[governance] Packet Clearing House warns .ORG websites to suffer downtime under Ethos Capital management

[Bill Woodcock]

> On Dec 20, 2019, at 9:17 PM, Joly MacFie <joly at punkcast.com> wrote:
> Is this the same Bill Woodcock that wrote on Nov 23*
> 
>> Overall, this is an excellent thing to be happening, since it gets ISOC out from under the USG, and deconflicts it from gTLD politics. So, very good for the Internet. I honestly don't think anyone's going to die because the cost of their domain name went from $10 to $12.

Yep.  Because I was giving everyone the benefit of the doubt, and assuming that they weren’t trying to do an unsustainable deal.  I assumed that they’d done a deal in the $400M range, which is what any sensible and well-informed person would come to.  That would have had a very beneficial effect for ISOC, which I’d love to see happen, and wouldn’t have harmed anyone else, relative to their current situation.

I had also been led to believe, by several ISOC and PIR board members, that non-profit registered domains (which have inelastic demand) constituted less than 1% of the total, and that domain speculators (who have extremely elastic demand) held the majority, perhaps more than 60%, of the registered domains.  If that were the case, there would be a huge net-revenue valley between about $15 and about $1500 wholesale annual cost, so no sane purchaser would venture beyond the first peak, probably somewhere in the neighborhood of $13-$14, much less cross all the way into full-Martin-Shkreli territory at the other side.  It’s also the case that that narrative, that non-profits are a tiny minority and speculators are the majority, was used to minimize the relevance and authenticity of the protest against lifting the price cap: it was derided as speculators astroturfing.

But two things happened.

First, on December 3, the amount was announced, and the amount was completely unsustainable.  There’s no way to make it fly without (1) gutting the registry’s operations, (2) maximizing prices, and (3) selling everybody’s data out the back door.  Nobody’s really started talking about that third yet, but I encourage you to go look at the business models, if you can call them that, of the other companies Ethos is buying.

Second, on December 17, I manually coded a large random sample of .ORG domains, and found that 30% were non-profits, and only 8% speculators. Which means both that the first protest was likely completely legitimately from non-profits who were concerned about pricing (even if their demand is inelastic, it hurts many of them more than I’d realized), and also that there’s no net-revenue-valley to dissuade price-hikes of the sort Vint was suggesting, to $60 or above.

So, yeah, on November 23, I was still mis-assuming that people who had been dealing behind closed doors had been dealing _rationally_ behind closed doors.

There’s no impediment to returning to rationality, it just takes people actually applying a little financial acumen rather than acting like yahoos with auction fever.

                                -Bill

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