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

Sat Nov 16 13:41:00 UTC 2019

Hi Roberto,

Could you further explain your view that a serious rise in the price will
cause a substantial drop in the renewal rates?

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.

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.

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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