
Why ISOC sold .ORG to VCs - StuntPope
https://easydns.com/blog/2019/12/06/its-called-f-you-money-for-a-reason-why-isoc-sold-org-to-vcs/
======
simias
Honestly if that analysis is correct then on one hand I concede that it does
make the decision appear less like pure bribery than I initially thought but
on the other it's even worse for .org users.

Maybe I'm wrong to consider this a zero-sum game, but surely if ISOC made a
good deal selling .org that means that Ethos Capital got the short end of the
stick. That means that eventually they'll realize that they can't make as much
money out of it as they had hoped. And then what will they do? Agree to
continue operating the TLD at a loss? ell oh ell. It's more likely that
they'll either attempt to extort more money from people who can't actually
afford to migrate or "strip" the TLD for parts somehow.

On the other hand if ISOC bet on the wrong horse they've lost the Goose that
Laid Golden Eggs, and they'll be in a worse position to help the open web.
From the point of view of people believing in the ethos (ha!) of what .org is
supposed to stand for, it seems like a lose/lose situation.

I still don't really think it made sense to greenlight that deal for purely
monetary reasons, I think the people on that board lost track of their
objective, which I think is what the author acknowledges in part in his
conclusion.

~~~
manwe150
> Maybe I'm wrong to consider this a zero-sum game, but surely if ISOC made a
> good deal selling .org that means that Ethos Capital got the short end of
> the stick.

The field of economics, and pretty much all monetary transactions, are about
demonstrating that sales (and thus wealth) are not a zero-sum game. Whether
that’s true for any particular case, such as this one, can be debated forever
still, just often not based simply on that assumption.

~~~
TeMPOraL
> _The field of economics, and pretty much all monetary transactions, are
> about demonstrating that sales (and thus wealth) are not a zero-sum game._

Yes, a good chunk of them are really _negative_ -sum games, once you include
all secondary stakeholders in the calculations.

------
herodotus
If I understand the article correctly, ISOC took a reasonable decision based
on (a) they are not supposed to be a registry operator; and (b) "a bird in the
hand is worth two in the bush". That is, the $75m/annum profit from .org may
not last for long, but the $1.1135 billion will be a great endowment fund.

The flip side is the implication (and I hope I read this correctly) is that a
bunch of smart but possibly ethically challenged individuals infiltrated ISOC
(a non profit) in order to create investment opportunities for themselves down
the road.

~~~
Rebelgecko
Considering that the price of a .org will almost certainly be going up soon, I
think that $75m/year will soon be $82million. I don't think it's sustainable
to pull that amount of money every year from a 1.1 billion endowment.

~~~
herodotus
From the article (not my view): "And yet, those of us in the technology
business understand viscerally that nothing lasts forever. What seems like a
steady cash cow today may be obsolete sooner than anybody suspects. Personally
I think even DNS will be disrupted in the future by some kind of distributed
ledger technology beyond even blockchain, like hyperledger or hashgraph or
some post-singularity quantum foam."

~~~
marcosdumay
Well, after that sale the odds of something disrupting DNS grew a lot.

------
jacquesm
No, that's not why they did it. They did it because they thought they could
get away with it. But the charter of ISOC never was to make a mint of the .org
TLD by selling it, and as far as I'm concerned this deal will be reversed at
some point or we should simply set up an alternative root and a pox on both
their houses.

~~~
e2le
OpenNIC would be that alternative root although often are they at odds with
ICANN creating new tlds that conflict with their own. It seems like the DNS
system in it's current form is broken and I'm not convinced an alternative
root is the solution but perhaps part of one.

~~~
troquerre
Handshake.org is trying to create an alternative root that is better (along
the dimensions of security and governance) than the current system. I can see
it gaining adoption especially in light of recent events.

~~~
duskwuff
Maybe I'm just cynical, but the fact that the first thing mentioned on their
homepage is a cryptocurrency "airdrop" doesn't leave me with a confident
feeling about the project's long-term viability.

~~~
xur17
That's a fair response. That said, it's worth noting:

> The Project Sponsors received a minority participation (7.5%) of HNS in the
> interest of aligning all stakeholders, including industry. All of the 10.2MM
> USD collected from Project Sponsors (Funds and Individuals) will be given to
> Free and Open Source Software projects.

The rest was all airdropped in an attempt to get wide distribution / get it in
the hands of as many users as possible.

~~~
duskwuff
Honestly, that doesn't allay my concerns at all. It all reeks of a pump-and-
dump scheme. (I'm not saying that Handshake is trying to execute this scheme,
but that they remind me of other projects which have done so.)

The pattern for these projects is pretty predictable: Promise amazing things
from a technical project associated with a cryptocurrency token. Premine a
bunch of those tokens and give them to insiders, then airdrop the token to
create a market. The insiders sell off their tokens, and the project is
forgotten.

------
gambler
I don't want to be aware of relationships between zillion different companies
and organization just to be able to understand how much it will cost to _map a
string to a number_ and what BS hoops I will have to jump through to keep that
mapping "operational". It's totally absurd.

DNS is a rotten system. It's rotten technically, politically and
administratively. It has to be replaced by something distributed. Step #1 is
to collectively admit this.

------
ulkesh
The real loser in this deal is us. Not only is trust lost (or already has been
from other past DNS goings-on), but we, the registrants, end up paying more,
financially and otherwise.

Generally speaking, the underpinnings of the Internet (protocols, certain
levels of infrastructure) should always and forever be public, not-for-profit,
"open-source", and not patentable, in order to protect the integrity of the
system. I'm no expert, so maybe a lot of it is this way already, but DNS seems
to be a bastion of for-profit greed.

All of this walks hand in hand with Net Neutrality, in my view -- governance
to protect what is a fundamental human right, the free (as in freedom, and to
some degree, as in beer) flow of information. And in an ideal world,
objectively factual information.

~~~
troquerre
Agreed. IMO no organization should be able to collect rent on what’s basically
public infrastructure at this point.

------
emn13
This analysis is _highly_ suspect. It's a great sales pitch sure - but it's
false.

So first of all: the overhead for running the registry is unreasonably high.
You'd expect there to be considerable room for reducing costs, so the 75M$ per
year is artificially low; revenue is around 100M.

Secondly, that revenue is artificially (but reasonably!) low because the price
is capped. But guess what? That price cap was just removed; so the actual
price may rise considerably; certainly it is not reasonable to assume that
under the terms specifically changed for the deal the revenue will stay at
just 100M a year.

Thirdly, the risk of .org evaporating is pretty absurd. The cost of a domain
is (and should be) pretty trivial compared to the value most people can
extract from it; the fact that this is a for-profit business at all is highly
questionable - it's as if your street address were owned by a third party, and
you can't have anything shipped their at your cost without the acquiescence of
a third party. I'm not sure _anybody_ is seriously buying this story of .org
becoming irrelevant to the point that people won't pay 10$ (+margin above
wholesale) for a domain. But even if you're unsure - the very fact that a
private party snapped this up is evidence to the contrary.

Fourthly, it's entirely unreasonable for ISOC to earn even a penny off of this
deal. What exactly did they do to earn the right to profit of other people's
valuable contributions? Right, nothing - they were just there are the right
time. There's no reason they should even be an exclusive party at all, let
alone one that operates with a profit motive.

Fifthly, the people involved, and the timing, stinks. If this were all above-
board, it should have been public and not have been bought out by insiders
almost immediately after those same people are involved in enabling the deal.
It's not at all transparent what those insiders were doing, but if it's not
plain old highway robbery again, perhaps some transparency would have helped.

Frankly, the whole cartel (DNS, not merely .org) should simply be dumped;
there's just no reason this is private to start with, and most certainly not
run with a profit motive; that's just asking to reasons to distort the far
more important markets with rent-seeking behavior here. If chrome+safari were
to sponsor an alternative to DNS, I'm sure the rest of the browsers would
follow; e.g. by using a different protocol (not http(s)) to disambiguate, and
by forking the existing (as of some fixed date) DNS domains. Good riddance to
those leaches.

~~~
commandersaki
Pretty sure PIR outsources their DNS management to afilas or something, and
they even negotiated a cut of the fees by 50% in a recent bid.

------
stefan_
The "devils advocate" first part misses that ISOC was already not operating
.org, all of that was outsourced to Afilias, PIR was essentially a vehicle to
pay some more graft to another set of musical chairs people that travel freely
between ISOC, ICANN, PIR and Afilias.

------
kevin_thibedeau
If they've been rolling $75M in profit for the past 15 years, why couldn't
they have built their own endowment from that? Where did that money go?

~~~
liability
It went up their noses.

------
rnhmjoj
Can someone explain to me what actually operating a registry means? I have
always assumed that it basically consists of maintaining a database replicated
across a few authoritative servers and handling WOIS information but this
can't possibly warrant $25M of yeary expenses.

~~~
jessaustin
Administration can consume any amount of money, so long as it isn't getting in
the way of the money coming in the door. Just look at universities in USA.
They're not doing anything now they weren't doing in 1980, yet tuition
inflation was 7% over for most of the period since then. Where did the money
go? They hired more assistant administrators, to justify higher salaries for
the top administrators. Also the perks are pretty nice.

~~~
einpoklum
I doubt even your numeric figure is exact; source?

Anyway, supposing that it is - how do you know that's where the money went?
And - how do you know the money went mostly to the same place in most
universities?

This sounds like a baseless generalization.

PS - I'm not from the US.

~~~
jessaustin
[https://www.kansascityfed.org/publications/research/er/artic...](https://www.kansascityfed.org/publications/research/er/articles/2019/1q19bundick-
pollard-rise-and-fall-college-tuition-inflation)

~~~
secabeen
The summary here has it all laid out:

>They find that supply factors such as wages in the education sector and state
appropriations to higher education both play important roles in explaining
changes in college tuition inflation. In contrast, they find little evidence
that demand factors such as changes in the availability of student loans have
a significant effect on college tuition.

------
Animats
The whole concept that the registry owner has an ownership interest in domains
is just wrong. Registrars have gotten uppity. Here are the current terms from
Network Solutions:

 _" Web.com expressly reserves the right to deny, cancel, terminate, suspend,
lock, or modify access to (or control of) any goods or services (including the
right to cancel or transfer any domain name registration) for any reason (as
determined by Web.com in its sole and absolute discretion."_[1]

You don't have to put up with that overreach. Compare Gandi:

 _" You are the owner of the domain name, i.e. the individual or legal person
who is declared as the owner as soon as the domain name is registered and
visible as such in the "Whois" domain name directory"_[2]

[1]
[https://assets.web.com/legal/English/TermsOfUse.pdf](https://assets.web.com/legal/English/TermsOfUse.pdf)
[2]
[https://contract.gandi.net/v5/contracts/18056/DomainNameCond...](https://contract.gandi.net/v5/contracts/18056/DomainNameConditions_FR_3.0_fr.pdf)

~~~
jtl999
Gandi has had a "moral clause" in their ToS in the past. Don't know if it's
ever been enforced or not.

------
IshKebab
> But hey: if somebody offers you 11X revenues. You’re going to take it. I
> know I would.

Not if it's only 15x profits!! And those profits are more or less guaranteed.

------
joveian
If the mission of the Internet Societies is to connect people to the Internet,
one question is why they want to connect people to the Internet. The .org sale
communicates that the reason is to extract as much money from them as
possible. What they really have a problem with is the people extracting money
paying to develop standards, so they strive to extract as much free labor as
possible from people as their money is extracted.

------
lllr_finger
If you're a .org owner for personal use and aren't happy with this change -
what are the feasible alternatives that others have settled on?

------
pge
FWIW, the economics of .org are easy to look up in the PIR 990, as of 2017.
The 990 shows ~90m in revenue with ~75m in profit - which was split 40m to
ISOC and 35m to ISOC foundation (a subsidiary of ISOC).

------
ksec
Adding an additional pieces of Information to the mix.

Donuts, Inc, was bidding for .Web in 2016, and lost to Nu Dot. Nu Dot then
sold the name to Verizon. Somehow this was unfair and they decide to sue them.
( What ? )

Had Donut got .Web, they would have floated the company and make a return of
Investment. Since they lost, they figure out their next step / solution was
.ORG. And the timeline in 2017 and 2018 seems to confirm that.

------
tekacs
Since the site seems to be struggling:
[http://archive.is/0aOfz](http://archive.is/0aOfz)

------
nikolay
I haven't yet heard the point that if .org prices go up too much, nonprofits
could abandon it and switch to .ngo, which is better anyway. Many will keep
their .orgs even if prices go up 10-fold or more, but what percentage is that
from all .orgs?

~~~
walrus01
Why should organizations be forced to change their business cards, website
address, all email addresses, letterhead, signage and such because the new
venture capitalist vulture owners of .org are a pack of shady rent seekers?

To quote Michael Bolton from Office Space:

Samir: Hmm… well why don't you just go by Mike instead of Michael?

Michael: No way. Why should I change? He's the one who sucks.

~~~
hjkhtroeiupwq
For once, .ngo is more credible. From wikipedia:

> Unlike the more prevalent .org domain, which is also managed by the Public
> Interest Registry, .ngo will require validation of the registrant's non-
> governmental status

~~~
cupofsludge
It's more credible on paper, but the common internet user is more likely to
know and trust .org domains then any of the new TLDs.

~~~
dane-pgp
Yes, and it is slightly amusing to think that an ordinary internet user is
going to make a decision about whether to trust .org more than .ngo domains by
checking Wikipedia. That's wikipedia dot org...

------
colorincorrect
dumb question, but if VCs decided that the venture is profitable under a
certain model (aka: no limits pricing), then why doesn't the domain registry
just do so themselves?

------
paul7986
TLDR: Rich get richer

ICANN owner who also owns Donuts, Inc (they own all the new TLDs .donuts, etc)
buys .org from former owner (ISOC) who is also now much richer.

------
rdlecler1
It would be nice if the author knew the difference between VC and PE.

------
samstave
TLDs are interesting, intriguing and hard.

TLDs serve as a classification structure for various aspects of human
interest, knowledge, creativity and commerce...

Where should the canonical for TLDs come from?

Should a particular interest have its own TLD, regardless of topic - how to
measure when to provide a TLD -- is it scale of interested people? is it
ideologically based?

As such, should there be a .dem and a .gop? if so, then should them be a
.socialist? .nazi? .zionist? etc?

Some of the current TLDs are silly, to me, but what is the barrier to entry
and what is the criteria for approval?

And most importantly, WHO APPROVES? Like literally - the names of the people
who actually make TLDs happen?

------
hosh
Isn't the ISOC the same group that initially sponsored the Lets Encrypt
program?

------
ajkjk
I would love for the people who did this to lose a ton of money on it.

------
spullara
Ethos Capital, as per their website and business model, is a private equity
firm, not a VC firm. Very different things. Hard to take people seriously when
they don’t know the difference.

~~~
jessaustin
Are you here to argue that PE people are somehow more ethical or better at
business than VC people? That's going to be a laugh line for anyone who has
ever been exposed to them.

~~~
spullara
Nope. Just trying to help people distinguish the two businesses. PE companies
acquire private companies and run them. VC companies invest in founders and
they run the company.

~~~
jessaustin
Since we're striving for accuracy here, usually they acquire _public_ firms
and "take them private".

~~~
QuesnayJr
There are a lot of purely private transactions now -- they've already taken
everybody private who wants to go private.

------
e2le
How often do people notice domains? I've seen many users use Google or similar
to find their desired site such as facebook without typing the URL. If it were
only an IPv6 address, would people even care?

~~~
bad_user
I notice domains. And I don't trust domains that don't end in .com, .org or a
recognizable national TLD.

Besides, the point is irrelevant.

When you build an online brand, you build it by having links distributed on
the web, to get the Google juice going, on social media, on forums, etc. Even
in business emails you add your domain there for easy reference later.

Then if you have to change the domain, all of those links will be broken.

As they say... Cool URIs don't change ;-)

[https://www.w3.org/Provider/Style/URI.html](https://www.w3.org/Provider/Style/URI.html)

~~~
e2le
Perhaps it was incorrect of me to claim that users don't notice domains. I
suppose the issue I was getting at was users don't appear to memorize the
domain and instead use Google or similar for finding the site they are looking
for.

~~~
emn13
But how does google find those domains? Link juice still matters, and those
links work via... domains.

~~~
e2le
Those links work with domains or addresses no matter if it's
[https://yourdomain.com/](https://yourdomain.com/) or
[https://[2001::1]/](https://\[2001::1\]/). Google finds those domains through
a variety of means (social media, collecting other domains from the sites they
index, manually submitted domains, etc). Google also indexes addresses.

~~~
emn13
But links aren't alive; so if somebody once linked to something you
wrote/own/built/whatever on some domain, you can't magically transfer that
link to your new site if the domain name system decides to jack up prices
until you consider moving.

And you're similarly not likely to own an ip address forever, not to mention
that if you have any doubts about the userfriendliness of domains, you don't
need to wonder about ip-addresses. Ip addresses are worse on all fronts;
leaving you back to square one: the DNS gatekeepers own your domain and merely
let you use it. Just pray they don't change the terms of that deal.

