[governance] PIR Case/or the .org sell

Mon Dec 2 03:11:14 EST 2019

 Hi Suresh,
>Do you have some data points for the assumption that operating the registry at Donuts will reduce the costs by “a lot”?

The cost of the maintaining registry operation is not too much costly solution, and adding up the instances along with the other dozens of the gTLDs, there in no additional hardware of infrastructure cost involved..
>Domain registrations in org aren’t growing all that fast - .org is at 10 million domains – lower than ccTLDs like uk, tk and de (https://www.verisign.com/en_IN/domain-names/dnib/index.xhtml?section=tlds).  If you limit your search to actual non profits registering .org names that will show at most a fractional increase year on year.

Afilias charged $3.75/domain to run the registry, for 10m domains getting approx $37.5m/yr. As you asked for statistics,... let me quote you the example of your dot IN ccTLD for comparision. Afilias quoted $1.1/domain and Neustar won the bid for $0.70 per domain name to maintain less then 2m domains (<$1.4m annual).
Secondly, also note that in during the evaluation previous bidding of .ORG in Accra, Ghana meeting in March 2002, ICANN board did not accepted the proposal of reduction of the registry price below US$6, comparing with the GNR proposed price of $3.47/domain (around 42% reduction at that time), while Neustar proposed to setup $5/domain.
Best Regards
Imran Ahmed Shah
Consultant/ Advisor[TLDians.com][Urdu Internet Council]

   On Monday, 2 December 2019, 12:30:16 GMT+5, Suresh Ramasubramanian <suresh at hserus.net> wrote:  

Do you have some data points for the assumption that operating the registry at Donuts will reduce the costs by “a lot”?

Domain registrations in org aren’t growing all that fast - .org is at 10 million domains – lower than ccTLDs like uk, tk and de (Domain Name Industry Brief (DNIB) - Verisign).  If you limit your search to actual non profits registering .org names that will show at most a fractional increase year on year.

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Domain Name Industry Brief (DNIB) - Verisign

Verisign Domain Name Industry Brief (DNIB) provides up-to-date trends in new registrations, renewals and growth.
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From: <governance-request at lists.riseup.net> on behalf of "Imran Ahmed Shah (via governance Mailing List)" <governance at lists.riseup.net>
Reply to: <ias_pk at yahoo.com>
Date: Monday, 2 December 2019 at 12:26 PM
To: IGCaucus <governance at lists.riseup.net>, Bill Woodcock <woody at pch.net>
Subject: Re: [governance] PIR Case/or the .org sell

Dear Bill,

While comparing the revenue and income project of next 10 years, also add the yearly growth of domain registrations. 

Secondly, also note that....."PIR generated $101 million in revenue in 2018 and contributed nearly $50 million to Internet Society. It contributed $74 million to ISOC in 2017." "PIR paid over $33 millions to Afilias (in 2014)" to run the Registry Operations. Comparing with donuts.domains, if .Org operations are shifted from Afilias, the expense will reduce a lot. 

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?

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). 

Regards

Imran Ahmed Shah

On Monday, 2 December 2019, 03:49:28 GMT+5, Bill Woodcock <woody at pch.net> wrote: 

Forwarded from another list:

From: Bill Woodcock <woody at pch.net>

Date: December 1, 2019 at 10:01:19 PM GMT+1

Since I haven’t seen anyone else actually post this analysis yet, here goes:

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.

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.

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:

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.

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.

                                -Bill

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