back to article Would-be .org gobbler Ethos Capital promises to keep prices down in last-ditch effort to keep $1.1bn deal alive

The little-known private equity firm trying to buy the .org internet registry for $1.1bn has made a last-ditch effort to keep the deal alive, promising a series of commitments over pricing and control. Ethos Capital has announced “legally-binding and enforceable measures,” over the sale – even as DNS overseer ICANN asks more …

  1. Anonymous Coward
    Anonymous Coward

    A Very Bad Smell

    The whole thing has a very bad smell about it,

    1. AMBxx Silver badge
      Boffin

      Re: A Very Bad Smell

      Lack of proper data isn't helping.

      If they're paying $1.1bn, they're going to want to make a decent return on their investment. If we assume a basic return of 10% (not great), they'll want to make a profit of $110m per year.

      How does that compare to what the is currently paid to register .org (even if we ignore costs of running the registry).

  2. TrevorH

    10% per year for 8 years means that they "only" double the price (plus a bit more).

    1. katrinab Silver badge
      Coat

      115% increase over 8 years, plus unlimited increases after that.

      1. teknopaul Silver badge

        10% is ridiculous and totally unjustified. Prices should drop.

        Interested to know what percentage they are paying on the load they take out to buy .org.

        I doubt they really have any capital.

      2. Michael Wojcik Silver badge

        Indeed. What business wouldn't like to more than double its prices over the next 8 years? This isn't a sop to the objectors; it's a promise to gouge the customers.

        The Stewardship Council - which obviously is just a proxy for the PIR board - and the promise to give $10M to their friends are similarly bogus.

    2. MJB7 Silver badge

      "Only" double the price

      If we allow for 2% inflation, they are promising not to increase the price more than 85% in real terms in the first eight years. 2% inflation in the IT business is very VERY generous.

      I think this counts as "nice work if you can get it".

      1. Yes Me Silver badge
        Mushroom

        "nice work if you can get it"

        Indeed. So blame the people who privatised the top level domains in the first place. They sat in the Old Executive Office Building and other large buildings in Washington DC during the Clinton Administration. Oh, and you'll notice that they kept .gov and .mil for themselves; all the rest went to private operators in 1998, including .org of course. Despite all the artificial fuss that's blown up about .org, it's been operated on a commercial basis since then; in recent years PIR has simply been handing the surplus over to a non-profit.

        Don't like it? Go back to 1998 and change it, then.

  3. Smooth Newt Silver badge
    Meh

    Doubling the price?

    Ethos has promised that it will not increase the price of .org domains by more than 10 per cent per year, for eight years, and that any price increases won’t be front-loaded.

    Is my maths right? If they increase the price by 10% of the immediately preceding year's price for eight years, at the end they are charging more than double the original price? That sounds a nice business to be in.

    start price 1

    first year 1.1

    second year 1.21

    third year 1.331

    fourth year 1.4641

    fifth year 1.61051

    sixth year 1.77156

    seventh year 1.94872

    eighth year 2.14359

    1. Ordinary Donkey

      Re: Doubling the price?

      Ninth year unlimited

      Eight years is not a long time. All this does is delay their payout.

      1. Yes Me Silver badge

        Re: Doubling the price?

        It's a free market. Organisations that don't like compound interest can move to a different domain whose prices don't track inflation, if they can find one. But in fact, that tells you that it's against the registrar's own interests to price itself out of the market. They won't. Like anything else, they will set a price that people are prepared to pay.

        1. eldakka Silver badge

          Re: Doubling the price?

          Since inflation is closer to 2% than 10%, thus leading to a potential pricing increase of 4-5 times inflation, how can this be considered as tracking with inflation?

        2. IGotOut Silver badge

          Re: Doubling the price?

          "It's a free market"

          I think you don't have fucking clue if the definition of what a free market is.

          If it was a free market, I would be free to purchase it from a different supplier.

          This is what is known as a monopoly. Look it up.

        3. Anonymous Coward
          Anonymous Coward

          Re: Doubling the price?

          Switching domains isn't cheap when you consider the work that goes into them, you've also got the brand and fact these charities in my cases could potentially be victim to fraud if someone else uses the domain.

          They have them over a barrel.. screwed over if you do, potentially screwed over worse if you don't with the public losing confidence because your old domain is being used for malicious intent. It's not like this lot will keep that domain unregistered unless you pay them..

    2. katrinab Silver badge

      Re: Doubling the price?

      "No more than" means you round down to the nearest cent, not up, but other than that, yes you maths is correct.

      1. Smooth Newt Silver badge
        Happy

        Re: Doubling the price?

        "No more than" means you round down to the nearest cent, not up, but other than that, yes you maths is correct.

        Thanks.

      2. KarMann
        Headmaster

        Re: Doubling the price?

        If it were starting from $1.00, your point would be valid. But since this is to general pricing, rounding down any non-specific amount would be a mistake. If it were $10.00 to start, bam, there's another digit in your results. And the possible amounts that aren't integer powers of ten mean there's no allowing for all the possibilities, other than by taking the full decimal representation, as Smooth Newt almost did. (They did stop at five decimal places, which only changes things for years 6-8.)

  4. Anonymous Coward
    Anonymous Coward

    last-ditch effort

    in an ideal world, all the fuckers behind this grab, including all those in the supervisory institutions that looked away (bribed, directly or indirectly to look away), should be punished. In a real world... nothing.

  5. Mage Silver badge
    Flame

    Opens window

    Ah, the rural scent of the muck spreader.

    Less stink than this deal. The concessions are feeble and dishonestly worded PR.

    1. Michael Wojcik Silver badge

      Re: Opens window

      Oh, I wouldn't call the concessions feeble. I think they're pretty strong. It's just that they're concessions the objectors are being asked to make to Ethos, not the other way around.

      "Look, if you approve this, we'll give ourselves the right to double the price over eight years, give the PIR board direct control over executive decisions, and give away $10M to whomever we like. Sound good?"

  6. Aaiieeee
    FAIL

    The very fact this is so secretive should mean auto-apply the brakes subject to full disclosure.

    Secrecy = somebody is making a killing = this is not in the public interest.

  7. Schultz Silver badge
    FAIL

    None of the 'concessions' address the real problem:

    - Nobody, apart from those who would profiteer, sees any benefit in the deal. That circle of nobodies is quite large, after all it is called the World Wide Web.

    - Nobody apart from those profiteering trusts the players involved. Carefully worded statements from corporate lawyers about "legally-binding and enforceable measures" cannot repair this trust issue. We know those lawyers are smart. And we know who pays them.

    - Nobody understands why a billion-dollar investment vehicle should control the .org domains. It's not part of the"I built that" capitalism where the rewards go to those who painstakingly built a business. It feels more like a "cash in while we can" capitalism. All aspects of the domain name system resemble a common good: everybody needs it and relies on it. No individual can duplicate or replace it. It's value stems from the public consensus that we need one unified system, open to all. None of this comes from a person's or companies' hard work. Why should some clowns get to cash in on that?

    The $10m “community enablement fund” just makes me laugh. Who are they to take my registration fees and hand them off to whatever fund? Keep the fees as low as possible, allow the non-profits to do they work with minimum overhead -- that's the job of the .org registry. No words can hide the fundamental nature of their proposed deal: cash in while they can. Despicable.

    1. HildyJ Silver badge
      Megaphone

      Re: None of the 'concessions' address the real problem:

      Amen.

      But it's not just .org, it's any domain (see the ElReg post today on Columbia's .co).

      Domains should be managed by a non-profit company which commits (eternally) to cost based pricing.

      1. Yes Me Silver badge

        Re: None of the 'concessions' address the real problem:

        "Domains should be managed by a non-profit company."

        You might think that. I might think that. But that door closed in 1998 and we have to live with the consequences, which include registries being run as competitive businesses.

        1. FeepingCreature

          Re: None of the 'concessions' address the real problem:

          Public outcry is a way to deal with the consequences. Seems to be working.

    2. Michael Wojcik Silver badge

      Re: None of the 'concessions' address the real problem:

      Nobody, apart from those who would profiteer [sic], sees any benefit in the deal.

      I don't believe that's true. While I think this deal is complete crap, I believe that at least some of the ISOC board members are sincere in their belief that it's a good idea. As I've noted in other threads about this, John Levine defended the decision on RISKS, and I don't believe he'll profit from it.

      It's possible for well-meaning people to be misled. Happens all the time, in fact.

  8. oiseau Silver badge
    Flame

    Nothing but a shameless scam

    WTF?

    Ethos Capital

    Even if you do not know what an oxymoron is, you just know this stinks to high heaven.

    ... Ethos Capital will not be the actual owner of .org ...

    ... it will be another unknown company ...

    ... seemingly owned by another company ...

    ... unknown who the owners of either company are ...

    ... identified a third Delaware company ...

    So, let's see:

    1. Lack of transparency --> check

    2. Secrecy --> check

    3. Repeted refusals to disclose basic facts --> check

    4. Multiple shell companies in an offshore haven --> check

    5. Unknown money/people behind all this --> check

    6. Former ICANN Ceo and ex-employees involved --> check

    It's about time a definite stop is put to this.

    And then, once the smoke clears out, a thorough investigation conducted to get to the bottom of how this all came to be.

    That done, hold to task all those responsible for it.

    There is far too much at play here to do otherwise.

    It may not seem so to many but the future and health of the World Wide Web is actually at stake here.

    O.

  9. Alien Doctor 1.1
    FAIL

    Grrrreattttt!

    Oh wow, 10million for community projects! What does that buy these days, 50 yards of hs2? Or am I being optimistic?

    1. EveryTime

      Re: Grrrreattttt!

      $10M for 'community projects' is a barely-masked bribe. We don't know who it is to, but we can be pretty certain that a part of it is already secretly ear-marked.

      If they are as experienced as those making political deals, the ear-marked funds will be only a fraction of a fraction, so that it's not quite so obvious how the support was bought.

      1. Smooth Newt Silver badge
        Happy

        Re: Grrrreattttt!

        $10M for 'community projects' is a barely-masked bribe. We don't know who it is to, but we can be pretty certain that a part of it is already secretly ear-marked.

        $10 million is bugger all in comparison to the $1.1 billion that they are paying for the registry, and is not a meaningful concession, just a cuddly PR exercise. It means, in effect, they are "giving to the community" a measly 1% of the money they are paying upfront, and that upfront money is much less than they expect to take in revenue.

    2. Mike Moyle Silver badge

      Re: Grrrreattttt!

      "Oh wow, 10million for community projects!"

      And let's not forget; that $10 mil is deductible off of for-profit Ethos's taxes. (It's small, but every little bit helps, dontchaknow!)

  10. AndreRademan

    Start investigating who pushed hard for this deal

    This transaction makes ZERO financial and other sense! How much will ISOC earn if prices only increased by at 5% for the next 5, 10, 20, 50 etc years? Why sell something that gives annuity income, forever?

    Also, no matter what short term assurances they are giving, the message from the non-profit community is LOUD and VERY CLEAR, the community does NOT want to be owned by a venture capital company.

    Will ICAN uphold assurances given in the past, now that ISOC has shown the current "trustees" can't be trusted to make decisions on behalf of the community. How tone deaf do you have to be to negotiate a proposed deal in secret, a proposed deal that you knew would be HIGHLY controversial. From https://savedotorg.org: When ISOC originally proposed transferring management of .ORG to PIR in 2002, ISOC’s then President and CEO Lynn St. Amour promised that .ORG would continue to be driven by the NGO community—in her words, PIR would “draw upon the resources of ISOC’s extended global network to drive policy and management.” As long-time members of that global network, we insist that you keep that promise.

    So that is the next step IMHO: start investigating who pushed hard for this deal, and ask them to resign. They unwittingly (or wittingly) did not act in the best interest of the community, completely misread the community, did not uphold past assurances, kept everything secret while fully aware the deal was highly controversial and unpopular.

  11. fidodogbreath Silver badge
    Terminator

    It also appears that Ethos Capital is going to extraordinary length to shield the name of one individual.

    He who must not be named?

    1. Michael Wojcik Silver badge

      I hear if you stand before a mirror and say "Fadi Chehade" three times, he appears and steals your domain registry.

  12. Number6

    Here's me thinking it's about time to pay for as many years up-front for my .org that I can. At least I assume that insulates me for the duration and that they can't suddenly decide to add a surcharge.

  13. Jamie Jones Silver badge

    Bottom line, if the concessions are ever fair, it wouldn't be worth them buying it - and that's how it should be.

    As has already been said, this is not something has ever been run for profit, and that shouldn't change.

    Personally, I think ICANN or the FTC should just take .org back and invite other companies to run it as a non profit.. Though, I wouldn't hold my breath there - the only decent people in the FTC seem powerless, and all Ethos has to do is start wearing MAGA hats, and they'll be fine.

  14. Yes Me Silver badge
    Thumb Down

    Tendentious again, Kieren

    What is "last-ditch" about the new undertaking about pricing? The only concrete complaint about the bid was that the new owners would be able to raise prices (as could, of course, the previous owners). So Ethos Capital is responding constructively to public criticism.

    As for the shell companies, yes, sadly, that's what American capitalism has come to. Blame the Clinton Administration for privatising the registry business. Don't blame businesses for doing what businesses do.

    1. FeepingCreature

      Re: Tendentious again, Kieren

      "Don't blame businesses" Why not, if it works? Blame is also part of the environment in which businesses are expected to operate. The free market includes private individuals freely casting blame on bad actors. There is no moral imperative in the free market to not assign blame.

      1. Michael Wojcik Silver badge

        Re: Tendentious again, Kieren

        Hey, don't blame people for making idiotic arguments online. That's what people do.

    2. Michael Wojcik Silver badge

      Re: Tendentious again, Kieren

      What precisely is a "concrete complaint"? One that Yes Me thinks is valid?

      And how is promising to restrict price increases to a mere 215% over 8 years "constructive"? Well, it's constructive for Ethos, I suppose.

  15. RLWatkins

    Just like politicians...

    ... people in the M&A business will look you right in the eye and lie to you, knowing that once it's over with there will be nothing you can do about it.

  16. Jason B

    "Who is Number One?"

    "You are Number Six."

    The mystery and redirection behind the identity of the unknown board member—and actual owner, who may or may not be the same—has all the markings (and clarity) of an episode of The Prisoner.

    Hopefully, the end result won't be as confusing as the conclusion to that series …

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