5 ms·

Sounds like a lot of money for something that should actually only be a minor administrative cost. Something smells. Perhaps a few audits, some regulation and

Sounds like a lot of money for something that should actually only be a minor administrative cost. Something smells. Perhaps a few audits, some regulation and a lot more oversight by people who are less "enthusiastically driven by negotiable pleasantries" would help?

wmf 7y ago
AFAIK a .org domain costs ~$10/year; ~$5 is a mandatory "donation" to ISOC, <$2 goes to Afilias to actually operate .org, and I guess there is some kind of PIR administrative overhead. So yeah, your intuition is right.
- oefrha 7y ago
  Details in my comment here: https://news.ycombinator.com/item?id=21658218 https://news.ycombinator.com/item?id=21658218 (Clarification: by $0-2 goes to Afilias I meant that much goes to the profit of Afilias.) In addition to that, apparently $2 to Afilias (for-profit, actual registry operator) was a recent development[1]; it was more like $4 before 2018. And guess what, former PIR CEO (2011-2018) was Vice President of Discovery Services for Afilias (2018-2011).[2] (This was pointed out to me by [3].) So the shenanigans have been going on long before the monumental .org sale we're discussing here. [0] https://news.ycombinator.com/item?id=21658218 https://news.ycombinator.com/item?id=21658218 [1] https://domainnamewire.com/2019/10/28/pir-org-slashes-registry-fee-to-afilias-in-half-to-18-million/ https://domainnamewire.com/2019/10/28/pir-org-slashes-regist... [2] https://icannwiki.org/Brian_Cute https://icannwiki.org/Brian_Cute [3] https://news.ycombinator.com/item?id=21659856 https://news.ycombinator.com/item?id=21659856
ricardobeat 7y ago
They were reporting ~$90m/year revenue, so it's not an outrageous multiplier - no idea how they earned so much from the domain service though.
- Seanambers 7y ago
  This is quite cheap actually. 12x multipler - raise prices(10%) 3 times and it's down to 9x :) Viewed as a perpetuity the income should have been valued way higher - around 4 billion. This deal just stinks.
  - zhoujianfu 7y ago
    But what was their profitability? I saw in some other thread it estimates like 50%, which would put this at around a 24x p/e, kinda normal/high?
    - formercoder 7y ago
      Indeed, revenue multiples are dangerous. I’m guessing they bought it at a significant ebitda multiple making the deal sweet for the sellers. However, the private equity MO is going to be value creation through margin improvement. When they flip it their proceeds will be much sweeter. They’ve most likely modeled in multiple contraction as that’s rather common with tech buyouts these days. If the market stays hot they make a killing.
      - ddingus 7y ago
        If they simply make something more lean, no real impact to domain name holders, fine. There is some value there. But, nobody drops numbers that large without very fully exploiting what they see as an opportunity. The opportunity is to raise prices to max market will bear, then flip it. Given the intent behind .org, this is artificial value, created out of both position and leverage. I am beginning the work to be rid of my .org That will cost me. Fine. I abhor this kind of thing. A lot more money will move unnecessarily. I do not want to be a part of that.
  - eadmund 7y ago
    This comment and its parent are the two keys for me in this whole rotten situation. ISOC are like Esau selling his birthright for a mess of pottage (i.e., a bowl of lentils). They could have done so much better for themselves, for the Internet and for society at large by holding on to the domain.
3xblah 7y ago
Domain names were initially provided free of charge. I once saw an estimate that put the administrative cost of a domain name at less than 20 cents. Then came "NewCo", now known as ICANN, and the "business" of "selling" domain names. Verisign, the operator of .com, arguably the most important TLD, operates the com registry subject to agreements with US Department of Commerce and ICANN. These contracts now let them keep raising prices gradually. It is doubtful that these increases reflect or are in any way proportional increases in administrative costs.
- fanf2 7y ago
  When ICANN was founded, the DNS was almost entirely monopolized by Network Solutions who sold domains for $100 per year. The process was very manual and time consuming (think old-style TLS certificates). ICANN’s purpose was to break up the monopoly by setting up the two-level registry/registrar system, by creating more TLDs, and by taking away some TLDs. Verisign, through various acquisitions and sell-offs, the descendent of Network Solutions, and still dominates.
  - 3xblah 7y ago
    I also remember it was $50/year for a time. A 100% increase/decrease. The fees were/are arbitrary and do not correlate to administrative costs.
  - wmf 7y ago
    The transition from InterNIC to Network Solutions was botched, but ICANN was a very complex and still expensive fix for that mistake.
- rs23296008n1 7y ago
  I figured that domain names were essentially just an excuse for taking rental money (or printing money if you add a bit of poetic license). I understand why the sale price can vary. Stuff has a market price and some are now more valuable. Initial setup for new domain should be negligible however. I also understand there are costs for keeping the lights on but I can't see that rental being much more than a dollar per month. It can't cost THAT much to serve a single name entry. Not when I can get a generic server for $20/month or so. And that is without much effort. With a minimal bit more effort I could probably get something a lot cheaper. The whole pricing structure seems like a scam.

wmf 7y ago

AFAIK a .org domain costs ~$10/year; ~$5 is a mandatory "donation" to ISOC, <$2 goes to Afilias to actually operate .org, and I guess there is some kind of PIR administrative overhead. So yeah, your intuition is right.

oefrha 7y ago
Details in my comment here: https://news.ycombinator.com/item?id=21658218 https://news.ycombinator.com/item?id=21658218 (Clarification: by $0-2 goes to Afilias I meant that much goes to the profit of Afilias.) In addition to that, apparently $2 to Afilias (for-profit, actual registry operator) was a recent development[1]; it was more like $4 before 2018. And guess what, former PIR CEO (2011-2018) was Vice President of Discovery Services for Afilias (2018-2011).[2] (This was pointed out to me by [3].) So the shenanigans have been going on long before the monumental .org sale we're discussing here. [0] https://news.ycombinator.com/item?id=21658218 https://news.ycombinator.com/item?id=21658218 [1] https://domainnamewire.com/2019/10/28/pir-org-slashes-registry-fee-to-afilias-in-half-to-18-million/ https://domainnamewire.com/2019/10/28/pir-org-slashes-regist... [2] https://icannwiki.org/Brian_Cute https://icannwiki.org/Brian_Cute [3] https://news.ycombinator.com/item?id=21659856 https://news.ycombinator.com/item?id=21659856

ricardobeat 7y ago

They were reporting ~$90m/year revenue, so it's not an outrageous multiplier - no idea how they earned so much from the domain service though.

Seanambers 7y ago
This is quite cheap actually. 12x multipler - raise prices(10%) 3 times and it's down to 9x :) Viewed as a perpetuity the income should have been valued way higher - around 4 billion. This deal just stinks.
- zhoujianfu 7y ago
  But what was their profitability? I saw in some other thread it estimates like 50%, which would put this at around a 24x p/e, kinda normal/high?
  - formercoder 7y ago
    Indeed, revenue multiples are dangerous. I’m guessing they bought it at a significant ebitda multiple making the deal sweet for the sellers. However, the private equity MO is going to be value creation through margin improvement. When they flip it their proceeds will be much sweeter. They’ve most likely modeled in multiple contraction as that’s rather common with tech buyouts these days. If the market stays hot they make a killing.
    - ddingus 7y ago
      If they simply make something more lean, no real impact to domain name holders, fine. There is some value there. But, nobody drops numbers that large without very fully exploiting what they see as an opportunity. The opportunity is to raise prices to max market will bear, then flip it. Given the intent behind .org, this is artificial value, created out of both position and leverage. I am beginning the work to be rid of my .org That will cost me. Fine. I abhor this kind of thing. A lot more money will move unnecessarily. I do not want to be a part of that.
- eadmund 7y ago
  This comment and its parent are the two keys for me in this whole rotten situation. ISOC are like Esau selling his birthright for a mess of pottage (i.e., a bowl of lentils). They could have done so much better for themselves, for the Internet and for society at large by holding on to the domain.

3xblah 7y ago

Domain names were initially provided free of charge. I once saw an estimate that put the administrative cost of a domain name at less than 20 cents. Then came "NewCo", now known as ICANN, and the "business" of "selling" domain names. Verisign, the operator of .com, arguably the most important TLD, operates the com registry subject to agreements with US Department of Commerce and ICANN. These contracts now let them keep raising prices gradually. It is doubtful that these increases reflect or are in any way proportional increases in administrative costs.

fanf2 7y ago
When ICANN was founded, the DNS was almost entirely monopolized by Network Solutions who sold domains for $100 per year. The process was very manual and time consuming (think old-style TLS certificates). ICANN’s purpose was to break up the monopoly by setting up the two-level registry/registrar system, by creating more TLDs, and by taking away some TLDs. Verisign, through various acquisitions and sell-offs, the descendent of Network Solutions, and still dominates.
- 3xblah 7y ago
  I also remember it was $50/year for a time. A 100% increase/decrease. The fees were/are arbitrary and do not correlate to administrative costs.
- wmf 7y ago
  The transition from InterNIC to Network Solutions was botched, but ICANN was a very complex and still expensive fix for that mistake.
rs23296008n1 7y ago
I figured that domain names were essentially just an excuse for taking rental money (or printing money if you add a bit of poetic license). I understand why the sale price can vary. Stuff has a market price and some are now more valuable. Initial setup for new domain should be negligible however. I also understand there are costs for keeping the lights on but I can't see that rental being much more than a dollar per month. It can't cost THAT much to serve a single name entry. Not when I can get a generic server for $20/month or so. And that is without much effort. With a minimal bit more effort I could probably get something a lot cheaper. The whole pricing structure seems like a scam.