[governance] Are Internet users powerless or empowered, and how?

[Alejandro Pisanty]

George,

quick:

1. re cost/pricing/profit in domain names. Karl can research this among 
the companies. Some are public so the information is available for the 
really curious. The general perception is that the real killing is being 
made in the secondary market, by "domainers."

2. UDRP and intellectual property law. The UDRP is predicated on the 
premise that ICANN is to create new law. Many of us want non-commercial 
speech and names to be better protected. We have to work through the GNSO 
and changin laws.

3. ICANN Board members' complacency, as assumed by Karl, particularly for 
those seated by the Nominating Committee. Having been a fellow Director 
to, I think, three generations of them, and having observed the members of 
the other councils seated by the NomCom, I can assure you: not so. That's 
empirical fact, not a subjective appreciation. Available for confirmation 
in the transcripts of public meetings and in the vote counts in the 
minutes. Insisting on the characterization of complacency would mean 
extending it to Joi Ito, Avri Doria, Steve Goldstein, Sophia Bekele, and 
many other well-known independent spirits. "Concrete analysis of concrete 
situations," as Lenin used to ask for.

No, not everything is perfect with ICANN. Nor much of the rest of the 
world.

Next subject please.

Yours,

Alejandro Pisanty


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      Dr. Alejandro Pisanty
Director General de Servicios de Computo Academico
UNAM, Universidad Nacional Autonoma de Mexico
Av. Universidad 3000, 04510 Mexico DF Mexico
Tel. (+52-55) 5622-8541, 5622-8542 Fax 5622-8540
http://www.dgsca.unam.mx
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On Sat, 1 Dec 2007, George Sadowsky wrote:

> Date: Sat, 01 Dec 2007 13:01:51 -0500
> From: George Sadowsky <george.sadowsky at attglobal.net>
> Reply-To: governance at lists.cpsr.org,
>     George Sadowsky <george.sadowsky at attglobal.net>
> To: governance at lists.cpsr.org
> Subject: Re: [governance] Are Internet users powerless or empowered, and how?
> 
> Karl has raised a number of useful observations, some of which I agree with 
> and some of which I don't.  My comments are interspersed below.
>
> I think that this has been an interesting discussion, but I am seeing 
> decreasing returns to continuing it.  Others may feel differently.
>
>
>> George Sadowsky wrote:
>> 
>>> However, I do think that the way you phrase it, i.e. "the body that 
>>> extracts over half a billion dollars (US$ out of the pockets of domain 
>>> name buyers every year," goes in the wrong direction.  It's correct that 
>>> ICANN is involved in price setting, but per domain name the cost is closer 
>>> to $6.
>> 
>> My estimate is based on a computed registry cost (which I'll get to in a 
>> few paragraphs), an ICANN granted registry fee of about $7 (not to mention 
>> the ICANN piece of every registration), and about 75,000,000 names (largely 
>> in .com).
>> 
>> There is no doubt that domain name buyers are paying in excess of 
>> $500,000,000 per year just in the ICANN granted registry fee.  The question 
>> is how much does it actually cost to provide those registry services?
>> 
>> A price-setting regulatory body ought to know how much it costs to provide 
>> the regulated service being provided.  Unfortunately the body of internet 
>> governance that sets domain name registry prices (and its own fee as well) 
>> seems to never have bothered to inquire as to the actual cost.
>> 
>> Perhaps it is obvious to that body, but it is certainly not obvious to me.
>> 
>> The $6 appears to be nothing but a fiat amount - it appears to be based on 
>> no evidence, no information, no audit - no nothing.  There is no evidence 
>> that ICANN has never tried to establish a cost basis. And now it is going 
>> up to $7, not $6, with an additional bi-yearly 7% rise, again without any 
>> supporting accounting, much less audited accounting.
>> 
>> I've estimated the cost at about $0.03 per name per year.  Perhaps that is 
>> too low, perhaps not.  But what evidence is there to contradict my 
>> calculations?  I'd love to hear concrete, auditable, quantitative 
>> information that leads me (and us) to a real answer that we can believe and 
>> use rather than debate.
>
> Cost, of course, depends upon the number, nature, and level of services that 
> go with the registration.
>
>> 
>> The analysis of others also indicates that $6 much, much higher than the 
>> real cost.
>> 
>> Suppose that I'm off by a factor of 33x.  That still means that ICANN is 
>> pumping/taxing the internet to the tune of about $400,000,000 (USD) on .com 
>> alone every year and splitting the proceeds between itself and Verisign.
>> 
>> Alternatively we can use Tucow's bid at running .com at $2 - on which basis 
>> the money pump is a mere $330,000,000 every year (on .com alone) and rising 
>> with ICANN's 7% solution.
>> 
>> Even at these lesser amounts, the sums are still quite significant.
>
> I'm not as familiar with the history as I would like to be, but I believe 
> that you are right, that $6 was at first a guess at what it would take to 
> support registry and registar operations.  that guess must have been made a 
> long time ago, based upon some untested assumptions regarding volume, cost 
> projections, and service levels.
>
>> 
>> Thus we see an ICANN, because it is not accountable to the community of 
>> internet users, that has become excessively accommodating to the registry 
>> industry - gifting it with huge revenue streams and profit margins that are 
>> measured in the 1000% to 35,000% range.
>
> Without commenting on your profit margin estimates, I would be curious to 
> know if any studies or good business plans exist that indicate that a much 
> lower cost would be commercially viable.  The business has changed 
> significantly since the fist price was set, including mirror servers, query 
> rates and now data escrow issues. Perhaps that would be a useful study for an 
> economist in industrial organization who also has a technical bent.  In fact, 
> the entire domain name industry is ripe for study.  Ross Rader gave me the 
> name of a writer at the Wall Street Journal who he thought was writing such a 
> study, but I've receiived no response from him.
>
>> 
>> When the body of internet governance not only guarantees registries a 
>> profit, but a profit margin measured in tens of thousands of percents, is 
>> it still internet governance?  Or is it something else?
>> 
>> When I was on the board at ICANN I found an across-the-board (pun intended) 
>> reluctance to look at any sort of hard numbers of anything, even ICANN's 
>> own expenses.  Indeed, when I went to look for myself I found my way barred 
>> and I had to bring legal action simply so that I could do what board 
>> members around the world are empowered to do - look at the financial 
>> records.
>
> When you were on the Board, the dynamics of ICANN, and of its interactions 
> with the burgeoning industry were considerably different.   I can understand 
> that it is natural for you to look through the lens of that period, but isn't 
> it possible that it's not the right lens now?  I can think of a number of 
> ways to test that hypothesis.  Can you?
>
>> 
>> In other words, I am suggesting that there may be an institutional aversion 
>> to asking too many questions about where and how money flows.
>> 
>> One of my concerns about ICANN's nominating committee process is that it 
>> tends to produce people who are worthies but are of an accommodating 
>> nature, not of the ilk will demand to see hard proof of an assertion.
>
> Well, I would disagree somewhat here, in part because of my familiarity with 
> the process as Chair of the ICANN NomCom for the last three years.  I know 
> that you said "tends to produce" and certainly some people nominated have an 
> accommodating nature, but we have also nominated people who are 
> professionally aggressive almost to a fault.  They may have directed their 
> energies to other problems, of course.  And you would not want a Board of 
> people, most of whom were overly demanding in different directions (we may 
> disagree here), because it would be difficult for such a Board to get things 
> done. There are, of course, cultural differences that cause people from some 
> cultures to be more accommodating  ---  essentially practicing a different 
> style of management  ---  and that often produces a less than perfect result. 
> When I worked at the United Nations, I observed many misunderstandings and 
> disagreements  largely due to different cultural norms and conflicting 
> cultural assumptions.
>
> I don't see the ICANN Board as complacent.  I agree that it would be a bad 
> thing; just look at corporate board behavior  in the US and we could both 
> identify cases in which the board-CEO collusion has led to disaster for 
> stockholders, as well as having significant financial repercussions across 
> the economy (Tyco, Enron, MCI, ...)
>
>> 
>> As such it is not surprising that ICANN has simply accepted a domain name 
>> registry price policy that began with an arbitrary number - a number that 
>> was simply created out of thin air a few years ago - and increments it by a 
>> percentage that was also created out of thin air.
>> 
>> Had ICANN had a working election process it may have found its board 
>> populated by more people willing to require hard facts before granting rich 
>> price terms, paid for not by ICANN but, instead, out of the pockets of the 
>> users of the internet.
>
> There are several problems with elections, and I don't want to get into a 
> discussion of them now, but the one show-stopper that I see is defining the 
> electorate
>
>> 
>>> I agree with you that WHOIS continues to be a problem, complicated by 
>>> competing interests but also by non-interoperable national legal codes, 
>>> over which we have relatively no control (at least in the short run).  I'd 
>>> like to see that sorted out also, but I don't see any voting scheme able 
>>> to solve that problem without creating other problems of equal or greater 
>>> magnitude.
>> 
>> You are right that voting systems alone will not solve Whois.
>> 
>> But allowing internet users light a fire under ICANN's board, a fire 
>> created through the accountability provided by elections, then I submit 
>> that ICANN would not have repeatedly waivered when the intellectual 
>> property industry said "boo", as it did just a few weeks ago in Los 
>> Angeles.
>
> I do not like the WHOIS result either.  In my view, Ross Rader's presentation 
> of the alternative made a great deal of sense.  But it seems to me that this 
> is a problem within the GNSO, which could be considered a general problem in 
> the structure of ICANN.  If GNSO makes policy and decides not to make a 
> recommendations, and the ICANN Board reviews the appropriateness of the 
> process, how would an elected Board be able to come to a different result? 
> (Just asking, not criticizing)
>
>> 
>>> I understand that you have a severe dislike of the current UDRP. Is there 
>>> a comprehensive alternative you would like to suggest that is 
>>> significantly better?  If you have already suggested it, what has been its 
>>> reception and why?
>> 
>> The UDRP starts with a fundamental error: It acts as a sword to vindicate 
>> rights in a name only if those rights are based on trademark.
>> 
>> In other words, if I own a trademark "foo" then I can use the UDRP to 
>> challenge others who use "foo".  I might win, I might loose, but at least I 
>> have the UDRP as a tool.
>> 
>> On the other hand, if I am named "foo" or my god is named "foo" or my 
>> university is named "foo" - all of which are legal, valid, and legitimate 
>> non-trademark uses of that name - and I feel that my rights are violated by 
>> someone else's use of "foo", then I can not call upon the UDRP, the UDRP is 
>> not a tool that I can invoke simply because my rights in the name are not 
>> trademark based.
>> 
>> In other words, the first thing to fix in the UDRP is to make require only 
>> that the plantiff have rights in a name, not that those rights are 
>> trademark rights.
>> 
>> Secondly, the UDRP replaces the existing legal system.  The legal system is 
>> complex and expensive because it bends over backwards to be fair. The UDRP 
>> is attractive to intellectual property owners and lawyers (like me, on both 
>> counts) because it is fast and cheap.  But that speed and low cost come at 
>> a price - the loss of fairness. Among the ways the UDRP is unfair is the 
>> way that those who make choices are paid, it tends to make them friendly to 
>> the plaintiff.
>> 
>> Thirdly, because the UDRP is a private law that supersedes nations it tends 
>> to squash cultural differences.  I'm certain that in the Sudan right now 
>> nobody is wondering about the trademark names associated with a certain 
>> teddy bear that has been in the news. That situation demonstrates how 
>> different are the cultural feelings about names that the UDRP covers with a 
>> single worldwide, commercial trade name based system.
>
> Thanks for the exposition.  I feel a bit out of my depth here, because I have 
> no legal training.  But it seems to me that a significant piece of this issue 
> is related to the concept of copyright in general, and its application in 
> certain media. Furthermore, is it not correct that the UDRP is an optional 
> mediation device, and that challenge within a legal system (not clear whose 
> system or what decides it), outside of the Internet space, is still possible?
>
>> 
>>> What do you think of my suggestion to concentrate on the great majority of 
>>> Internet users, mostly those without domain names, and do two things. 
>>> First, define their real needs to the best of our ability.  Second, and 
>>> only after we've done the first, discuss what forms of structure, conduct 
>>> and governance would best meet those needs, nows and in the future?
>> 
>> Yes is useful to remember that the internet is much larger than those who 
>> spend money on domain names.  And that is precisely why I find the 
>> "stakeholder" conception so pernicious - it tends to identify the degree of 
>> interest ("stake") and thus the degree of authority in bodies of internet 
>> governance with the amount of money that the putative "stakeholder" spends 
>> or makes.
>> 
>> So yes, we ought to remember the vast masses who are unheard and who's 
>> money in the net is not clearly identifiable and not, on an individual 
>> basis, very large.
>> 
>> On the other hand, when we have a fairly clear cut issue - such as domain 
>> name registry fees unrelated to the actual cost of providing the domain 
>> name registry service - and a well identifiable body of people being harmed 
>> (those who buy domain names and also, as we should not forget, those who 
>> find them too expensive and this forego buying a domain name), and an 
>> amount of money that would be significant even by Rockefeller standards, 
>> then that is an issue we ought to face.
>
>
> I agree that DN registry fees are a clearer issue.  But I'd rather attack the 
> larger and IMHO the considerably more important issue, even if it is 
> ill-defined, because i think that convergence and appropriate action in this 
> space will yield, to be somewhat trite, the greater good for the greater 
> number.  However, I'd still love to see the domain name industry study done 
> so that there would be durable factual evidence to help guide the evolution 
> of that industry in an efficient and effective manner.
>
>> 
>> 		--karl--
>
>
> George
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