The sale of PIR

[Sam Lanfranco]

For what it is worth, here is my view of the pending sale from the view of
an economist. 
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". 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. 
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. 
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. 
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.  
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 poorly funded
global community of .org users. Who that might be should be the subject of
stakeholder discussion. 
 Sam Lanfranco  
	------------------------------------------------ "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
------------------------------------------------ Visiting Prof, Xi'an
Jiaotong-Liverpool Univ, Suzhou, China Dr Sam Lanfranco (Prof Emeritus),
Econ, York U., CANADA email: sam at lanfranco.net (mailto:sam at lanfranco.net)
Skype: slanfranco blog: https://samlanfranco.blogspot.com
(https://samlanfranco.blogspot.com) Phone: +1 613-476-0429 cell: +1
416-816-2852
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