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Community Call: December 5, 2019

Amy Sample Ward of NTEN was joined by Andrew Sullivan of Internet Society, Mitch Stoltz and Cara Gagliano of the Electronic Frontier Foundation, Rick Cohen of the National Council of Nonprofits, Brandt Dainow of  Internet Society Ireland, Jon Nevett of Public Interest Registry, and Erik Brooks and Nora Abusitta of Ethos Capital.

We’ve included the lengthy transcript below the recording and below that is a selection of unanswered questions posted during the call that we didn’t have to address.

Recording

Transcript

Amy Sample Ward:       Hi everyone. Thank you so much for joining today, or joining later if you are watching the recording, which we anticipate many folks may do. I’m Amy Sample Ward. I [inaudible 00:00:12]. I’m the CEO at NTEN. NTEN is a nonprofit organization and our focus is ensuring that all other nonprofits know how to use technology effectively and strategically to meet their needs and meet their missions. We are happy to host this community call today on a topic that I think a lot of folks have questions about, feelings about, a lot of uncertainty, and I’m really grateful for the time of all the presenters joining today to provide some answers and have discussion together.

Amy Sample Ward:       We have had a great deal of community questions submitted in advance and appreciate how much folks are interested in the conversation. I’m sharing that because it means we probably won’t be able to take many questions live during the conversation, because we have already seen so many that we’re going to try and cover today. We will do our best to watch those as they come in and indicate if we’re able to get their questions in the queue. If nothing else, you can still feel free to chat questions in all throughout, even if they aren’t things that we cover live today, and we’re happy to provide that list of questions that was surfaced to Andrew and Jon and Eric and the team in case they are helpful in this ongoing process.

Amy Sample Ward:       To get things started, I’m going to quickly ask for some folks to do some intros, and then ask folks to do some longer intros, and then we will start in on the questions. First, Rick, can I have you go first, and then Kara and Mitch, I’ll turn to the two of you.

Rick Cohen:                   Sure, and thanks Amy, and thanks to NTEN for convening this call. I’m Rick Cohen, I’m chief communications officer and chief operating officer for the National Council of Nonprofits. We are a resource and advocate for charitable nonprofits and the largest network of charitable nonprofits in the country. I’ll turn it over to Mitch next.

Mitch Stoltz:                 Thank you. I’m Mitch Stoltz. I’m a senior staff attorney at the Electronic Frontier Foundation. We are a donor-supported nonprofit public interest organization that promotes rights and freedoms of internet users everywhere.

Amy Sample Ward:       Cara?

Cara Gagliano:              I’m Cara Gagliano. I work with Mitch. I’m a staff attorney at the Electronic Frontier Foundation or EFS.

Amy Sample Ward:       Awesome. We also have on the line, Brandt. I’ll have you introduce yourself next.

Brandt Dainow:             Hi folks, my name is Brandt Dainow. I’m the chair of the Internet Society in Ireland.

Amy Sample Ward:       Awesome. Great. All right, so for potentially longer intros and a bit of context information. Andrew, can I have you go first?

Andrew Sullivan:           Sure. I’m Andrew Sullivan. I’m the president and CEO of the Internet Society. We exist to promote the internet for everyone, and we are supported by the Public Interest Registry, among other parts of our organization. We’re the ones who are part of this transaction and I guess people have a lot of questions, so rather than going on about why we think that this is a good idea and why this is good for the internet, I thought I would not talk for very long and answer more questions.

Amy Sample Ward:       Awesome. I appreciate that, Andrew. Nora, are you with Eric and able to be both people at once on your feed?

Nora Abusitta:              Yes, but I want to make sure you guys can hear Eric. Eric?

Eric:                              Hey. Hello everybody. Can you hear me?

Amy Sample Ward:       I can hear Eric.

Nora Abusitta:              Perfect.

Eric:                              Great. Great. My apologies for the technical glitch, but anyway, this is great. I’m incredibly excited to be on this call. Candidly, it’s been challenging for us to not be able to communicate directly with larger group of folks. I think this is going to be a really great opportunity for everyone to hear our perspective and also ask questions. I think maybe just a little bit of quick background on Ethos. I started Ethos after having spent 25 years in the business with a set of values that are really fundamentally broader and more expansive than traditional investing. Most importantly, if I could identify that particular area, it is the notion that success is defined as success for all constituents. That’s success for customers, employees, vendors, the community that’s impacted by the company, and that that really is the very best longterm strategy for the business is success in and of itself.

Eric:                              The mission and purpose of PIR is exactly in line with our values, and that will not change at all. In fact, we plan to actively invest in the longterm success of PIR, which is something that I think has been difficult historically, just given the annual budgetary issues that PIR has dealt with. We plan to support PIR and its plans to grow org by keeping the focus on the [inaudible 00:05:37] mission-based principles. The identity of org as a domain for good is critically important to both PIR and Ethos. We intend to do everything we can to protect and enhance that reputation. That is the fundamental, most important principle of the business itself, that reputation.

Eric:                              There are a variety of things that we’re planning on doing. We want to develop this in collaboration with those of you on the phone. I completely understand people’s concerns and fears, and will do my very best to answer questions and be transparent and include you in the process to get your feedback on how to best position PIR for success. Let me just address what I’ve heard as some of the most important concerns up front, which is-

Amy Sample Ward:       Eric? Just one moment before you say those, because I want folks to be able to hear them well. I think, Nora, because you’re using your phone to be Eric, all of the sounds of your notifications and alerts are also coming through and creating some audio disturbance.

Nora Abusitta:              Yeah, I don’t-

Amy Sample Ward:       Okay. If there’s a way to …

Eric:                              Turn off the notifications on some of those.

Nora Abusitta:              Yeah.

Amy Sample Ward:       Okay. Thanks Eric. I didn’t mean to interrupt. I just want it to be clear when you’re speaking.

Eric:                              No, no, no, no, of course. No, thank you. Thank you. Thank you. I really want to make sure that everybody understands that keeping org accessible and reasonably priced for everyone is 100% our intention. I hope I’ve made that clear in some of the things that we’ve said. We’re going to live completely within the sphere of historic practice when it comes to pricing. Specifically this means, as I think we stated publicly, that the annual price increase could be know more than 10% on average, which is consistent with historic practice, and that’s about a dollar a year right now.

Eric:                              We’re enthusiastic about the opportunity to support org in the community, committed to maintaining org’s position as the home for purpose-driven organizations. I really am very open and look forward to hearing everyone’s questions and advice. I’ve offered to have one-on-one meetings with many of you already. Some of you have accepted those conversations I thought have been extremely positive and very productive. Some folks have not accepted. I really encourage you either communicating your concerns directly with us. It’s the best way for us to understand each other and define some common ground. I guess [inaudible 00:08:23] in my opening comments with very clearly it’s my absolute intention for everyone to be better off as a result of the Ethos PIR partnership. I’m very confident that over time you’ll come to understand and believe that, and you have my commitment that we will deliver that.

Amy Sample Ward:       Thanks Eric. Nora, it does look like we lost your video there, in case that is something you can-

Nora Abusitta:              Yeah, I was hoping to lose some of the background prompts by clicking any button that looked like it could help, but here we are. I’m sorry if you guys hear more prompts from my computer, and apologies from our end if there’s this technical glitch, but I’m going to be very brief here. I’m here to support, obviously, everyone. I’m Nora Abusitta. I’m chief purpose officer at Ethos Capital. I think I am the person who is supposed to hold everyone accountable for not just doing well but also doing good, and I am extremely community-facing by experience and hope to hear back from everyone here and see what their concerns are and how best to tackle them. I think we should just hear from Jon now and dive into the real questions.

Amy Sample Ward:       Great. Thanks Nora, and I think we’ll need to mute your phone if you speak not on the phone going forward, because I think we could hear a bit of echo there. We’ll figure it out as we go. That’s technology.

Amy Sample Ward:       Jon, do you want to say a few words?

Jon Nevett:                   I would love to. My name is Jon Nevett. I’m the president and CEO of PIR.org. I guess I’m leading the organization that’s the subject of this great issue. When I first learned that there was a chance that ISOC could sell PIR, I had the same emotions that you would suspect; surprise, confusion, concern, probably many of the same emotions that many of the folks on this call have as well. I know that .org is the crown jewel of the domain name system. Full stop.

Jon Nevett:                   We have the best name, the best customers, the best brand, the best mission, and the best employees, and an amazingly supportive board. We consider ourselves an exemplary registry in all facets, and serving mission-based customers and consumers like you. We have the lowest incidents of abuse of all the major extensions, our quality initiatives, reward registrars that bring us good names. We relaunched our brand. We’ve had an amazing celebration of .orgs that use their domain names in innovative ways. We’ve had education outreach campaigns. We operate transparently. We issued our first annual report in years. We publish our financials. We publish our anti-abuse principles and take down stats for anti-abuse. We’re industry leaders in privacy and transparency and policy, and we have an amazing team of 34 hardworking individuals, and I’m proud to lead that team.

Jon Nevett:                   A lot of the employees have been here for many years, and some came since I’ve joined as well. In light of all this, I was really concerned whether all the great work we’ve been doing and all the great plans would go away. With that said, I understand why ISOC would do this. They would enter this transaction, and I’m sure Andrew will talk about it. He talked about it on a webinar on Friday, that a diversified portfolio is just much better and less risky than relying on one company in one industry, as he put, it for most of its funding. I get that. It makes sense.

Jon Nevett:                   My goal in this transaction was to protect the .org mission, the.org brand, and the .org staff. I met with each potential suitor and it was clear to me that Ethos Capital would be the best steward for the new .org. I understood and I still understand that the move from a nonprofit to a for-profit would be disconcerting, but I’ve moved from concern to optimism for a number of reasons.

Jon Nevett:                   Ethos wants to continue and expand the org mission, as Eric and Nora said. They’re committed to the continuity of our operations and our longterm financial security, and they’re committed to our employees, which is very important to me and to the PIR board. They came with some good ideas; establishing a stewardship council, you’ll hear about or have read about a community enablement fund, B Corporation status possibility, enhancing our .org impact awards and .org stories, and most importantly they’re open to input.

Jon Nevett:                   For example, I suggested to each of the suitors that they consider a voluntary price constraint to address the anticipated concerns from the transaction, and only Ethos was open to the idea. They’ve now announced that as Eric mentioned. When Article 19 Organization came around in asking about a human rights assessment of PIR, Ethos was totally open to it. They’re all in favor of it. They’ve expressed their commitment to our anti-abuse leadership and quality initiatives, and I’m just convinced that they’re here to do the right thing. I’m heartened that, not only with the great attributes of .org be staying the same, but the future of .org actually is strengthened by Ethos.

Jon Nevett:                   ISOC is an amazing partner, but instead of being in perpetual harvest mode where we send all the fruits of our labor to ISOC for them to do their great work, we will be able to invest in .org and deliver more to the .org community and the internet at large. We’ll be able to focus even more on what you all care about; certainty, security, and that we operate in an ethical manner, and we have the resources provide innovative solutions. I know most of you aren’t there yet. I’ve had more time to think about this. Many of you are opposed to the transaction and I understand that, and many of you have questions and concerns just like I did, but I know that I will listen and that Ethos and their team will listen, and we’ll all be open-minded and want to continue having an open dialogue to address the concerns when we operate .org together. I look forward to the questions. Thank you.

Amy Sample Ward:       Thanks so much, Jon. I’m going to skip right into questions for folks following along. I’m going to be trying to watch the clock, and both Rick and Cara have volunteered to ask some of the questions so that you don’t just hear me all of the time, so you will hear questions from them as we go. Like I said, I am watching the time and will do what I can to make sure we’re getting through as many questions as possible.

Amy Sample Ward:       This first question … Andrew, I anticipate that you will be the one to answer, but folks on the line, please let us know. This was a question that, of course, we have heard a lot prior to the call once the call was announced, it has been discussed on internet policy lists a great deal. On the key points about .org website, of course, you mentioned that .org wasn’t intended to be used by nonprofits in the first place. Can you just address that, and maybe also address how it relates to the 2002 ISOC application in which I saw promise to define .org as the global home for nonprofits. Can you address that a bit?

Jon Nevett:                   I didn’t hear the question.

Andrew Sullivan:           I’m happy to give our view, and I think it’s possible that Jon will want to say something as well. I understand that the positioning of .org has in fact been to support global nonprofits, but it is not true and it’s never been true that .org was exclusively for nonprofits. It could be that this is a little bit of a difference in the way that I think about this. There’s no requirement for anything in terms of a .org registration. You can register a .org and you’ve always been able to register a .org for any reason whatsoever.

Andrew Sullivan:           What is not the case is that this is a registry that has those kinds of restrictions on it. That isn’t to say that it’s not positioned or branded or used by not for-profits, and I think it is, and I think that that’s an important part of the identity of .org, and I think that that’s … I’m not trying to dismiss it. I just think that it’s important to recognize that any claim that it was always this way is not really backed up by the history. I still think that it’s valuable as a property where not for-profits live. I think for that reason, Ethos, I can’t speak for them, but I think that that’s part of the reason that Ethos is interested in this, because I think that that’s the business that they’re trying to build.

Amy Sample Ward:       Thanks so much, Andrew. Jon, did you want to address that at all?

Jon Nevett:                   Sure. Yeah, I agree with Andrew. .org was run as a for-profit in its infancy. Network Solutions ran it, Verisign ran it, and then it got transferred over to PIR. If you look in the value chain of your internet providers, whether it’s your ISP, your hosting company, your registrars, your search engine optimization companies or internet marketing companies or security companies, almost all of them are for-profit serving the nonprofit folks and customers. We have a broad customer base. It’s not just nonprofits, it’s anyone who wants to do good on the internet should be looking for a .org. It could be a family, a community, and anything else like that. I think for-profits often serve not-for-profits and quite successfully. I think that’s the model that Ethos is managing here.

Amy Sample Ward:       Thanks Jon. I want to pause. Mitch, or Cara, Rick? Did you have any followup question? I didn’t want to steam … Okay. Yeah. Mitch?

Mitch Stoltz:                 There I go.

Amy Sample Ward:       We can hear you. Go ahead.

Mitch Stoltz:                 Thank you. Regarding the history of .org, I think we should be sure to point out that Verisign, or was it Network Solutions at that point, was compelled to divest the operation of .org, and in that process when PIR was created by ISOC to run .org, they made representations that it was going to be the home of nonprofits. I think that’s an important point, whatever the earlier history, the pre-2002 history was.

Jon Nevett:                   Yeah, this is Jon. I think the point is it could still be the home of nonprofits for .org, it’s just operated by a for-profit like it was originally. I don’t think those two are …

Mitch Stoltz:                 They’re not, accept that, again, the one thing that that leaves out is there are now millions of nonprofits. We have a letter signed by over 250 nonprofits, some very household names, who are essentially captive audience of .org at this point. Regardless of who else is out there wanting to do good on the internet, there are people for whom switching domain names is basically impossible at this point. The policies and the way that .org is operated in the future directly affects them, which is why they need to have a say.

Jon Nevett:                   Yeah, absolutely. As Eric mentioned, we don’t expect to have a change in the way .org has operated. We’ll have the same staff, we’ll have the same-

Jon Nevett:                   The change in the .org is operated, we’ll have the same staff, we’ll have the same technology, we’ll have the same policies. I think it should be comfortable and it’d be a somewhat, you won’t see the change when it comes to .org the day before the transaction closes and the day after when it comes to those kinds of things. And if anything, like I said, it’ll get better because we’ll have more investment and more resources to provide innovative solutions. We’re talking about having a webinar to hear what a .org customers want from us, to see if there’s new products or new services that we could provide that would be interesting and exciting for and helpful most importantly for organizations and families and others that use .org. Yeah, we’re excited to work with you on those issues.

Amy Sample Ward:       Thanks John. I’m going to keep us moving forward because I think some of these questions will continue to come up. Rick has volunteered to lead the next small batch of questions, so I’m going to turn it over to Rick.

Rick Cohen:                   Great. Thanks Amy. And as many on the call know one of the big issues here is around the pricing. Even at a 10% increase per year over the next several years, you’re talking about hundreds of millions of dollars cumulatively. And one of the questions that we saw come up a number of times relates to the removal of the price caps on the .orgs which we know is something that predated the sale here by a few months and came in the renewal of the domain agreement with ICANN. And from what we understand, that change was not just kind of handed down by ICANN but welcomed, invited. And so we’re, the question that we got from the communities how is removing those price caps beneficial to those 10 million plus registrants and the .org domain space?

Jon Nevett:                   Yeah, that’s a very fair question. Thank you for that Rick. We received the same contract that every other top level domain has other than .com and .net. That was not something that we negotiated each piece of that agreement. It was, here’s the agreement, we talked about it, we accepted it and then it was published for the first time for public comment, I believe in late February, early March. It was six, eight months before this occurred. And with that said, the pricing constraints that Ethos is willing to do is consistent with the pricing constraints in the prior contract. And so, apparently it wasn’t part, and Eric and Nora could talk to this, but apparently, any kind of dramatic price increase as some folks have claimed was not part of their business plan. And the fact that they’re willing to go from a period of not having any price constraint to a voluntary price constraint said a lot to me at least. And I would hope it would say a lot to the community.

Amy Sample Ward:       Nora, are you hoping to respond?

Eric:                              Yeah. Actually this is Eric. Sorry. I totally understand that there is tremendous eagerness for more certainty around this issue. We can say it as many times as we want to and I think there is appropriate skepticism by the community looking at the situation saying, “Well how do we know? How do we know you say you’re going to do that, but how do we know you’re going to do that?” What I can share with you is that we are working on some mechanisms and some ideas that I think will give people some more assurance other than just taking my word and believing that we’ll be sharing over the coming weeks.

Eric:                              And again looking for feedback and response from folks as to what they think of those ideas. I know it’s not a specific answer right now, but it is a commitment to share some specific ideas and mechanisms that I think, will give folks comfort to this is more than our word. But again, I’ll say it as many times as I possibly can. We are absolutely committed to staying within the spirit of how PIR has operated with the price system that they operated with before.

Amy Sample Ward:       Rick, do you want to keep this moving?

Rick Cohen:                   Yep, I just want to kind of do a follow up on that one that’s sort of related is, would this deal have been made if the price caps were not removed? It’s a question that I know a number of folks have just due to the the time proximity of the events unfolding.

Amy Sample Ward:       Eric?

Jon Nevett:                   I’ll let Eric answer that, but it seems obvious to me that if they put the price caps back on that they would have done the deal had there been no price constraints. But Eric, if you can answer that, that’d be great.

Amy Sample Ward:       Go ahead Eric.

Eric:                              Yep. Thank you. I don’t think there’s any more evidence that if we could give that the removal of the price caps were not part of our decision making process in making a decision to partner with PIR then willing to live under the regime that they had been operating before the price caps were removed. We again totally understand and empathize that folks are concerned about this and are looking for reassurance. But I can tell you point blank that that was not part of our decision making process.

Amy Sample Ward:       Just a process note before you go. Nora, if you can leave your video on when when you or Eric are speaking, it just lets us make it clear on the live feed that that’s who’s presenting.

Nora:                            Oh, okay.

Amy Sample Ward:       Yeah. Rick.

Rick Cohen:                   Great. The next question from the community was why were registry operating rights not put out for a public bid in this process?

Amy Sample Ward:       Great. Andrew, I see you are ready to go.

Andrew Sullivan:           Well that seems like a question that I need to answer. The Internet Society had no plan of any kind to put PIR up for sale. We didn’t have this plan and honestly the next year and in fact all of 2019 has been incredibly busy. I have just come, I’m at the end of an event where the staff has been essentially completely reorganized. We have a new way of delivering our annual plans to the community. We’ve been talking to the community about multiple year plans and so on. This is a period of enormous change at the Internet Society and I had no interest in investigating whether we were going to sell PIR or anything else. The pencils down the hall were not really on the block and we were approached by Ethos for this transaction and we thought it was an enormous opportunity for PIR, for .org registrants, for the Internet Society so that we could do the work that we can, that we try to do for the benefit of all of the internet and yet PIR would be able to grow and expand and offer its improved services that it’s intended to do.

Andrew Sullivan:           Under those circumstances, it wasn’t really realistic to enter a public commentary period. It would have taken probably a year, but it isn’t the time that’s really the issue. The uncertainty was something that would have been very bad for this transaction. And since it wasn’t something that we were really planning to do in advance, we felt that we had to make the decision under the circumstances with the information that we had. That’s the reason we have trustees. We have trustees who are by the community. The community selects them for that very reason. And that’s why they’re called trustees. And so we believe that it was our responsibility to do something in the benefit of the Internet Society and the whole internet community. And so we did it.

Andrew Sullivan:           That doesn’t mean that we want to run everything as a secret shop. We like to consult. We spent the bulk of the year consulting with the community about our action plan, about the things that we’re trying to work on for the next five years. But this was something that we had to take the opportunity. And I believe that it was the right thing for everybody.

Amy Sample Ward:       Yeah, Cara? Yeah, you’re live, you can go.

Cara:                            Took a sec to switch.

Amy Sample Ward:       You can talk at any time.

Cara:                            Andrew, question about that. You seem to be saying that this was something, ISOC really wasn’t looking to do when it just kind of came up this great opportunity. But I think earlier John mentioned something about meeting with and evaluating different suitors, which seems potentially in tension with that. And if there was evaluation of different suitors, why couldn’t that have been more of a public process? Including considering the fact that, as Mitch mentioned in 2002, ISOC made these representations about what the PIR would be in bidding to ICANN and including one of ICANN’s published criteria for evaluating bids was the level of support for the proposal from .org registrants, particularly those actually using .org domain names for non-commercial purposes. I think a lot of people are wondering about why those kind of types of principles were applied here.

Andrew Sullivan:           Actually we went through the principles at the time. I was involved back in 2002 because I was an employee of Affilius and so I recall that process really, really well. I was involved, I was a nerd, I was doing database stuff and there was a lot of difficulty in sort of understanding what the user community behind .org really wanted because in fact registries are not really allowed to talk to registrants. They’re supposed to go through their registrars and it’s extraordinarily difficult to make any evaluation of what registrants really want under these circumstances. That was acknowledged back in 2002 and it’s only gotten worse. I really don’t know how we would’ve done reliably. I can imagine constructing a sample such that you get the answer you wanted, but I don’t think that that’s real consultation either.

Andrew Sullivan:           The more important thing here though is that you’re asking, well there was multiple suitors. Why didn’t you ask everybody? By the time we were in the position where we had anything to evaluate, the only way we could evaluate it was under nondisclosure agreement. And the reason for that was quite frankly, that people were offering rather big sums of money, considerable multiples over what other registries have have sold for in recent years. And under those circumstances, potential buyers want to have a high degree of certainty. And also they’re not prepared to come out in public until such time as they’re pretty confident that they’re going to be the winner.

Andrew Sullivan:           Under those circumstances, we decided we had to make the decision on the basis of a nondisclosure agreement. Now, I am not by nature, a secretive person. I don’t really like to work this way, but I recognize that secrets are sometimes a fact of the matter in business. And I also am aware that there are people who think that it’s unfair to call this a business or that it’s unseemly. But in truth, the registry business is a business. It’s not wrong for it to be a business and at the same time for it to be something that is beneficial to the public. I would like to hope that a lot of the internet has been built along those lines. I believe it has been.

Andrew Sullivan:           And so we concluded that this was the going to be the best arrangement for everyone. I would like it to be the case that everything could run in completely transparently all the time. But that wasn’t the reality that we were faced with. We made the decision that we did. I do appreciate however, that this creates a level of uncertainty because people are uncomfortable with things that are done in secret like that. And I get it. I have the same reaction when I’m not included in a decision, but that is the reason we have trustees. That’s the reason that we have our trustees selected by our community. And I believe that we made the right decision.

Cara:                            Yeah. One clarifying point, and this might be a question either for you or for Eric is, so did Ethos condition its offer then on there not being a public bidding process or the fact of these negotiations going on not being made public?

Eric:                              Yeah, happy to answer that. No, our proposal to the Internet Society was a proposal that we made directly and for the purpose of trying to buy the business, but there was no explicit requirement that that remain private. I think the reality of the situation is ISOC retained a financial advisor who ended up conducting a process that is normal and standard for these kinds of situations that resulted in multiple other bids coming in. And so, no, there were no specific requirements we put on ISOC at all as to how they conducted the process.

Amy Sample Ward:       Great. Andrew, I’m going to ask you to be brief.

Andrew Sullivan:           Yep. I think that’s fair. But I think it’s also the case that, this was a proposal that was happening under extraordinarily short timelines and it would not have been possible to run the kind of public consultation that would have been meaningful under those circumstances. At best if we’d run it as a public consultation, that would have been a sham. And I think sham public consultations are much worse than simply admitting we had to make a decision and we did it.

Amy Sample Ward:       Cara, can I ask that we move into the next set of questions? I’m conscious of time.

Cara:                            Yes. This is a set of questions that was submitted for Ethos by some community members. First question, will Ethos published its financial plan and the information that you’ve provided to your investors?

Eric:                              No. Ethos, the the acquisition will become a private company so our financials will not be made public. However, we do look forward to creating a report that we can share with the community on an annual basis. That highlights all of the good work that we’re doing and provides the community and opportunity to interact with us so that we can continue to see what’s important to them, the issues that are important to them, the new products and services that are important to them, so that we can serve their purposes and be good stewards of the domain name. It’s something that’s important to us and making sure that everybody understands what we’re doing to be good stewards of .org is something that we promise to deliver.

Cara:                            The next question there was will Ethos publish its articles of incorporation and bylaws?

Eric:                              Articles of incorporation. I’m not totally sure I understand the question, but I guess let me share that we are exploring the idea of becoming a B certified business. This is an interesting categorization that is third party validated. It’s something that we’ve started to do the work on and I think will give the community a very clear understanding of what our guiding principles are, how we conduct business, how we interact with the community, what’s important to us. Companies like Patagonia and Allbirds, Ben and Jerry’s are all organizations that have this certification. We’re starting to do the work to look into that. I think there will be multiple ways that the community has confidence that we are operating in the best interest of all the constituents as I said earlier.

Cara:                            And I think there’s a question related to that. Amy was going to ask me, did you want to ask that now?

Amy Sample Ward:       Yes, exactly. I think it’d be best if we just pivot over to that. There were a number of questions that have come in related to the reference to potential B corp certification. Eric, I want to clarify that what you were just saying was about Ethos or about PIR? You don’t have to answer that now, but I want to actually say the whole string of questions that has been submitted so that we can take them as a bundle and I can watch and if there are any that you don’t cover, I can help toss them back up.

Amy Sample Ward:       The first question is the distinction between a B corporation that’s subject to state law in the jurisdiction where it has that status versus the B corp certification, which is a scheme for organizations based all over the place to meet a set of criteria. Understanding if the intention is for PIR to become an actual B corporation or fit into that certification process. If yes to the former, will the proposed new articles of incorporation and the bylaws of PIR be submitted for public comment? And when is this transition to that B corp taking place? And are there repercussions if the transition doesn’t go through?

Amy Sample Ward:       I can help make sure we cover them all, but I wanted to say them all so you understood the breadth of questions.

Eric:                              Understood, understood. And what I would say is there’s a tremendous amount of work that needs to be done to fully understand and appreciate exactly which path we’re going to go down. There are those two paths. There are other paths, all focused on responsibility, transparency, being engaged in the community. We are very actively engaged in evaluating all of those. What I’d say is, it’s premature or for me to say exactly what the answer is because…

Eric:                              … for me to say exactly what the answer is, because I don’t know. There’s a lot of work that needs to be done as we take this very seriously, in sitting down with John and the management team of PIR. Because there are policies and procedures, disclosures and resources, that need to be brought to bear, and a whole host of activities in pursuit of making sure we understand what is the most appropriate designation and structure for PIR. And John and his management team are going to be leading that charge candidly, in helping sort of figure out what the best incarnation is.

Eric:                              So what I would say is, as John mentioned a little bit earlier, we’re going to be having a couple of open webinars in the coming weeks to put some more meat on the bones of this sort of corporate structure issue. And we’d love to get folks’ input and ideas, are completely open to that. We’ll be sharing more details as we do the work, to figure out exactly what the right avenue is for the company itself. But I get sort of to tell you rest assured we will go down the road of pursuing those, and I think make the right decisions for everybody.

Amy Sample Ward:       I appreciate those comments, and recognize that you’re saying that there isn’t total clarity, because that decision hasn’t been made. Can you speak to the timeline piece in the scheme of all of this? When do you anticipate PIR making that transition?

Eric:                              So we will have to make a decision about the corporate structure before we close, so that we close upon something, but depending on exactly what that is. For example the B certification is actually done by a third party. And, I mean, it’s going to take some work and some time, in order to get PIR in a condition for those folks to come in and do the work to validate the certification. To actually sort of say okay, what are the policies and procedures, and organizational intentions, that you have in place, such that you qualify to meet those B certifications? That’s a lot of work that needs to get done. So I’m certain that a B certification is not possible before we close, but we will close the transaction with some corporate structure that, again, we’re happy to share with folks.

Amy Sample Ward:       Great. I’m going to keep us moving. There’s definitely been a lot of concerns from the community that either center on or reference the removal of prior protections, in terms of pricing and potential censorship. And I think folks have felt and articulated that the responses, at least the kind of provided responses on key facts about .org, et cetera, have felt like a trust us-type message. We’ve received a number of questions asking specifically will Ethos make a binding, legally-enforceable commitment not to raise the price of a .org registration above some absolute cap, like a multiple of cost or something like that.

Mitch Stoltz:                 And, if I could add, will Ethos make a binding, legally-enforceable commitment not to, for example, sell the right to conduct censorship to an organization like the Motion Picture Association, the pharmaceutical manufacturers, or others who have made similar agreements with domain registries and other internet intermediaries? Will you make a legally-binding commitment not to engage in that practice?

Amy Sample Ward:       Thanks Mitch.

Eric:                              Yeah. So from my perspective I would say that there are a variety of mechanisms that we are going to employ to make sure that PIR’s historic operating policies remain exactly as they have been. And hopefully John and his team will continue to grow and build those over time, with the sole purpose of making sure that .org is a domain that’s open and free, and not censored, and not curated, in any way, shape or form. It’s important to me. I know it’s important to John, and it’s consistent with the history of PIR.

Eric:                              As I mentioned, I believe earlier, and we’ve put out on our website, we are going to be putting together a board of stewards that will be members of the community and folks of a variety of different backgrounds. Those kinds of questions we will address, and I think put to that type of organization, I think sort of acting as the conscience for the business itself.

Eric:                              But those are great questions. Candidly, I hadn’t thought of that Motion Picture Association example that you had given. But again, sort of treating everybody fairly and in a very open way is something that’s incredibly important to me. And I’m going to rely on John and his team to make sure that this stays open and fair for everybody.

Amy Sample Ward:       Rick, I know that you wanted to ask a follow up there?

Rick Cohen:                   Yeah. I just wanted to circle back to just the core of the question Amy was asking, in terms of the statements on the website are good, as well as the statements that we’re hearing today. But they are, as Amy mentioned, and as the community mentioned, kind of a trust us sort of a thing. And the core of the question is whether there would be any sort of binding, legally-enforceable commitment to uphold these things, rather than just the assurances we have now. Which, quite frankly, are undercut a little bit by the number of uncertainties that have been mentioned in the last few minutes about we’re not sure what corporate form, and we think we want to do B court but we’re not sure. So, with so much up in the air, the big question is whether there would be a binding commitment to abide by the things that you’ve been saying you intend.

Eric:                              Sure. I guess the answer would be there are a number of mechanisms that we are currently evaluating, that I’d like to get feedback from the community as to ideas that would make people comfortable. As I said, we’re going to have a couple of webinars over the coming weeks to discuss that very topic. But I’m optimistic that we will be able to come back to folks with a structure that demonstrates that we are accountable and responsible, and have sort of a standard that we have to report to. Exactly what that mechanism is yet I don’t know, but that’s something that we will work on over the coming weeks, and be able to deliver to everybody in a way that they can comment on. So I’d say just give me a little more time to work on that and get some feedback from everybody, and we promise to deliver something shortly.

Amy Sample Ward:       Great. I want to make sure we cover two final questions. And, recognizing time, I encourage us to be brief and direct in our responses so any remaining minutes we can have for any final closing remarks. The first is to pick up on the council, the stewardship council that you referenced Eric. There were a number of questions related to that. Folks were curious about what the scope and authority and independence of that proposed council will be, as well as if .org stakeholders will have opportunities to weigh in on the selection of those council members, and the development of its bylaws in relationship to PIR and Ethos.

Eric:                              Great. What we are, as it relates to the steward’s council, we are in the process of working on a charter right now. That will be a subject that we are going to open up to the community in these webinars. And we’d love to get feedback on what’s important to folks, and how they think about the responsibility that that stewardship council carries. There will be a diverse group of members on that council. I think potentially having members of the community on that council is a fantastic idea, something that we’re open to, so we look forward to getting feedback on that.

Eric:                              There are some very specific things that we can immediately think of that make sense for them to be responsible for. Like deciding and allocating on the community fund, helping to organize and orchestrate the .org impact awards. There’s sort of a long list of activities and responsibilities that I think will be important for us to engage with them on. And I think that’s something that we’re looking forward to the community actually helping us pick some of those stewards. So that’s something we’re open to and will definitely be a very specific subject of conversation over the coming weeks.

Amy Sample Ward:       Great. And the final question, hopefully very brief, how long has Ethos committed to being invested in PIR?

Eric:                              Sure. Our investment thesis is for an extraordinarily long period of time. To keep it very simple, the way that we’re approaching this I potentially would describe as dramatically outside the normal window of someone owning a business, and all of the folks that support this investment are excited about that. This is something that we take incredibly seriously. This is not just a financial investment for us. It’s just something that we feel a tremendous amount of responsibility for. And that is something that we hope and are confident that over many, many, many, many years we’ll be able to grow and improve, so that, as I said at the beginning of my remarks, every constituency on this phone call feels like this has just been a tremendously positive outcome for all. So I hope that’s helpful.

Amy Sample Ward:       Thanks Eric. Knowing we only have five minutes left, I want to see if folks have any final closing remarks. Rick, I’ll actually ask you first, and go around the table from there.

Rick Cohen:                   Sure. I’ll make it quick. Just I need to thank you again, Amy and Anton, for making this conversation possible. And certainly Andrew and John, Eric, Nora, for joining us to talk to the community. I’ll just say there certainly is some uncertainty remaining, just given a number of the answers today about things that you’re still working on. And so we look forward to hearing more of those answers as soon as they become available. And certainly there are a lot of concerns out there, and we want to hear kind of the plans for the future. But thanks again for joining the conversation and I’ll stop there.

Amy Sample Ward:       Great. Kara, do you want to go next?

Kara:                            Yeah. I think actually Mitch was playing to [inaudible 00:00:54:09].

Amy Sample Ward:       Great. Mitch?

Mitch Stoltz:                 Thank you. Thanks Amy, and thanks everyone else for this conversation. I see an inconsistency in what’s been said today. On one hand, on nearly all of the things that the community has concerns about here, the answer seems to be that the resolution of those concerns is uncertain, that the timeline for the resolution of those things is uncertain. And yet at the same time we’ve been told that this deal had to be done as fast as possible. And in fact Andrew and ISOC have said publicly that they are completely and contractually committed to this deal, that there will be no walking away at this point. These two things are inconsistent. There’s really at this point no way without having that conversation, which we welcome and will participate in, short of that, to get the community’s support behind this transaction.

Amy Sample Ward:       I don’t know who may want to go in what order. I appreciate everybody being on here. Andrew, do you want to go next? Okay. And before we do close off I do want to say thanks to Andrew for renegotiating time, when I know you were not otherwise available, but you did join today. So I just wanted to acknowledge that. Thank you.

Andrew Sullivan:           Well thank you for inviting me, and I’m sorry to appear from this lovely Holiday Inn, but here we are. I appreciate being invited. And look, I really want to assure people that we have done the diligence that we believe ensures a positive outcome for the community. That’s what we believe. If not, we never would have gone ahead with this. I recognize that there remains some uncertainties, and that is something that Ethos is going to have to assure all of you about. But I am quite convinced that the range of options that they had open, before us at least, were ones that I believe are only beneficial for .org registrants, and also for the wider internet community. Thank you for inviting me today.

Amy Sample Ward:       Great. Nora and Eric, or John? Any of you want to make a closing remark?

Nora Abusitta:              So I’m going to go first, and then maybe Eric. And I just want to assure everyone that what is being perceived today as uncertainty is really very serious issues that we’re looking at today with very concrete, plausible answers, that we will provide either in consultation with individuals from the community or in groups, the webinars. And so we have noted all these concerns. We’ve been listening, and we are talking to our lawyers and our consultants, and our community members, to just give you the best options out there. So I understand this might be frustrating from the side of the community, because they’re not seeing actual, okay, this is what we’re going to go with versus that. But before we are able to do that, we need to make sure we’re taking all the points of view into consideration. And Eric, if you want to follow up to that, or you can move to John, just let me know.

Eric:                              Sure. Yeah. Listen, I empathize with the sentiments of this must be frustrating, and I understand the skepticism. It’s understandable. You don’t know me, but I’m confident that over the coming weeks as we continue to have more of these conversations, and as you share your ideas with us, and we come back to you with not uncertainties, but concrete answers and ideas that you can make your own decisions about, you will appreciate the sincerity with which we’re coming to this relationship, the integrity with which we’re approaching PIR, and how important its reputation is within the community. So I’d ask just for a tiny bit of patience and understanding, and I look forward to delivering on our promises to you. So thanks everybody for taking the time today.

Amy Sample Ward:       Great. John, do you want to have any final words?

Jon Nevett:                   Sure. I just want to thank Amy and Rick, and Karen and Mitch, and obviously Andrew, Eric and Nora and everyone, for pulling this together. I think this is hopefully the start of additional dialogue. I’m open to speaking to anyone about any of these issues. Mitch raised some issues about censorship. I think we’re absolutely aligned, if he read the New York Times Op-Ed today, that we’re absolutely aligned on that issue, that people should not be prevented from getting a .org name, a 501C3, based on the content of their speech. So I look forward to working with you all in the future, and making progress on these issues, so thank you.

Amy Sample Ward:       Great. Thanks. And I want to recognize Brent. You’re on the line. Is there anything that you want to say before we jump off?

Brent:                           Yeah please. Thank you. I guess I’m representing those members of ISOC that are really opposed to this deal. And what I’d just like to say is it’s all very well and good to talk about assurances, and promises and future guarantees. The problem is that we have a conflicting timeline, and effectively what we’re being presented with is we’re being asked to accept the deal on the basis that later on our concerns will be dealt with. And I just don’t think it’s reasonable. And I would like to ask that Ethos, and ISOC and so on, consider simply delaying it long enough to put in place the binding commitments that they clearly are willing to undertake before we finalize the deal, rather than the other way around. Thank you.

Amy Sample Ward:       Thanks so much Brent. Thank you again to everyone. Like I said, we will still take all the questions that were submitted, even though we weren’t able to get to them today, and share those out. Today was recorded and translated, and all of those pieces will be posted online, and accessible for folks that want to review them or share them. So thank you again to everybody. Hopefully there is more to come, and we can convene this community to continue these conversations. Thanks so much.

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Unanswered questions posted during the call

  • What is Ethos’ time horizon for this investment? 5 years? 10?
  • About what percent of .ORG names are owned by non-profit organizations?
  • You talk about Ethos having values and ethics that are fundamental to the establishment of Ethos. What is Ethos history on this (and I’m asking fully aware how nascent the company it is)?
  • So it seems that one of the biggest changes of a private company running the TLD is that the records of how the $ is managed are not as public as non-profit owners would be. Do you see that as an issue?
  • Are we talking of a $1 increase per year or a 10% increase based on the previous year’s price?
  • How much was the purchase price?
  • Were any of the buyers involved with the seller when discussions of the sale began?
  • Is there a difference in law, custom, and ideology between a not for profit corporation with a charter to act in the public interest and a private organization answerable, first, foremost, and in practice, only to its Owners?
  • You say you met with potential suitors but the fact that .org was for sale was never announced publicly so who were the other “suitors” and how did they learn of the availability of a potential sale?
  • Does the proposed deal include non-disparagement and/or non-compete clauses?
  • If the cost to operate .org decline, will you make the commitment to lower prices to registrants?
  • What ROI are the investors expecting and at what time do they expect to make their profit?
  • Who are the investors and do they have any connections to or with any political party?.
  • Will details of the purchase be made public, for example, the source of funds, the terms of loans involved, etc, so that the community can understand the risks that could potentially lead to the price increase?
  • Are you going to raise the price of renewing .org domains?
  • What rate of return does Ethos expect to achieve with this investment?
  • What percentage of the domain names are operating legal nonprofits?
  • Macon Phillips: This transaction is reported to be valued at more than a billion dollars. Where does the $1.135 billion go?
  • Do any current officers or employees of ISOC or PIR stand to benefit financially from the acquisition?
  • Given that ISOC and PIR are both non-profits and subject to disclosures such as the 990, will Ethos continue to provide this level of transparency?
  • Are any members of the nonprofit seller’s board involved with the for-profit buyer group? When did a discussion of the sale begin? Were any members of the buyer’s group on the seller’s Board at the time of those discussions?
  • Is there a breakup fee on this transaction with Ethos Capital and what is that amount?
  • Can you speak of the possible conflict of interest of having the former CEO of ICANN and his staff which were an integral part of starting the process of lifting price caps for .org associated directly with this acquisition?
  • If Ethos Capital has no plans to increase prices by more than 10% every 365 days – why not put everyone’s concerns to ease by putting this in the .ORG Registry Contract?
  • Putting the issues around pricing aside, please explain how the ISOC-Ethos deal will address the registry owners (Ethos) having “The power to implement processes to suspend domain names based on accusations of “activity contrary to applicable law.” The .ORG registry should not implement such processes without understanding how state actors frequently target NGOs with allegations of illegal activity”.
  • Will the sale be held off until these mechanisms are put in place?
  • What happens to all these assurances when Ethos Capital decides to on-sell PIR to the next for-profit?
  • Given that the price caps were not part of the decision-making process, is there a willingness to cap prices to benefit the community?
  • So you all were approached by Ethos. Who were the other suitors that Jon was speaking about?
  • Wasn’t the failure to take bids a violation of the fiduciary duties of the trustees?
  • With the Internet Society’s incredibly full-time frame, was it possible to do a detailed financial analysis of Ethos to determine the long-term viability of the company to support the PIR?
  • Why does a registry need to be run like a business? TLDs can be run as member-based not-for-profits.
  • Are any of the trustees of the seller now involved with the buyer?
  • What happens if Ethos goes through financial difficulties, and needs to sell PIR to stay solvent?
  • Why was the timeline so short?
  • Why does ISOC have charters representing the ïnternet for the good” community, next to Trustees (also representing other organizations), if even they were not consulted (under NDA)?
  • What is Ethos’ expected timeframe for an exit from PIR?
  • About what percent of .ORG names are owned by non-profit organizations?
  • Does Ethos believe offering .org registration services at lower prices is consistent with being a “good steward”?”
  • How will a private equity firm not be influenced by investors and their opinions on “activity contrary to applicable law”?
  • Is there a breakup fee on this transaction with Ethos Capital and what is that amount?
  • What’s the exit strategy for PIR? What assurances to registrants have that a subsequent owner has the same ethos as Ethos?
  • Yesterday Senator Ron Wyden tweeted that he was concerned with this transaction and would be looking deeper into it. Is there any concern from ISOC or Ethos that the interest around this transaction is escalating?
  • While Ethos has committed to not increase prices by more than 10% per year, what is to prevent the next owner of PIR from raising prices unreasonably?
  • What is going to happen to .ngo & .ong?
  • Would Ethos be willing to sign binding mediation agreeing to these vague commitments?
  • What is Ethos’ expected standard rate of return?
  • Any constraints on who they can sell it to? Chinese national funds have an extra reason to want an ownership stake
  • If the transaction has not been finalized, will the seller entertain a larger offer?
  • As a show of accountability, will Ethos hold off on the sale until the mechanisms are determined with community consultations
  • Can you address the captive base of users? That any price hike you force upon your base of registrants – that they have no option but to pay higher prices. Despite the fact that prices have been going down over the past few years.
  • I would really like a definition of “community” for PIR and ISOC vs. the “community” discussed by EFF, NTEN, etc. ISOC’s community has never been the same as the non-profit one, or so it seems.

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