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Addressing Recent Media Mischaracterizations of the .ORG Acquisition

Given the level of public interest in Ethos' acquisition of Public Interest Registry ("PIR") from the Internet Society, it is no surprise that this agreement continues to attract press attention. Ethos welcomes open discussion on this important investment, and we are of course following the media coverage closely. Unfortunately, it is not always possible to respond point-by-point to every article, so I would like to take this opportunity to address several mischaracterizations of the deal recently reported by Wired, Deutsche Welle, and others.

First, I would like to reiterate our commitments around price restrictions. As Andrew Sullivan recently made clear during an interview with NPR, the removal of the price restrictions was not connected to the decision to sell PIR. The price caps on .ORG were lifted as part of a shift to a base Registry Agreement with ICANN. ICANN wanted uniform contract terms among registry operators.

When we heard concerns from the community about Ethos coming in and raising prices, we addressed them head on — that's why Ethos has committed to limiting any potential increase in the price of a .ORG domain registration to no more than 10% per year on average, even though today there are no regulatory pricing constraints on PIR or virtually any other domain name registry. To be clear, this is in line with the historical practices of PIR before the price caps were lifted. At less than $10 today, .ORG is one of the most affordable domains in the world, and it will continue to be — even a 10% increase would equate to about $1.

There has also been concern voiced around for-profit ownership, with some going so far as to incorrectly portray .ORG as "one of the last bastions of the internet to remain staunchly nonprofit". Nonprofits rely on for-profit businesses every day to achieve their online goals — from registrars to web designers, to Internet providers, to hosting services, and beyond. The Internet was expanded by for-profit companies with the resources and capabilities to innovate, and we want to make sure that the registrants of .ORG, like every other domain in the world, have the benefit of being served by a company with the ability, desire and resources to innovate and compete on a global scale. When ICANN awarded the operation of .ORG to the Internet Society, that agreement did not require that .ORG be operated by a non-profit entity or by a non-governmental organization. In fact, from 1993 through to the reassignment in 2003, .ORG was a for-profit registry, operated by a for-profit entity, and nonprofits thrived. Not only is it possible for Public Interest Registry to be run as a for-profit business and have a mission-driven purpose at the same time — it has been done before.

We have also seen concerns about who Ethos' investors are, and the potential for Ethos to "flip" or sell PIR for a profit — there have even been implications that China and Russia could be involved. To be clear, Ethos' co-investors are individuals, family offices, and nonprofits — all from the United States. Ethos has made clear its commitment to investing in the long-term vitality of .ORG and its users, and intends to serve the needs of the broader .ORG community for many years to come. Ethos' co-investors also have long investment horizons, and would like to own this asset for many years to come — they are not looking for short-term returns. But fundamentally, the question of who the individual investors are misunderstands what's important here — and that's who is buying PIR. That's Ethos, and we were founded on the belief that prosperity should be built and shared, and that innovation has the power to fuel growth and success for all.

Many articles mention the pressure on ICANN to "block" the transaction. ICANN has a clear and specific contractual mandate with respect to its pending review of the proposed indirect change of control for PIR. ICANN's mandate, which is reflected in its bylaws and was developed through a multi-stakeholder process, is to ensure that the transfer does not adversely impact the stability, reliability, or security of the registry. This is the role it has played in reviewing hundreds of prior transfers of control, and its mandate cannot be expanded simply because of external pressure. PIR, which will remain the registry operator and has successfully operated .ORG for 17 years, meets all relevant criteria and has the proven resources to ensure that the registry remains secure, reliable, and stable.

Lastly, some publications have misleadingly portrayed the co-operative proposal as "an alternative route." Ethos has pledged to adhere to clear pricing guidelines, create a Stewardship Council to oversee important governance issues, and establish a community fund to celebrate and support the mission-driven organizations of dot-org. By contrast, a new co-operative proposal, led by a group with no funding and no experience operating a registry, would strip the Internet Society of a $1.1 billion asset and cripple its work to keep the Internet open and accessible. It would also reward speculators sitting on tens of thousands dot-org names with profits "proportional" to the number of names they hold. There has been little coverage to date of these important facts. Also, there is no mechanism or contractual provision by which ICANN has the right unilaterally to transfer the .ORG agreement away from PIR to a third party such as the co-operative.

For those who are following the transaction and looking for Ethos' responses to points such as those outlined above, you can always refer to www.keypointsabout.org, which serves as a comprehensive resource for all public statements we have made regarding this investment. We look forward to continuing the important public dialogue on this topic.

By Nora Abusitta-Ouri, Chief Purpose Officer at Ethos Capital – Nora Abusitta-Ouri is the Chief Purpose Officer at Ethos Capital, where she oversees the development and execution of social impact and ethics initiatives for the firm and the companies in which it invests. She also serves as the Executive Director of the Digital Ethos Foundation, a global nonprofit committed to fostering a trustworthy, just and peaceful digital world. Visit Page

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Comments

Question By Andrew Allemann  –  Feb 06, 2020 9:57 am PDT

There is certainly a lot of misinformation and misunderstanding out there, which is common when the general press writes about domain names.

I have two questions.

First, regarding 10% price increases. You state "To be clear, this is in line with the historical practices of PIR before the price caps were lifted."

Do you mean it's in line with what the contract stated? PIR has not raised prices 10% per year on average so the historic practice has not been to raise prices 10% per year on average.

Second, with regards to the "alternative route". I see this as highly unlikely and your criticism may be well placed. However, I don't understand the statement "It would also reward speculators sitting on tens of thousands dot-org names with profits "proportional" to the number of names they hold." How would this alternative route reward speculators?

#SaveDotOrg By Kevin Ohashi  –  Feb 08, 2020 2:42 am PDT

The 10% per year number is a lie. Just because that was the most recent cap allowed, it's nowhere near the historical average.

There have been 7 price increases in the past 17 years.
2003 $6.00
10/15/07 $6.15 (2.5%)
11/09/08 $6.75 (~10%)
04/01/11 $7.21 (~7%)
07/01/12 $7.45 (~3.5%)
07/01/13 $8.00 (~7%)
07/31/15 $8.80 (10%)
08/01/16 $9.68 (10%)

Does that look like 10% per year increases on average? Nope. Only during a one year window of 2015-2016 do you see back to back 10% increases. The majority of years see no price increases.

Speaking of averages, the phrasing 10% on average instead of committing to a hard cap is also worrisome. Average over what time frame? No real firm commitments have been made by Ethos. Ethos has no track record. The director invested in the registry operator donuts, which committed to not raising prices and then did exactly that on over 200 new gTLDs later. The best look for Ethos is no track record, but looking at the connections the employees have shows no regard for public statements made by the companies they are connected to in the registry space.

Ethos, ISOC and PIR had no role in the creation of .ORG. They don't own it. They shouldn't have the right to simply tax non profits with no benefit for the public good. Pretending .ORG is like the new gTLDs is disingenuous and saying .ORG should be treated like new gTLDs is a for profit motivated heist from the organizations who have committed to using .ORG and are locked in because of the enormous switching costs involved with domain names.

ICANN has been a regulator for ages and .ORG is a key piece of internet infrastructure that shouldn't be sold to your nebulous brand new private equity firm. The internet doesn't need Ethos. It doesn't need ISOC/PIR to run .ORG. They already outsource the technical handling of a registry, PIR is a tax entity on .ORG registrants. Ethos wants to raise those taxes and capture the benefit. .ORG can survive easily without you.

#SaveDotOrg

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