Other companies should now circle .org, and GoDaddy is one of them.
There’s a lot of consternation about Ethos Capital’s proposed takeover of the .org registry. It will move from a non-profit entity that’s out to help organizations to one that is profit-motivated.
It’s also clouded by the involvement of former ICANN CEO Fadi Chehadé in Ethos’ bid.
The door is open for a white knight. A company with deep pockets can come in and offer terms that are better than Ethos’. The terms would be better in two ways:
1. More money.
2. Setting up a contractual price limitation with ICANN.
Several businesses would pay more than what Ethos’ is paying. Based on what Internet Society CEO Andrew Sullivan said on this webcast last week, it seems that Ethos put strict time constraints on Internet Society to get this deal through, making it difficult to shop it. I also assume ISOC didn’t want the fact that it was selling .org to go public before a deal was consummated, giving further advantage to Ethos.
I’ve talked to multiple private equity groups that were disappointed that they weren’t invited to the table.
But another private equity company swooping in to buy .org doesn’t alleviate the community’s concerns, especially when it comes to pricing. Someone needs to do more than offer its assurances that it won’t jack up prices.
Enter GoDaddy (NYSE: GDDY).
GoDaddy has avoided becoming a registry, preferring to stick to the registrar side. It has flirted with becoming a registry, though. It unsuccessfully bid for the .Us contract. It applied for .home and .casa, only to later withdraw.
Now could be the time to reconsider. Here’s why.
First, GoDaddy wants to make sure that it doesn’t have to jack up prices on domains from one year to the next. It halted selling Uniregistry domains after the registry significantly increased wholesale prices.
Mike McLaughlin, who was GM of the GoDaddy’s domain business at the time, said:
GoDaddy works to deliver a great customer experience. We now have customers who will be paying up to 3,000 percent more for their renewal. That’s an extremely poor customer experience and does not reflect well on the domain name industry in general.
Drastic price increases definitely lead to a poor customer experience and hurt the domain industry.
Ethos Capital says it’s not going to raise .org prices a lot. But so far that’s just talk. Even if it’s true to its word, someone could come to Ethos next year and offers it $2 billion for .org. The new owner could increase prices substantially.
That would be bad for .org registrants. Bad for GoDaddy. Bad for domain names in general.
GoDaddy accounts for nearly 40% of all registered .org domain names, so it has a lot to lose if .org prices shoot through the roof. (It also has a lot to gain by owning 100% of the sale!)
Second, GoDaddy’s valuation is currently very high. It is valued at over $11 billion. That’s on forecasted 2019 revenue of about $3 billion and unlevered free cash flow of $730 million to $740 million.
The markets would like to see another $100 million in revenue with almost all of it falling to the bottom line.
GoDaddy’s cost of capital is cheap right now, too.
Third, owning a major registry could put pressure on .com and .net registry Verisign (NASDAQ: VRSN) to keep prices in check. In the short term, I expect .org to continue to cost more than .com. But if the U.S. government lifts the lid further on .com prices, GoDaddy would have another domain it could promote as an alternative.
(Note that Verisign’s new agreement with the U.S. government clarifies that Verisign can also become a retailer for non-.com domains.)
Would GoDaddy’s competitors be concerned about it owning .org? Probably. It could also be referred to the competition authorities.
But GoDaddy could assuage these concerns. It could keep .org’s management separate. It could limit its price increases contractually with ICANN. And it could state a minimum price at which it would offer .org as a registrar, ensuring it doesn’t undercut rivals.
A lot of groups could swoop in and offer better terms than Ethos. They can offer ISOC more money, which, in and of itself, should force ISOC to rethink its deal. They can also offer to contractually restrict pricing, which would eliminate much of the blowback ISOC is getting over its deal.
One of those bidders should be GoDaddy.
The .org registry should remain in the hands of a 501c3 non-profit.
From what I understand, Congress gave PIR to ISOC in trust. It’s not a property that they’re entitled to sell for their personal gain. Directors and officers of a charity are not entitled to engage in self dealing.
If the ISOC board is getting too old, they should create a special purpose 501c3 non-profit to take over the .org registry.
Finally – someone else reminding people of this core reality, that legacy TLDs are a PUBLIC TRUST, NOT owned like new gTLDs.
And please, don’t stop.
That is a very interesting idea. I wonder if GoDaddy has considered it.
“Ethos put strict time constraints on Internet Society to get this deal through, making it difficult to shop it”
At this point you have to wonder how competent is ISOC and Andrew Sullivan and their behavior on this deal.
Who did they hire to be their adviser on this transaction ? Abry partners?
Forget the issue of price caps, the incompetence here by ISOC should be the real reason this deal does not get consummated.
My guess is ISOC agreed to a steep breakup fee , so any other acquirer would have to eat the cost , thereby raising the price of the deal
What a mess
Thing with Godaddy it would create a monopoly against it’s comp… it wouldn’t be fair to other companies. I would rather Godaddy own it than Ethos, because Ethos has no business owning .org, other than insider connections.
It should remain as is, this is human greed at it’s worst, and lots of officials totally dropped the ball.
No. .ORG should remain in non-profit hands.
Technology is driving the cost of running a registry lower. There is no reason to justify price increases for registrants.
All ICANN is doing at this point is allowing de-facto monopolies.
If the operations of this registry were put out for public bidding, the registration prices would go down drastically.
I think you could argue at this point that ISOC/PIR have already lost the confidence of the community that they were supposed to represent. They put their own financial gain over the community interests.
Put the rights to run the registry out for public bidding. There will be many qualified parties will to run it for far less, that the community will actually support.
Brad
Godaddy- not likely to get involved
Not worth the bad rep.this deal has created by “insiders”.
Wouldn’t wish this for Godaddy.
Trading one for profit for another?
Why not Donuts?
Just specspit- connect the dots
Surprised to see a case being made to bolster the bottom line of a for profit entity. Is it more acceptable to remain in the “domain family” of for profits?
No guarantee of responsible stewardship.
Is it OK for speculators to profit from .org but not for profit companies?
If .org is the digital ID specifically for nonprofit credibility / cost containment then no one should ever profit from reg fee or resale.
For me the bottom line is the ability of nonprofits and everyone else to have the option to control long term cost with long term reg ability. Protect all.
There is no justification for reg time limits that benefit end users.
.org not likely to ever be a viable “alternative” for .com. seriously?
The new generation of users are demonstrating newG’s, and cc’s are the viable, affordable, multiple choice alternatives to .com
OKboomer- .com old tech market monopoly greed
There is good reason Verisign secured the ability to sell other extentions.
Just specspit- Verisign is the most likely to get .org in the “domain family” if Ethos an “outsider” isnt approved.
Cheers
.ORG should remain a non-profit organization one way or another.