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ICANN explains how .org pricing decision was made

ICANN has responded to questions about how its decision to lift price caps on .org, along with .biz and .info, was made.

The buck stops with CEO Göran Marby, it seems, according to an ICANN statement, sent to DI last night.

ICANN confirmed that was no formal vote of the board of directors, though there were two “consultations” between staff and board and the board did not object to the staff’s plans.

The removal of price caps on .org — which had been limited to a 10% increase per year — proved controversial.

ICANN approved the changes to Public Interest Registry’s contract despite receiving over opposing messages from 3,200 people and organizations during its open public comment period.

Given that the board of directors had not voted, it was not at all clear how the decision to disregard these comments had been made and by whom.

The Internet Commerce Association, which coordinated much of the response to the comment period, has since written to ICANN to ask for clarity on this and other points.

ICANN’s response to DI may shed a little light.

ICANN staff first briefed the board about the RA changes at its retreat in Los Angeles from January 25 to 28 this year, according to the statement.

That briefing covered the reasons ICANN thinks it is desirable to migrate legacy gTLD Registry Agreements to the 2012-round’s base RA, which has no pricing controls.

The base RA “provides additional safeguards and security and stability requirements compared to legacy agreements” and “creates efficiencies for ICANN org in administration and compliance enforcement”, ICANN said.

Migrating old gTLDs to the standardized new contract complies with ICANN’s bylaws commitment “to introduce and promote competition in the registration of domain names and, where feasible and appropriate, depend upon market mechanisms to promote and sustain a competitive environment in the DNS market”, ICANN said.

They also contain provisions forcing the registry to give advance notice of price changes and to give registrants the chance to lock-in prices for 10 years by renewing during the notice period, the board was told.

After the January briefing, Marby made the call to continue negotiations. The statement says:

After consultation with the Board at the Los Angeles workshop, and with the Board’s support, the CEO decided to continue the plan to complete the renewal negotiations utilizing the Base RA. The Board has delegated the authority to sign contracts to the CEO or his designee.

A second board briefing took place after the public comment periods, at the board’s workshop in Marrakech last month.

The board was presented with ICANN’s staff summary of the public comments (pdf), along with other briefing documents, then Marby made the call to move forward with signing.

Following the discussion with the Board in Marrakech, and consistent with the Board’s support, the CEO made the decision for ICANN org to continue with renewal agreements as proposed, using the Base gTLD Registry Agreement.

Both LA and Marrakech briefings “were closed sessions and are not minuted”, ICANN said.

But it appears that the board of directors, while not voting, had at least two opportunities to object to the new contracts but chose not to stand in staff’s way.

At the root of the decision appears to be ICANN Org’s unswerving, doctrinal mission to make its life easier and stay out of price regulation to the greatest extent possible.

Reasonable people can disagree, I think, on whether this is a worthy goal. I’m on the fence.

But it does beg the question: what’s going to happen to .com?

Charities “could move to .ngo” if .org prices rise

File this one under “wrong-headed argument of the day”.

The head of policy at the Charities Aid Foundation reportedly has said that the recent removal of price increase caps at .org could lead to charities moving to other TLDs, “like .ngo”, which would cause confusion among charitable givers.

Rhodri Davies told The Telegraph (registration required) newspaper:

One of the benefits at the moment is you have at least at least one very well known and globally recognised domain name, that indicates to people that what they’re looking at is likely to be a charity or a social purpose organisation. If in the future, the pricing changes, and suddenly organisations have all sorts of different domain names, it’s going to be much harder for the public to know what it is they’re looking at. And that will get confusing and will probably have a negative impact on on people’s trust

The Telegraph gave .ngo (for non-governmental organization) as an example of a TLD they could move to. It’s not clear whether that was the example Davies gave or something the reporter came up with.

While Davies’ argument is of course sound — if charities were forced en masse to leave .org due to oppressive pricing, it would almost certainly lead to new opportunities for fraud — the choice of .ngo as an alternative destination is a weird one.

.ngo, like .org, is run by Public Interest Registry. It also runs .ong, which means the same thing in other languages.

But as 2012-round new gTLDs, neither .ngo or .ong have ever been subject to any pricing controls whatsoever.

At $30 a year, PIR’s wholesale price for .ngo is already a little more than three times higher than what it charges for .org domains. I find it difficult to imagine that .org will be the more expensive option any time soon.

.org domains currently cost $9.93 per year, and PIR has said it has no current plans to increase prices.

PIR does not have a monopoly on charity-related TLDs. Donuts runs .charity itself, which is believed to wholesale for $20 a year. It’s quite a new TLD, on the market for about a year, and has around 1,500 domains under management compared to .org’s 10 million.

Of course, .charity doesn’t have price caps either.

In the gTLD world, the only major TLDs left with ICANN-imposed price restrictions are Verisign’s .com and .net.

.org now has no price caps, but “no specific plans” to raise prices

ICANN has rubber-stamped Public Interest Registry’s new .org contract, removing the price caps that have been in effect for the best part of two decades.

That’s despite a huge outcry against the changes, which saw the vast majority of respondents to ICANN’s public comment period condemn the removal of caps.

The new contract, signed yesterday, completely removes the section that limited PIR to a 10% annual price increase.

It also makes PIR pay the $25,000 annual ICANN fee that all the other registries have to pay. Its ICANN transaction tax remains at $0.25.

PIR, a non-profit which funnels money to the Internet Society, is now allowed to raise its wholesale registry fee by however much it likes, pretty much whenever it likes.

But PIR again insisted that it does not plan to screw over the registrants of its almost 11 million .org domains.

The company said in a statement:

Regarding the removal of price caps, we would like to underscore that Public Interest Registry is a mission driven non-profit registry and currently has no specific plans for any price changes for .ORG. Should there be a need for a sensible price increase at some point in the future, we will provide advanced notice to the public. The .ORG community is considered in every decision we make, and we are incredibly proud of the more than 15 years we have spent as a responsible steward of .ORG. PIR remains committed to acting in the best interest of the .ORG community for years to come.

That basically restates the comments it made before the contract was signed.

The current price of a .org is not public information, but PIR has told me previously that it’s under $10 a year and “at cost” registrar Cloudflare sells for $9.93 per year.

The last price increase was three years ago, reported variously as either $0.88 or $0.87.

ICANN received over 3,200 comments about the contract when it was first proposed, almost all of them opposed to the lifting of caps.

Opposition initially came from domainers alerted by an Internet Commerce Association awareness campaign, but later expanded to include general .org registrants and major non-profit organizations, as the word spread.

Notable support for the changes came from ICANN’s Business Constituency, which argued from its established position that ICANN should not be a price regulator, and from the Non-Commercial Stakeholders Group, which caps should remain but should be raised from the 10%-a-year limit.

There’s a bit of a meme doing the rounds that ICANN has been hit by “regulatory capture” in this case, following a blog post from ReviewSignal.com blogger Kevin Ohashi last week, which sought to demonstrate how those filing comments in favor of the new contract had a vested interest in the outcome (as if the thousands of .org registrants filing opposing comments did not).

But I find the argument a bit flimsy. Nobody fingered by Ohashi had any decision-making power here.

In fact, the decision appears to have been made almost entirely by ICANN employees (its lawyers and Global Domains Division staff) “in consultation with the ICANN board of directors”.

There does not appear to have been a formal vote of the board. If there was such a vote, ICANN has broke the habit of a lifetime and not published any details of the meeting at which it took place.

After the public comment period closed, ICANN senior director for gTLD accounts and services Russ Weinstein prepared and published this comment summary (pdf), which rounds up the arguments for and against the proposed changes to the contract, then attempts to provide justification for the fait accompli.

On the price caps, Weinstein argues that standardizing .org along the lines of most of the other 1,200 gTLDs in existence fits with ICANN’s mission to enable competition in the domain name industry and “depend upon market mechanisms to promote and sustain a competitive environment”.

He also states:

Aligning with the Base gTLD Registry Agreement would also afford protections to existing registrants. The registry operator must provide six months’ notice to registrars for price changes and enable registrants to renew for up to 10 years prior to the change taking effect, thus enabling a registrant to lock in current prices for up to 10 years in advance of a pricing change.

This appears to be misleading. While it’s true that the new contract has the six-month notice period for price increases, so did the old one.

The new contract language takes several sentences to say what the old version did in one, and may remove some ambiguity, but both describe the notice period and lock-in opportunity.

If there’s a problem with how the new .org contract was signed off, it appears to be the lack of transparency.

It’s signed by GDD senior VP Cyrus Namazi, but who made the ultimate decision to sign it despite the outrage? Namazi? CEO Göran Marby? It certainly doesn’t seem to have been put before the board for a formal vote.

What kind of “consultation” between GDD and the board occurred? Is it recorded or noted anywhere? Was the board briefed about the vast number of negative comments the price cap proposal elicited?

Are public comment periods, which almost never have any impact on the end result, just a sham?

In my view, .org (along with .com and .net) are special cases among gTLDs that deserve a more thorough, broad and thoughtful consideration than the new .org contract received.

UPDATE: This article was updated at 1600 UTC to correct information related to .org’s current wholesale price.

Dodgy registrars could be banned from .org promotions

The worse a registrar is at tackling abuse, the more likely it is to be excluded from promotions in the .org space, according to a new policy from Public Interest Registry.

The .org registry said today that it is introducing a new “Quality Performance Index” to rate its registrars according to the quality of their registrations.

They’ll be ranked according to three criteria: abuse takedown, renewal rates, and domain usage.

Those that score above a certain threshold will be pre-qualified for promotions. The others will be encouraged to talk to their PIR rep about things they could do to get their scores up.

This kind of mechanism should in theory make it relatively easy to separate registrars into conscientious corporate citizens on the one hand and fly-by-night spam-friendly jerks on the other.

Keeping the bad guys away from the discounts could go a long way to keeping .org a relatively healthy zone.

But I expect there may be concern from the middle-ground of the registrar space, where we have well-meaning but under-resourced registrars that may find their scores wanting.

An additional concern may be that PIR said it intends to change the score threshold depending on the promotion, which appears to give it the ability to exclude registrars more or less at will.

The QPI initiative also extends to PIR’s newer, lesser-used gTLDs.

PIR says it has no plans to raise .org prices

Public Interest Registry claims it has no plans to raise its wholesale fee for .org domains, in the face of outrage from domainers and non-profits.

Under a proposed renegotiated contract with ICANN, price caps that have limited PIR to a 10% price increase every year would be removed.

But in a statement last week, the company said:

Rest assured, we will not raise prices unreasonably. In fact, we currently have no specific plans for any price increases for .ORG. We simply are moving to the standard registry agreement with all of its applicable provisions that already is in place for more than 1,200 other top-level domain extensions.

This does not necessarily translate to a commitment to not raise prices, of course. PIR may have “no specific plans” today, but it may tomorrow.

Over 3,300 people and organizations filed comments with ICANN about the proposed removal of the price caps, almost all of them negative.

Comments came initially from domain investors, but they were soon joined by many non-profit .org registrants and others.

Most claimed that it was unfair to allow unlimited price increases in legacy, pre-2012 gTLDs such as .org, which can be seen more as a public trust.

PIR went on to point out in its letter that it has not raised its prices — believed to be still under $10 a year — for the last three years.

But it might be worth noting that senior management has changed in that period. Brian Cute left the CEO job a year ago and, after an interim caretaker manager, was replaced by Donuts alumnus Jon Nevett in December.

.org’s registration numbers have been dipping. Over the last three years, it’s dropped from a peak of 11.3 million to 10.6 million at the end of 2018.

But it’s also renegotiated its back-end contract with Afilias over that period, meaning it’s now paying millions less on technical running costs than it once was.

PIR also reiterates that, like many of its customers, it is also a non-profit that is not motivated by investors and share prices.

More than half of its profits go to fund the Internet Society, itself a non-profit organization.

“We are different. We are mission based and not every decision is a financial one; we are not just driven by the bottom line,” its statement says.

PIR says that registrants are also protected by the measure in all ICANN gTLD contracts that allows registrants to lock in prices for up to 10 years in the event of a price increase, and by the fact that .org operates in a competitive market.

Reasonable people can and do disagree on whether these are effective protections in a case like .org.