Internet Society says opportunity to sell .org to private equity biz for $1.14bn came out of the blue. Wow, really? The price tag for one of the internet’s largest and most important domain-name registries has finally been revealed: $1.135bn. That is how much unknown private equity company Ethos Capital, funded by the investment vehicles of US billionaires, has offered the Internet Society (ISOC) to take over the .org registry; a move that …
So they want to buy up registrars and hold us all to ransom - this is domain squatting at the next level.
As the article details dabbling in other registrars, then you have to wonder which TLD's are next on their acquisition plan.
I'm also wondering what a non-profit organisation will do with $1.14bn ...
They will need a lot more than $1.14 billion. Donald J Trump spent $600 million last election; Hillary Clinton spent twice that. If you think the blowhard in chief won't spend less than that this election, I pity you. And if you think the know-nothing idiot the other party puts out there will spend less than DJT, I pity you even more.
Well, no, there was no breach of trust and no broken promise, despite the polemics that have been floating around. .org has been supporting ISOC financially for many years. Nothing new here, unless you're only just discovering that name registration has been a profit-making business since 1998.
And the "news" story you are commenting on is highly suspect:
"...the two men who subsequently agreed the secret sale of .org..."
If it was secret, why was it announced in a press release? This is just playing with words to make a non-existent point.
I'm also wondering what a non-profit organisation will do with $1.14bn ...
Make the board very happy and very wealthy.... Judging from the article all the inter-related companies involved, I would expect at some point there will be some charges levied for "fiduciary responsibility" not being used. But by then, all the perpetrators will have divvied things up, sold off assets, etc. Which makes me wonder... is Icahn involved in this?
>'m also wondering what a non-profit organisation will do with $1.14bn ...
That's easy. Let's assume that the deal's for cash. There will be fees and costs associated with the acquisition. There might even be a tax angle because the IRS might look at something of intrinsic value zero that's just been sold for a billion or so and assume that there might be a capital gains tax angle (so you'll have to hire pros to hedge against this). Then there's the bonuses for the people who bought this deal to the table, that could easily dispose of half of the take. The rest of the new found prosperity can be sunk into leased premium premises, staffing, salaries and so on. They'll be broke in a year or two, ready to sell more stuff they don't really own (I thought the ownership was in trust -- not a legal trust but community property that they managed for us......but then everyone in the UK has had a lot of experience with public property being sold off for private ownership, just ask Sid.....).
So a couple guys manage to take over administration of the .org domain registry, which most people who have .org domains probably didn't even pay attention to. Then they convert this domain for non-profits into a saleable asset and sell it, without any public scrutiny.
This looks a lot like a couple rather corrupt/enterprising guys finding a way to line their pockets, now that they are sitting on this money pile. In the meantime, the owners of the actual domains are going to get hit with a bill that will probably be significantly larger than what they used to pay.
If my pocket calculator is correct, somebody just offered to pay US$ 113.5 for every single registrant of a .org domain. Now I would assume that those venture capitalists are not doing this for philanthropy, so the prices can be expected to go up rather fast. Say some hundred $ per year per registrant in the near future (assuming they'll have to make up for some attrition rate). Those investors clearly bet on the fact that the domain owners do not want to move their websites - its a pain to move your user base to a new address!
Quite disgusting. But with a billion dollar dangling in front of their eyes, can you really blame them for turning soft? It'll be free money for EveryBody for Life! (If you are part of the team.)
This.
Shady = serious understatement.
ICANN/ISOC => some regulatory body should start investigating their boards, follow the money, check if it clears with statutes etc (which it won't) and hit them really, really hard. If only I knew who?
EU, Asia, Japan, maybe some regional registries if they are independent enough? RIPE did challenge ICANN over WHOIS privacy controversy, if I'm not mistaken, so who knows. Probably no US entity will do anything under this administration ...
It has obviously been meticulously planned, and its success is due to the good ol' buddy network.
Now they're going to cash in, pretending all the while that they are innocent of all wrongdoing.
And, since this is the age where nobody pays attention to acts but only to words, they're likely to get away with it entirely.
Where are those pesky kids when you need them ?
Rubbish. You are ignoring the facts (that the money will go into an endowment fund to continue paying for exactly what the .org registry has been paying for the last 15 years.) And you are libelling people who as far as you actually know have done nothing illegal and taken no personal advantage. If I was your lawyer, I'd be advising you to shut up.
Pre-sale, all the technical functions of running the registry is outsourced - who is drawing the $5m in salaries, and what are their job responsibilities. Sounds like grift.
Current net income is $30m, and they have sold it for $1.1bn - clearly the plan for the purchasers is to make significantly more money than $30m a year.
ISOC would have $1.1bn in funds to invest - how much of that will disappear in to "consulting" companies I wonder.
Nah, paying a earnings multiple of 36x is entirely normal for a free market. Luckily Ethos is a private venture. I'm a bit curious why $1.14bn given it doesn't come close to any normal valuation based on assets, earnings multiples etc. I suspect the answer will be because the purchase price will be converted to debt for the new non-non-profit PIR, so that becomes a useful tax writedown.
ISOC would have $1.1bn in funds to invest - how much of that will disappear in to "consulting" companies I wonder.
After a comprehensive and thorough market review, ISOC has decided to invest the funds with Abry Partners LLC..
Yup. Like Kieren's previous articles where $60/yr is perfectly reasonable as annual rent for a database record.. Especially as the cost of providing the tech parts has been halved.
But the multiplier is really relevant at transaction time, where it's excessive even by unicorn/bubble standards. But that's also back to the legalalities. ISOC can probably easily justify it as it's a large pile of cash, and Ethos only has to justify it to it's own investors/execs.
I still think Abry will also offload a lot of the Donuts TLDs to Ethos, and revenues from .org will cover the losses that are probably being made on those.
Any way you look at it though, the deal still stinks given all the insiders involved.
>Especially as the cost of providing the tech parts has been halved.
But have they?...
Given it is the same small circle of names that keep popping up at each of the company's involved. I wonder whether the price that was originally paid to Afilias contained a significant amount of 'padding'...
So the reported cost reduction only arises because the game has changed...
A question has to be when and thus if the ISOC actually see the $1.14bn, wouldn't be surprised if most of it is in the form of IOU's or some other form that allows for future finance shenanigans (think of high grossing films which have failed to make a tax profit, yet all the parties are happy except those who were promised a share of the profits...).
Given it is the same small circle of names that keep popping up at each of the company's involved. I wonder whether the price that was originally paid to Afilias contained a significant amount of 'padding'...
I wish I could find a copy of the bid I did some work on. Afilias won, we didn't. From memory though, the non-profit nature was stressed. Challenge was fairly normal for long-term contracts, ie trying to forecast costs over the contract term. From memory, the technical element I did was basically a network of anycast servers with collocation & capacity. I can't remember if there was any revenue sharing clause, or if that's something Afilias offered to win the deal. Benchmarking clauses and sometimes 'open book' accounting can be common in RFPs. It's certainly something I'd expect at renewal time though, ie looking at price movements for things like servers, collo, capacity etc. So I'm not suprised the costs fell.
From the insiders though, I think the concern is as Kieren says, whether this is something the insiders had been developing within their roles at ICANN/ISOC with a view to cashing out big time.
A question has to be when and thus if the ISOC actually see the $1.14bn, wouldn't be surprised if most of it is in the form of IOU's or some other form that allows for future finance shenanigans
On paper, Ethos doesn't have $1.14bn, which is one of those due diligence challenges. It's too new to have filed accounts and looks like it's been created to do this deal. I suspect the offer won't be a lump sum, but then some of the names mentioned could cover that. At Cerf's 'reasonable' $60/yr though, that's $600m/yr with very little in the way of costs making an installment plan possible. Main shenanigan I'd expect is dumping the $1.14 debt into the new entity, probably along with debt from Donut's TLDs. That would take care of tax, but if the company is kept private, we may not see just how profitable the entity is.
The $1.14bn would no doubt be dumped into ISOC's foundation, and used to fund their jollies and outreach activities. If they're all 501(c)(3), there'll be some transparency at least.
Would possibly be cheaper (and definitely more satisfying) for each nonprofit to formally register their trademark, then sue anyone and everyone that tries to register <trademark>.org. Basically remove the domain name entirely from the Ethos' ownership unless they want a nice trademark IP battle.
"ISOC would have $1.1bn in funds to invest - how much of that will disappear in to "consulting" companies I wonder."
Take a look at what happened in New Zealand in 2000/2001, because the parallels are striking.
I'm pretty sure that if you dig a little deeper you'll start finding the same players are involved too.
> simply do not renew it
Yeah, with the added benefit that all emails sent to you will henceforth go to /dev/nul.
Even better, some smart guy might register the now available old domain and take over your operations and donations, since he now (legally!) receives all your visitors and emails...
Suggestions like "just change domain" only work for private vanity domains. For anything bigger, the domain is your facade, your address. You can't change it lest you lose all contact with everyone supposed to somehow interact with you (and if you don't need to interact with anybody, you don't really need an organization or a domain, do you).
MUST... MAKE.... PROFIT.... AT.... EXTORTIONATE....LEVELS.
F**K....THE....LITTLE....PEOPLE....THEY....DON'T....MATTER.
I currently have a .com and a .org and I pay approx £25 each every 2 years for them. I guess we now wait and see just how much they are going to gouge for the .org domains. I am getting very sick of profiteering capitalism and the corruption that seems to be everywhere these days.
"The explanation for that lack of notice and consultation – and the core argument for the sale itself – has been built around a huge lump sum that ISOC will receive for handing over its rights to the registry; something that Sullivan has said will be put into an endowment and used to fund the organization’s activities in perpetuity."
If they just did it for the money, Shirley putting it up for auction would make more sense? I'll bet that an Alphabet company (for example) would pay a LOT more than 1.135bn for it, given the opportunity.
Shady doesn't even begin to describe the pending sale, IMO.
With $1B+ and some time they can easily put a few shell companies between the source of the payoff and ones that will receive it. It will be very difficult to prove that some future venture of theirs was bought for $100M just because they set up this deal.
Transparency and fair dealing rules get in the way of legitimate organizations. Even so, it's important to remember that they exist for good reason.
where a few guys and their buddies can monetize the common good of the internet names to line their pockets? Sorry, they'll only use the money to "endow" themselves for perpetuity. But based on their actions, I assume they are already endowed with quite some mighty cojones. Wasn't the internet supposed to be shared space of rainbows and unicorns? Well, they certainly found the pot of gold at the end of the rainbow and they will not share!
I guess this is a sign that the "trust" based organization of the internet infrastructure is coming to an end. The first to break the trust can, of course, cash in mightily. Get ready for the race to the lowest common moral denominator before the internet registry is moved to a more regulated foundation.
Any bets about how many of those non-profit do-gooders at ISOC and PIR (and friends ...) will end up with significantly better pay checks within the next few years as the billion trickles down from the pockets of .org registrants to those of flexible morals? And nobody should get hurt if a few bucks are divided by 10 million, right? Oh, its a billion buck - those don't divide so neatly.
In the future you'll just have to bring some money to the table if you want to play on the internet. there is bigger fish out there and it wants to be fed. Straight from the revolutionary ideals: you gotta pay your tax if you want you voice to count.
I just hope the Register (or some other publication) will follow this up with a report in some 5-10 years time, telling us where that billion went. We should have some names to hate when/if the profiteering took its course. Or maybe I am mistaken and all that money will flow back into rainbows and unicorns. Free rainbows and unicorns for everybody, payed by those rich and generous .org registrants. Check your pipe to find that unicorn, it will lead you straight to the end of the rainbow...
Has been going on forever in the offline world. I know of multiple areas in towns designated "for the community" in perpetuity and funds for it (which were not at risk or run out at any time) still somehow sold for millions to other people, by the council or existing trusties... who walked with the sales cash.
Yes, this happened where I live just last year. A property, including a historically important mansion and land that was used as a park, and an endowment fund to keep everything operating and maintained, was bequeathed to the city by a rich guy who died. The terms of the will stated that the property may only be used for that purpose in perpetuity.
The city just successfully completed a decade-long legal effort to void the "in perpetuity" part. Now, they've sold it to a developer who razed the whole thing in order to build some new eyesore. The whole thing is disgusting, but really brings home the fact that any claim that something is "in perpetuity" is bullshit.
The same thing happened in Philadelphia, USA, when real-estate investors and their lawyers got a pathetic neighboring Montgomery County CP Judge to break the will of the founder-capitalizer of the world-famous (amoung art historians and collectors) Barnes Foundation. (Impressionist and post-impressionist artists.)
Now the entire collection is in central Philadelphia, not in Lower Merion Township, where Barnes intended it to remain.
I doubt that judge ran out of campaign funds. (We have elected judges in Pennsylvania.)
"a huge lump sum that ISOC will receive for handing over its rights to the registry; something that Sullivan has said will be put into an endowment and used to fund the organization’s activities in perpetuity."
Yeah, whatever. ISOC sold the internet out in order to get a huge payday. It doesn't matter what the hell they do with the money -- ISOC is not an organization that operates in the best interest of the internet. I'd be perfectly happy if they stopped operating tomorrow, so being funded "in perpetuity" means nothing to me.
ISOC is a scumbag operation.
Where people actually believe "financial engineering" produces a real output; where a pill that costs 1 dollar in Egypt (for HepC) costs 1000 each ("but you don't actually pay that, your insurance company pays that". Yeah, and where does the insurance company get its money? Yeah, I thought so); where bond ratings agencies are paid by the grifters wanting bonds rated (this accumulation of steaming worthless paper is AAA if you want my business again in the future); ad nauseum.
Only suckers produce anything.
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