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<div dir="ltr" data-setdir="false">Dear Bill,</div><div dir="ltr" data-setdir="false"><br></div><div dir="ltr" data-setdir="false">While comparing the revenue and income project of next 10 years, also add the yearly growth of domain registrations. <br></div><div dir="ltr" data-setdir="false">Secondly, also note that....."<span>PIR generated $101 million in revenue in 2018 and contributed nearly $50
million to Internet Society. It contributed $74 million to ISOC in
2017.</span>" "PIR <span>paid over $33 millions to Afilias (in 2014)" to run the Registry Operations. Comparing with <span>donuts.domains, if .Org operations are shifted from Afilias, the expense will reduce a lot. <br></span></span></div><div dir="ltr" data-setdir="false"><span><span><br></span></span></div><div dir="ltr" data-setdir="false"><span><div><span><span>Think about 2-3 years ahead, if this investor exit and sells
it to new bidder for $2b or $3b, should they calculate for setting up
new prices for return of investment?<br></span></span></div></span><span></span></div><div dir="ltr" data-setdir="false"><span><span><br></span></span></div><div dir="ltr" data-setdir="false"><span><span>However, question is not how the .Org is profitable for perceptive buyers, either it is ethos and any other future bidder, the question is the Public Interest vs Commercial Interest (or Non Public Interest). <br></span></span></div><div dir="ltr" data-setdir="false"><span><span><br></span></span></div><div dir="ltr" data-setdir="false"><span><span><br></span></span></div><div dir="ltr" data-setdir="false"><span><span>Regards</span></span><br></div><div dir="ltr" data-setdir="false"><br></div><div dir="ltr" data-setdir="false">Imran Ahmed Shah</div><div dir="ltr" data-setdir="false"><br></div></div><div id="ydpe9278200yahoo_quoted_5476278818" class="ydpe9278200yahoo_quoted">
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On Monday, 2 December 2019, 03:49:28 GMT+5, Bill Woodcock <woody@pch.net> wrote:
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<div><div id="ydpe9278200yiv1387642728"><div><div class="ydpe9278200yiv1387642728">Forwarded from another list:<br class="ydpe9278200yiv1387642728"><div class="ydpe9278200yiv1387642728"><br class="ydpe9278200yiv1387642728"><div class="ydpe9278200yiv1387642728"><span style="font-family:-webkit-system-font, Helvetica, sans-serif;" class="ydpe9278200yiv1387642728"><b class="ydpe9278200yiv1387642728">From: </b></span><span style="font-family:-webkit-system-font, Helvetica, sans-serif;" class="ydpe9278200yiv1387642728">Bill Woodcock <<a href="mailto:woody@pch.net" class="ydpe9278200yiv1387642728" rel="nofollow" target="_blank">woody@pch.net</a>></span></div><div style="margin-top:0px;margin-right:0px;margin-bottom:0px;margin-left:0px;" class="ydpe9278200yiv1387642728"><span style="font-family:-webkit-system-font, Helvetica, sans-serif;" class="ydpe9278200yiv1387642728"><b class="ydpe9278200yiv1387642728">Date: </b></span><span style="font-family:-webkit-system-font, Helvetica, sans-serif;" class="ydpe9278200yiv1387642728">December 1, 2019 at 10:01:19 PM GMT+1</span></div><br class="ydpe9278200yiv1387642728"><div class="ydpe9278200yiv1387642728"><div class="ydpe9278200yiv1387642728">Since I haven’t seen anyone else actually post this analysis yet, here goes:<div class="ydpe9278200yiv1387642728"><br class="ydpe9278200yiv1387642728"></div></div></div><img id="ydpe9278200yiv1387642728CC38E21B-70F8-432A-B063-B34DC2AD22BC" src="cid:YXhsGI1ykGLnR9KgzXET" class="ydpe9278200yiv1387642728" style="width: 100%; max-width: 800px;"></div><div class="ydpe9278200yiv1387642728"><br class="ydpe9278200yiv1387642728"><div class="ydpe9278200yiv1387642728"><div class="ydpe9278200yiv1387642728"><div class="ydpe9278200yiv1387642728">Ethos’ offered purchase price is $1.135B. At that price, if they exercise the maximum 10% annual wholesale price increase, .ORG domains wind up at $26/year at the end of the ten-year period. If Ethos pays the actual cost of registry and DNS services, without the subsidies ISOC currently receives, but continues at the same level of quality, they’d make a total of $318M in profit over the ten years, or 8.59% annualized return. If they cut spending to the bone, using the crappiest available registry and DNS services and not caring how much downtime they had, they could increase their profit to $598M, or 9.71% annualized return.</div><div class="ydpe9278200yiv1387642728"><br class="ydpe9278200yiv1387642728"></div><div class="ydpe9278200yiv1387642728">If they were to do a single 10% increase, at the beginning of the first year, they’d lose $355M if they maintained current service levels, or $55M if they axed spending. If they maintained current prices, they’d lose $435M or $155M. Private equity doesn’t plan to lose money. Therefore the suggestions from the public that the deal be allowed to proceed “if they agree not to raise prices” or “if they only raise prices 10%” simply won’t happen.</div><div class="ydpe9278200yiv1387642728"><br class="ydpe9278200yiv1387642728"></div><div class="ydpe9278200yiv1387642728">The other implication of this is that if a non-profit were to buy from ISOC and maintain current prices, putting all available money toward ISOC and keeping nothing for themselves, they could only offer $700M, and that would be at the rate of $70M per year, “seller financed” at no interest. ISOC is currently chewing up $45M/year, but once they’re no longer dependent on .ORG, they could drop a significant chunk of their spending that’s going toward maintaining those interests. Let’s say that they could drop their spending to $30M. That would leave $40M in excess profits each year going toward an endowment:</div><div class="ydpe9278200yiv1387642728"><br class="ydpe9278200yiv1387642728"></div><div class="ydpe9278200yiv1387642728"><br class="ydpe9278200yiv1387642728"></div></div></div><img id="ydpe9278200yiv1387642728B3C31C7C-1564-4045-9FBA-739E756074E3" src="cid:w1dx1QW3npxLPXgRsW4e" class="ydpe9278200yiv1387642728" style="width: 100%; max-width: 400px;"><div class="ydpe9278200yiv1387642728"><div class="ydpe9278200yiv1387642728"><div class="ydpe9278200yiv1387642728"><br class="ydpe9278200yiv1387642728"></div><div class="ydpe9278200yiv1387642728">At the end of the ten-year period, the endowment would stand at $626M, and interest from the endowment would be $50M/year. Which is more than they’re receiving right now. If they continued to just draw $30M/year, the endowment would continue to grow by $20M/year, making it safer and safer over time.</div><div class="ydpe9278200yiv1387642728"><br class="ydpe9278200yiv1387642728"></div><div class="ydpe9278200yiv1387642728">So, I don’t think it works to ask Ethos to not raise prices, but (putting aside the fact that they’ve already signed an agreement with Ethos, which ICANN or the State of Pennsylvania would have to stop) ISOC could certainly do well (not _as_ well, but much better than they’re doing right now) and be completely out of the domain name business, while giving .ORG registrants a guarantee of no price increases, and having .ORG become fully non-profit, rather than the odd non-profit/for-profit hybrid it is right now.</div><div class="ydpe9278200yiv1387642728"><br class="ydpe9278200yiv1387642728"><div class="ydpe9278200yiv1387642728"> -Bill</div></div></div></div></div></div></div></div></div>
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