Re: [CPWG] A white knight on the horizon for .ORG?
"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@mcgill.ca<mailto:alan.greenberg@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@jacquelinemorris.com<mailto:jam@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@telly.org<mailto:evan@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.... 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 _______________________________________________ CPWG mailing list CPWG@icann.org<mailto:CPWG@icann.org> https://mm.icann.org/mailman/listinfo/cpwg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy ( https://www.icann.org/privacy/policy) and the website Terms of Service ( https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on. _______________________________________________ CPWG mailing list CPWG@icann.org<mailto:CPWG@icann.org> https://mm.icann.org/mailman/listinfo/cpwg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy ( https://www.icann.org/privacy/policy) and the website Terms of Service ( https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on. -- Evan Leibovitch, Toronto Canada @evanleibovitch or @el56 _______________________________________________ CPWG mailing list CPWG@icann.org<mailto:CPWG@icann.org> https://mm.icann.org/mailman/listinfo/cpwg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy ( https://www.icann.org/privacy/policy) and the website Terms of Service ( https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on. _______________________________________________ CPWG mailing list CPWG@icann.org<mailto:CPWG@icann.org> https://mm.icann.org/mailman/listinfo/cpwg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy ( https://www.icann.org/privacy/policy) and the website Terms of Service ( https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on.
At the risk of rehashing... On Wed, 8 Jan 2020 at 13:47, Alan Greenberg <alan.greenberg@mcgill.ca> wrote: - The deal will be good for ISOC. It gives them financial security and gets
them out of the Domain name business.
Specifically, the deal will be good for ISOC's finances. There are numerous arguments that can be made of how the move actually runs counter to the ISOC mission and ethics. ISOC may not be directly in the domain name business but neither is it in the business of setting Internet standards. But it is in the resource-stewardship business, of not only PIR but also IETF. - They believe that this will work out well for .ORG (and with the recent
assurances, perhaps they are right).
Without the input from the community they had no way of knowing this, so it took a back seat to "It's good for finances".
- 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.
Again, finances. It's all about the money. Over community. Over ethics. Over mission. - Evan
Evan, I do agree with all you said. Tijani Evan Leibovitch <evan@telly.org> a écrit :
At the risk of rehashing...
On Wed, 8 Jan 2020 at 13:47, Alan Greenberg <alan.greenberg@mcgill.ca> wrote:
- The deal will be good for ISOC. It gives them financial security and gets them out of the Domain name business.
Specifically, the deal will be good for ISOC's finances. There are numerous arguments that can be made of how the move actually runs counter to the ISOC mission and ethics. ISOC may not be directly in the domain name business but neither is it in the business of setting Internet standards. But it is in the resource-stewardship business, of not only PIR but also IETF.
- They believe that this will work out well for .ORG (and with the recent assurances, perhaps they are right).
Without the input from the community they had no way of knowing this, so it took a back seat to "It's good for finances".
- 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.
Again, finances. It's all about the money. Over community. Over ethics. Over mission.
- Evan -- Tijani BENJEMAA Executive Director Mediterranean Federation of Internet Associations (FMAI) Telephone: +216 52 385 114
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@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@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@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@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.... 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 _______________________________________________ CPWG mailing list CPWG@icann.org https://mm.icann.org/mailman/listinfo/cpwg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy ( https://www.icann.org/privacy/policy) and the website Terms of Service ( https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on.
_______________________________________________ CPWG mailing list CPWG@icann.org https://mm.icann.org/mailman/listinfo/cpwg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy ( https://www.icann.org/privacy/policy) and the website Terms of Service ( https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on.
-- Evan Leibovitch, Toronto Canada @evanleibovitch or @el56 _______________________________________________ CPWG mailing list CPWG@icann.org https://mm.icann.org/mailman/listinfo/cpwg
_______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy ( https://www.icann.org/privacy/policy) and the website Terms of Service ( https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on.
_______________________________________________ CPWG mailing list CPWG@icann.org https://mm.icann.org/mailman/listinfo/cpwg
_______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy ( https://www.icann.org/privacy/policy) and the website Terms of Service ( https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on.
Hi David. One sentence in your email prompts another element that we want to consider if we want to build a complete picture.
On 08.01.2020, at 20:51, David Mackey <mackey361@gmail.com> wrote:
< ….. >
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.
< ….. >
I am not an expert of finances, but I believe that the sale price of PIR is appropriate for granting ISOC a steady income - once invested - that is at least what PIR was providing. OTOH, I am not convinced that the current value of PIR is above a billion - but I may be proven wrong. Whatever the case, we should wonder why Ethos believes to be able to extract from PIR a higher revenue than what PIR produces today. IMHO, the ability to raise price is not the good answer. This ability is provided by the contract with ICANN, and predates the sale - so it is something that ISOC has without doubt factored in the sale price. The best chance to increase the profitability comes from a different business model or a different corporate structure (or both, obviously). The first thing that comes to my mind, that I have hinted already in my early comments - but then not elaborated upon - is vertical integration. I am not claiming to be an expert on the domain name business, but as co-chair of the Vertical Integration Working Group I have learned a lot. PIR, as registry, has to treat all the registrars equally. When PIR owned a registrar, it was obliged to provide to all other registrars the same information given to it. However, a registrar can pick and choose registries to partner with and with whom to share information even of strategic nature. Considering the relationship that folks in Ethos have with Donuts, it would not be surprising to see in the future a collaboration where - to be compliant with ICANN rules - Donuts is running the show, and PIR would set its business accordingly. Should we take this also into account to assess the situation? Maybe we should. But maybe the first step could be to discuss whether this is a reasonable scenario or whether I am off the mark. Cheers, Roberto
Roberto, I am not an expert of finances either. However, from a broad historical perspective, I can see the following... .ORG established in 1985. Estimated Value = $0. .ORG transferred from Verisign to PIR in 2003. Estimated Value = $0 plus right for Verisign to maintain .COM contract PIR sold from iSOC to Ethos in 2019. Value = $1.135 billion (yet to be closed) I don't have any reason to doubt the valuation of the proposed transaction. I trust Ethos has done their financial homework properly. I also have no reason to doubt that iSOC has not done their homework too. Ethos and iSOC seem to believe they have found fair market value. I think it's irrelevant to worry about the valuation of the transaction in 2019, as agreed to between Ethos and PIR. It's up to the buyer and the seller to establish a fair market price. I also think it's a red herring to worry about any potential .ORG domain price increases. That ship has sailed. I do think end users have an interest in whether PIR is sold as an asset from iSOC (non-profit) to Ethos (for-profit). The mission of those two organizations are very different. It is well accepted that for-profit companies only have one mandate to their shareholders and that is to make money. It's simple and should not be controversial in, and of, itself. They may want to protect the value of their asset, PIR, but their overriding mission serves the interests of their shareholders. I think many people are missing the nature of Ethos's investment. Although ICANN may add guard rails to protect against pure-profit behaviour, I suspect the investment payoff to Ethos is when they sell their asset in the future. A metaphor that can be used is when a company purchases a building. They maintain it and collect rent for a number of years, but the big payoff is when they sell it for capital gains in the future. Capital gains is the profit motive, not the rent/revenue that's earned each year while managing the asset. Hence, it is highly likely that Ethos is making a $1.135 billion bet that it can maintain and grow the value of PIR, so that it will make more than $1.135 billion in the future. This is what private equity companies do. If Ethos is successful, PIR will be worth more than $1.135 billion in the future. Still the current and future valuation of PIR is not relevant to end users. End users are often well served by properly functioning capital markets in the right context. However, in this case, it's the switching of the organizational mission from a non-profit, iSOC, to a for-profit, Ethos, which causes problems and risks for many Internet stakeholders and end users. Current .ORG registrants are switching from assumed stakeholders to Ethos/PIR customers. The nature of the relationship is changed during the transaction. Regardless on how this is done, I believe Katherine Maher, CEO and Executive Director of the Wikimedia Foundation, makes a valid point in wanting to preserve "a longterm commitment to the open and noncommercial internet". Hence, I believe At-Large End Users interests do not align with iSOC organizational interests for purposes of this transaction. Cheers, David On Wed, Jan 8, 2020 at 4:06 PM Roberto Gaetano < mail.roberto.gaetano@gmail.com> wrote:
Hi David. One sentence in your email prompts another element that we want to consider if we want to build a complete picture.
On 08.01.2020, at 20:51, David Mackey <mackey361@gmail.com> wrote:
< ….. >
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.
< ….. >
I am not an expert of finances, but I believe that the sale price of PIR is appropriate for granting ISOC a steady income - once invested - that is at least what PIR was providing.
OTOH, I am not convinced that the current value of PIR is above a billion - but I may be proven wrong. Whatever the case, we should wonder why Ethos believes to be able to extract from PIR a higher revenue than what PIR produces today. IMHO, the ability to raise price is not the good answer. This ability is provided by the contract with ICANN, and predates the sale - so it is something that ISOC has without doubt factored in the sale price. The best chance to increase the profitability comes from a different business model or a different corporate structure (or both, obviously). The first thing that comes to my mind, that I have hinted already in my early comments - but then not elaborated upon - is vertical integration. I am not claiming to be an expert on the domain name business, but as co-chair of the Vertical Integration Working Group I have learned a lot. PIR, as registry, has to treat all the registrars equally. When PIR owned a registrar, it was obliged to provide to all other registrars the same information given to it. However, a registrar can pick and choose registries to partner with and with whom to share information even of strategic nature. Considering the relationship that folks in Ethos have with Donuts, it would not be surprising to see in the future a collaboration where - to be compliant with ICANN rules - Donuts is running the show, and PIR would set its business accordingly.
Should we take this also into account to assess the situation? Maybe we should. But maybe the first step could be to discuss whether this is a reasonable scenario or whether I am off the mark.
Cheers, Roberto
David, Just a point of clarification. When I was talking about valuation, I was not talking about the sale price but about an assessment of the PIR assets according to financial standards. Although I am not an expert, and therefore I might be wrong, I do believe that the sale price was higher than the objective valuation of the company, considering the assets including reserve funds, that have been drastically reduced in the last couple of years. The reason why Ethos is ready to pay more than the valuation is that it has a strategy that could extract more value from PIR than ISOC was able to, and this is, IMHO, a key element in the understanding of the importance of the operation. My personal opinion is that Ethos wants to change the business model of PIR - the question is how, and my answer is that this will be realised through vertical integration with Donuts. This might well be done via a sale to a different entity that ensures this vertical integration - in this case I believe that our two assessment by and large coincide. Of course, this is just a personal opinion, and I do not have any information for drawing this conclusion other than what is currently public. Cheers, Roberto
On 09.01.2020, at 01:19, David Mackey <mackey361@gmail.com> wrote:
Roberto,
I am not an expert of finances either. However, from a broad historical perspective, I can see the following...
.ORG established in 1985. Estimated Value = $0. .ORG transferred from Verisign to PIR in 2003. Estimated Value = $0 plus right for Verisign to maintain .COM contract PIR sold from iSOC to Ethos in 2019. Value = $1.135 billion (yet to be closed)
I don't have any reason to doubt the valuation of the proposed transaction. I trust Ethos has done their financial homework properly. I also have no reason to doubt that iSOC has not done their homework too. Ethos and iSOC seem to believe they have found fair market value.
I think it's irrelevant to worry about the valuation of the transaction in 2019, as agreed to between Ethos and PIR. It's up to the buyer and the seller to establish a fair market price. I also think it's a red herring to worry about any potential .ORG domain price increases. That ship has sailed.
I do think end users have an interest in whether PIR is sold as an asset from iSOC (non-profit) to Ethos (for-profit). The mission of those two organizations are very different. It is well accepted that for-profit companies only have one mandate to their shareholders and that is to make money. It's simple and should not be controversial in, and of, itself. They may want to protect the value of their asset, PIR, but their overriding mission serves the interests of their shareholders.
I think many people are missing the nature of Ethos's investment. Although ICANN may add guard rails to protect against pure-profit behaviour, I suspect the investment payoff to Ethos is when they sell their asset in the future. A metaphor that can be used is when a company purchases a building. They maintain it and collect rent for a number of years, but the big payoff is when they sell it for capital gains in the future. Capital gains is the profit motive, not the rent/revenue that's earned each year while managing the asset. Hence, it is highly likely that Ethos is making a $1.135 billion bet that it can maintain and grow the value of PIR, so that it will make more than $1.135 billion in the future. This is what private equity companies do. If Ethos is successful, PIR will be worth more than $1.135 billion in the future. Still the current and future valuation of PIR is not relevant to end users. End users are often well served by properly functioning capital markets in the right context.
However, in this case, it's the switching of the organizational mission from a non-profit, iSOC, to a for-profit, Ethos, which causes problems and risks for many Internet stakeholders and end users. Current .ORG registrants are switching from assumed stakeholders to Ethos/PIR customers. The nature of the relationship is changed during the transaction.
Regardless on how this is done, I believe Katherine Maher, CEO and Executive Director of the Wikimedia Foundation, makes a valid point in wanting to preserve "a longterm commitment to the open and noncommercial internet". Hence, I believe At-Large End Users interests do not align with iSOC organizational interests for purposes of this transaction.
Cheers, David
On Wed, Jan 8, 2020 at 4:06 PM Roberto Gaetano <mail.roberto.gaetano@gmail.com <mailto:mail.roberto.gaetano@gmail.com>> wrote: Hi David. One sentence in your email prompts another element that we want to consider if we want to build a complete picture.
On 08.01.2020, at 20:51, David Mackey <mackey361@gmail.com <mailto:mackey361@gmail.com>> wrote:
< ….. >
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.
< ….. >
I am not an expert of finances, but I believe that the sale price of PIR is appropriate for granting ISOC a steady income - once invested - that is at least what PIR was providing.
OTOH, I am not convinced that the current value of PIR is above a billion - but I may be proven wrong. Whatever the case, we should wonder why Ethos believes to be able to extract from PIR a higher revenue than what PIR produces today. IMHO, the ability to raise price is not the good answer. This ability is provided by the contract with ICANN, and predates the sale - so it is something that ISOC has without doubt factored in the sale price. The best chance to increase the profitability comes from a different business model or a different corporate structure (or both, obviously). The first thing that comes to my mind, that I have hinted already in my early comments - but then not elaborated upon - is vertical integration. I am not claiming to be an expert on the domain name business, but as co-chair of the Vertical Integration Working Group I have learned a lot. PIR, as registry, has to treat all the registrars equally. When PIR owned a registrar, it was obliged to provide to all other registrars the same information given to it. However, a registrar can pick and choose registries to partner with and with whom to share information even of strategic nature. Considering the relationship that folks in Ethos have with Donuts, it would not be surprising to see in the future a collaboration where - to be compliant with ICANN rules - Donuts is running the show, and PIR would set its business accordingly.
Should we take this also into account to assess the situation? Maybe we should. But maybe the first step could be to discuss whether this is a reasonable scenario or whether I am off the mark.
Cheers, Roberto
_______________________________________________ CPWG mailing list CPWG@icann.org https://mm.icann.org/mailman/listinfo/cpwg
_______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy (https://www.icann.org/privacy/policy) and the website Terms of Service (https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on.
Roberto, "I believe that our two assessment by and large coincide" Agreed! On Sat, Jan 11, 2020 at 11:27 AM Roberto Gaetano < mail.roberto.gaetano@gmail.com> wrote:
David, Just a point of clarification. When I was talking about valuation, I was not talking about the sale price but about an assessment of the PIR assets according to financial standards. Although I am not an expert, and therefore I might be wrong, I do believe that the sale price was higher than the objective valuation of the company, considering the assets including reserve funds, that have been drastically reduced in the last couple of years. The reason why Ethos is ready to pay more than the valuation is that it has a strategy that could extract more value from PIR than ISOC was able to, and this is, IMHO, a key element in the understanding of the importance of the operation. My personal opinion is that Ethos wants to change the business model of PIR - the question is how, and my answer is that this will be realised through vertical integration with Donuts. This might well be done via a sale to a different entity that ensures this vertical integration - in this case I believe that our two assessment by and large coincide. Of course, this is just a personal opinion, and I do not have any information for drawing this conclusion other than what is currently public. Cheers, Roberto
On 09.01.2020, at 01:19, David Mackey <mackey361@gmail.com> wrote:
Roberto,
I am not an expert of finances either. However, from a broad historical perspective, I can see the following...
.ORG established in 1985. Estimated Value = $0. .ORG transferred from Verisign to PIR in 2003. Estimated Value = $0 plus right for Verisign to maintain .COM contract PIR sold from iSOC to Ethos in 2019. Value = $1.135 billion (yet to be closed)
I don't have any reason to doubt the valuation of the proposed transaction. I trust Ethos has done their financial homework properly. I also have no reason to doubt that iSOC has not done their homework too. Ethos and iSOC seem to believe they have found fair market value.
I think it's irrelevant to worry about the valuation of the transaction in 2019, as agreed to between Ethos and PIR. It's up to the buyer and the seller to establish a fair market price. I also think it's a red herring to worry about any potential .ORG domain price increases. That ship has sailed.
I do think end users have an interest in whether PIR is sold as an asset from iSOC (non-profit) to Ethos (for-profit). The mission of those two organizations are very different. It is well accepted that for-profit companies only have one mandate to their shareholders and that is to make money. It's simple and should not be controversial in, and of, itself. They may want to protect the value of their asset, PIR, but their overriding mission serves the interests of their shareholders.
I think many people are missing the nature of Ethos's investment. Although ICANN may add guard rails to protect against pure-profit behaviour, I suspect the investment payoff to Ethos is when they sell their asset in the future. A metaphor that can be used is when a company purchases a building. They maintain it and collect rent for a number of years, but the big payoff is when they sell it for capital gains in the future. Capital gains is the profit motive, not the rent/revenue that's earned each year while managing the asset. Hence, it is highly likely that Ethos is making a $1.135 billion bet that it can maintain and grow the value of PIR, so that it will make more than $1.135 billion in the future. This is what private equity companies do. If Ethos is successful, PIR will be worth more than $1.135 billion in the future. Still the current and future valuation of PIR is not relevant to end users. End users are often well served by properly functioning capital markets in the right context.
However, in this case, it's the switching of the organizational mission from a non-profit, iSOC, to a for-profit, Ethos, which causes problems and risks for many Internet stakeholders and end users. Current .ORG registrants are switching from assumed stakeholders to Ethos/PIR customers. The nature of the relationship is changed during the transaction.
Regardless on how this is done, I believe Katherine Maher, CEO and Executive Director of the Wikimedia Foundation, makes a valid point in wanting to preserve "a longterm commitment to the open and noncommercial internet". Hence, I believe At-Large End Users interests do not align with iSOC organizational interests for purposes of this transaction.
Cheers, David
On Wed, Jan 8, 2020 at 4:06 PM Roberto Gaetano < mail.roberto.gaetano@gmail.com> wrote:
Hi David. One sentence in your email prompts another element that we want to consider if we want to build a complete picture.
On 08.01.2020, at 20:51, David Mackey <mackey361@gmail.com> wrote:
< ….. >
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.
< ….. >
I am not an expert of finances, but I believe that the sale price of PIR is appropriate for granting ISOC a steady income - once invested - that is at least what PIR was providing.
OTOH, I am not convinced that the current value of PIR is above a billion - but I may be proven wrong. Whatever the case, we should wonder why Ethos believes to be able to extract from PIR a higher revenue than what PIR produces today. IMHO, the ability to raise price is not the good answer. This ability is provided by the contract with ICANN, and predates the sale - so it is something that ISOC has without doubt factored in the sale price. The best chance to increase the profitability comes from a different business model or a different corporate structure (or both, obviously). The first thing that comes to my mind, that I have hinted already in my early comments - but then not elaborated upon - is vertical integration. I am not claiming to be an expert on the domain name business, but as co-chair of the Vertical Integration Working Group I have learned a lot. PIR, as registry, has to treat all the registrars equally. When PIR owned a registrar, it was obliged to provide to all other registrars the same information given to it. However, a registrar can pick and choose registries to partner with and with whom to share information even of strategic nature. Considering the relationship that folks in Ethos have with Donuts, it would not be surprising to see in the future a collaboration where - to be compliant with ICANN rules - Donuts is running the show, and PIR would set its business accordingly.
Should we take this also into account to assess the situation? Maybe we should. But maybe the first step could be to discuss whether this is a reasonable scenario or whether I am off the mark.
Cheers, Roberto
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A really good summation of what has happened, and why. The outstanding question for ALAC in this context is whether it was ever in ICANN’s mandate to preserve the non-commercial mission of PIR - or whether it should have been - and whether there are steps that can be taken that can mitigate the for-profit nature of the takeover - in Katherine Maher’s words, preserve the long term commitment to the open and non-commercial nature of PIR - now in the hands of a for-profit corporation. Holly
On Jan 12, 2020, at 3:48 AM, David Mackey <mackey361@gmail.com> wrote:
Roberto,
"I believe that our two assessment by and large coincide"
Agreed!
On Sat, Jan 11, 2020 at 11:27 AM Roberto Gaetano <mail.roberto.gaetano@gmail.com <mailto:mail.roberto.gaetano@gmail.com>> wrote: David, Just a point of clarification. When I was talking about valuation, I was not talking about the sale price but about an assessment of the PIR assets according to financial standards. Although I am not an expert, and therefore I might be wrong, I do believe that the sale price was higher than the objective valuation of the company, considering the assets including reserve funds, that have been drastically reduced in the last couple of years. The reason why Ethos is ready to pay more than the valuation is that it has a strategy that could extract more value from PIR than ISOC was able to, and this is, IMHO, a key element in the understanding of the importance of the operation. My personal opinion is that Ethos wants to change the business model of PIR - the question is how, and my answer is that this will be realised through vertical integration with Donuts. This might well be done via a sale to a different entity that ensures this vertical integration - in this case I believe that our two assessment by and large coincide. Of course, this is just a personal opinion, and I do not have any information for drawing this conclusion other than what is currently public. Cheers, Roberto
On 09.01.2020, at 01:19, David Mackey <mackey361@gmail.com <mailto:mackey361@gmail.com>> wrote:
Roberto,
I am not an expert of finances either. However, from a broad historical perspective, I can see the following...
.ORG established in 1985. Estimated Value = $0. .ORG transferred from Verisign to PIR in 2003. Estimated Value = $0 plus right for Verisign to maintain .COM contract PIR sold from iSOC to Ethos in 2019. Value = $1.135 billion (yet to be closed)
I don't have any reason to doubt the valuation of the proposed transaction. I trust Ethos has done their financial homework properly. I also have no reason to doubt that iSOC has not done their homework too. Ethos and iSOC seem to believe they have found fair market value.
I think it's irrelevant to worry about the valuation of the transaction in 2019, as agreed to between Ethos and PIR. It's up to the buyer and the seller to establish a fair market price. I also think it's a red herring to worry about any potential .ORG domain price increases. That ship has sailed.
I do think end users have an interest in whether PIR is sold as an asset from iSOC (non-profit) to Ethos (for-profit). The mission of those two organizations are very different. It is well accepted that for-profit companies only have one mandate to their shareholders and that is to make money. It's simple and should not be controversial in, and of, itself. They may want to protect the value of their asset, PIR, but their overriding mission serves the interests of their shareholders.
I think many people are missing the nature of Ethos's investment. Although ICANN may add guard rails to protect against pure-profit behaviour, I suspect the investment payoff to Ethos is when they sell their asset in the future. A metaphor that can be used is when a company purchases a building. They maintain it and collect rent for a number of years, but the big payoff is when they sell it for capital gains in the future. Capital gains is the profit motive, not the rent/revenue that's earned each year while managing the asset. Hence, it is highly likely that Ethos is making a $1.135 billion bet that it can maintain and grow the value of PIR, so that it will make more than $1.135 billion in the future. This is what private equity companies do. If Ethos is successful, PIR will be worth more than $1.135 billion in the future. Still the current and future valuation of PIR is not relevant to end users. End users are often well served by properly functioning capital markets in the right context.
However, in this case, it's the switching of the organizational mission from a non-profit, iSOC, to a for-profit, Ethos, which causes problems and risks for many Internet stakeholders and end users. Current .ORG registrants are switching from assumed stakeholders to Ethos/PIR customers. The nature of the relationship is changed during the transaction.
Regardless on how this is done, I believe Katherine Maher, CEO and Executive Director of the Wikimedia Foundation, makes a valid point in wanting to preserve "a longterm commitment to the open and noncommercial internet". Hence, I believe At-Large End Users interests do not align with iSOC organizational interests for purposes of this transaction.
Cheers, David
On Wed, Jan 8, 2020 at 4:06 PM Roberto Gaetano <mail.roberto.gaetano@gmail.com <mailto:mail.roberto.gaetano@gmail.com>> wrote: Hi David. One sentence in your email prompts another element that we want to consider if we want to build a complete picture.
On 08.01.2020, at 20:51, David Mackey <mackey361@gmail.com <mailto:mackey361@gmail.com>> wrote:
< ….. >
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.
< ….. >
I am not an expert of finances, but I believe that the sale price of PIR is appropriate for granting ISOC a steady income - once invested - that is at least what PIR was providing.
OTOH, I am not convinced that the current value of PIR is above a billion - but I may be proven wrong. Whatever the case, we should wonder why Ethos believes to be able to extract from PIR a higher revenue than what PIR produces today. IMHO, the ability to raise price is not the good answer. This ability is provided by the contract with ICANN, and predates the sale - so it is something that ISOC has without doubt factored in the sale price. The best chance to increase the profitability comes from a different business model or a different corporate structure (or both, obviously). The first thing that comes to my mind, that I have hinted already in my early comments - but then not elaborated upon - is vertical integration. I am not claiming to be an expert on the domain name business, but as co-chair of the Vertical Integration Working Group I have learned a lot. PIR, as registry, has to treat all the registrars equally. When PIR owned a registrar, it was obliged to provide to all other registrars the same information given to it. However, a registrar can pick and choose registries to partner with and with whom to share information even of strategic nature. Considering the relationship that folks in Ethos have with Donuts, it would not be surprising to see in the future a collaboration where - to be compliant with ICANN rules - Donuts is running the show, and PIR would set its business accordingly.
Should we take this also into account to assess the situation? Maybe we should. But maybe the first step could be to discuss whether this is a reasonable scenario or whether I am off the mark.
Cheers, Roberto
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I think it's critical that At Large focuses on what the future of .org will look like, and how we get there. I don't think there is any legal basis for the .org contract to be terminated with PIR. Similarly, I don't think there is any legal basis for ISOC's control of PIR to be terminated against the will of ISOC. It's a waste of time to consider solutions based on these end results, whether from the Coalition or otherwise. However, it is entirely realistic (even it seems unlikely) to think that ICANN could block the sale to Ethos Capital. If ICANN does block the sale, the result will be the *status quo ante*: ISOC will continue to control PIR and PIR will continue to be the registry operator for .org. Same thing if the sale doesn't go through for other reasons (e.g., Pennsylvania Attorney General review, which appears to be required under these circumstances). ISOC/PIR/.org remain linked. At that point, ISOC either ends this exploration or looks at other options. Alternatively, it's realistic to think that ICANN could put binding conditions on its approval of the sale. Therefore, I suggest that we concentrate on providing advice to the ICANN Board on how it should review and analyze this sale. We should consider what criteria ICANN should use, and how these relate to ICANN Bylaws, the .org contract, etc. This analysis could result in ICANN blocking the sale or imposing conditions on the sale. If the latter, we should advise what those conditions are, and how they would be enforced. There are multiple legitimate reasons to critique the sale, the seller and the buyer -- both the process and the result, and the actions and statements throughout. Unfortunately, there are also multiple criticisms driven by self-interest, score-settling, animus, stereotype, exaggeration or lack of information; the latter type tends to obscure the former, because the latter are more sensational. We need to separate the wheat from the chaff -- a frustrating but necessary step -- and provide the best advice we can based on legitimate concerns about this transaction. And it's not a bright line between the two. Take, for example, the non-profit status of the .org registry operator. I see no reason or evidence to show that ICANN or PIR or ISOC were mandated or required to preserve the non-commercial status of PIR. Claims that they were have led to some fairly scorching allegations. But this is a distraction. The better question is forward looking -- being confronted with this fork in the road, should the .org registry operator be required to remain a non-profit? If so, on what basis? If not, on what basis? In either case, what are we trying to protect and preserve about .org as it is and as it should be (but not as some wish it had been but wasn't -- e.g., an official non-profit registry)? If we can keep our discussion on track, we will get to a result more quickly. Best regards, Greg On Sat, Jan 11, 2020 at 7:44 PM Holly Raiche <h.raiche@internode.on.net> wrote:
A really good summation of what has happened, and why. The outstanding question for ALAC in this context is whether it was ever in ICANN’s mandate to preserve the non-commercial mission of PIR - or whether it should have been - and whether there are steps that can be taken that can mitigate the for-profit nature of the takeover - in Katherine Maher’s words, preserve the long term commitment to the open and non-commercial nature of PIR - now in the hands of a for-profit corporation.
Holly
On Jan 12, 2020, at 3:48 AM, David Mackey <mackey361@gmail.com> wrote:
Roberto,
"I believe that our two assessment by and large coincide"
Agreed!
On Sat, Jan 11, 2020 at 11:27 AM Roberto Gaetano < mail.roberto.gaetano@gmail.com> wrote:
David, Just a point of clarification. When I was talking about valuation, I was not talking about the sale price but about an assessment of the PIR assets according to financial standards. Although I am not an expert, and therefore I might be wrong, I do believe that the sale price was higher than the objective valuation of the company, considering the assets including reserve funds, that have been drastically reduced in the last couple of years. The reason why Ethos is ready to pay more than the valuation is that it has a strategy that could extract more value from PIR than ISOC was able to, and this is, IMHO, a key element in the understanding of the importance of the operation. My personal opinion is that Ethos wants to change the business model of PIR - the question is how, and my answer is that this will be realised through vertical integration with Donuts. This might well be done via a sale to a different entity that ensures this vertical integration - in this case I believe that our two assessment by and large coincide. Of course, this is just a personal opinion, and I do not have any information for drawing this conclusion other than what is currently public. Cheers, Roberto
On 09.01.2020, at 01:19, David Mackey <mackey361@gmail.com> wrote:
Roberto,
I am not an expert of finances either. However, from a broad historical perspective, I can see the following...
.ORG established in 1985. Estimated Value = $0. .ORG transferred from Verisign to PIR in 2003. Estimated Value = $0 plus right for Verisign to maintain .COM contract PIR sold from iSOC to Ethos in 2019. Value = $1.135 billion (yet to be closed)
I don't have any reason to doubt the valuation of the proposed transaction. I trust Ethos has done their financial homework properly. I also have no reason to doubt that iSOC has not done their homework too. Ethos and iSOC seem to believe they have found fair market value.
I think it's irrelevant to worry about the valuation of the transaction in 2019, as agreed to between Ethos and PIR. It's up to the buyer and the seller to establish a fair market price. I also think it's a red herring to worry about any potential .ORG domain price increases. That ship has sailed.
I do think end users have an interest in whether PIR is sold as an asset from iSOC (non-profit) to Ethos (for-profit). The mission of those two organizations are very different. It is well accepted that for-profit companies only have one mandate to their shareholders and that is to make money. It's simple and should not be controversial in, and of, itself. They may want to protect the value of their asset, PIR, but their overriding mission serves the interests of their shareholders.
I think many people are missing the nature of Ethos's investment. Although ICANN may add guard rails to protect against pure-profit behaviour, I suspect the investment payoff to Ethos is when they sell their asset in the future. A metaphor that can be used is when a company purchases a building. They maintain it and collect rent for a number of years, but the big payoff is when they sell it for capital gains in the future. Capital gains is the profit motive, not the rent/revenue that's earned each year while managing the asset. Hence, it is highly likely that Ethos is making a $1.135 billion bet that it can maintain and grow the value of PIR, so that it will make more than $1.135 billion in the future. This is what private equity companies do. If Ethos is successful, PIR will be worth more than $1.135 billion in the future. Still the current and future valuation of PIR is not relevant to end users. End users are often well served by properly functioning capital markets in the right context.
However, in this case, it's the switching of the organizational mission from a non-profit, iSOC, to a for-profit, Ethos, which causes problems and risks for many Internet stakeholders and end users. Current .ORG registrants are switching from assumed stakeholders to Ethos/PIR customers. The nature of the relationship is changed during the transaction.
Regardless on how this is done, I believe Katherine Maher, CEO and Executive Director of the Wikimedia Foundation, makes a valid point in wanting to preserve "a longterm commitment to the open and noncommercial internet". Hence, I believe At-Large End Users interests do not align with iSOC organizational interests for purposes of this transaction.
Cheers, David
On Wed, Jan 8, 2020 at 4:06 PM Roberto Gaetano < mail.roberto.gaetano@gmail.com> wrote:
Hi David. One sentence in your email prompts another element that we want to consider if we want to build a complete picture.
On 08.01.2020, at 20:51, David Mackey <mackey361@gmail.com> wrote:
< ….. >
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.
< ….. >
I am not an expert of finances, but I believe that the sale price of PIR is appropriate for granting ISOC a steady income - once invested - that is at least what PIR was providing.
OTOH, I am not convinced that the current value of PIR is above a billion - but I may be proven wrong. Whatever the case, we should wonder why Ethos believes to be able to extract from PIR a higher revenue than what PIR produces today. IMHO, the ability to raise price is not the good answer. This ability is provided by the contract with ICANN, and predates the sale - so it is something that ISOC has without doubt factored in the sale price. The best chance to increase the profitability comes from a different business model or a different corporate structure (or both, obviously). The first thing that comes to my mind, that I have hinted already in my early comments - but then not elaborated upon - is vertical integration. I am not claiming to be an expert on the domain name business, but as co-chair of the Vertical Integration Working Group I have learned a lot. PIR, as registry, has to treat all the registrars equally. When PIR owned a registrar, it was obliged to provide to all other registrars the same information given to it. However, a registrar can pick and choose registries to partner with and with whom to share information even of strategic nature. Considering the relationship that folks in Ethos have with Donuts, it would not be surprising to see in the future a collaboration where - to be compliant with ICANN rules - Donuts is running the show, and PIR would set its business accordingly.
Should we take this also into account to assess the situation? Maybe we should. But maybe the first step could be to discuss whether this is a reasonable scenario or whether I am off the mark.
Cheers, Roberto
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_______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy (https://www.icann.org/privacy/policy) and the website Terms of Service (https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on.
_______________________________________________ CPWG mailing list CPWG@icann.org https://mm.icann.org/mailman/listinfo/cpwg
_______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy (https://www.icann.org/privacy/policy) and the website Terms of Service (https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on.
Hi Greg. I totally second what you are saying here -- we should set out the conditions under which such a sale could happen and point out that Ethos does not, as yet, appear to meet them. Conditions would include need to retain the public interest aspect of the registry, and elements about how the board is constituted and conditions for transparency. The most recent info. from the PIR response to ICANN presents serious issues about the board of this organization -- whose members they not prepared to reveal. Marita On 1/12/2020 5:33 PM, Greg Shatan wrote:
I think it's critical that At Large focuses on what the future of .org will look like, and how we get there.
I don't think there is any legal basis for the .org contract to be terminated with PIR. Similarly, I don't think there is any legal basis for ISOC's control of PIR to be terminated against the will of ISOC. It's a waste of time to consider solutions based on these end results, whether from the Coalition or otherwise.
However, it is entirely realistic (even it seems unlikely) to think that ICANN could block the sale to Ethos Capital. If ICANN does block the sale, the result will be the /status quo ante/: ISOC will continue to control PIR and PIR will continue to be the registry operator for .org. Same thing if the sale doesn't go through for other reasons (e.g., Pennsylvania Attorney General review, which appears to be required under these circumstances). ISOC/PIR/.org remain linked. At that point, ISOC either ends this exploration or looks at other options.
Alternatively, it's realistic to think that ICANN could put binding conditions on its approval of the sale.
Therefore, I suggest that we concentrate on providing advice to the ICANN Board on how it should review and analyze this sale. We should consider what criteria ICANN should use, and how these relate to ICANN Bylaws, the .org contract, etc. This analysis could result in ICANN blocking the sale or imposing conditions on the sale. If the latter, we should advise what those conditions are, and how they would be enforced.
There are multiple legitimate reasons to critique the sale, the seller and the buyer -- both the process and the result, and the actions and statements throughout. Unfortunately, there are also multiple criticisms driven by self-interest, score-settling, animus, stereotype, exaggeration or lack of information; the latter type tends to obscure the former, because the latter are more sensational. We need to separate the wheat from the chaff -- a frustrating but necessary step -- and provide the best advice we can based on legitimate concerns about this transaction. And it's not a bright line between the two.
Take, for example, the non-profit status of the .org registry operator. I see no reason or evidence to show that ICANN or PIR or ISOC were mandated or required to preserve the non-commercial status of PIR. Claims that they were have led to some fairly scorching allegations. But this is a distraction. The better question is forward looking -- being confronted with this fork in the road, should the .org registry operator be required to remain a non-profit? If so, on what basis? If not, on what basis? In either case, what are we trying to protect and preserve about .org as it is and as it should be (but not as some wish it had been but wasn't -- e.g., an official non-profit registry)?
If we can keep our discussion on track, we will get to a result more quickly.
Best regards,
Greg
On Sat, Jan 11, 2020 at 7:44 PM Holly Raiche <h.raiche@internode.on.net <mailto:h.raiche@internode.on.net>> wrote:
A really good summation of what has happened, and why. The outstanding question for ALAC in this context is whether it was ever in ICANN’s mandate to preserve the non-commercial mission of PIR - or whether it should have been - and whether there are steps that can be taken that can mitigate the for-profit nature of the takeover - in Katherine Maher’s words, preserve the long term commitment to the open and non-commercial nature of PIR - now in the hands of a for-profit corporation.
Holly
On Jan 12, 2020, at 3:48 AM, David Mackey <mackey361@gmail.com <mailto:mackey361@gmail.com>> wrote:
Roberto,
"I believe that our two assessment by and large coincide"
Agreed!
On Sat, Jan 11, 2020 at 11:27 AM Roberto Gaetano <mail.roberto.gaetano@gmail.com <mailto:mail.roberto.gaetano@gmail.com>> wrote:
David, Just a point of clarification. When I was talking about valuation, I was not talking about the sale price but about an assessment of the PIR assets according to financial standards. Although I am not an expert, and therefore I might be wrong, I do believe that the sale price was higher than the objective valuation of the company, considering the assets including reserve funds, that have been drastically reduced in the last couple of years. The reason why Ethos is ready to pay more than the valuation is that it has a strategy that could extract more value from PIR than ISOC was able to, and this is, IMHO, a key element in the understanding of the importance of the operation. My personal opinion is that Ethos wants to change the business model of PIR - the question is how, and my answer is that this will be realised through vertical integration with Donuts. This might well be done via a sale to a different entity that ensures this vertical integration - in this case I believe that our two assessment by and large coincide. Of course, this is just a personal opinion, and I do not have any information for drawing this conclusion other than what is currently public. Cheers, Roberto
On 09.01.2020, at 01:19, David Mackey <mackey361@gmail.com <mailto:mackey361@gmail.com>> wrote:
Roberto,
I am not an expert of finances either. However, from a broad historical perspective, I can see the following...
.ORG established in 1985. Estimated Value = $0. .ORG transferred from Verisign to PIR in 2003. Estimated Value = $0 plus right for Verisign to maintain .COM contract PIR sold from iSOC to Ethos in 2019. Value = $1.135 billion (yet to be closed)
I don't have any reason to doubt the valuation of the proposed transaction. I trust Ethos has done their financial homework properly. I also have no reason to doubt that iSOC has not done their homework too. Ethos and iSOC seem to believe they have found fair market value.
I think it's irrelevant to worry about the valuation of the transaction in 2019, as agreed to between Ethos and PIR. It's up to the buyer and the seller to establish a fair market price. I also think it's a red herring to worry about any potential .ORG domain price increases. That ship has sailed.
I do think end users have an interest in whether PIR is sold as an asset from iSOC (non-profit) to Ethos (for-profit). The mission of those two organizations are very different. It is well accepted that for-profit companies only have one mandate to their shareholders and that is to make money. It's simple and should not be controversial in, and of, itself. They may want to protect the value of their asset, PIR, but their overriding mission serves the interests of their shareholders.
I think many people are missing the nature of Ethos's investment. Although ICANN may add guard rails to protect against pure-profit behaviour, I suspect the investment payoff to Ethos is when they sell their asset in the future. A metaphor that can be used is when a company purchases a building. They maintain it and collect rent for a number of years, but the big payoff is when they sell it for capital gains in the future. Capital gains is the profit motive, not the rent/revenue that's earned each year while managing the asset. Hence, it is highly likely that Ethos is making a $1.135 billion bet that it can maintain and grow the value of PIR, so that it will make more than $1.135 billion in the future. This is what private equity companies do. If Ethos is successful, PIR will be worth more than $1.135 billion in the future. Still the current and future valuation of PIR is not relevant to end users. End users are often well served by properly functioning capital markets in the right context.
However, in this case, it's the switching of the organizational mission from a non-profit, iSOC, to a for-profit, Ethos, which causes problems and risks for many Internet stakeholders and end users.Current .ORG registrants are switching from assumed stakeholders to Ethos/PIR customers. The nature of the relationship is changed during the transaction.
Regardless on how this is done, I believe Katherine Maher, CEO and Executive Director of the Wikimedia Foundation, makes a valid point in wanting to preserve "a longterm commitment to the open and noncommercial internet". Hence, I believe At-Large End Users interests do not align with iSOC organizational interests for purposes of this transaction.
Cheers, David
On Wed, Jan 8, 2020 at 4:06 PM Roberto Gaetano <mail.roberto.gaetano@gmail.com <mailto:mail.roberto.gaetano@gmail.com>> wrote:
Hi David. One sentence in your email prompts another element that we want to consider if we want to build a complete picture.
> On 08.01.2020, at 20:51, David Mackey <mackey361@gmail.com <mailto:mackey361@gmail.com>> wrote: > > < ….. > > > 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. > > < ….. > >
I am not an expert of finances, but I believe that the sale price of PIR is appropriate for granting ISOC a steady income - once invested - that is at least what PIR was providing.
OTOH, I am not convinced that the current value of PIR is above a billion - but I may be proven wrong. Whatever the case, we should wonder why Ethos believes to be able to extract from PIR a higher revenue than what PIR produces today. IMHO, the ability to raise price is not the good answer. This ability is provided by the contract with ICANN, and predates the sale - so it is something that ISOC has without doubt factored in the sale price. The best chance to increase the profitability comes from a different business model or a different corporate structure (or both, obviously). The first thing that comes to my mind, that I have hinted already in my early comments - but then not elaborated upon - is vertical integration. I am not claiming to be an expert on the domain name business, but as co-chair of the Vertical Integration Working Group I have learned a lot. PIR, as registry, has to treat all the registrars equally. When PIR owned a registrar, it was obliged to provide to all other registrars the same information given to it. However, a registrar can pick and choose registries to partner with and with whom to share information even of strategic nature. Considering the relationship that folks in Ethos have with Donuts, it would not be surprising to see in the future a collaboration where - to be compliant with ICANN rules - Donuts is running the show, and PIR would set its business accordingly.
Should we take this also into account to assess the situation? Maybe we should. But maybe the first step could be to discuss whether this is a reasonable scenario or whether I am off the mark.
Cheers, Roberto
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Greg, "If we can keep our discussion on track, we will get to a result more quickly." Your wording seems a bit oblique. Are you suggesting that discussions around phrases like "End users benefit from a long-term commitment to the open and noncommercial internet" are off track? Cheers! David On Sun, Jan 12, 2020 at 5:33 PM Greg Shatan <greg@isoc-ny.org> wrote:
I think it's critical that At Large focuses on what the future of .org will look like, and how we get there.
I don't think there is any legal basis for the .org contract to be terminated with PIR. Similarly, I don't think there is any legal basis for ISOC's control of PIR to be terminated against the will of ISOC. It's a waste of time to consider solutions based on these end results, whether from the Coalition or otherwise.
However, it is entirely realistic (even it seems unlikely) to think that ICANN could block the sale to Ethos Capital. If ICANN does block the sale, the result will be the *status quo ante*: ISOC will continue to control PIR and PIR will continue to be the registry operator for .org. Same thing if the sale doesn't go through for other reasons (e.g., Pennsylvania Attorney General review, which appears to be required under these circumstances). ISOC/PIR/.org remain linked. At that point, ISOC either ends this exploration or looks at other options.
Alternatively, it's realistic to think that ICANN could put binding conditions on its approval of the sale.
Therefore, I suggest that we concentrate on providing advice to the ICANN Board on how it should review and analyze this sale. We should consider what criteria ICANN should use, and how these relate to ICANN Bylaws, the .org contract, etc. This analysis could result in ICANN blocking the sale or imposing conditions on the sale. If the latter, we should advise what those conditions are, and how they would be enforced.
There are multiple legitimate reasons to critique the sale, the seller and the buyer -- both the process and the result, and the actions and statements throughout. Unfortunately, there are also multiple criticisms driven by self-interest, score-settling, animus, stereotype, exaggeration or lack of information; the latter type tends to obscure the former, because the latter are more sensational. We need to separate the wheat from the chaff -- a frustrating but necessary step -- and provide the best advice we can based on legitimate concerns about this transaction. And it's not a bright line between the two.
Take, for example, the non-profit status of the .org registry operator. I see no reason or evidence to show that ICANN or PIR or ISOC were mandated or required to preserve the non-commercial status of PIR. Claims that they were have led to some fairly scorching allegations. But this is a distraction. The better question is forward looking -- being confronted with this fork in the road, should the .org registry operator be required to remain a non-profit? If so, on what basis? If not, on what basis? In either case, what are we trying to protect and preserve about .org as it is and as it should be (but not as some wish it had been but wasn't -- e.g., an official non-profit registry)?
If we can keep our discussion on track, we will get to a result more quickly.
Best regards,
Greg
On Sat, Jan 11, 2020 at 7:44 PM Holly Raiche <h.raiche@internode.on.net> wrote:
A really good summation of what has happened, and why. The outstanding question for ALAC in this context is whether it was ever in ICANN’s mandate to preserve the non-commercial mission of PIR - or whether it should have been - and whether there are steps that can be taken that can mitigate the for-profit nature of the takeover - in Katherine Maher’s words, preserve the long term commitment to the open and non-commercial nature of PIR - now in the hands of a for-profit corporation.
Holly
On Jan 12, 2020, at 3:48 AM, David Mackey <mackey361@gmail.com> wrote:
Roberto,
"I believe that our two assessment by and large coincide"
Agreed!
On Sat, Jan 11, 2020 at 11:27 AM Roberto Gaetano < mail.roberto.gaetano@gmail.com> wrote:
David, Just a point of clarification. When I was talking about valuation, I was not talking about the sale price but about an assessment of the PIR assets according to financial standards. Although I am not an expert, and therefore I might be wrong, I do believe that the sale price was higher than the objective valuation of the company, considering the assets including reserve funds, that have been drastically reduced in the last couple of years. The reason why Ethos is ready to pay more than the valuation is that it has a strategy that could extract more value from PIR than ISOC was able to, and this is, IMHO, a key element in the understanding of the importance of the operation. My personal opinion is that Ethos wants to change the business model of PIR - the question is how, and my answer is that this will be realised through vertical integration with Donuts. This might well be done via a sale to a different entity that ensures this vertical integration - in this case I believe that our two assessment by and large coincide. Of course, this is just a personal opinion, and I do not have any information for drawing this conclusion other than what is currently public. Cheers, Roberto
On 09.01.2020, at 01:19, David Mackey <mackey361@gmail.com> wrote:
Roberto,
I am not an expert of finances either. However, from a broad historical perspective, I can see the following...
.ORG established in 1985. Estimated Value = $0. .ORG transferred from Verisign to PIR in 2003. Estimated Value = $0 plus right for Verisign to maintain .COM contract PIR sold from iSOC to Ethos in 2019. Value = $1.135 billion (yet to be closed)
I don't have any reason to doubt the valuation of the proposed transaction. I trust Ethos has done their financial homework properly. I also have no reason to doubt that iSOC has not done their homework too. Ethos and iSOC seem to believe they have found fair market value.
I think it's irrelevant to worry about the valuation of the transaction in 2019, as agreed to between Ethos and PIR. It's up to the buyer and the seller to establish a fair market price. I also think it's a red herring to worry about any potential .ORG domain price increases. That ship has sailed.
I do think end users have an interest in whether PIR is sold as an asset from iSOC (non-profit) to Ethos (for-profit). The mission of those two organizations are very different. It is well accepted that for-profit companies only have one mandate to their shareholders and that is to make money. It's simple and should not be controversial in, and of, itself. They may want to protect the value of their asset, PIR, but their overriding mission serves the interests of their shareholders.
I think many people are missing the nature of Ethos's investment. Although ICANN may add guard rails to protect against pure-profit behaviour, I suspect the investment payoff to Ethos is when they sell their asset in the future. A metaphor that can be used is when a company purchases a building. They maintain it and collect rent for a number of years, but the big payoff is when they sell it for capital gains in the future. Capital gains is the profit motive, not the rent/revenue that's earned each year while managing the asset. Hence, it is highly likely that Ethos is making a $1.135 billion bet that it can maintain and grow the value of PIR, so that it will make more than $1.135 billion in the future. This is what private equity companies do. If Ethos is successful, PIR will be worth more than $1.135 billion in the future. Still the current and future valuation of PIR is not relevant to end users. End users are often well served by properly functioning capital markets in the right context.
However, in this case, it's the switching of the organizational mission from a non-profit, iSOC, to a for-profit, Ethos, which causes problems and risks for many Internet stakeholders and end users. Current .ORG registrants are switching from assumed stakeholders to Ethos/PIR customers. The nature of the relationship is changed during the transaction.
Regardless on how this is done, I believe Katherine Maher, CEO and Executive Director of the Wikimedia Foundation, makes a valid point in wanting to preserve "a longterm commitment to the open and noncommercial internet". Hence, I believe At-Large End Users interests do not align with iSOC organizational interests for purposes of this transaction.
Cheers, David
On Wed, Jan 8, 2020 at 4:06 PM Roberto Gaetano < mail.roberto.gaetano@gmail.com> wrote:
Hi David. One sentence in your email prompts another element that we want to consider if we want to build a complete picture.
On 08.01.2020, at 20:51, David Mackey <mackey361@gmail.com> wrote:
< ….. >
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.
< ….. >
I am not an expert of finances, but I believe that the sale price of PIR is appropriate for granting ISOC a steady income - once invested - that is at least what PIR was providing.
OTOH, I am not convinced that the current value of PIR is above a billion - but I may be proven wrong. Whatever the case, we should wonder why Ethos believes to be able to extract from PIR a higher revenue than what PIR produces today. IMHO, the ability to raise price is not the good answer. This ability is provided by the contract with ICANN, and predates the sale - so it is something that ISOC has without doubt factored in the sale price. The best chance to increase the profitability comes from a different business model or a different corporate structure (or both, obviously). The first thing that comes to my mind, that I have hinted already in my early comments - but then not elaborated upon - is vertical integration. I am not claiming to be an expert on the domain name business, but as co-chair of the Vertical Integration Working Group I have learned a lot. PIR, as registry, has to treat all the registrars equally. When PIR owned a registrar, it was obliged to provide to all other registrars the same information given to it. However, a registrar can pick and choose registries to partner with and with whom to share information even of strategic nature. Considering the relationship that folks in Ethos have with Donuts, it would not be surprising to see in the future a collaboration where - to be compliant with ICANN rules - Donuts is running the show, and PIR would set its business accordingly.
Should we take this also into account to assess the situation? Maybe we should. But maybe the first step could be to discuss whether this is a reasonable scenario or whether I am off the mark.
Cheers, Roberto
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On Sun, 12 Jan 2020 at 20:40, David Mackey <mackey361@gmail.com> wrote:
"If we can keep our discussion on track, we will get to a result more quickly." Your wording seems a bit oblique.
Are you suggesting that discussions around phrases like "End users benefit from a long-term commitment to the open and noncommercial internet" are off track?
Actually, in ICANN's narrow context, it might well be interpreted that way. ICANN's mandate is about trust, stability and security of the DNS, everything it does supposedly stems from that. It's not within ICANN's remit to make value judgments on the inherent value of anything being open and non-commercial. Yes, that means plenty to *us*, but when confronted with that demand ICANN can just ignore it as out of scope. Its history of extreme risk-aversion make it easy for ICANN's board to take advice from its legal counsel that may silently override any emotional or ethical arguments. But that does not mean we have nothing to say, it's just how we say it. ICANN's interest in the public good for its own sake is hard to come by. So IMO our job, should we choose to accept it, is to paint the ISOC abandonment of .ORG as an issue of stability, trust and security, so it's directly in scope. Something that was assumed to be stable no longer is, an assumed endowment of a rare resource is now being treated as a commodity, and the secrecy of the transaction gives rise to potentially more instability, especially if new owners prices or policies push registrants away en-masse to other TLDs. ICANN knows (or at least suspects) that if it derails the sale to Ethos it's going to get sued, by insiders who know how ICANN works and how best to threaten it. The case needs to be made that - - Lawsuits on not, letting the re-delegation to Ethos goes through contravenes either ICANN's mission or commitments made when .ORG was given to ISOC - - The lawsuits and government interventions to come by letting the sale go through, that threaten ICANN itself, may exceed the danger of Ethos' lawsuits if it blocks. - Evan
Evan, Thank you for your thoughts. "Its history of extreme risk-aversion make it easy for ICANN's board to take advice from its legal counsel that may silently override any emotional or ethical arguments." It makes a lot of sense to be cognizant of the rules established in the ICANN bylaws and prudently stay within the boundaries as they are currently written. Venturing too far beyond ICANN's remit may result in unwanted and unproductive chaos. However, the risk in the long run of being too narrow and not thinking beyond the letter of the law is that policy debates may be whittled down to discussions about how many angels can fit on a the head of a pin. This is not desirable either. But that does not mean we have nothing to say, it's just how we say it." Understood. Side Question: I reviewed the ICANN bylaws and found section 12.2.d.i which could be considered relevant to how our advice is given ... "The role of the ALAC shall be to consider and provide advice on the activities of ICANN, insofar as they relate to the interests of individual Internet users." Are there any other written pieces of documentation that provides guidelines on what is or is not acceptable advice? "... an issue of stability, trust and security..." In general, I agree with your choice of words and how you said them. Specifically, I can see how the issue of trust comes into play with this transaction. I'm mostly averse to picking any single hill to die on, but it seems to me that issue is outside the norm of most policy discussions and has long term consequences too. Another side note: I heard a question in the general question session at ICANN66 from a former staff member who questioned the rules of staff not being allowed to interact with ICANN participants in social gatherings. Without getting into the larger ethical debate the answer given was to gently restate the existing policy of non-interaction. It seems to me that there's a relevant question for interaction between former staff and former ICANN leadership in the makeup of the Ethos organization. ICANN is a relatively young organization, so it's not surprising that it doesn't yet have a complete set of rules to guide staff/leadership interaction. However, maybe there's an opportunity to look at improving policy/bylaws for this type of behaviour in the future. It's not always easy to anticipate which pieces of the Internet infrastructure will be worth a billion dollars in the future, but better post-employment and post-leadership policies might help moderate human behaviour motivated by money which don't add value to end users. Just a thought. Cheers! David On Mon, Jan 13, 2020 at 9:32 AM Evan Leibovitch <evan@telly.org> wrote:
On Sun, 12 Jan 2020 at 20:40, David Mackey <mackey361@gmail.com> wrote:
"If we can keep our discussion on track, we will get to a result more quickly." Your wording seems a bit oblique.
Are you suggesting that discussions around phrases like "End users benefit from a long-term commitment to the open and noncommercial internet" are off track?
Actually, in ICANN's narrow context, it might well be interpreted that way.
ICANN's mandate is about trust, stability and security of the DNS, everything it does supposedly stems from that. It's not within ICANN's remit to make value judgments on the inherent value of anything being open and non-commercial. Yes, that means plenty to *us*, but when confronted with that demand ICANN can just ignore it as out of scope. Its history of extreme risk-aversion make it easy for ICANN's board to take advice from its legal counsel that may silently override any emotional or ethical arguments.
But that does not mean we have nothing to say, it's just how we say it.
ICANN's interest in the public good for its own sake is hard to come by. So IMO our job, should we choose to accept it, is to paint the ISOC abandonment of .ORG as an issue of stability, trust and security, so it's directly in scope. Something that was assumed to be stable no longer is, an assumed endowment of a rare resource is now being treated as a commodity, and the secrecy of the transaction gives rise to potentially more instability, especially if new owners prices or policies push registrants away en-masse to other TLDs.
ICANN knows (or at least suspects) that if it derails the sale to Ethos it's going to get sued, by insiders who know how ICANN works and how best to threaten it. The case needs to be made that
- - Lawsuits on not, letting the re-delegation to Ethos goes through contravenes either ICANN's mission or commitments made when .ORG was given to ISOC - - The lawsuits and government interventions to come by letting the sale go through, that threaten ICANN itself, may exceed the danger of Ethos' lawsuits if it blocks.
- Evan
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....) 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@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@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@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@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@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.... 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 _______________________________________________ CPWG mailing list CPWG@icann.org https://mm.icann.org/mailman/listinfo/cpwg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy ( https://www.icann.org/privacy/policy) and the website Terms of Service ( https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on.
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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@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....) 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@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@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@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@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@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.... 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 _______________________________________________ CPWG mailing list CPWG@icann.org https://mm.icann.org/mailman/listinfo/cpwg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy ( https://www.icann.org/privacy/policy) and the website Terms of Service ( https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on.
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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@icann.org> on behalf of Nat Cohen <ncohen@telepathy.com> Sent: Wednesday, January 8, 2020 5:06:01 PM To: Greg Shatan <greg@isoc-ny.org> Cc: CPWG <cpwg@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@isoc-ny.org<mailto:greg@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....) 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@gmail.com<mailto:mackey361@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@mcgill.ca<mailto:alan.greenberg@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@mcgill.ca<mailto:alan.greenberg@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@jacquelinemorris.com<mailto:jam@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@telly.org<mailto:evan@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.... 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 _______________________________________________ CPWG mailing list CPWG@icann.org<mailto:CPWG@icann.org> https://mm.icann.org/mailman/listinfo/cpwg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy ( https://www.icann.org/privacy/policy) and the website Terms of Service ( https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on. _______________________________________________ CPWG mailing list CPWG@icann.org<mailto:CPWG@icann.org> https://mm.icann.org/mailman/listinfo/cpwg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy ( https://www.icann.org/privacy/policy) and the website Terms of Service ( https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on. -- Evan Leibovitch, Toronto Canada @evanleibovitch or @el56 _______________________________________________ CPWG mailing list CPWG@icann.org<mailto:CPWG@icann.org> https://mm.icann.org/mailman/listinfo/cpwg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy ( https://www.icann.org/privacy/policy) and the website Terms of Service ( https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on. _______________________________________________ CPWG mailing list CPWG@icann.org<mailto:CPWG@icann.org> https://mm.icann.org/mailman/listinfo/cpwg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy ( https://www.icann.org/privacy/policy) and the website Terms of Service ( https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on. _______________________________________________ CPWG mailing list CPWG@icann.org<mailto:CPWG@icann.org> https://mm.icann.org/mailman/listinfo/cpwg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy (https://www.icann.org/privacy/policy) and the website Terms of Service (https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on. _______________________________________________ CPWG mailing list CPWG@icann.org<mailto:CPWG@icann.org> https://mm.icann.org/mailman/listinfo/cpwg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy (https://www.icann.org/privacy/policy) and the website Terms of Service (https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on.
*Responses in-line.* My understanding is that the cooperative intends to continue funding IETF, which is one of ISOC's primary missions. *Weird. That underscores the concern that this is as much about burying ISOC as it is about rescuing .ORG. I'd be very interested to see what they propose. Right now, that would mean funding ISOC, since IETF is an unincorporated activity of ISOC. Do they propose to both starve ISOC and dismantle it?* 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? *I think trashing ISOC is essentially off-topic, a massive distraction and an unnecessary time-suck. W**hile I'm curious about your factual basis for the $900 million number or for saying anyone is "paying themselves excessive compensation" or for using colorful words and phrases like "excess payments," "excessive" and "extracted," I don't want to muddy the waters here. I'm not an ISOC fanboy, but the merits of ISOC (or the like thereof) is a different discussion for a different time (or at least, a different thread)..* 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. *Please see above. * *ISOC was never set up to deliver value to .org registrants as such. As for the larger .org community (beneficiaries and members and employees of non-profits), we would have to look at what ISOC has done to evaluate the truth of your statements. Because ISOC directs significant efforts to underserved communities who may not be participating here, the shard of the .org community that has been set on fire here may not be aware of what ISOC's done. As for Esther Dyson, I have no clue how 20+ years of history have brought her to this point. * In what way is the .org community's resistance to the sale to Ethos Capital "Ill-informed" and contrary to their own interests? *At this point, everybody is still fairly ill-informed, However, some people and entities (which cannot be called "the .org community") have chosen to jump to conclusions. Ethos Capital could very well be a better steward and manager of PIR and .ORG than ISOC has been -- they could invest capital, add services, increase reliability, innovate, etc. If this is the case the change in ownership could be significantly beneficial to the .org community (including, but not limited to NPO/NGO .org registrants.)* *Another way in which this portion of the .org community is ill-informed is that a lot of what they have read is ill-informed, overheated, highly slanted rhetoric -- long on innuendo and insinuation and short on facts (but long on opinion and outright fantasy masquerading as facts -- I think the kids these days call that "fake news"). The jumping to conclusions and worst-case-scenario mongering is truly impressive, in a bizarre way.* 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. *I never thought I would quote Ronald Reagan, but "There you go again." No one is overcharging or being overcharged, nor would I agree that the stream, etc. is "entirely disconnected' from the good, etc., or that ISOC lacks all "operational and mission discipline." (That last point could be the subject of a nuanced debate, but should not be the subject of a casually tossed grenade.) Other than that, see the first response above.* 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. *There's no reason to assume that any of this would change if Ethos Capital owns PIR. All of this assumes that Ethos Capital would spectacularly mismanage PIR and .org to the point where numerous significant non-profits jumped ship (and by extension even more numerous smaller non-profits), the billion-dollar asset is essentially destroyed, and the TLD becomes a lawless no-man's-land rife with cybersquatters, spammers, scammers, malware purveyors, phishers and other miscreants of the DNS. I'm getting scared just writing about it, but I remind myself that it's only a story.... * 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. *This is more of the same. PCH may be good at what they do, but their "analysis" seemed to be a poorly-reasoned, illogical hatchet job that relied on some very questionable assumptions. Again, why would Ethos Capital sabotage a billion dollar asset? If you want to lose a billion dollars, there are easier ways to do it -- try betting on New York sports teams or the ponies, or investing in Broadway musicals. What Ethos Capital can't afford to do is torch their biggest asset -- the investors will say goodbye and the principals will be destroyed. It's far more rational to assume that they will invest in and improve the assets to create an environment that is more attractive to .org registrants. Airlines need passengers, restaurants need diners, sports teams need fans and audiences. For a TLD, the equivalent is registrants and traffic.* *That said, I am frustrated at not being better informed (though not so frustrated as to buy into the apocalyptic narratives). I would like to know much more about how Ethos Capital intends to run the business, what their overall PE strategy is, what their goals and exit strategies are, what their plans are for future purchases and investments and how those will relate to PIR. I am not enthusiastic about the sale or about the process so far. But I'm less enthusiastic about the arguments to oppose the sale that I've seen so far. **Call me an open-minded skeptic at this point. * *It's entirely possible that the facts, once gathered, could convince me and many others to oppose the sale -- even without the "parade of horribles" above. There are more plausible (though less electrifying) ways that this could go appear likely to go wrong: Ethos could load PIR up with debt or demoralize the workforce; it could spend money on improvements that don't pan out; it could juice up PIR for a quick sale and return on value while PIR becomes a nomadic PE asset; domain names could finally turn out to be a fad, etc. But I need a lot more substance and a lot less smoke to reach a conclusion that truly bad things are likely to happen.* *Best regards,* *Greg* On Wed, Jan 8, 2020 at 5:14 PM Jonathan Zuck <JZuck@innovatorsnetwork.org> wrote:
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
------------------------------ *From:* CPWG <cpwg-bounces@icann.org> on behalf of Nat Cohen < ncohen@telepathy.com> *Sent:* Wednesday, January 8, 2020 5:06:01 PM *To:* Greg Shatan <greg@isoc-ny.org> *Cc:* CPWG <cpwg@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@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....) 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@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@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@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@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@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.... 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 _______________________________________________ CPWG mailing list CPWG@icann.org https://mm.icann.org/mailman/listinfo/cpwg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy ( https://www.icann.org/privacy/policy) and the website Terms of Service ( https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on.
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Il 2020-01-09 01:18 Greg Shatan ha scritto:
My understanding is that the cooperative intends to continue funding IETF, which is one of ISOC's primary missions.
_Weird. That underscores the concern that this is as much about burying ISOC as it is about rescuing .ORG. I'd be very interested to see what they propose. Right now, that would mean funding ISOC, since IETF is an unincorporated activity of ISOC. Do they propose to both starve ISOC and dismantle it?_
Well, the IETF is actually incorporated as IETF LLC, even if it's true that it is currently 100% owned by ISOC ( https://ietf.org/about/administration/background/ ). Perhaps ISOC would be interested in selling the IETF as well? Though I don't think they can make a billion dollars out of it. Anyway, just a historical note: when ISOC was awarded .org, "ensuring the money to run the IETF" was the #1 justification that was given for the deal in the corridors. Of course ISOC was chosen after a lengthy bidding process; still everyone in the ICANN community understood that picking them was necessary to keep the Internet running - if not for that, we could have heard much stronger complaints at that time already. I've not been meeting Esther for over a decade now, so I have no idea of her motivations, but I suppose she is just trying to preserve the original deal: the .org extra revenue, after running costs are covered, is meant to pay for the practical cost of the vital community efforts that keep the Internet running, not for some venture capitalist's yacht in the Bahamas. More generally, this is also a cultural issue; perhaps in the United States this might be seen as normal, but in other parts of the world (and dot org is used globally) it is just unfair to make significant profit over a basic community resource, no matter how well the resource is run. This explains why so many people find it just right that dot org should only ever be assigned to a non-profit entity. -- vb. Vittorio Bertola - vb [a] bertola.eu <-------- --------> now blogging & more at http://bertola.eu/ <--------
The "White Knight" looks more like a "Dark Prince": https://www.internetgovernance.org/2020/01/08/new-org-stewards-or-vultures-c... Among many other things, the fact that Bill Woodcock is in this group might explain the bizarre "analysis" that PCH circulated a few weeks ago... Greg Shatan greg@isoc-ny.org President, ISOC-NY *"The Internet is for everyone"* On Thu, Jan 9, 2020 at 12:24 PM Vittorio Bertola via CPWG <cpwg@icann.org> wrote:
Il 2020-01-09 01:18 Greg Shatan ha scritto:
My understanding is that the cooperative intends to continue funding IETF, which is one of ISOC's primary missions.
*Weird. That underscores the concern that this is as much about burying ISOC as it is about rescuing .ORG. I'd be very interested to see what they propose. Right now, that would mean funding ISOC, since IETF is an unincorporated activity of ISOC. Do they propose to both starve ISOC and dismantle it?*
Well, the IETF is actually incorporated as IETF LLC, even if it's true that it is currently 100% owned by ISOC ( https://ietf.org/about/administration/background/ ). Perhaps ISOC would be interested in selling the IETF as well? Though I don't think they can make a billion dollars out of it.
Anyway, just a historical note: when ISOC was awarded .org, "ensuring the money to run the IETF" was the #1 justification that was given for the deal in the corridors. Of course ISOC was chosen after a lengthy bidding process; still everyone in the ICANN community understood that picking them was necessary to keep the Internet running - if not for that, we could have heard much stronger complaints at that time already. I've not been meeting Esther for over a decade now, so I have no idea of her motivations, but I suppose she is just trying to preserve the original deal: the .org extra revenue, after running costs are covered, is meant to pay for the practical cost of the vital community efforts that keep the Internet running, not for some venture capitalist's yacht in the Bahamas.
More generally, this is also a cultural issue; perhaps in the United States this might be seen as normal, but in other parts of the world (and dot org is used globally) it is just unfair to make significant profit over a basic community resource, no matter how well the resource is run. This explains why so many people find it just right that dot org should only ever be assigned to a non-profit entity.
-- vb. Vittorio Bertola - vb [a] bertola.eu <-------- --------> now blogging & more at http://bertola.eu/ <-------- _______________________________________________ CPWG mailing list CPWG@icann.org https://mm.icann.org/mailman/listinfo/cpwg
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Greg, How is denigrating other's comments a useful contribution to the discussion? Bill Woodcock has decades of expertise in running DNS infrastructure. As I recall his letter, his group provides around $30 million in infrastructure support at no cost to ensure that .org is stable. That contribution can only be made to a nonprofit organization, not to a for-profit organization. The analysis Bill provided is that if Ethos Capital has to pay for that infrastructure itself, it more or less guarantees that its purchase of PIR will be unprofitable. This raises the highly relevant question of whether .org would be as stable under Ethos Capital as it has been under ISOC. Your calling the analysis "bizarre" does not make it so. Similarly, Milton Mueller's trashing of others' reputations likely reflects more poorly on him than it does on them. Regards, Nat On Thu, Jan 9, 2020 at 4:58 PM Greg Shatan <greg@isoc-ny.org> wrote:
The "White Knight" looks more like a "Dark Prince":
https://www.internetgovernance.org/2020/01/08/new-org-stewards-or-vultures-c...
Among many other things, the fact that Bill Woodcock is in this group might explain the bizarre "analysis" that PCH circulated a few weeks ago...
Greg Shatan greg@isoc-ny.org President, ISOC-NY *"The Internet is for everyone"*
On Thu, Jan 9, 2020 at 12:24 PM Vittorio Bertola via CPWG <cpwg@icann.org> wrote:
Il 2020-01-09 01:18 Greg Shatan ha scritto:
My understanding is that the cooperative intends to continue funding IETF, which is one of ISOC's primary missions.
*Weird. That underscores the concern that this is as much about burying ISOC as it is about rescuing .ORG. I'd be very interested to see what they propose. Right now, that would mean funding ISOC, since IETF is an unincorporated activity of ISOC. Do they propose to both starve ISOC and dismantle it?*
Well, the IETF is actually incorporated as IETF LLC, even if it's true that it is currently 100% owned by ISOC ( https://ietf.org/about/administration/background/ ). Perhaps ISOC would be interested in selling the IETF as well? Though I don't think they can make a billion dollars out of it.
Anyway, just a historical note: when ISOC was awarded .org, "ensuring the money to run the IETF" was the #1 justification that was given for the deal in the corridors. Of course ISOC was chosen after a lengthy bidding process; still everyone in the ICANN community understood that picking them was necessary to keep the Internet running - if not for that, we could have heard much stronger complaints at that time already. I've not been meeting Esther for over a decade now, so I have no idea of her motivations, but I suppose she is just trying to preserve the original deal: the .org extra revenue, after running costs are covered, is meant to pay for the practical cost of the vital community efforts that keep the Internet running, not for some venture capitalist's yacht in the Bahamas.
More generally, this is also a cultural issue; perhaps in the United States this might be seen as normal, but in other parts of the world (and dot org is used globally) it is just unfair to make significant profit over a basic community resource, no matter how well the resource is run. This explains why so many people find it just right that dot org should only ever be assigned to a non-profit entity.
-- vb. Vittorio Bertola - vb [a] bertola.eu <-------- --------> now blogging & more at http://bertola.eu/ <-------- _______________________________________________ CPWG mailing list CPWG@icann.org https://mm.icann.org/mailman/listinfo/cpwg
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_______________________________________________ CPWG mailing list CPWG@icann.org https://mm.icann.org/mailman/listinfo/cpwg
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Il 2020-01-09 22:58 Greg Shatan ha scritto:
The "White Knight" looks more like a "Dark Prince":
https://www.internetgovernance.org/2020/01/08/new-org-stewards-or-vultures-c...
Among many other things, the fact that Bill Woodcock is in this group might explain the bizarre "analysis" that PCH circulated a few weeks ago...
As I said, I have not spoken to anyone in the "alternative" group so I do not know their motivations. But then, if you are afraid that this discussion is only attracting "more vultures", why doesn't the At Large focus on ensuring that the future of .org is not decided through lobbying wars among insiders, but through a transparent process? In case the discussion on who manages .org gets reopened (not a likely case, IMHO, but the only one that would allow to make things substantially better, as frankly I think that, in the Ethos arrangement, some kind of board with people from the At Large and other community groups would just be a fig leaf), ICANN should just put it out for bidding with a few conditions: - only non-profit applicants - some form of registrant representation at the policy board level - no price increases unless justified by running cost increases or necessary investment - a fixed additional percentage on top of the costs should be collected and used for the IETF and other community projects That would IMHO be a proposal that could present a substantially different way of running .org in the public interest. Otherwise, I agree that there is a risk to just watch a beauty contest among commercial groups thinly masqueraded as benefactors. Ciao, -- vb. Vittorio Bertola - vb [a] bertola.eu <-------- --------> now blogging & more at http://bertola.eu/ <--------
Greg, I disagree with your concern that resistance to the deal is being driven by "special interests". I've witnessed several accusations of that sort in this very group. I think there are enough significant players to say their is genuine lack of consent across the community. I can list significant players in a future email if you'd like. However I think your point below is very useful ... "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." Cheers, David On Wed, Jan 8, 2020 at 4:48 PM Greg Shatan <greg@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....) 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@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@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@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@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@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.... 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 _______________________________________________ CPWG mailing list CPWG@icann.org https://mm.icann.org/mailman/listinfo/cpwg _______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy ( https://www.icann.org/privacy/policy) and the website Terms of Service ( https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on.
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_______________________________________________ CPWG mailing list CPWG@icann.org https://mm.icann.org/mailman/listinfo/cpwg
_______________________________________________ By submitting your personal data, you consent to the processing of your personal data for purposes of subscribing to this mailing list accordance with the ICANN Privacy Policy (https://www.icann.org/privacy/policy) and the website Terms of Service (https://www.icann.org/privacy/tos). You can visit the Mailman link above to change your membership status or configuration, including unsubscribing, setting digest-style delivery or disabling delivery altogether (e.g., for a vacation), and so on.
participants (11)
-
Alan Greenberg -
David Mackey -
Evan Leibovitch -
Greg Shatan -
Holly Raiche -
Jonathan Zuck -
Marita Moll -
Nat Cohen -
Roberto Gaetano -
Tijani BEN JEMAA -
Vittorio Bertola