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.
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.
I appreciate your excellent write up. When I read the allegations in the original article I kinda wanted more detail. You break it down very well with great attention to detail.
I'd like to place this here for those who only read comments:
.org registry rights belong to a non-profit - the rights were sold to a private equity group - somewhere between 50% and 90% below market rate. It was based on self dealing of the people given stewardship of the non-profit that manages .org
Basically, this is privatization Russian style. Not good. Even if you like privatization, no-bid stuff is just wrong.
I don’t know if it’s fair to say they could have easily doubled but your point about not acting like investors is fair. In contrast, AAA, USAA, and AARP have chosen to leverage their assets to enter new lines of business while Isoc simply sold their’s off. I am not familiar with what governance issues might be in play here but the simpleton like me would ask, what alternatives did ISOC evaluate before taking a buyout offer from a insider-linked entity that ironically calls itself “ethos”...
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...
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.
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 .
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.
Ah, thanks -- you're right, the second is prohibited; corrected. The first seems fine per 2.10(c) as long as the registrant agrees on first registration that renewals will be expensive.
"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.
The US has done a fantastic job of legalizing its bribes. It's not bribery! It's lobbying! It's not corruption, it just happens to be that the guy in charge of the agency for co-ordinating economic policy is also the head of Goldman Sachs. It's not corruption, because we made it legal and so it can't be corruption, because we've redefined corruption. It's great!
This is one of the reasons why people around the world are a little sceptical of American exceptionalism.
I can't believe ANY possible explanation (not even incompetency in this case) except direct or indirect bribery.
Really sad to see more and more of theses cases where Non-Profits sell out (e.g. OpenAI), I wonder whether this is a byproduct of people sozialized in the age of hyper-capitalism and consumerism...
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.
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.
Why would anywhere else have legal power to? .org doesn't sell domains directly to consumers, and ICANN is intentionally centralized, up until a few years ago being owned by the US government. US-owned US-created top-level domains are hardly an international affair.
You could argue that DNS is broken, and that ICANN is bad, but there's no legal argument for .org being subject to foreign governments.
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.
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.
This depends on the TLD (top level domain) in question.
For .com, .net, .org it has historically not been possible to price discriminate like this.
For the "new TLDs" (the explosion of new extensions we have seen in recent years), the registry contract is different and they are indeed allowed to do this. They call it "premium pricing".
Part of the big outcry about the recent changes to .org is that it brings it closer to the "new TLD" model, which disfavors the registrant.
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?
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..
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).
I believe the problem is the lack of protocols implemented in browsers. It's needlessly fragile to have a single route to the data.
"Web pages only last about 100 days on average"[1]
http was nice, we gave it a good spin, it was certainly close enough for the cigar but in all honesty... where you have 100 days to find the content you want to consume it is not even a reasonable approach. I bet a lot of it is still available some place but whoever archived it legally may not distribute it without permission.
I really don't care if TOR, IPFS, freenet or zeronet work out of the box. If it means access to more content its great. I don't even know how to use gopher atm.
Good stuff is happening[2] but where they apparently chose to make it an extension is pretty lame.
also..
If the user types "salvation army" into the browser we know what they want. Selling the rights to deny access is not what we need.
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.
> 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).
.onion isn't a direct competitor for DNS. It does some of the things DNS does (e.g. a consistent identifier that sticks even if your IP address changes), and even does some things DNS doesn't (e.g. encrypted transport), but the names aren't human-readable. And it compromises the security if you try to pretend that they are by generating pretty keys, because the random junk on the end there is important.
Namecoin, on the other hand, is a direct competitor for DNS.
However, DNS itself is pretty well federated. You're at the mercy of the TLD operator, but that only means you need to be careful to choose a trustworthy one. On the other hand, if you had asked last year which of the TLD operators would be the least likely to screw you over, a lot of people would have said .org, so... maybe there is something to this whole cryptographic trust thing.
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.
[+] [-] lancewiggs|6 years ago|reply
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|6 years ago|reply
[+] [-] 4ntonius8lock|6 years ago|reply
I'd like to place this here for those who only read comments:
.org registry rights belong to a non-profit - the rights were sold to a private equity group - somewhere between 50% and 90% below market rate. It was based on self dealing of the people given stewardship of the non-profit that manages .org
Basically, this is privatization Russian style. Not good. Even if you like privatization, no-bid stuff is just wrong.
Want to help support the democratic institutions which hopefully won't fail us? Look here: https://drewdevault.com/2019/11/29/dotorg.html
[+] [-] mattrp|6 years ago|reply
[+] [-] LegitShady|6 years ago|reply
[+] [-] deepaksurti|6 years ago|reply
OT. Isn't 4% also the rule of early retirement, that is if you can live of 4% of your savings you can retire?
Can anyone clarify if this rule applies for both individual and corporate? If so, how would be even more interesting to know?
[+] [-] xwdv|6 years ago|reply
[deleted]
[+] [-] forrestthewoods|6 years ago|reply
[+] [-] annoyingnoob|6 years ago|reply
[+] [-] metasj|6 years ago|reply
"Save .org": https://news.ycombinator.com/item?id=21611677
"Take action to save .org": https://news.ycombinator.com/item?id=21664582
"Why I Voted to Sell .org": 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
[+] [-] nathcd|6 years ago|reply
[+] [-] shkkmo|6 years ago|reply
> 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...
[+] [-] mortenjorck|6 years ago|reply
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|6 years ago|reply
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|6 years ago|reply
> 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-...
[+] [-] cannonedhamster|6 years ago|reply
[+] [-] metasj|6 years ago|reply
[+] [-] slantedview|6 years ago|reply
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|6 years ago|reply
[+] [-] romaaeterna|6 years ago|reply
[+] [-] TheRealPomax|6 years ago|reply
[+] [-] Traster|6 years ago|reply
This is one of the reasons why people around the world are a little sceptical of American exceptionalism.
[+] [-] jpdus|6 years ago|reply
I can't believe ANY possible explanation (not even incompetency in this case) except direct or indirect bribery.
Really sad to see more and more of theses cases where Non-Profits sell out (e.g. OpenAI), I wonder whether this is a byproduct of people sozialized in the age of hyper-capitalism and consumerism...
[+] [-] leibnitz27|6 years ago|reply
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|6 years ago|reply
[+] [-] enjoyyourlife|6 years ago|reply
[+] [-] quantified|6 years ago|reply
If they invest with GS, see how much is left after 5-7 years.
[+] [-] tinus_hn|6 years ago|reply
[+] [-] C1sc0cat|6 years ago|reply
[+] [-] unknown|6 years ago|reply
[deleted]
[+] [-] TomMckenny|6 years ago|reply
[+] [-] freddie_mercury|6 years ago|reply
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.
[+] [-] kick|6 years ago|reply
You could argue that DNS is broken, and that ICANN is bad, but there's no legal argument for .org being subject to foreign governments.
[+] [-] scarejunba|6 years ago|reply
[+] [-] LegitGandalf|6 years ago|reply
[+] [-] philipn|6 years ago|reply
E.g. can they ask google.com for $1B to renew and mygrandmascookiecompany.com for $20 to renew?
[+] [-] agwa|6 years ago|reply
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-...
[+] [-] joedavison|6 years ago|reply
For .com, .net, .org it has historically not been possible to price discriminate like this.
For the "new TLDs" (the explosion of new extensions we have seen in recent years), the registry contract is different and they are indeed allowed to do this. They call it "premium pricing".
Part of the big outcry about the recent changes to .org is that it brings it closer to the "new TLD" model, which disfavors the registrant.
[+] [-] jijji|6 years ago|reply
[+] [-] glitcher|6 years ago|reply
I mean, I'm not trying to imply it should be attributed to malice, but are they asleep at the wheel or what?
[+] [-] syshum|6 years ago|reply
[+] [-] dependenttypes|6 years ago|reply
[+] [-] kingludite|6 years ago|reply
"Web pages only last about 100 days on average"[1]
http was nice, we gave it a good spin, it was certainly close enough for the cigar but in all honesty... where you have 100 days to find the content you want to consume it is not even a reasonable approach. I bet a lot of it is still available some place but whoever archived it legally may not distribute it without permission.
I really don't care if TOR, IPFS, freenet or zeronet work out of the box. If it means access to more content its great. I don't even know how to use gopher atm.
Good stuff is happening[2] but where they apparently chose to make it an extension is pretty lame.
also..
If the user types "salvation army" into the browser we know what they want. Selling the rights to deny access is not what we need.
[1] - http://blog.archive.org/2015/02/11/locking-the-web-open-a-ca...
[2] - https://blog.ipfs.io/2019-10-08-ipfs-browsers-update/
[+] [-] matheusmoreira|6 years ago|reply
[+] [-] zrm|6 years ago|reply
.onion isn't a direct competitor for DNS. It does some of the things DNS does (e.g. a consistent identifier that sticks even if your IP address changes), and even does some things DNS doesn't (e.g. encrypted transport), but the names aren't human-readable. And it compromises the security if you try to pretend that they are by generating pretty keys, because the random junk on the end there is important.
Namecoin, on the other hand, is a direct competitor for DNS.
However, DNS itself is pretty well federated. You're at the mercy of the TLD operator, but that only means you need to be careful to choose a trustworthy one. On the other hand, if you had asked last year which of the TLD operators would be the least likely to screw you over, a lot of people would have said .org, so... maybe there is something to this whole cryptographic trust thing.
[+] [-] jacquesm|6 years ago|reply
[+] [-] Accujack|6 years ago|reply
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.