Internet Society reveals the price it is selling out for.
On a webinar today, Internet Society has purportedly disclosed that Ethos Capital will pay $1.135 billion to acquire the .org registry from it:
#Internetsociety offered 1b and 135mil$USD for #.ORG from Ethos Capital, disclosed only now at a special webinar
— Desiree (@Des) November 29, 2019
This was a savvy investment for former ICANN CEO Fadi Chehadé and Ethos Capital. Had .org been sold in a competitive process, it surely would have sold for much more.
At the same time, the deal makes financial sense for ISOC. It should earn a solid $50 million+ per year from its endowment, giving it stability without concerns to what might happen to its golden goose in the future.
The current wholesale price for .org is $9.93, bringing in around $100 million in revenue per year. Costs are approximately $25 million but can be dramatically reduced. If Ethos doubles the price, it will lose very few registrations and bring in nearly $200 million a year in revenue.
Let’s take Ethos at its word that it might, possibly, “potentially” just raise prices 10% per year. That’s more than what Public Interest Registry has done in the past, but it’s also what was allowed in the contract before price caps were removed.
At the end of ten years, that puts the wholesale price at $25.75. Assuming it still has 10 million domains under management, that’s $257.5 million in revenue and around $235 million in profit.
Roll Donuts into it, take it public, and you get a nice payday.
More .Org Coverage:
Private Equity company acquires .Org registry
The interesting connection between the .Org deal and ICANN
The economics of .org domain names
Great reporting, given the registrations, and revenues, .org sold way under market value. Insider deal for sure.
I never buy again (.org)
Haha, but if you are an existing .org registrant, you have no option. You will be forced to pay higher prices because substitutes do not exist.
Existing registrants are locked-in and held hostage to their domain names. They do not switch.
Ethos Capital is sitting on a gold mine – and opportunity to increase prices on domain names which will have no corresponding impact on consumer demand.
I’d say that they’re sitting on the only huge diamond mine in the World not controlled by DeBeers.
Everyone seems to be focused on PIR and Ethos Capital.
But realize this is all ICANN’s doing. When ICANN removed all pricing caps in .org several months ago (even though they have been in place for more than 20 years for consumer protection), private equity saw a tremendous opportunity.
The underline problem is that ICANN is abandoning its competition mandate and removing all pricing caps. Thus, nobody is serving as the regulatory oversight body over the DNS and domain name pricing.
On top of this, ICANN has granted TLD operators the presumptive right of renewal. Which means the TLD operators never have to compete for the rights to operate domain extensions. Excluding all forms of competition causes direct harm to consumers. There is no way consumers will ever realize the benefits of lower prices through competition. ICANN is ignoring the fact that competition is healthy and good for consumers. But instead, hands out contracts that last for eternity.
The United States Department of Justice Antitrust Division recommended ICANN put the TLD contracts out for competitive bid at the end of each term for consumer protection. ICANN has ignored DOJ advice.
If ICANN is not willing to put the TLD’s out for periodic bidding – so consumers and the DNS industry can realize the benefits of competition, it cannot remove pricing caps. By not putting the TLD contracts out for public bid, this excludes all forms of competition and will allow operators to increase prices however they see fit. This is BAD for consumers and does not agree with ICANN’s competition mandate.
ICANN is the reason we are in this situation. ICANN should have never removed all pricing caps in .org. ICANN did not consider market and competition issues and did not even bother to commission a basic economic study prior to removing all pricing caps. As a result, consumers will be harmed.
ICANN – we believe two paths forward:
1.) If you don’t want to be a price regulator anymore – you must have a mechanism in place to discipline pricing of the legacy TLD’s with market power. The natural way to do this is through a competitive bidding process.
2.) If you are not willing to initiate a competitive bidding process (TLD’s providers never have to complete for the rights to operate), you must use pricing caps to protect consumers.
If you do neither of the above, consumers will be harmed and this is in direct violation of Antitrust laws in many nations.
You are directly facilitating supra competitive pricing on 10+ million registrants.
We don’t understand why ICANN is putting the interest of one contracted party ahead of millions and millions of registrants? Is it because the ICANN organization has been entirely captured by the registries?
It’s called COLLUSION
The Ethos domain was registered before the ink was even dry, something stinks within ICANN.
Ethos will likely move ORG away from Afilias as a backend provider to Donuts ASAP since they are both owned / controlled by Abry . That would a huge cost savings and even more profit
Rubens Kuhl says
PIR website for the sale said Ethos is not owner or controller by Abry.
10% per year?
Only for, at best, the next 6 years. After that it will be far more than 10%.
Far more than 10% for many TLDs, not just .ORG and .COM.
I think $25 to $50 is likely the base price, then variable pricing will go into effect for anything of greater value.
My biggest concern is a “domain resolving tax”, where the variable fee is derived based on the number of root transactions resolved for the domain. So the more traffic your site gets, to more you pay for the domain …. Pricing will have NOTHING to do with intrinsic keyword value or TLD.
Such a pricing scheme is an ideal, and hidden, censorship method as well.
Currently, you can reg a domain for very little, and find free hosting. From there you focus on putting “your message” on the site. People like it or they don’t. If people like it, the success then distracts you from the content as you are now forced to work and focus on paying for the domain tax. This places a natural limit on “grass roots” traffic evolution. In fact, under such a pricing scheme, too much success may well force you into “domain bankruptcy” and then someone else gets your domain that you built the traffic to. Go ahead with your original reg of 10 years, means nothing if you can’t pay the additional “resolving tax” that comes with your success.
And of course at the registry, there is then no justification for a domains “variable fee”. With the “domain resolving tax” you pay for “your share of load on the infrastructure”. At that point, commercial interests will advance markedly, individual interests will disappear as they can’t afford the access that the previous pricing structure fostered.
Human history has endless examples of this technique being used to shift societies in a desired direction. There is no “if” here, its purely down to “when”.
“this little thing called the Internet … makes it much harder to govern.”
– John Kerry, US Secretary of State
Rubens Kuhl says
The number of DNS queries is not dependent only on the traffic, but also on the TTL (Time To Live) configured in the DNS servers for the domain. So this is not a good proxy for visibility, unless adjusted for TTL.
Note also that new technical developments such as QNAME minimisation will totally hide domains from the TLD DNS servers.
>So this is not a good proxy for visibility
Not about visibility, it would be about paying for the service you receive. A long TTL lowers the cost, yes. So if you lower the TTL you pay more.
I run very short TTL’s, as do many others.
>QNAME minimisation will totally hide domains
Not possible. Only the root is authoritative, at some point a query SHALL pass to the TLD’s root.
Taken to the limit, this is what Russian Security Council is doing with their root mirroring in Brazil, Russia, India, China and South Africa:
But they still need to query the authority, and the more load the resource experiences the more likely it will have a short TTL. Thus the DB sync queries will need to be higher for some resources than others.
That said, ISP’s tend to overwrite/extend TTL as well as other caching issues. Its very annoying when testing changes and I’m forced to use my cell phone to see if changes occured. And it also breaks things that change quickly, or need to be changed say do to an emergency … Back to why many of us like short TTLs and want service provider to stop messing with them often extending them to an hour.
“Generally, we recommend a TTL of 24 hours (86,400 seconds).”
“Note: If DNS is used for failover, then you should probably keep the TTL at approximately 5 minutes all the time.”
The .ORG registry is a public resource so it simply can’t be sold to Ethos Capital.
The deal will be halted, otherwise it’s a tsunami leading to ICANN’s death !
Who owns .org?
Who is the trustee?
My understanding is that ICANN is the owner / administrator of .org?
PIR does not own .ORG – and never has had ownership rights or control over it.
PIR is simply an outsourced back-end provider for ICANN.
Ethos Capital is simply acquiring a contract to operate the .org namespace. They are not acquiring the .org namespace – as this belongs to ICANN.
Is this correct??
>My understanding is that ICANN
> is the owner / administrator of .org?
Who does ICANN bend a knee to?
Regarding GDPR, ICANN seems very willing to bend a knee to unelected administrators of EU administrative law.
Recall anytime ICANN has been ask to explain how it serves the needs of registrant’s, its response is contempt at the question being asked … Witness Sydney …
As a supranational organization ICANN serves the interest of governments, and thus does what they want. So its governments which “own” the root, ICANN is their proxy of control.
As Russia continues its ultimate “root split”, ICANN does face obsolescence. I can’t recall the article at the moment, but it discussed the issue of other governments watching Russia closely. Seems governments around the world recognize the value of having “there own root server” infrastructure to route DNS traffic through, versus handed it to infrastructure they do not have total control of (ICANN).
ISOC, PIR, and dot Org have really torn their community apart.
It’s sad to see all the trust that was built up over nearly two decade just vanish as a result of greed.
Certainly the value of dot Org brand is taking a hit as a result. If registrants follow through with actions (dropping their dot orgs, not registering new ones), then the financial value of the extension will decline as well.
Mark Thorpe says
Smells like and tastes like, day old Donuts!
“Let’s take Ethos at its word that it might, possibly, “potentially” just raise prices 10% per year.”
You were showing such great signs of being smart and “savvy” yourself, but now you are reverting to naivete and foolishness?
You were all for the “transition” away from US oversight too, which wasn’t broken and didn’t need fixing, and none of what has been happening lately would be happening were it not for that.
“This was a savvy investment for former ICANN CEO Fadi Chehadé and Ethos Capital.”
Right, savvy, like when cannibal serial killers invest in a refrigerated warehouse and stock up on corpse from the surrounding community, or mother aliens hang up a batch of live larva hosts in cocoons.
When searching: what is the icann and what is its function, this appears to me: The Internet Corporation for Assigned Names and Numbers (ICANN) is an internationally organized, non-profit corporation that has responsibility for Internet Protocol (IP) address space allocation, protocol identifier assignment, generic (gTLD) and country code (ccTLD) Top-Level Domain name system management, and root
Internet Assigned Numbers Authority (whose acronym is IANA) is the entity that oversees the global assignment of IP addresses, autonomous systems, root servers of DNS domain names and other resources related to Internet protocols. It is currently a department operated by ICANN.
This Corporation is a conglomerate of many acronyms that all end in ICANN.
Corporation: I look for this: How many corporations are there in the world? and its result: Millions of companies and entrepreneurs are registered daily all over the world. Only China daily counts about 11-13 thousands of new businesses and total number of the registered companies in this country exceeds 77 millions. The total amount of companies all over the world is approaching to 200 millions.
Search: corporation examples
Result is this: What is an example of a corporation? Apple Inc., Walmart Inc., and Microsoft Corporation are all examples of corporations.
See this link https://companiesinc.com/start-a-business/non-profit/
Then I see: nonprofit corporation examples and look for the most important result when reading myself.
Also look for: non profit organizations examples and this is the result: Examples of nonprofit organizations include hospitals, universities, national charities, churches, and foundations. A nonprofit must serve the public in some way, whether through the offering of goods, services, or a combination of the two. 13 May. 2019
Top 100 Nonprofit Organizations (2019 Edition) | Top Nonprofits
To conclude two issues about ICANN: The Internet is a worldwide business and as far as I can learn from ICANN after the ORG issue, I see it as a very lucrative business.
The last issue about ICANN: with this Title of a post: Domain investors are used and abused! ICANN NEEDS TO BE FULLY INVESTIGATED! See for yourself what to write and Posted on April 30, 2019 Rick Schwartz – Domain King on his blog:
Alan Dodd says
Your numbers re: 10yrs ,
Are you assuming purchase price paid off? 50mill endowment?
To Charles point 25-50yr for reg.for most tlds should be expexted.
Metering too. Good points.
land lines/ mobile phones followed a similar path.
I know my cost to do business will be up in 10yrs.
The market will accept or reject.
I think the reg price is moot.
Noticed their excitement of providing add on services.
The market in nonprofits is huge.
Having served on professional and educational boards of nonprofits
Much needed services were rarely donated, sometimes discounted, mostly provided by for profit companies.
So what’s different here ?
Even if they didn’t raise wholesale
The money is on the add-ons.
China was the first to create their own root others will follow.
The first to recognize ICAAN issues.
This sale could also be a move to keep .org under USA law ?
For interest open-root.eu
curt mayer says
this positively reeks of self-dealing. somebody with subpeona power needs to follow the money and throw people into prison.