and then return competition at the root. If ICANN wants freedom, great, lets just jump to the end so this industry can start experiencing innovation again.
ICANN is the prime example of STAGNATING innovation. Why is the monopoly on the Internet (ICANN) granting everyone and everyone around it ongoing monopolies to do whatever they want, and not encouraging innovation?!
Blockchain can do what registries do for 1/100th of the cost. Why is ICANN saying “pffttt – we like our friends better than innovation.”? This is a cartel. It is absolutely horrid what ICANN is doing to the Internet.
i only use .org for defensive resistrations. have about 3 thank god.
now they are owned by the biggest scumbags on planet earth. i feel sorry for people that are heavily invested in .org
ICANN fees = taxation without representation for domain registrants.
Registrants have few to no rights in the eyes of ICANN.
Time for the Boston Tea party within the domain industry.
right after .com comes .de
way more registered domain names there and very good sales
.org is nice but .de is better
#ethoscapital
But Denic, the german registry operator is so down to the core non-profit that they are able to operate at a price of less than 1€ per .de domain. So yes, there are more .de domains than .org, but the .org registry is way more profitable at $10 per name.
DENIC is a cooperative of .de registrars. No chance of it being sold and hurting their members costs.
Holding back expiring good names is already happening. All 2-letter names go straight into registry reserved status instead of dropping.
“To maximize profits, it should wait a year until things quiet down and then implement an increase.”
Why wait? It’s not as if noisy “things” makes a difference. People will make nasty blog comments. So what?
I’ve been thinking about this as well. I think lowering the price for a year or two might “sucker in” more registrations. Of course it can be done as a promotion, which PIR has been doing for a while. Lower the price, if you reg for 2 years or more, then reap the rewards.
I also think registries will always have to provide some advanced notice if for no other reason than to avoid issues with registrar balance management. So while a registry might want to just increase prices tomorrow, the registrar backlash will have some teeth it must pay attention to.
Sucker in now is the plan. I expect a lot of REVERSE HILLING in our future. Watch out for those claiming to be buying.org!
Don’t fall for smoke and mirrors.
Other than Verisign, When are the contracts for the other gTLDs do to expire?
If that is soon, then wouldn’t it make sense to wait until everyone can up the prices at the same time? At that point nobody is on the political hot seat, and hate it diluted as it spreads across them all.
Nobody has to come together to agree. The first announced price increase results in the dusting off of the others prepared announcements, only thing adjusted might be the price.
Even though Versign’s might seem bound by a current contract, that could change easier than some might think. If both “sides” (which as we see are the same side for PIR) agree, then they can redo it.
The difference with .com is that it is regulated by the US government. .org and the others have no real regulation.
Would guess a bit under a billion, high 9 figures.
Compared to .com/Verisign they do have pricing power but they also have an extension that is already in decline. Numbers are now back to late 2011 levels (10.0 million). It looks to be off about 5% from the peak.
The uncertainty of all of this will probably seal its fate in terms of long term steeper declines like .net is seeing. It is likely a very good deal for the PE buyer but it will do a lot of damage to the extension itself.
So, this is what they meant by “thenew.org”?
Apples and oranges.
Anyone who compares this catastrophe to what Schilling or anyone involved with new gTLDs has done is talking apples and oranges, even if the latter has done anything genuinely “bad.” The two are categorically different.
The legacy TLDs were and are a public trust, public resource, public asset, public utility. Obviously people have also invested and relied on certain principles about that for many years since the dawn of DNS. This is a violation of public trust, public resources, and public interest.
There are issues at stake in addition to the money and economics. Long term, ultimately it’s about pursuing absolute power and control and over every aspect of society.
Agree, people people know with new tlds that the price is going to be messed with and many choose not to use them because of that. Icann’s “new tld rules” shouldn’t be applied by already trusted extensions like .org.
.org is another contract that should be going out to tender, especially since it is now being pass around as a private equity plaything.
How long is the current owner going to keep it? These guys usually aren’t in it for long term. Will they jack up prices and then sell it to someone else?
A new set of rules for each is asking for trouble, especially long term. Lead to a lot of corruption. Favoritism…btw, Snoopy, I know you bat for the wrong team, for a long time.
>These guys usually aren’t in it for long term.
This is a monopoly they have purchased, this seems more like the World Bank and privatization of key resources:
http://whirledbank.org/development/private.html
That is to say the World Bank (ICANN = supranational control point) is the leverage point through which key resources are taken from “public interest” and placed into private hands.
Nope. Shouldn’t be dif set of rules! Now registries like uni give 90% off new reg for 1 year through partner registars. The problem? Huge domains owns 1500 registries, pays icann millions and can catch any Dropped domain. They can do such perpetually, re-reg for 10% of what everyone else would pay to renew. The scheme can’t be Beat, and all about money to the top. Do you mind, who do you work for?
Either you’re opposition or rly naive.
Let’s see if anyone from ICANN joins “Ethos Capital” in the next year or two.
AFAIK, global inflation rate is around 3.5 % per year. An increase of 3.5 % per year to the current price of 10 USD leads to a price of 14.10 USD in ten years. But we can expect Ethos Capital to raise the price by 10 % per year. This leads to a price of 25.94 USD in ten years. This is 84 % more. Congratulations, Ethos Capital!