[CPWG] A white knight on the horizon for .ORG?

Wed Jan 8 22:13:38 UTC 2020

I think there are some strong arguments here and, in parallel to whatever is happening with Dyson, we should pursue some of this as commitments in the new contract.

Jonathan Zuck
Executive Director
Innovators Network Foundation
www.Innovatorsnetwork.org<http://www.Innovatorsnetwork.org>

________________________________
From: CPWG <cpwg-bounces at icann.org> on behalf of Nat Cohen <ncohen at telepathy.com>
Sent: Wednesday, January 8, 2020 5:06:01 PM
To: Greg Shatan <greg at isoc-ny.org>
Cc: CPWG <cpwg at icann.org>
Subject: Re: [CPWG] A white knight on the horizon for .ORG?

My understanding is that the cooperative intends to continue funding IETF, which is one of ISOC's primary missions.

As for ISOC's other missions, what has ISOC/PIR accomplished with the $900 million in excess payments that they have extracted from .org registrants over the years, aside from paying themselves excessive compensation?

If ISOC had delivered $900 million in value to the community, then it would likely have more support from Dyson et. al, and from the .org community.

In what way is the .org community's resistance to the sale to Ethos Capital "Ill-informed" and contrary to their own interests?

As in your Cooper Union example, ISOC has been overly reliant on overcharging .org registrants for their funding, rather than needing to attract funding voluntarily from donors through demonstrating that they are doing good work with contributed funds.  Perhaps removing them from a stream of money they receive that is entirely disconnected from any good that they do with the money will be good for ISOC, and impose some operational and mission discipline on them.

As for the end-user interest here.  End-users have an interest in finding nonprofits where they expect to find them - on their long-standing .org domain names.  End-users wish to avoid confusion and uncertainty trying to find the nonprofits they wish to support, or whose services they wish to benefit from, at a new address.  They also wish to avoid being ripped off by any new registrant who mispurposes a previously registered .org domain name.  They also wish to avoid downtime in .org, if Ethos Capital scrimps on infrastructure investment to boost profits as PCH suggests would need to happen for Ethos to earn a reasonable return on their investment.  All these are risks that would occur if PIR moves to Ethos Capital, and Ethos Capital creates an environment that is unattractive to .org registrants - whether through pricing, policies, use of data or loss of stability.

Regards,

Nat

On Wed, Jan 8, 2020 at 4:49 PM Greg Shatan <greg at isoc-ny.org<mailto:greg at isoc-ny.org>> wrote:
In my view the Cooperative idea is a non-starter, if its stated goal is to take .ORG away from ISOC and leave ISOC with nothing.  This does more to muddy the waters than to to clarify them -- though it is a great way to get attention.

ISOC never said it didn't want to run .ORG. And there's no reason to believe that the Ethos sale was contemplated when the contract was renewed.  As for the price caps, ICANN has been the primary driver for removing them, by getting all registries on the 2013 agreement.  There are legitimate reasons for concern about the transaction, but these are not. These are distractions.

As a matter of good governance, ISOC had to consider the concerns arising from largely relying on a single source of income.  It's not unheard of, but it's best avoided. (See footnote)  ISOC had no choice but to consider whether it would be a more responsible steward of its mission (https://www.internetsociety.org/mission/) by changing this situation, e.g., by selling PIR. I assume this has long been on ISOC's mind. That does not mean that this sale to this buyer is the right decision -- but it provides much-needed context.

Simply losing .ORG would be incredibly destructive of ISOC's mission and operations, and would be the worst possible outcome from an ISOC governance standpoint (and every other ISOC standpoint).  It's interesting that Dyson et al. are making a proposal that would essentially bury ISOC.  It's certainly not an outcome that ISOC would or could ever put on the table.

I would not jump to the conclusion that a sale of PIR is counter to the interests of any other non-profit, much less every other non-profit.  Ethos Capital is largely an unknown factor.  Whatever their strategy, their goal is almost certainly to increase the value of PIR. Driving away its customer base will do the opposite.  Ethos may be able to make investments in PIR that ISOC could not (e.g., turning PIR from a consumer of back-end services to a provider of back-end services), and which would make PIR a stronger company.

That said, I'm still skeptical about Ethos Capital.  I have plenty of experience with the private equity world and its hard to imagine any PE (Private Equity) firm as the ideal home of .ORG.  On the other hand, PE firms have many different approaches, and we can't jump to the conclusion that Ethos will repeat some other PE horror story.  (And there have been numerous PE horror stories, along with even more numerous PE success stories.)  Their stated approach provides some comfort, though it's too vague and too oriented toward loose "promises" rather than binding commitments.  Their current investments (all minority holdings which may have been contributed to the PE fund rather than originated by it) are fairly standard tech investments that do not reveal any public interest orientation.

As for community resistance, a lot of it still seems ill-informed and may well be driven by "special interests" wielding the "community" as a tool. The resistance is likely sincere on the part of many non-profits, based only on the information they've been fed and concerns about Ethos arising from lack of information.  (For a fascinating and disturbing example of non-profits being manipulated to lobby against their own interests, see the article about the Energy industry and NAACP chapters  at   https://www.nytimes.com/2020/01/05/business/energy-environment/naacp-utility-donations.html.)  And who knows if the opposition is "widespread"?  It's noisy, and its gotten attention, but that's not the same thing...

On paper the sale of .ORG is a Good Thing for ISOC; in reality, it's only good for ISOC if it's good for .ORG.  From an individual end-user perspective, how do we define what "good" means and how do ensure that, if the sale happens, it's good for end-users (and if it's not good for end-users, it shouldn't happen)?  That is where we need to focus our efforts.

Best regards,

Greg

Footnote: Cooper Union, the storied engineering school in New York, is largely dependent on rent from the land it owns under the Chrysler Building. For decades, this allowed Cooper Union to be tuition-free, but costs outstripped revenue, deficits mounted. Cooper Union was in a bind and roundly criticized for this over-reliance, particularly when they started charging tuition for the first time in history.  Fortunately, they had renegotiated the lease during the real estate boom of 2006 with a schedule of future rent hikes that went from $7.8 million in 2017 to $32.5 million in 2019 (and then $41 million in 2028), and they are on the road to recovery.  But there's no such pot of gold at the end of the .ORG rainbow.)

On Wed, Jan 8, 2020 at 2:51 PM David Mackey <mackey361 at gmail.com<mailto:mackey361 at gmail.com>> wrote:
Alan,

Agreed. Your points make sense from an iSOC centric perspective.

I guess there's irony in that iSOC's organizational interests seem to be in conflict with interests of other stakeholders in the larger Internet community. Who could have seen that coming? Multistakeholder model?

I guess it's not totally surprising as we've seen the Internet expand over decades across the globe to the point where organizations like PIR are valued in the billions of dollars. As the Internet continues to expand, and as the value to global society increases, we probably can all agree that an end user's perspective is probably worth more than ever before, and yet still so hard to understand and express.

Cheers!
David

On Wed, Jan 8, 2020 at 1:46 PM Alan Greenberg <alan.greenberg at mcgill.ca<mailto:alan.greenberg at mcgill.ca>> wrote:
"It's hard to understand why the iSOC organization is pushing back against strong community resistance."

Its not so hard to understand.

- The deal will be good for ISOC. It gives them financial security and gets them out of the Domain name business.

- They believe that this will work out well for .ORG (and with the recent assurances, perhaps they are right).

- If this deal is cancelled (or not allowed by ICANN), it is not clear that there will be a replacement that puts .ORG in non-profit hands and will be nearly as lucrative to ISOC - which implies they might have to scale down operations.

Alan

At 08/01/2020 01:24 PM, David Mackey wrote:
Maybe a bonanza for lawyers, but also it also comes with tarnished reputations for .ORG, PIR, iSOC, Andrew Sullivan, etc.

It's hard to understand why the iSOC organization is pushing back against strong community resistance.

So much for consensus building with the multistakeholder model. Maybe we're headed back towards the days of pre-ICANN Internet Governance with the associated financial costs and time-delays to resolve disputes.

On Wed, Jan 8, 2020 at 9:54 AM Alan Greenberg <alan.greenberg at mcgill.ca<mailto:alan.greenberg at mcgill.ca> > wrote:

I don't see how a proposal to ICANN can imply $ to ISOC. The only way I can interpret this is as Evan has: an outright cancellation of the agreement by ICANN and re-delegate to the new corp.

An interesting concept, but if nothing else, the resultant lawsuits would likely to be a bonanza for lawyers...

Alan

At 08/01/2020 09:25 AM, Evan Leibovitch wrote:
>From what I can gather from what's been written so far, they're going to demand ICANN to simply re-delegate the registry to them and leave ISOC with nothing (though the actual proposal to ICANN may be different and indeed include compensation of some sort). Looks like they want to make the case that .ORG is a resource that needs a custodian rather than commodity that can be tossed around at will. It's comprised of an interesting group that includes ICANN's first president and the USG person in charge of handing TLD control to it.

- Evan

On Wed, 8 Jan 2020 at 07:05, Jacqueline Morris <jam at jacquelinemorris.com<mailto:jam at jacquelinemorris.com> > wrote:

Hi Evan
Do you know if there is a monetary  value on this bid that is public yet? Will it give ISOC the endowment that it is looking for?
Jacqueline A. Morris
Technology should be like oxygen: Ubiquitous, Necessary, Invisible and Free. (after Chris Lehmann<http://twitter.com/chrislehmann> )

On Wed, Jan 8, 2020 at 3:27 AM Evan Leibovitch <evan at telly.org<mailto:evan at telly.org>> wrote:

Looks like Esther Dyson and others are forming a co-operative to offer an alternative bid to Ethos:

https://www.nytimes.com/2020/01/07/technology/dot-org-private-equity-battle.html
It is unfortunate that the proposed alternative is yet another US corporation, though the bulk of .ORG registrants are American so this will likely be unchallenged.
Chance of ISOC accepting to even evaluate this alternative bid without pressure is slim given that many deals like Ethos' contain penalties for backing out. But the pressure is certainly there, and not abating.
--
Evan Leibovitch, Toronto Canada
@evanleibovitch or @el56
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Evan Leibovitch, Toronto Canada
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