[GTLD-WG] [CPWG] [registration-issues-wg] We Object!

Nat Cohen ncohen at telepathy.com
Sat Nov 16 15:55:01 UTC 2019


Roberto,

I agree with you that for strategic reasons Ethos may not decide to
maximize its profits through bluntly increasing prices.  For instance,
Ethos would make a huge windfall if it raised .org renewal prices to $1,000
per year, even if that meant that 90% of the registrants wound up
abandoning .org, for it would still bring in $1 billion from the one
million .org registrants who could not afford to abandon their .org domain
name even at a cost of $1,000 per year.

Yet even though ICANN's removal of price caps on .org would put the
nonprofit community in jeopardy of facing huge price increases, and even
though Ethos would earn huge returns from doing so, we can safely predict
that Ethos would do no such thing.  Unfortunately confidence in the
community's ability to safely predict the future is low right now, as most
of us thought we were safe in predicting that .org would stay with ISOC for
many years to come.

There is no plausible scenario in which Ethos would lose money by raising
prices.  The question is merely by how much and how quickly prices will
rise.

What is the rationale for abandoning price caps?  For most agreements
between owners and service providers, the price at which the service will
be delivered is a key component.  The U.S. Government originally offered
domain names for free.  Prices were later added merely to cover the cost of
handing out registrations.  Now thanks to the new gTLD program, where brand
new registries were awarded to entrepreneurial companies, the ICANN
community has been successfully deceived into treating the legacy domain
name extensions - created to benefit the public at large and then entrusted
to ICANN - as the equivalent to new gTLDs that are owned by their registry
operators.  For thirty years .org, created as the online home for the
nonprofit community, operated under predictable, stable pricing.  With the
removal of price caps and the sale of the .org registry to a private equity
firm, nonprofits face a destabilizing price environment and may be forced
to flee their longstanding online presence on .org.  ICANN's core mission
is to maintain the stability of the Internet, yet its actions with respect
to the .Org registry are destabilizing the Internet, in particular for the
nonprofit community.

The value of the .org name space is many billions of dollars, created not
by PIR, or ISOC or Ethos, but due to the years of use of .org domain names
by the nonprofit sector that has created substantial goodwill in their .org
domain names.  How ICANN thinks it is good policy to allow Ethos to plunder
at will the value of the goodwill developed over decades by the nonprofit
community is something I do not understand.

Regards,

Nat



On Sat, Nov 16, 2019 at 10:08 AM Roberto Gaetano <
roberto_gaetano at hotmail.com> wrote:

> My answers in line below.
>
> On 16.11.2019, at 17:41, Nat Cohen <ncohen at telepathy.com> wrote:
>
> Hi Roberto,
>
> Could you further explain your view that a serious rise in the price will
> cause a substantial drop in the renewal rates?
>
>
> It is public information that large part of .org registrations do not
> resolve - that means that they are in the hands of speculators, or are
> defensive registrations, or other. If not all .org registrants are
> locked-in, like the ones who have developed a business over their domain
> name, that means that they are more price-sensitive than the ones that are
> locked-in.
>
>
> My understanding is that Ethos Capital will be able to raise renewal
> prices substantially and that active nonprofits will be forced to pay the
> increased renewal rates, because as you point out many of the 10M
> registrants are locked in to their use of .org.
>
>
> Many, true, several millions of them. But even if only 20% are not locked
> in, that makes 2M names anyway. Still enough income, true, but what I am
> trying to say is that indefinite raise of the price is no good long term
> strategy.
>
>
> I believe the challenge in moving to a different domain name is
> particularly great for nonprofits, in large part because those who engage
> with the nonprofit online, whether by making donations or making use of
> their services, must have a high degree of trust that they are dealing with
> the actual nonprofit and not with an imposter seeking to defraud them.
> That level is trust is based on the nonprofit's long and continued use of
> its .org domain name.  That trust level would be lost if the non-profit
> were forced to move to a different extension.
>
> Moving to a different domain name does not merely involve porting content
> over to a different hosting service.  It means changing the email address
> for every person at that organization, and updating the address books of
> everyone who needs to communicate by email with that organization.  It
> means the loss of all back links in the articles written about the
> organization.  It means the loss of search engine ranking, meaning that
> those searching for the organization online will have a harder time finding
> the organization, especially if it moves from the more intuitive and
> familiar .org extension to a less familiar extension.  All marketing
> materials, banners, business cards, pamphlets and brochures would need to
> be reprinted with the new domain name.
>
> Most organizations would willingly (or be forced to) spend tens of
> thousands of dollars to avoid such a severely harmful and expensive
> disruption to their organization.  The harm incurred in moving domain names
> leaves Ethos plenty of room to raise .org prices on active nonprofits, as
> those nonprofits would have no real choice but to pay the inflated rates.
>
> Even if you are correct that a serious rise in price will cause a
> substantial drop in the renewal rates, Ethos will still have the financial
> incentive to sharply increase prices.  The math on this is quite simple.
> PIR generates around $100 million annually in revenues from 10 million
> registrants paying around $10 per year for their .org domain names.  If an
> increase to $20 causes renewals to drop by 20%, PIR would generate around
> $160 million annually in revenues from 8 million registrants paying $20 per
> year, a $60 million increase in revenue.  If an increase to $100 causes
> renewals to drop by 50%, PIR would generate revenues of around $500 million
> annual from 5 million registrants paying $100 per year, a $400 million
> increase in revenues.
>
> While some domain investors may fail to renew their .org domain names as
> prices rise, .org domain names are a negligible portion of most domain
> investors' portfolios.  Nonprofits are, on the other hand, the predominant
> users of .org domain names.  For the reasons given above, the nonprofits
> using .org will almost certainly be forced to pay the higher renewal rates
> as renewal rates reach $100 per year and higher.  Even if the registrant
> base shrinks by half, a $100 per year renewal rate would still allow Ethos
> to extract an additional $400 million per year in revenues from the
> donations that have been contributed to the nonprofits to further their
> public service missions, but instead will be diverted to increasing the
> profits of the private equity funders of Ethos.
>
> But the harms described above are just the start of the harms that will be
> suffered by a nonprofit that gives up its .org address.
>
> The biggest flaw in the argument that nonprofits can easily move to
> another domain extension is that *the nonprofit cannot abandon its
> existing .org domain name, *and must continue paying renewal fees even
> after it has moved to a new domain extension.  To avoid paying rising .org
> renewal fees, the nonprofit must not only move to a new domain name, it
> must also *abandon* its existing .org domain name.  This means that
> organizations like https://www.lightthenight.org/, who organize the walks
> against Leukemia, https://marthastable.org/, which provides food and
> shelter to those in need, as well as much larger organizations such as
> NPR.org and RedCross.org, must not only move to a different domain name,
> they must allow their registration of their long standing domain names to
> terminate and they must allow someone else to because the registrant of
> LighttheNight.org or the RedCross.org.  That would be the only way to
> stop paying the higher renewal fees.  Someone else could register
> LighttheNight.org and start asking for donations.  Or a gun-control group
> could register NRA.org, or an anti-abortion group could register
> PlannedParenthood.org.  DNW recently wrote up an example of an expired
> website being registered and repurposed by a group with a contrary mission
> -
> https://domainnamewire.com/2019/10/17/oops-if-you-dont-renew-your-domain-name-this-could-happen/
> .
>
> Nonprofits therefore are truly locked in.  To escape rising .org fees they
> must not only move to a different domain extension, they must also abandon
> their .org domain name, and this they cannot do.
>
> Even if they were to move - where would they move to?  There are some
> domain name spaces that are managed for the benefit of registrants, not of
> the registries, but none of these name spaces are managed by ICANN.  For
> instance, .org registrants could flee to .de, the German country code,
> which is run by a nonprofit consortium of registrars at a cost to
> registrants of around 1 Euro per year.  But moving to a .de would not be
> that desirable and would cause considerable confusion.  Perhaps the
> nonprofits could move to .foundation, a new gTLD operated by Donuts, but
> that is of course on the new gTLD agreement without price caps.  Donuts,
> reportedly controlled by the same folks who control Ethos Capital, would
> have the same ability to raise prices without limit that PIR now has
> without .org.  Perhaps the nonprofit could move to a .charity, to a .gives
> or to a .church domain extension.  Yet all those possible alternatives are
> operated by Donuts too.  There is no safe sanctuary where the nonprofits
> can go and be on a meaningful gTLD domain name that offers stable pricing.
> ICANN has taken the longstanding stable .org name space that was entrusted
> to it, and has destabilized it.  The big money behind Ethos Capital gets
> richer.  The nonprofit community is deprived of essential funding and the
> suffering of those who rely on the work of the nonprofit community
> increases.
>
>
> I do not disagree with what you say, except for the fact that milking the
> cow to the end - that means getting the most out of the current situation
> regardless the implications on image, adoption of alternative
> opportunities, fidelity of the channel, and so on - is a good strategy only
> when the marketplace is towards the end of its lifetime. Although it goes
> without any doubt that the current situation is far from being the bonanza
> of a decade ago, I would argue that the domain name market is not about to
> die - as .com growth is proving: the only challenge is to find a winning
> strategy, and that requires more thinking than just blunt doubling of
> prices.
> Cheers,
> Roberto
>
>
> Regards,
>
> Nat Cohen
>
>
>
> On Sat, Nov 16, 2019 at 4:10 AM Roberto Gaetano <
> roberto_gaetano at hotmail.com> wrote:
>
>> Hi all
>> I am not sure whether ICANN has the power to stop the deal, because what
>> is sold is not the .org contract but the whole PIR company. This said, it
>> is by and large irrelevant because I believe that ICANN would not stand up
>> to block the transfer even if it could.
>> I agree with most of what the article says, first and foremost that one
>> thing was lifting the price cap for a non-profit that claims to be
>> operating in the public interest, and another thing is allowing an
>> investment fund to have free hand in deciding the prices in a situation
>> where 10M customers are locked in. This said, I remain convinced that a
>> serious rise in the price will cause a substantial drop in the renewal
>> rates - although a small raise would not affect substantially the DUM base.
>> But a small raise was already allowed, under some circumstances, by the
>> previous contract.
>> Cheers,
>> Roberto
>>
>>
>> On 16.11.2019, at 00:10, Carlton Samuels <carlton.samuels at gmail.com>
>> wrote:
>>
>> The Internet Commerce Association has gone nuclear on the .org deal.
>>
>> Somewhat lefthandedly but for the first time at last, I see in print what
>> I have long believed; it is ICANN who is the 'effective* owner*' of all
>> domain names, dictionary word or no, every character set known and unknown,
>> heretofore and after, chattels and all! Damn, whoever thought this one
>> up.....!!
>>
>>
>> https://domainnamewire.com/2019/11/15/ica-asks-icann-to-block-org-private-equity-deal-in-damning-letter/
>>
>>
>> Carlton
>>
>> ==============================
>> *Carlton A Samuels*
>>
>> *Mobile: 876-818-1799 Strategy, Process, Governance, Assessment &
>> Turnaround*
>> =============================
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