
The .Org Fire Sale: How it sold for less than half its valuation - metasj
http://blogs.harvard.edu/sj/2019/12/02/the-dot-org-fire-sale-sold-for-half-its-valuation/
======
lancewiggs
I wrote about this too - linked in the article.
[https://lancewiggs.com/2019/12/01/did-isoc-
leave-1-billion-o...](https://lancewiggs.com/2019/12/01/did-isoc-
leave-1-billion-on-the-table/)

The travesty is that ISOC has given up a sure-fire stream of $55+ million/year
in tax-free income, along with the ability to easily grow that to over
$100m/year with price increases - all for just over $1.1 billion.

As any r/personalfinance reader can tell you a rule of thumb for endowments is
to spend a maximum of 4% of your assets each year. This means $44m from the
$1.1bn, which means ISOC is immediately worse off than they were forecasting
for this year (~$55m). Alternatively use the Yale method, which in today's
low-return market will yield similar or worse results.

Moreover it's clear that ISOC are not behaving as the sharpest of investors,
so we can imagine that the endowment might be be poorly managed or over-spent.

~~~
cameldrv
The bigger issue is that org was given to PIR to manage in the public
interest. It was not supposed to even be a moneymaker for ISOC, they were just
supposed to be the stewards of .org in the public interest. The fact that it’s
worth even $1 billion shows that they’re operating it in the interest of the
ISOC and not the public interest. ICANN should simply create a new entity that
will charge break-even fees for registrations and stop trying to tax .org
registrants with mandatory charitable donations to a dubious charity.

~~~
evross
It's worth noting that the former ICANN CEO, Fadi Chehadé is highly involved
in this sale. This timeline also seems to suggest that current members of
ICANN are also biased towards the sale of the .org domain, ICANN may not be
interested in the views of the people who currently have .org domains.

From [https://www.privateinternetaccess.com/blog/2019/11/isoc-
pir-...](https://www.privateinternetaccess.com/blog/2019/11/isoc-pir-..). :

"March 2019:

ICANN receives 3,300 comments uniformly opposed to the change and 6 in favor
of removing price caps, and sides with the 0.2% minority.

May 2019:

PIR responded to the comments with an open letter that said,

“We are a mission-based non-profit, and would never betray the trust that you
have put into .ORG and us.”

On 7 May, Chehadé registered the domain for EthosCapital.com.

On 13 May, ICANN decided to lift the price caps anyway.

On 14 May, Ethos Capital was incorporated as a new investment firm founded by
Brooks. Ethos Capital has two staff: Brooks and Nora Abusitta-Ouri, a former
ICANN SVP who later worked for Chehadé and was also a classmate of Chehadé."

~~~
Joeri
So basically ICANN itself is corrupt and must be replaced wholesale with a
proper public interest steward?

Maybe people are protesting the wrong thing. The sale of .org is a symptom,
the underlying cause is a bad regulatory framework for internet names.

~~~
Accujack
Exactly. Internet naming is a situation where artificial value is assigned to
a nearly valueless resource for the purpose of collecting rent.

There's no technical reason we can't have multiple systems for translating
names into addresses. There's no longer any technical reason for having neatly
organized dot separated addresses based on TLDs.

Allowing the translation of any text string into an address is entirely
possible with present day computing power, and a truly distributed system
similar to the global routing table would work to organize different providers
announcing their own name domains.

Maintaining the old DNS TLD domains is stupid and subject to manipulation by
corporations and corrupt politicians.

Like this sale.

~~~
stkdump
I heard this argument a few times now. But are domain names not important for
internet security? Https certs prove that the entity you expect communicates
with you, given that you know the domain name of that entity.

~~~
Accujack
It's one way to do that... but the present format and management of the domain
name system isn't important. You can create a security certificate for any
form of text string and use it to validate the other end of the connection.

The certificates are essentially a trusted authority saying cryptographically
"we have verified this is really the person you think this name is" and that
can be done for any identifier. Also, this system was set up before public key
encryption became common, and there are plenty of other ways to accomplish the
same function with PK crypto.

~~~
stkdump
Ok, but how is a domain name essentially different from 'any form of text
string'? There needs to be some central registry, unless you are ok with such
long strings that nobody will effectively double check, that they are correct.

------
metasj
Related past threads:

"Save .org":
[https://news.ycombinator.com/item?id=21611677](https://news.ycombinator.com/item?id=21611677)

"Take action to save .org":
[https://news.ycombinator.com/item?id=21664582](https://news.ycombinator.com/item?id=21664582)

"Why I Voted to Sell .org":
[https://news.ycombinator.com/item?id=21656960](https://news.ycombinator.com/item?id=21656960)

"ISOC sold the .org registry to Ethos Capital for $1.1B"
[https://news.ycombinator.com/item?id=21667355](https://news.ycombinator.com/item?id=21667355)

~~~
nathcd
Dupe of "Take action to save .org" with some discussion:
[https://news.ycombinator.com/item?id=21677533](https://news.ycombinator.com/item?id=21677533)

------
shkkmo
Wow, the level of corruption and self dealing here is remarkable. Chehadé was
the CEO of ICANN until a couple of years ago.

> On May 7th, Chehadé registered the domain for EthosCapital.com.

> On May 13th, ICANN decided to lift the price caps anyway. The decision was
> made by ICANN staff, not its board, evading the obligation to publicly carry
> out due diligence and explain board decisions.

> On May 14th, Ethos Capital was incorporated as a new Boston-based
> “investment firm”, founded by Brooks — who stepped down from running the
> 60-person team at Abry to do so. Ethos Capital has two staff: Brooks and
> Nora Abusitta-Ouri, a former ICANN SVP who later worked for Chehadé. [0]

Then a couple of months later, surprise, .org gets sold to Ethos Capital...
Almost as if this was the plan the whole time...

Here's hoping that somehow these crooks actually end up in jail...

[0] [http://blogs.harvard.edu/sj/2019/11/23/a-tale-of-icann-
and-r...](http://blogs.harvard.edu/sj/2019/11/23/a-tale-of-icann-and-
regulatory-capture-the-dot-org-heist/)

------
mortenjorck
I wonder what the level of awareness of this is in the nonprofit community
itself. Something like the National Council of Nonprofits would seem to be in
a good position to file a suit or at least raise awareness among its members
who might be interested in forming a class.

While a major charity like the Salvation Army certainly doesn’t care if a
single, sub-$100 annual expense doubles or even goes up by a factor of ten,
thousands of small organizations across the country might care enough to band
together and take action.

~~~
C1sc0cat
Former member of the worker coop that bid to run .org when ISOC won here.

Technically .org is not just for American style "non profits", I it was and
should be any thing else that doesn't fit the other big 5 eg jwz.org.

That was the problem a lot of shady stuff goes on in the Charity world ("but
its for charity") notorious for bullying often much worse than the behaviour
of wall street or city bankers and traders.

I feel that a more sensible approach such as ours would have been better
served - as coop members tend to be stroppy bastards and would have stood up
for the common good - a lot of our ISP side in Manchester where members of alt
2600 .

------
agwa
> Take a page from the Donuts book: create multiple price tiers for popular
> domains, up to 100x the base rate.

> Raise rates for long-time owners of common words. They weren’t using that
> premium space anyway.

This is forbidden by the .org registry agreement, 2.10(c):
[https://www.icann.org/sites/default/files/tlds/org/org-
agmt-...](https://www.icann.org/sites/default/files/tlds/org/org-agmt-
html-30jun19-en.htm)

~~~
cannonedhamster
And amazingly won't matter under the new owners who get to write their own
rules. That's why everyone is upset. There was a vote that allowed .org to set
whatever prices they wanted right before the sale.

~~~
dwild
His link was to the updated agreement. The sale doesn't allow the owner to
write their own rules.

------
slantedview
"Sullivan suggested that their goal is to return roughly the same annual
revenue as they have been getting from PIR — around $50M. Of course this time
it would come without the possibility of expanding the underlying business
year by year."

This hurts my head. Needless to say, the returns on this fund will be _far_
less assured than the returns on simply maintaining the .org business as it
was (especially with Goldman managing the fund).

Impressively, even ISOC comes out a loser from this deal. Only Ethos wins, but
then, that was surely the point.

~~~
ohashi
Waiting to hear who are ISOC gets new gigs in the Ethos orbit.

------
romaaeterna
If this is really the case, someone(s) very possibly took and gave bribes, and
we're going to see Federal scrutiny all over this.

~~~
TheRealPomax
No, we won't. Not unless you help set that in motion. Have you contacted the
DA already?

~~~
schoen
Note that in the U.S., district attorneys are normally the prosecutors at the
state court level. At the Federal level, most prosecutors are "U.S. attorneys"
or "assistant U.S. attorneys".

[https://en.wikipedia.org/wiki/District_attorney](https://en.wikipedia.org/wiki/District_attorney)

[https://en.wikipedia.org/wiki/United_States_Attorney](https://en.wikipedia.org/wiki/United_States_Attorney)

~~~
TheRealPomax
Right, so: the DA. Because as incredible as this is: neither ICANN nor ISOC
are controlled or run by the federal government.

As much as people think that the organization that oversees internet naming
must be federal (because how could it not be, they control stuff for the
ENTIRE COUNTRY AND BEYOND), both ICANN and ISOC are literally just private
industry non-profit organisations, like any other 501c3. If you want to sue
them, or you want them sued by government, you're going to have to contact the
DA for the state(s) they are registered in.

~~~
schoen
The reason that I mentioned the distinction was that you suggested contacting
DAs in response to romaaeterna's prediction that "we're going to see Federal
scrutiny". Contacting DAs might be the most appropriate way to handle a
problem, but in itself it probably won't lead to Federal scrutiny of that
problem.

~~~
TheRealPomax
Unless you found a loophole that allows the federal government to even form an
opinion on this matter before it reaches federal courts, a non-profit selling
its asset is a matter of state law first, and transgressions or questionable
ethics are a matter of state investigation, not federal.

As insane as that might seem for something as far-reaching as "the ownership
of the .org top level domain".

------
leibnitz27
I bought an org domain back in the 90s, and have been using it as my personal
domain (i.e. also primary email address) ever since.

While, granted, I was perhaps a little silly to go org (it seemed like a good
idea back then!), it's mildly terrifying that my personal footprint on the web
of 20+ years can now be held to ransom by a random VC firm, and to keep my own
email address I might have to pay an additional $$$ annually.

Sigh.

~~~
tqkxzugoaupvwqr
Extend your domain lease by 10 years at the current yearly fee. Gives you some
time to migrate if you choose to.

~~~
zrm
That's a bad deal unless you actually need ten years to migrate, which you
probably don't. Better off to take a year or three at the 10% annual increase
and then stop paying entirely (~364% of the existing rate for three years,
with payments made in the future rather than the present) than to pay 1000% of
the existing rate right now.

~~~
dropmann
10 years is a long time, maybe until than its bought back to non-profit, you
never know. Also it allows you the luxury of starting worrying about your
migration later. If you could invest that money now with more than 4-5 times
US interest rates (which is the price increase I would expect), then I would
consider this a bad deal.

~~~
zrm
If it's reverted back to non-profit then prepaying is still a bad proposition
because then you're paying today the same amount you would be able to pay
years from now -- and paying it to the for-profit entity now instead of the
non-profit entity later.

And I don't see any reason to expect the annual probability that it's
transitioned back to a non-profit to be a lot different in the future than it
is right now, which means that if it makes sense to migrate then it doesn't
make sense to wait. Especially when continued use of the domain only increases
the migration cost as it gets further distributed as your active contact
information.

~~~
pythonaut_16
Isn't the price like $12 a year? So prepaying 10 years would be $120? That's
not an insignificant amount, but it's not like you're going to make a life-
changing profit by investing it either.

Locking down [your-name].org for 10 years carries its own value proposition
beyond the mere calculation of price today vs in the future.

~~~
zrm
> Isn't the price like $12 a year? So prepaying 10 years would be $120? That's
> not an insignificant amount, but it's not like you're going to make a life-
> changing profit by investing it either.

For most people there aren't a lot of individual decisions that will cause you
to make a life-changing profit on their own, but it's making little decisions
again and again that adds up.

> Locking down [your-name].org for 10 years carries its own value proposition
> beyond the mere calculation of price today vs in the future.

The premise is that you're going to immediately migrate away from using the
domain. Which means that any further use of the old domain just keeps you
invested in it, and it's not worth a whole lot if you're not going to use it
for anything.

There is also something to be said for minimizing the profits of the entity
screwing you over, even if it's only by a little, because that adds up too.

~~~
tqkxzugoaupvwqr
If you stop leasing a domain, you should be very sure that you changed your
e-mail address at all the services you ever used and informed all the contacts
of your new e-mail address. Because the second you let your domain expire,
someone else might gobble it up and receive all the e-mail addressed to you.
If you keep leasing for multiple years even after migration, you can be sure
to catch any services/people still mailing you at the old address.

------
enjoyyourlife
The reason for this is because former Ethos members are involved with ICANN
and are probably making money because of the sale

~~~
quantified
Follow the money.

If they invest with GS, see how much is left after 5-7 years.

------
tinus_hn
I don’t know if it is allowed but it sure would be amusing if ICANN decided to
grant .org to someone else now, leaving Ethos with a worthless carcass.

~~~
C1sc0cat
Anyone know anyone with a spine at ICANN I am sure that I could find people
who might be interested Ivan Pope for one.

------
TomMckenny
Honest question: since .org is relied on world wide, why are just two US state
courts the only ones with the legal power to review the sale?

~~~
freddie_mercury
You've got the causality backwards. It isn't "the whole word uses this, so we
decided to put two US state courts in charge of it".

It was "only two US state courts are in charge of it but the whole world
decided to start using it anyway".

No one _forced_ anyone to use the US DNS system. They all knew what they were
signing up for when they joined the public internet in the 80s and 90s and
haven't spend any time or money lobbying for a change.

~~~
logifail
> They all knew what they were signing up [..]

Really? Knew as in "ticked a box" or as in "informed consent"?

~~~
dependenttypes
You should not tick boxes if you are not informed as to what they do.

~~~
ganstyles
Not very pragmatic in the general sense, with the length of ToSs and
signatures and check marks on forms. There's a difference between having the
ability to read and review forms and informed consent before ticking boxes.

------
scarejunba
My favourite part is that they didn't own it really. We told them to run it
for us. It's like if my property management guy sold my house and took the
money.

------
LegitGandalf
It's almost like someone figured out how to cash out. Just about any
percentage kickback on a billion discount is life changing money.

------
philipn
Are registries allowed to charge different prices for different domain names?

E.g. can they ask google.com for $1B to renew and mygrandmascookiecompany.com
for $20 to renew?

~~~
agwa
In the case of .org, non-uniform renewal pricing is only allowed if "the
applicable registrant expressly agreed in its registration agreement with
registrar to higher Renewal Pricing at the time of the initial registration of
the domain name following clear and conspicuous disclosure of such Renewal
Pricing to such registrant"

So Ethos wouldn't be able to screw over existing registrants with non-uniform
renewal pricing.

Source: Section 2.10(c) of
[https://www.icann.org/sites/default/files/tlds/org/org-
agmt-...](https://www.icann.org/sites/default/files/tlds/org/org-agmt-
html-30jun19-en.htm)

------
jijji
it looks like an inside job when the CEO of ICANN sells the .Org TLD to
himself...

------
glitcher
I find it very curious that NPR has not covered this story, _and_ that they
are notably missing from the list of organizations that signed at
savedotorg.org. Especially because they are a .org!

I mean, I'm not trying to imply it should be attributed to malice, but are
they asleep at the wheel or what?

------
syshum
This is one of the most blanetly and openly corrupt transactions in modern
history. It saddens me that it looks like they are going to get away with it
as well..

------
dependenttypes
This is a good chance to stop our dependence on DNS and move to things such as
.onion domains instead (which by the way help avoid the whole certificate CA
mess).

~~~
matheusmoreira
Absolutely agree. Every site should also available on the onion network. This
would put some pressure on DNS operators. This would also help dissociate the
onion network from criminal activity. The more sites become available as
hidden services, the more legitimate the network becomes.

~~~
cyphar
I agree, but I would say that .onion addresses should already be seen as being
entirely legitimate. Let's not forget that Facebook's onion address
(facebookcorewwwi.onion) is the main target of "darknet" traffic by a very
wide margin.

------
jacquesm
Isn't there a technical resolution possible here where outsiders set up a new
root for .org and people can change their allegiance and leave them to rot?
That way Ethos capital (what a disingenuous name) paid $1B for nothing at all.

~~~
Accujack
Yes, you just have to get everyone who might want to access a .org address or
their DNS provider to recognize the new root.

That's the problem - you have to get organizations - some of whom are deeply
invested in making money off of DNS - to agree to not do so.

Or you just ignore the existing system and build a new one... once enough
desirable sites are in the new one, then the old one will fade away.

------
zapita
The article says that a national bond fund may have fronted the endowment
without turning .org into a for-profit. What does this mean?

~~~
lalaland1125
They could have sold bonds (raised money via debt) as an alternative to
selling .org. They probably would have gotten a good yield considering the
stability of the .org revenue stream.

~~~
zapita
But would buyers of national bonds consider buying debt from a non-government
entity? Would they be willing and able to model the investment without a good
understanding of the Internet industry?

~~~
freddie_mercury
They buy trillions of bonds from GSEs every day. This wouldn't be any
different. Agency debt is a well understood thing.

~~~
zapita
Thanks. I find this topic fascinating, even though I know nothing about it. Do
you have any recommendations for reading material to learn more?

~~~
Reelin
You might try
([https://www.investopedia.com/terms/c/corporatebond.asp](https://www.investopedia.com/terms/c/corporatebond.asp))
for an overview.

------
Darvon
It's so hard to stay angry and not just default to sad.

------
xivzgrev
Ok honest question fellow comment reader - what are you going to do about it?
This is the 5th or 6th article I’ve seen on this transaction, with hundreds of
comments each.

Ethos Capital does not give 2 shits about your comments here.

Are you writing to the DA like this article suggested? What else can you do?

Myself, I don’t personally care that much. But I see a lot of people here
obviously do, and I don’t really see that energy translating into action. I
would like to see it move forward in a positive direction, so I’m asking the
question of you - you don’t like it, what are you going to do about it besides
complain here?

~~~
matthewdgreen
The DA (and others) are a lot more likely to care about this if it gains press
attention — preferably national and preferably well beyond the HN audience.
Keep sending those emails to the DA, by all means. But if anything happens to
this deal, it’s going to be 100% driven by press attention.

------
WalterSobchak
Can the URL be updated to use HTTPS, which is fully supported on
blogs.harvward.edu?

[https://blogs.harvard.edu/sj/2019/12/02/the-dot-org-fire-
sal...](https://blogs.harvard.edu/sj/2019/12/02/the-dot-org-fire-sale-sold-
for-half-its-valuation/)

------
timwaagh
Maybe they can use the money to buy some shares in Ethos. They seem to be
going places.

------
kerkeslager
For all the people who keep saying there's no application for blockchain:
here's one. Namecoin was a bad implementation, but the concept is sound.

Letting companies control domain names serves no purpose. They don't prevent
domain squatters, they've censored on behalf of governments in the past, and
now they're allowed to gouge nonprofits on .org domains.

A decentralized domain name system wouldn't solve all these problems, but at
least we wouldn't be paying rent-seeking middle-men to provide terrible
service.

------
apexalpha
I still can't really believe someone can sell a building block of the world
wide web like .org tld. Who runs .net? .com? .edu? .info? Can they be sold,
too?

~~~
f4ewagy34aew
Yes all of those are private now. .com is still with ICANN (which is now an
NGO), .net is now VeriSign, .edu is Educause NGO, .info is Afilias (coop
formed by several independent domain registrars)

~~~
icedchai
.COM's registry is Verisign, just like .NET.

------
edgefield0
Is there a benefit to locking in pricing today for say 10 years? I assume the
major registries, such as namecheap and godaddy, will allow a longer term buy
in?

~~~
patrickdavey
Another way to look at it - is there a downside to locking in the current
price for 10 years? It doesn't _seem_ if Ethos do end up with it that the
prices will go anywhere but up.

I renewed my .org for 10 years.

~~~
Tepix
You are supporting a broken system. Chances are it won't get fixed. The better
option may be to support a new, decentralized name system instead.

I'm hoping this incident will provide new energy to these efforts.

~~~
soraminazuki
The whole reason people are upset about this deal is because it's not possible
to just "switch" to an alternative name system without breaking the whole
internet. What you're suggesting is unrealistic.

~~~
Tepix
Is it? All it takes initially is support by the browser makers.

~~~
soraminazuki
Endorsement by browser makers is not enough, because browsers are far from the
only software that uses the internet. We would need to rewrite every single
one of these software to successfully make the transition. In an ideal world
where legacy software don't exist and people would rewrite their software to
adjust to new standards overnight, yes it might work but that's just not the
way things are. Worse, things would break badly when we have different
software using conflicting naming systems. I'm pretty sure nobody would want
to spend time debugging that kind of mess.

Now, even if browser support is all we need (it's not), how can we possibly
explain this to users? Many, many links, bookmarks, and URLs would break along
the way, causing confusion and harm.

------
markman
I'm probably going to regret asking this and I apologize for my ignorance but
I thought .org's were all government and nonprofit. I didn't think anybody
owned it nor that the entire domain could be sold?!

------
dropmann
Wait, if you can no longer trust ICANN, does not that mean you cannot trust
the whole internet (domain name system) anymore?

~~~
metasj
I would assume that ICANN itself may give up its non-profit status in time.
That doesn't make them untrustworthy in general -- they will only exist so
long as the system they administer is reasonably useful -- just trustworthy
for fewer things (don't expect them to implement any sanity check on prices,
for instance)

------
kome
I love the smell of some rent extracting capitalism in the morning...

------
lazyguy2
The reason it sold at half it's valuation is because the valuation was
bullshit.

It's like some guy claiming his classic car is worth 25,000 dollars. If nobody
is offering 25k for it then it's not worth 25k. Period, end of story.

~~~
lancewiggs
They didn't appear to shop the offer.

It's like that 'some guy' selling his classic car to a classic car dealer who
was walking by, without first testing the price with experts or posting an
advertisement.

~~~
yborg
Except in this case the "some guy" is selling the classic car without actually
owning it since it actually belonged to a public museum, and the dealership
was just set up last week by the former director of the museum who just
happened to retire the week before that.

There seems to be some kind of breach of fiduciary trust here somewhere, heads
should roll at ICANN even if all of this was somehow not in violation of any
laws.

