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

[George Sadowsky]

Alex,

I fear that it will take much more than the public record to 
determine the real costs of operating the registry/registrar system. 
I hope that someone tackles the question and performs an 
authoritative comprehensive analysis in an independent manner.

The domainers and their activities are at best a vexing unintended 
consequence of some rules that were established for other, at the 
time meritorious, reasons.  There has to be some way to fix that 
situation, and I am all in favor of eliminating the add grace period, 
among other things.  I view the Internet as a public trust, not as a 
feeding trough for hungry animals.

On the subject of complacent Directors, I suggest an addition.  No 
one in their right mind would make the mistake of placing Susan 
Crawford or Harald Alvestrand in that class.

On to the next subject.

Regards,

George

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

At 7:14 PM +0000 12/1/07, Alejandro Pisanty wrote:
>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
>
>
>.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . .  .  .  .  .  .
>      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
>*
>---->> Unete a ISOC Mexico, www.isoc.org
>  Participa en ICANN, www.icann.org
>.  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
>
>
>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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