<html><body><font face="Tahoma" size="2"><font size="2" face="Tahoma"><div>For what it is worth, here is my view of the pending sale from the view of an economist. <br></div><div><br></div><div>The creation of PIR as the registry for .org, given to ISOC under the condition of a fixed registration fee, created over time the potential for what economists call "economic rent". <span>Economic rent is the revenue to an owner over and above the costs, including a reasonable profit margin, needed to sustain the provision of the product or service. PIR was covering costs and returning revenue to ISOC, but the potential for greater return (economic rent) was prevented by the registration cap, which also translated into a lower asset value for PIR. <br></span></div><div><br></div><div>The removal of the cap raised the potential PIR asset value via registration fee increases. That presents several forces for a "friendly" buyout of PIR. Should ISOC retain PIR and attempt to raise fees, it would get ongoing push back from ISOC chapters, and from the Internet community at large. Should ISOC instead opt to sell PIR it gets one time flack, but surviving that, it sells PIR at an enhanced asset value based on the buyer's assessment of the economic rent they can capture from future rate increases. ISOC effectively receives an "endowment" that carries none of the operating costs, or tasks, of running a registry. That probably looks attractive to ISOC, if not to its chapters. <br></div><div><br></div><div>The entity that purchases PIR can, as is always done, profess no intentions to raise fees at this time, with the unspoken proviso that "times change". In this case the purchasing entity is not a charitable organization, nor is it a social benefits B Corp. It would be possible, working from PIR's balance sheets and the offer price for PIR to get a "guesstimate" of what the purchaser is paying for access to the economic rent that will flow from future fee increases. The purchaser will, of course, say that the premium they are paying represents their ability to better market .org, and to reduce operating costs. At that point opinions get reduced to who do you believe. <br></div><div><br></div><div>However, what is clear is that the decision to remove the price cap on .org has opened the door for fee increases and the potential for the capture of economic rent by whomever owns PIR. What is less clear are: (a) the coincidence of the timing of the proposed sale and its relation to the price cap removal, and (b) who knew what, and when, especially given the cast of players on the buyer's side. <br></div><div><br></div><div>Lastly, if ISOC simply wants to divest itself of running PIR, and doesn't view this as an asset bonanza based on the sale of an uncapped PIR, ICANN should look to other potential owners of PIR. PIR can be handed over to those more concerned with the public interest, and less concerned with monetizing and capturing economic rent at the expense of the <font size="2" face="Tahoma">poorly funded </font>global community of .org users. Who that might be should be the subject of stakeholder discussion. <br></div><div><br></div><div> Sam Lanfranco <br><span></span><span><span></span></span></div><font size="2" face="Tahoma"><font size="2" face="Tahoma"><font size="2" face="Tahoma"><pre class="moz-signature" cols="72">------------------------------------------------
"It is a disgrace to be rich and honored
in an unjust state" -Confucius
邦有道，贫且贱焉，耻也。邦无道，富且贵焉，耻也
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Visiting Prof, Xi'an Jiaotong-Liverpool Univ, Suzhou, China
Dr Sam Lanfranco (Prof Emeritus), Econ, York U., CANADA
email: <a onclick="return checkLinkHref(this.href);" target="_blank" class="moz-txt-link-abbreviated" href="mailto:sam@lanfranco.net">sam@lanfranco.net</a> Skype: slanfranco
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