Four big developments in the .org pricing scandal

The renewal of Public Interest Registry’s .org contract and its subsequent acquisition by Ethos Capital is the gift that keeps on giving in terms of newsworthy developments, so I thought I’d bundle up the most important into a single article.
First, ICANN has thrown out the appeal filed by Namecheap and provided a (kinda) explanation of how the recent contract renewal came about.
The board of directors voted to reject Namecheap’s Request for Reconsideration on Thursday, as I reported last week, but the decision was not published until last night.
Namecheap had demanded ICANN reverse its decision to remove the 10%-a-year cap on price increases previously in the .org contract, enabling PIR to unilaterally raise its prices by however much it wants.
It said that ICANN had “ignored” the more then 3,000 people and organizations that had submitted comments opposing the lifting of caps.
But the board said:

ICANN org’s Core Values do not require it to accede to each request or demand made in public comments or otherwise asserted through ICANN’s various communication channels. ICANN org ultimately determined that ICANN’s Mission was best served by replacing price caps in the .ORG/.INFO Renewed RAs with other pricing protections to promote competition in the registration of domain names, afford the same “protections to existing registrants” that are afforded to registrants of other TLDs, and treat registry operators equitably.

The board also decided to describe, in a roundabout kinda way, how it conducts renewal talks with pre-2012 legacy gTLDs, explaining that ICANN “prefers” to move these registries to the 2012 contract, but that it cannot force them over. The resolution states:

All registry agreements include a presumptive right of renewal clause. This clause provides a registry operator the right to renew the agreement at its expiration provided the registry operator is in good standing (e.g., the registry operator does not have any uncured breaches), and subject to the terms of their presumptive renewal clauses.
In the course of engaging with a legacy registry operator on renewing its agreement, ICANN org prefers to and proposes that the registry operator adopts the new form of registry agreement that is used by new gTLDs as the starting point for the negotiations. This new form includes several enhancements that benefit the domain name ecosystem such as better safeguards in dealing with domain name infrastructure abuse, emergency backend support, as well as adoption of new bilaterally negotiated provisions that ICANN org and the gTLD Registries Stakeholder Group conduct from time to time for updates to the form agreement, and adoption of new services (e.g., RDAP) and procedures.
Although ICANN org proposes the new form of registry agreement as a starting place for the renewal, because of the registry operator’s presumptive right of renewal ICANN org is not in a position to mandate the new form as a condition of renewal. If a registry operator states a strong preference for maintaining its existing legacy agreement form, ICANN org would accommodate such a position, and has done so in at least one such instance.

I believe the gTLD referred to in the last sentence is Verisign’s .net, which renewed in 2017 without substantially transitioning to the 2012-round contract.
On the acquisition, the board notes:

the Board acknowledges (and the Requestor points out in its Rebuttal) the recently announced acquisition of PIR, the current .ORG registry operator, and the results of that transaction is something that ICANN organization will be evaluating as part of its normal process in such circumstances.

That appears to be a nod to the fact that ICANN has the power to reject changes of control under exceptional circumstances, per the .org contract.
Despite the wholly predictable rejection of Namecheap’s RfR, appeals against the contract’s new terms may not be over.
For some reason I have yet to ascertain, the very similar RfR filed around the same time by the Electronic Frontier Foundation was not considered, despite being on the agenda for last Thursday’s board meeting.
Additionally, I hear Namecheap has applied for Cooperative Engagement Process status, meaning it is contemplating filing an Independent Review Process appeal.
Second, Ethos Capital, PIR’s new owner, launched a web site in which it attempts to calm many of the concerns, criticisms and conspiracy theories leveled its way since the acquisition was announced.
Found at keypointsabout.org, the site tries to clarify the timing and motivation of the deal.
On timing, Ethos says:

Ethos Capital first approached the Internet Society in September 2019, well after PIR’s contract renewal with ICANN had finished… PIR was not for sale at the time the price caps were lifted on .ORG. The removal of .ORG’s price restrictions earlier this year was not unique to .ORG and was in no way motivated by a desire to sell PIR.

The .org contract was signed at the end of July, so while Ethos may well have been lusting after PIR before the renewal, it apparently did not run towards it with its trousers around its ankles until at least a month later.
On its pricing intentions, Ethos says:

The current price of a .ORG domain name is approximately $10 per year. Our plan is to live within the spirit of historic practice when it comes to pricing, which means, potentially, annual price increases of up to 10 percent on average — which today would equate to approximately $1 per year.

This sounds rather specific, but it’s vague enough to give PIR leeway to, say, introduce a 100% increase immediately and then freeze prices until it averages out at 10% per year. I don’t think the company will do something so extreme, but it would technically be possible the way it’s described here.
On the connections to Abry Partners and former ICANN CEO Fadi Chehade, Ethos says that while founder and CEO Erik Brooks is a 20-year veteran of Abry (which also owns Donuts) “Abry Partners is not involved in this transaction.”
It adds, however, that Chehade’s company, Chehade & Company, where Ethos chief purpose officer Nora Abusitta-Ouri has worked “is an adviser to Ethos”.
What this means, at the very least, is that the new owner of .org allowed an outside contractor to register the domain matching its name in the very gTLD it runs, which most domain veterans will recognize as a rookie mistake.
Ethos goes on to list VidMob Inc, Whistle Sports Inc, Adhark Inc and LiquidX Inc as other companies Ethos has invested in, perhaps rubbishing the hypothesis (which I, admittedly, have publicly floated) that Ethos was a vehicle created by Abry purely to buy up PIR.
Third, Ethos may be funded by “billionaire Republicans”.
.eco registry founder Jacob Malthouse, who’s trying to rouse up support for the #SaveDotOrg campaign, dug up an email apparently sent by ISOC CEO Andrew Sullivan to a members mailing list in the wake of the acquisition announcement, which names some of the backers of the deal.
They are: Perot Holdings, FMR LLC and Solamere Capital.
What they have in common is that they’re all — at least according to Malthouse’s since-amended original post — founded/owned/affiliated with prominent billionaire US Republicans. I’m not sure I’d fully agree with that characterization.
Perot was founded by Ross Perot, who stood for US president as an independent a few times but spent the last couple of decades of his life (which ended in July) as a Republican. I’d say his political affiliation died with him.
FMR, or Fidelity Investments, is run by Abigail Johnson, who inherited the role from her father and grandfather. While she’s made donations to Republicans including local senator, Mitt Romney, she also gave Hillary Clinton a tonne of cash to support her 2016 presidential election run, so I’m not sure I’d necessarily characterize her as die-hard GOP.
Romney himself was involved in the founding of Solamere Capital, the third apparent Ethos investor, but according to its web site he stepped down at the start of this year, long before Ethos was even founded, in order to re-join the US Senate.
I’m not sure what the big deal about these connections is anyway, unless you’re of the (often not unreasonable) belief that you don’t get to be a billionaire Republican without being just a little bit Evil.
Fourth, a bunch of non-profits are campaigning to get the deal scrapped.
The #SaveDotOrg campaign now has its matching .org address and web site, savedotorg.org.
It appears to have been set up by the EFF, but its supporters also include the non-profits American Alliance of Museums, American Society of Association Executives, Aspiration, Association of Junior Leagues International, Inc., Creative Commons, Crisis Text Line, Demand Progress Education Fund, DoSomething.org, European Climate Foundation, Free Software Foundation, Girl Scouts of the USA, Independent Sector, Internet Archive, Meals on Wheels America, National Council of Nonprofits, National Human Services Assembly, NTEN, Palante Technology Cooperative, Public Knowledge, R Street Institute, TechSoup, VolunteerMatch, Volunteers of America, Wikimedia Foundation, YMCA of the USA and YWCA USA.
The letter (pdf) states:

Non-governmental organizations all over the world rely on the .ORG top-level domain. Decisions affecting .ORG must be made with the consultation of the NGO community, overseen by a trusted community leader. If the Internet Society (ISOC) can no longer be that leader, it should work with the NGO community and the Internet Corporation for Assigned Names and Numbers (ICANN) to find an appropriate replacement.

It claims that the new .org contract gives PIR powers to “do significant harm” to non-profits, should they be abused.
The campaign has had a little traction on social media and so far has over 8,000 signatures.

Petition launched to fight .org deal

A petition has been opened on Change.org calling for the acquisition of Public Interest Registry by Ethos Capital.
The petition calls on ICANN, the Internet Society and PIR to “suspend” the sale “pending an open, transparent and multi-stakeholder public process about the future of .ORG.”
It was started by Jacob Malthouse, who worked at ICANN over a decade ago but is perhaps better known more recently as a founder and co-CEO of Big Room, the .eco gTLD registry. He appears to have left that company in August.
He blogged last week expressing his dismay with the news of the acquisition.
“This is a very sad day for the progressive movement. We need infrastructure like this and we need it to stay run by and for nonprofits, where it can be managed in a transparent and accountable fashion,” he wrote.
Almost two days in, the petition has attracted a piddling 32 signatures. That’s about 1% of the number of people who chose to email ICANN to protest .org price increases earlier this year, voices that ICANN nevertheless found unpersuasive.
The acquisition, for an undisclosed sum believed to be in the hundreds of millions of dollars at the least, was announced last week.

ICANN board meets to consider PIR acquisition TODAY

ICANN’s board of directors will gather today to consider whether the acquisition of Public Interest Registry by a private equity company means that it should reverse its own decision to allow PIR to raise .org prices arbitrarily.
Don’t get too excited. It looks like it’s largely a process formality that won’t lead to any big reversals, at least in the short term.
But I’ve also learned that the controversy could ultimately be heading to an Independent Review Process case, the final form of appeal under ICANN rules.
The board is due to meet today with just two named agenda items: Reconsideration Request 19-2 and Reconsideration Request 19-3.
Those are the appeals filed by the registrar Namecheap in July and rights group the Electronic Frontier Foundation in August.
Namecheap and EFF respectively wanted ICANN to reverse its decisions to remove PIR’s 10%-a-year price-raising caps and to oblige the registry to enforce the Uniform Rapid Suspension anti-cybersquatting policy.
Both parties now claim that the sale by the Internet Society of PIR to private equity firm Ethos Capital, announced last week, casts new light on the .org contract renewal.
The deal means PIR will change from being a non-profit to being a commercial venture, though PIR says it will stick to its founding principles of supporting the non-profit community.
I reported a couple of weeks ago that the board had thrown out both RfRs, but it turns out that was not technically correct.
The full ICANN board did in fact consider both appeals, but it was doing so in only a “preliminary” fashion, according to an ICANN spokesperson. ICANN told me:

On 3 November the Board considered “proposed determinations” for both reconsideration request 19-2 and 19-3. In essence, the Board was taking up the Board Accountability Mechanism Committee (BAMC) role, as the BAMC had not been able to reach quorum in early November due to certain recusals by BAMC members.
Once the Board adopted the proposed determinations (in lieu of the BAMC issuing a recommendation to the Board) the parties that submitted the reconsideration requests had 15 days to submit a rebuttal, for the Board’s full consideration of the matter, which is now on the agenda.

Normally, RfRs are considered first by the four-person BAMC, but in this case three of the members — Sarah Deutsch, Nigel Roberts, and Becky Burr — recused themselves out of the fear of appearing to present conflicts of interest.
The committee obviously failed to hit a quorum, so the full board took over its remit to give the RfRs their first pass.
The board decided that there had been no oversights or wrongdoing. Reconsideration always presents a high bar for requestors. The .org contract was negotiated, commented on, approved, and signed completely in compliance with ICANN’s governing rules, the board decided.
But the ICANN bylaws allow for a 15-day period following a BAMC recommendation during which rejected RfR appellants can submit a rebuttal.
And, guess what, both of them did just that, and both rebuttals raise the PIR acquisition as a key reason ICANN should think again about the .org contract changes.
The acquisition was announced a week ago, and it appears to have come as much of a surprise to ICANN as to everyone else. It’s a new fact that the ICANN board has not previously taken into account when considering the two RfRs, which could prove important.
Namecheap reckons that the deal means that PIR is now almost certain to raise .org prices. New gTLD registry Donuts was bough by Ethos affiliate Abry Partners last year, and this year set about raising prices across the large majority of its 200-odd gTLDs. Namecheap wrote in its rebuttal:

Within months of be acquired by Abry Partners, it raised prices in 2019 for 220 out of its 241 TLDs. Any statements by PIR now to not raise prices unreasonably are just words, and without price caps, there is no way that .org registrants are not used a source to generate revenue for acquisitions or to pay dividends to its shareholders.

It also said:

The timing and the nature of this entire process is suspicious, and in a well-regulated industry, would draw significant scrutiny from regulators. For ICANN not to scrutinize this transaction closely in a completely transparent and accountable fashion (including public disclosure of pertinent information regarding the nature, cost, the terms of any debt associated with the acquisition, timeline of all parties involved, and the principals involved) would demonstrate that ICANN org and the ICANN Board do not function as a trusted or reliable internet steward.

Namecheap also takes issue with the fact that ICANN’s ruling on its RfR (pdf) draws heavily on a 2009 economic analysis by Professor Dennis Carlton, which concluded that price caps were unnecessary in the new gTLD program.
The registrar trashes this analysis as being based on more opinion than fact, and says it is based on outdated market data.
Meanwhile, the EFF’s rebuttal makes the acquisition one of four reasons why it thinks ICANN should reverse course. It said;

ICANN must carefully reexamine the .ORG Registry Agreement in light of this news. Without the oversight and participation of the nonprofit community, measures that give the registry authority to institute new [Rights Protection Mechanisms] or make other major policy changes invite management decisions that conflict with the needs of the .ORG community.

Quite often, RfRs are declined by ICANN because the requestor does not present any new information that the board has not already considered. But in this case, the fact of the PIR acquisition is empirically new information, as it’s only week-old news.
Will this help Namecheap and the EFF with their cause? The board will certainly have to consider this new information, but I still think it’s unlikely that it will change its mind.
But I’ve also learned that Namecheap has filed with ICANN to trigger a Cooperative Engagement Process procedure.
The CEP is an often-lengthy bilateral process where ICANN and an aggrieved party attempt to resolve their differences in closed-door talks.
When CEP fails, it often leads to an Independent Review Process complaint, when both sides lawyer up and three retired judges are roped in to adjudicate. These typically cost both sides hundreds of thousands of dollars in legal fees.
CEP and IRP cases are usually measured in years rather than months, so the PIR acquisition could be under scrutiny for a long time to come.

I attempt to answer ICA’s questions about the “terrible blunder” .org acquisition

The Internet Commerce Association launched a withering attack on ICANN late last week, accusing the organization of a “terrible blunder” by lifting pricing restrictions on .org domain names.
As by now you’re no doubt aware, .org manager Public Interest Registry was acquired last week by a private equity firm with ties to ICANN’s former CEO, in a deal likely to have delivered hundreds of millions of dollars, if not more, to former owner the Internet Society.
The deal means PIR is now almost certain to exercise its newfound right to raise its prices arbitrarily, adding tens of millions to its annual top line at the expense of .org registrants.
While such a price increase is likely to have little impact on most registrants — an annual increase of even 100% would only add about $10 to the per-domain cost — it would certainly prove onerous to many of the high-volume domain investors ICA represents.
So ICA chief Zak Muscovitch whipped off a letter to ICANN (pdf) on Friday, demanding that ICANN use its contractual powers to terminate PIR’s registry agreement and put .org out for open tender. He wrote:

If you were led to believe that removing price caps on .Org domain names was a sound approach because the registry would remain in the hands of a nonprofit foundation, you have clearly been misled. If you were led to believe that despite being the effective owner of the .org registry, you were somehow forced to let your service providers tell you how much they can charge, instead of the other way around, you have been led astray. If you have been told that .Org does not have market power within the nonprofit sector, you have been led astray. If you have been told that competition from other gTLDs will constrain .org prices, you have been led astray.

I think the letter has about as much chance of working as an ice sculptor in hell, but Muscovitch does include a list of seven questions for ICANN that I’m going to attempt to answer to the best of my ability here.
First, he asks:

Were you aware whether ISOC was in talks to sell the registry when you approved the removal of the price caps?

I put the same question to PIR CEO Jon Nevett last week, and he told me: “I don’t know when the talks started with ISOC and the buyer, but neither ICANN nor PIR knew about it when finalizing the .ORG [Registry Agreement].”
I’ve no particular reason to believe he’s lying.

If ISOC was in such talks at that time, why was this material fact not disclosed to you by the registry operator, prior to you approving the renewal agreement?

The acquisition talks between ISOC and Ethos Capital certainly could have been going on prior to the .org contract being signed, which happened June 30 this year.
The main piece of evidence here is that Fadi Chehadé of private equity firm and presumed Ethos affiliate Abry Partners registered the domain ethoscapital.org on May 7, according to Whois records. A company of the same name was formed in Delaware a week later.
Given that Ethos appears to be an Abry vehicle set up purely to acquire PIR, it seems likely that talks were already underway at this point.
The domain ethoscapital.com, which Ethos is currently using as its primary, seems to have been acquired on the secondary market around August. The acquisition was announced November 13.
To Muscovitch’s question, though, I return to Nevett’s line that PIR knew nothing about the acquisition talks before the RA was finalized.
The RA was finalized and opened to public comment in March.
It’s quite possible Ethos and ISOC entered talks in the three months after the deal had been finalized but before it had been signed.

When did you first learn of the negotiations to sell the .Org registry?

An excellent question I’ve also posed but as yet have no answer to.

Did you base your decision to approve the removal of price caps, at least in part, on the expectation or belief that the registry would continue to be operated by a nonprofit organization with a public commitment to maintaining a stable pricing environment, instead of on behalf of a private equity firm whose objective is to maximize profits for its funders?

Cheekily, I’m going to take ICANN at its word and say the answer is “yes”.
One of the controversies concerning the .org renewal was that ICANN seemingly ignored thousands of comments calling for the retention of price caps.
This, ICANN has denied, saying that it “reviewed and evaluated” every comment.
Among the very few comments that weren’t outright condemnations of the decision to remove price caps were two nuanced, arguably ambivalent, analyses from two influential ICANN structures — the At-Large Advisory Committee and the Non-Commercial Stakeholders Group.
ALAC’s eight-page comment (pdf) was very much of the “on the one hand…” variety, but it paid special attention to ISOC’s public interest works when putting forward the view that uncapped pricing might be a good thing, noting (and quoting itself):

a significant portion of .ORG registration fees “are returned to serve the Internet community [through] redistribution of .org funds into the community by the Internet Society, to support Internet development.”… ISOC’s goals and priorities, while far broader than At-Large (and even ICANN), parallel those of At-Large and the interests of end-users. Many At-Large Structures are also ISOC Chapters, further demonstrating the commonality of interests.

NCSG, meanwhile, said in its comments (pdf) that price caps should remain, but increased from the 10%-per-year level. It acknowledged that some .org money flows into funding NCSG.
So there’s two influential groups, both with organizational and/or funding ties to ISOC, saying price increases may be a good thing because ISOC acts in the public interest.
And ICANN said it read and absorbed all the comments, so I’m cheekily going to say that yes, ICANN at least in part renewed the .org contract in the belief that PIR would continue to be a non-profit and act in the public interest.

Had you been aware of the planned sale of the .Org registry to a private equity firm, would you have treated the renewal of the .Org registry agreement and the removal of price caps as worthy of robust discussion and a vote by the Board, such that perhaps the terms of the agreement would have been modified?

I’m going to go out on a limb here and say hell, no. ICANN doesn’t want to be a pricing regulator, regardless of the registry operator, in my view. It’s only the US government that’s preventing it lifting price restrictions on .com, I reckon.

What involvement did your former CEO, Mr. Chehade and your former SVP, Ms. Abusitta-Ouri, have in the decision to employ the base gTLD registry agreement for legacy TLDs during their tenure, if any?

In Chehadé’s case, the answer is fairly clear. Even if he did not have a hands-on role in the decision to cajole legacy gTLD registries toward the 2012 agreement, it all happened on his watch so he bears ultimate responsibility.
It’s worth noting, perhaps, that most of the legacy gTLD agreements that migrated over to the new gTLD agreement’s standard language happened not only while Chehadé was at the helm, but also after he’d already accepted his new job at Abry.
He announced his early resignation in May 2015, telling the AFP at the time that he already had a job lined up in the commercial sector, but he declined to give specifics.
He’d probably made his mind up to quit some time before the announcement. He registered the domain name chehade.company, which he now uses for his investment vehicle Chehadé & Company, in the April.
He revealed he was joining Abry as senior advisor on digital strategy in August that year, but didn’t actually leave until March 2016.
During that interim, lame-duck period ICANN negotiated and signed (all in October 2015) renewals for 2003-round gTLDs .pro, .cat and .travel, all of which incorporated 2012 contract language related to, for example, the Uniform Rapid Suspension process.
Three months before Chehadé’s resignation announcement, ICANN signed a very similar deal with .jobs, the first time it had incorporated 2012 language into a legacy gTLD contract.
These contracts were all signed for ICANN not by Chehadé but by his long-time buddy, frequent co-worker and then-president of the Global Domains Division, Akram Atallah (who is now CEO of Donuts, which is owned by Abry).
Since Chehadé’s departure, ICANN has also taken the same contract renewal stance with TLDs including .xxx, .mobi, .museum and .aero.
By 2016 it had become standard operating practice at ICANN to nudge registries towards the 2012-round contract, as Atallah explained to then-ICA lead Phil Corwin at ICANN’s Hyderabad meeting in November 2016. Atallah stated (pdf):

So basically the negotiations are — the registries come and ask for something, and we tell them please adopt the new gTLD contract. And if they push back on it and they say they don’t want something, we can’t force them to take it. It’s a negotiation between two parties. And I think it’s within the remit of the corporation to negotiate its contracts. If the policy comes back and says that the URS is not something that we want to have as a policy, of course, we would support that.

As regards Nora Abusitta-Ouri, Ethos’s “chief purpose officer”, her former job title of “senior VP for development and public responsibility programs” suggests she had little to no involvement in gTLD contractual issues.
While her LinkedIn profile doesn’t mention it, she appears to have become chief engagement officer at Chehadé & Company after her stint at ICANN ended in July 2016.

What restrictions do you have in place with respect to cooling-off periods for former executives?

Fuck all, clearly.

Selling off PIR, did ISOC just throw .org registrants under a bus?

Public Interest Registry is to lose its not-for-profit status, dramatically increasing the chances of .org price increases, under an acquisition deal announced this evening.
The Internet Society is selling PIR to a brand-new private investment firm called Ethos Capital Investors, which is run by two people with ties to the domain industry.
PIR CEO Jon Nevett told DI today that the company is no longer a non-profit following the transaction, and that ISOC will no longer receive a slice of every .org registration fee.
There’s a lot to unpick here.
The biggest concern is arguably that the deal substantially increases risk for .org registrants.
PIR was recently, and very controversially, granted the right to raise its prices from $9.93 per year to whatever-the-hell-it-wants per year, due to a renegotiation of its ICANN contract that scrapped its longstanding 10%-per-year price increase caps.
Many domain investors and non-profits called for the caps to remain. Uncontrolled pricing could lead to smaller charities, for example, being priced out of their decades-held domains, it was claimed.
But PIR repeatedly assured concerned registrants that it was “a mission driven non-profit registry and currently has no specific plans for any price changes”.
That tune has changed, if only a little, today. Nevett told us:

Our goal has always been to make .ORG accessible and reasonably priced — and that will continue under our new ownership. PIR has made reasonable decisions on price in the past, and we will uphold this spirit going forward. We would never make dramatic price increases as we know it would harm our registrants, as well as our registrars.

PIR also says it plans to establish an advisory council and fund to ensure its founding principles are upheld, and to apply for “B Corporation” certification.
B Corp is a private program run by a non-profit called B Lab that certifies companies that meet certain social, environmental and transparency standards, but it has no legal recognition in, for example, the US tax code.
Nevett told us today that he does not know how long ISOC was negotiating the sale, but that neither PIR nor ICANN knew of it during their contract talks.
We know very little about the new owner. Its web site, which appears to have been created very recently, merely provides bios of its two principals.
These are founder and CEO Erik Brooks, who this year quit the private equity firm Abry Partners after 20 years.
Abry, you may recall, is the company that hired former ICANN CEO Fadi Chehade in 2016 and gobbled up new gTLD registry Donuts in September last year.
His second is Nora Abusitta-Ouri, named as “chief purpose officer”, who’s apparently tasked with overseeing the moral “ethos” of the company’s investments.
Abusitta-Ouri is a former ICANN staffer who most recently held the role of senior VP for development and public responsibility programs until her 2016 departure. She’s also executive director of the Digital Ethos Foundation.
In short, based on what little information is publicly available, it appears that Ethos was set up purely for the purpose of acquiring PIR. It’s not at all clear where the money to fund the deal is coming from.
The acquisition price has not been disclosed, but given that PIR was grossing over $90 million a year at the last count, I doubt Brooks and Abusitta-Ouri are paying out of their own pockets.
Whoever’s backing this is going to want a return, and the best way to quickly soup up PIR’s growth would be to take advantage of its newfound ability to raise .org prices arbitrarily.
More than half of PIR’s revenue before today — close to $50 million a year — was handed directly to ISOC, to fund its capacity-building and education projects worldwide.
That’s all over now, which begs the question of how it will continue to fund itself in future. My guess is that, now that it has hundreds of millions of dollars in the bank, and is talking about an “endowment”, it’s going to stash its windfall in high-interest accounts and live off that income.
Meanwhile, whatever assurances .org registrants had that PIR was going to remain a non-profit concern have been utterly trashed.
UPDATE: Thanks to domain lawyer John Berryhill for pointing out in the comments that the domain name ethoscapital.org was registered by Abry’s Fadi Chehadé on May 7 this year. Additionally, a commenter on Domain Name Wire tonight noted that a company called Ethos Capital LLC was formed in Delaware on May 14, a day after ICANN published its summary of the .org contract renewal’s public comment period.

Surprise! ICANN throws out complaints about .org price caps

ICANN has rejected two appeals against its decision to lift price caps and introduce new anti-cybersquatting measures in the .org space.
In other news, gambling is going on in Rick’s Cafe.
NameCheap and the Electronic Frontier Foundation both filed Requests for Reconsideration with ICANN back in July and August concerning the .org contract renewal.
NameCheap argued that ICANN should have listened to the deluge of public comments complaining about the removal of price caps in Public Interest Registry’s .org contract, while EFF complained about the inclusion of the Uniform Rapid Suspension rights protection mechanism.
Reconsideration requests are usually handled by the Board Accountability Mechanisms Committee but this time around three of its four members (Sarah Deutsch, Nigel Roberts, and Becky Burr) decided to recuse themselves due to the possibility of perception of conflicts of interest.
That meant the committee couldn’t reach a quorum and the RfRs went to ICANN’s outside lawyers for review instead, before heading to the full ICANN board.
This hasn’t happened before, to my recollection.
Also unprecedented, the board’s full discussion of both requests was webcast live (and archived here), which negates the need for NameCheap or the EFF to demand recordings, which is their right under the bylaws.
But the upshot is basically the same as if the BAMC had considered the requests in private — both were denied in a unanimous (with the three recusals) vote.
Briefing the board yesterday, ICANN associate general counsel Elizabeth Le said:

There was no evidence to support that ICANN Org ignored public consultation. Indeed both renewals went out for public comments and there were over 3,700 comments received, all of which ICANN reviewed and evaluated and it was discussed in not only the report of public comments, but it was discussed through extensive briefings with the ICANN board…
Ultimately, the fact that the removal of the price caps was part of the Registry Agreements does not render the public comment process a sham or that ICANN failed to act in the public benefit or that ICANN Org ignored material information.

General counsel John Jeffrey and director Avri Doria both noted that the board may not have looked at each individual comment, but rather grouped together based on similarity. Doria said:

Whether one listens to the content once or listens to it 3,000 times, they have understood the same content. And so I really just wanted to emphasize the point that it’s not the number of comments, it’s the content of the comments.

This seems to prove the point I made back in April, when this controversy first emerged, that letter-writing campaigns don’t work on ICANN.
As if to add insult to injury, the board at the same meeting yesterday approved paying an annual bonus to the ICANN Ombudsman, who attracted criticism from NameCheap and the Internet Commerce Association after dismissing many of the public comments as “more akin to spam”.

After .org price outrage, ICANN says it has NOT scrapped public comments

ICANN this evening said that it will continue to open up gTLD registry contract amendments for public comment periods, despite posting information yesterday suggesting that it would stop doing so.
The organization recently formalized what it calls “internal guidelines” on when public comment periods are required, and provided a summary in a blog post yesterday.
It was very easy to infer from the wording of the post that ICANN, in the wake of the controversy over the renegotiation of Public Interest Registry’s .org contract, had decided to no longer ask for public comments on future legacy gTLD contract amendments.
I inferred as much, as did another domain news blogger and a few other interested parties I pinged today.
I asked ICANN if that was a correct inference and Cyrus Namazi, head of ICANN’s Global Domains Division, replied:

No, that is not correct. All Registry contract amendments will continue to be posted for public comment same as before.

He went on to say that contract changes that come about as a result of Registry Service Evaluation Process requests or stuff like change of ownership will continue to not be subject to full public comment periods (though RSEP does have its own, less-publicized comment system).
The ICANN blog post lists several scenarios in which ICANN is required to open a public comment period. On the list is this:

ICANN org base agreements with registry operators and registrars.

The word “base” raised at least eight eyebrows of people who read the post, including my two.
The “base” agreements ICANN has with registries and registrars are the 2013 Registrar Accreditation Agreement and the 2012/2017 Registry Agreement.
The RAA applies to all accredited registrars and the base RA applies to all new gTLD registries that applied in the 2012 round.
Registries that applied for, or were already running, gTLDs prior to 2012 all have bespoke contracts that have been gradually brought more — but not necessarily fully — into line with the 2012/17 RA in renewal renegotiations over the last several years.
In all cases, the renegotiated legacy contracts have been subject to public comment, but in no cases have the comments had any meaningful impact on their ultimate approval by ICANN.
The most recent such renewal was Public Interest Registry’s .org contract.
Among the changes were the introduction of the Uniform Rapid Suspension anti-cybersquatting policy, and the removal of price caps that had limited PIR to a 10% increase per year.
The comment period on this contract attracted over 3,200 comments, almost all of which objected to the price regulation changes or the URS.
But the contract was signed regardless, unaffected by the comments, which caused one registrar, NameCheap, to describe the process as a “sham”.
With this apparently specific reference to “base” agreements coming so soon thereafter, it’s easy to see how we could have assumed ICANN had decided to cut off public comment on these contentious issues altogether, but that appears to not be the case.
What this seems to mean is that when .com next comes up for renewal, it will be open for comment.

PIR’s “new” .org domain is just temporary. Help it pick another new one!

Public Interest Registry unveiled a fancy new set of logos and a swanky new web site yesterday, but CEO Jon Nevett tells us that its new domain name is temporary.
The new site and logos are undeniably superior to those they replace, but what raised eyebrows was the fact that the non-profit company has replaced its old pir.org domain with thenew.org, and deprecated the PIR brand almost entirely on its site.
The old PIR domain now redirects to the new thenew one, but the older domain still ranks higher in search engines.
But Nevett tells us it’s not a permanent move.
“Think of it more as a marketing campaign,” Nevett said. “This is a limited campaign, then we’ll move to another name.”
The campaign is basically about PIR going back to its roots and repositioning itself as the .org guys.
It’s only been six years since PIR last rebranded. In September 2013, the company started calling itself “Your Public Interest Registry” in its logo, deliberately playing down the “.org”.
Then-CEO Brian Cute told us at the time that playing up .org “made a lot of sense when we were a single-product company” but that with the imminent launch of sister TLDs .ngo and .ong, the decision was made to lead with the PIR branding instead.
.ngo and .ong — for “non-governmental organization” in English and other languages — haven’t exactly flown off the shelves. Neither one has ever topped 5,000 domains under management, while .org, while declining for a few years, still sits comfortably at over 10 million domains.
“I wouldn’t say so,” Nevett said, when I asked him whether PIR is now essentially back to being a single-product company. “But .org is the flagship, and we’re going back to leading with .org as the key brand. It’s what we’re known for and to say otherwise would be silly.”
People outside the industry have no idea what PIR is, he said, but they all know what .org is.
Some suspect that the rebranding is a portent of PIR gearing up to raise prices, given its newly granted ability to up its registry fees beyond the 10% annual price increase cap that it has it has been to date contractually bound to.
But Nevett said the rebranding is “not at all related to a price increase”. He told me several times that PIR still has “no plans to raise prices”.
He said the rebranding was first put in motion over a year ago, after Cute’s departure but before Nevett’s hiring, during Jay Daley’s interim interregnum.
Anyway, here are the new logos:

To the untrained eye, like both of mine, the new, primary .org logo may just look like two blue circles and the word “org”, but PIR’s press release tells us it’s communicating so much more:

The open “ORG” lettering on either side of the sphere signals that .ORG is an open domain for anyone; it serves as a powerful and inclusive global connector. The logo uses a deep royal blue, evoking feelings of trust, security, and reliability that reflect .ORG’s long-standing reputation.

Because I don’t want to alienate any of PIR’s utterly lovely public relations agency people (the same PR agency that came up with the new branding), I’m not going to pass any comment whatsoever on this piffle.
I think the new logos and web site are improvements. They’re also long-term investments, while the new domain name is not.
“For three to six months we’ll be leading with the marketing campaign of thenew.org, after that we’ll be using a new name as the lead,” Nevett said.
But it won’t be back to pir.org or thenew.org, he said.
Which begs the question: what domain will PIR switch to?
During the course of our conversation, Nevett made the mistake of asking me what I thought the next domain should be, and I made the mistake of saying that I should open the question up to my readers.
So… what should PIR’s next domain be?
Be nice.

.org price cap complaints more like “spam” says Ombudsman

ICANN’s Ombudsman has sided with with ICANN in the fight over the lifting of price caps on .org domains, saying many of the thousands of comments objecting to the move were “more akin to spam”.
Herb Waye was weighing in on two Requests for Reconsideration, filed by NameCheap and the Electronic Frontier Foundation in July and August after ICANN and Public Interest Registry signed their controversial new registry agreement.
NameCheap wants ICANN to reverse its decision to allow PIR to raise .org prices by however much it chooses, while the EFF complained primarily about the fact that the Uniform Rapid Suspension anti-cybersquatting measure now appears in the contract.
In both cases, the requestors fumed that ICANN seemed to “ignore” the more than 3,200 comments that were filed in objection back in April, with NameCheap calling the public comment process a “sham”.
But Waye pointed to the fact that many of these comments were filed by people using a semi-automated web form hosted by the pro-domainer Internet Commerce Association.

As far as comments go for ICANN, 3200+ appears to be quite a sizeable number. But, seeing as how the public comments can be filled out and submitted electronically, it is not unexpected that many of the comments are, in actuality, more akin to spam.

With this eyebrow-raising comparison fresh in my mind, I had to giggle when, a few pages later, Waye writes (emphasis in original):

I am charged with being the eyes and ears of the Community. I must look at the matter through the lens of what the Requestor is asking and calling out. The Ombuds is charged with being the watchful eyes of the ICANN Community. The Ombuds is also charged with being the alert “ears” of the Community — with listening — with making individuals, whether Requestors or complainants or those just dropping by for an informal chat, feel heard.

Waye goes on to state that the ICANN board of directors was kept well-briefed on the status of the contract negotiations and that it had been provided with ICANN staff’s summary of the public comments.
He says that allowing ICANN’s CEO to execute the contract without a formal board vote did not go against ICANN rules (which Waye says he has “an admittedly layman’s understanding” of) because contractual matters are always delegated to senior staff.
In short, he sees no reason for ICANN to accept either Request for Reconsideration.
The Ombudsman is not the decision-maker here — the two RfRs will be thrown out considered by ICANN’s Board Accountability Mechanisms Committee at its next meeting, before going to the full board.
But I think we’ve got a pretty good indication here of which way the wind is blowing.
You can access the RfR materials and Waye’s responses here.

Can NameCheap reverse .org price cap scrap?

NameCheap has taken it upon itself to fight ICANN’s decision to remove price increase caps on .org. But does it stand a snowball’s chance in hell of winning?
The registrar has filed a Request for Reconsideration with ICANN, appealing the organization’s signing of a Registry Agreement with Public Interest Registry that allows PIR to raise prices by however much it wants, more or less whenever that it wants.
NameCheap, which had over 390,000 .org domains under management at the last count, says it is fighting for 700-odd of its customers whose comments, filed with ICANN, were allegedly not taken into account when the decision was made, along with registrars and everyone else that may be adversely impacted by unfettered .org price increases.
NameCheap thinks its business could be harmed if price increases are uncapped, with customers perhaps letting their domains expire instead of renewing. It’s RfR states:

The decision by ICANN org to unilaterally remove the price caps when renewing legacy TLDs with little (if any) evidence to support the decision goes against ICANN’s Commitments and Core Values, and will result in harm to millions of internet users throughout the world.
…
Unrestricted price increases for legacy TLDs will stifle internet innovation, harm lesser served regions and groups, and significantly disrupt the internet ecosystem. An incredible variety of public comments was submitted to ICANN from all continents (except Antarctica) imploring ICANN to maintain the legacy TLD price caps — which were completely discounted and ignored by ICANN org.

Before the new contract was signed, PIR was limited to a 10% increase in its .org registry fee every year. It didn’t always exercise that right, and has said twice in recent months that it still has no plans to increase its prices.
The new contract — which has already been signed and is in effect — was subjected to a public comment period that attracted over 3,200 comments, almost all of them expressing support for maintaining the caps.
Despite not-for-profit PIR’s protestations, many commenters came from the position that giving PIR the power to increase its fee without limit would very possibly lead to price gouging.
That ICANN allegedly “ignored” these comments is the key pillar of NameCheap’s RfR case.
The public comment period was a “sham”, the registrar claims.
But is this enough to make ICANN change its mind and (somehow) unsign the .org contract?
There are three ways, under ICANN’s bylaws, to win an RfR.
Requestors can show that the board or staff did something that contradicts “ICANN’s Mission, Commitments, Core Values and/or established ICANN policy(ies)”
They also win if they can show the decision was was taken “without consideration of material information” or with “reliance on false or inaccurate relevant information”.
It’s quite a high bar, and most RfRs are rejected by the Board Accountability Mechanisms Committee, which is the court of first instance for reconsideration requests.
Requestors rarely show up with sufficient new information sufficiently persuasive to kick the legs from under ICANN’s original decision, and the question of something contradicting ICANN’s core principles is usually a matter of interpretation.
For example, in this case, NameCheap is arguing that failing to side with the commenters who disagreed with the removal of price caps amounts to a breach of ICANN’s Core Value to make all decisions in consultation with stakeholders:

The ICANN org will decide whether to accept or reject public comment, and will unilaterally make its own decisions — even if that ignores the public benefit or almost unanimous feedback to the contrary, and is based upon conclusory statements not supported by the evidence. This shows that the public comment process is basically a sham, and that ICANN org will do as it pleases in this and other matters.

But one of ICANN’s stated reasons for approving the contract was to abide by its Core Value to depend “on market mechanisms to promote and sustain a competitive environment in the DNS market”. It doesn’t want to be a price regulator, in other words.
So we have a clash of Core Values here. It will be pretty easy for ICANN’s lawyers — who drafted the contract and will draft the resolutions of the BAMC and the full board — to argue that the Core Values were respected.
I think NameCheap is going to have a hard time here.
Even if it were to win, how on earth does one unsign a contract? As far as I can tell, ICANN has no termination rights that would apply here.
Where the RfR will certainly succeed is to force the ICANN board itself to take ownership, on the record, of the .org contract decision.
As ICANN explained to DI earlier this month, while the board was very much kept in the loop on the state of negotiations, it was senior staff that made all the calls on the new contract.
But an RfR means that the BAMC, which comprises five directors, will first have to raise their hands to confirm the .org decision was kosher.
NameCheap will then get a chance to file a rebuttal before the BAMC decision is handed to the full ICANN board for a confirmatory vote.
While the first two board discussions of the .org contract were not minuted, the bylaws contain an interesting feature related to RfRs that I’d never noticed before today:

If the Requestor so requests, the Board shall post both a recording and a transcript of the substantive Board discussion from the meeting at which the Board considered the Board Accountability Mechanisms Committee’s recommendation.

I sincerely hope NameCheap invokes this right, as I think it’s pretty important that we get some additional clarity on ICANN’s thinking here.