Dear Mr. Brooks:

I’m a .org registrant and longtime contributor to Internet and DNS policy (some might say I’m the community crank), and, not having fallen off the turnip truck last night, I am deeply concerned whenever representatives of shadowy moneyed interests talk about “strengthening the multistakeholder model.”  My concern is particularly heightened when said representative of shadowy moneyed interest makes such statements in the context of having been denied something desired.  Setting all that aside, I’ll offer a few insights for your post-mortem analysis — free of charge.

Lord knows that the multistakeholder model is not without its faults, but, in this particular instance, it worked as intended.  What inhibited your transaction, rather, was a veritable grab bag of unforced errors that belied what would otherwise have been a fairly decent marshaling of optics and retail politicking. 

First, it’s all about people.  Ethos’ initial significant misstep was allowing Fadi to bring it anywhere near the DNS. This is because, while on paper it may appear that he would be the perfect Sherpa for the type of deal you tried to accomplish, in reality he left ICANN deeply mistrusted by a wide cross-section of the community. This lack of trust is well-founded considering that his tenure is marked by rampant cronyism, cynical opportunism, and — after leaving early and abandoning the organization in the final days of the IANA transition — a legacy of an organization somehow less than it was when he took the reigns. Newly independent but saddled with enormous payroll costs and other expenses that continue decimating the balance sheet that were justified by overly rosy revenue projections to come from what turned out to be an albatross of a new gTLD program injecting into the market an enormous volume of new supply in search of demand.  The repercussions of his tenure are still being discovered — let alone addressed — and likely have shackled ICANN and the DNS for some time yet to come.

Ethos also relied heavily on proposed “binding” Public Interest Commitments and sought to leverage Fadi’s hand-picked Compliance soothsayer, Allen Grogan, for seeking community acquiescence.  Yet, Ethos failed to consider that Mr. Grogan was a well-known skeptic of PICs as ICANN’s most senior leader of contractual compliance and, had you asked, any number of people might have pointed out that he had stated publicly — on more than one occasion — that PICs are unenforceable. 

Regarding the additional new community resources in the amount of $10 million, it seems a bit paltry — perhaps even slightly insulting — when you consider that ICANN’s recent $20 million payday is twice that. 

Ethos also reveals nothing but inexperience with running a registry by referring to .ORG registrants as “customers.”  At least for the legacy registries, registrants may be users, perhaps, but they are not customers.  Although, because of the high number of mission-driven organizations who rely on .ORG — as opposed to, say, .COM or .NET which tends to be more commercially-driven — Ethos may have had its hands full with mission-driven registrants armed with torches and pitchforks once it became clear what was actually meant by the artfully constructed phrase “no more than 10% on average” with respect to pricing — the “on average” part being the real kicker and where potential future mischief would likely occur, but I digress. 

If you get the opportunity, and you choose to let it, then experience will teach you that the customers of a domain name registry — particularly legacy registries —  are the registrars. Registrars are the workhorses of the DNS and are too often unrecognized, under-appreciated, and undervalued for the role they play in the ecosystem.  You see, registrars actually compete in the market and, as such, must undertake costly activities like marketing and customer service. Registrars have to worry about margin and managing expenses is an existential exercise.

Legacy registries are monopolies granted by the U.S. government whose startup costs were underwritten by the American taxpayer that have become anticompetitive, oligarchic monstrosities that print cash while every other market participant does all the work. As a private equity guy, I’m sure you view this with professional envy — who wouldn’t like to print cash like the Fed engaged in quantitative easing? 

But when you zoom out a little and get some perspective, you might remember that competition and innovation are the twin engines that drive virtuous prosperity. However, legacy registries don’t compete and, having worked for the biggest domain name registry (twice) I couldn’t point to anything resembling innovation if my life depended on it.  This means that enormous value is being taken out of the economy — out of circulation, essentially — without any commensurate value being provided in return. In the global “new normal” — where recession is the optimistic view — how much longer will such economic injustice be overlooked before Leviathan reaches out its heavy hand?  In the final accounting, Ethos may have dodged a bullet. 

In any event, hope these insights offer some additional food for thought. Better luck next time — and welcome to the global community of DNS stakeholders.

Regards,
Greg Thomas

How come you didn’t bring any substantial innovation to Donuts with its hundreds of gTLDs? If the excuse is it didn’t have the registration volume of .ORG are you really bringing innovation or simply imposing things on customers who are locked in without a reasonable alternative?

While we’re on the topic, your original motivation was helping PIR and ISOC and not profit? That would be a hard sale.