Editor’s note: This article delves into the critical implications of ICANN’s proposal to remove price restrictions on .org domain names. The views expressed herein aim to provide comprehensive context and analysis on this significant policy shift.

Unveiling the .Org Domain Debate: Why Removing Price Caps Could Harm Non-Profits

The digital landscape is constantly evolving, but some cornerstones remain vital, none more so than domain names. Among these, the .org top-level domain (TLD) holds a unique and revered position, primarily serving the global non-profit community. However, a recent proposal from the Internet Corporation for Assigned Names and Numbers (ICANN) threatens to fundamentally alter the stability and affordability of this crucial online space.

In 2002, ICANN entrusted the stewardship of the .org registry to the Internet Society (ISOC), explicitly intending that “profits from the registry will go to ISOC”[2] to secure a consistent funding stream for its mission. Over the subsequent two decades, this arrangement has channeled hundreds of millions of dollars from .org registrations into ISOC. This substantial financial backing has fueled ISOC’s remarkable growth, transforming it from a modest organization with 8 employees and a $2 million budget in 2001[3] to a prominent entity boasting over 100 employees[4] and a projected 2019 budget exceeding $38 million, with $34 million directly attributable to the .org registry.[5]

The Public Interest Registry (PIR), an organization established by ISOC to manage the .org registry, currently operates under an agreement that caps annual price increases at 10%. Yet, a contentious new proposal from ICANN staff seeks to eliminate these price constraints entirely in the upcoming .org agreement.[6] Should this proposal be approved, PIR would gain the unprecedented ability to implement drastic price hikes for .org domains. This could lead to an annual increase of hundreds of millions of dollars in revenue from .org registrants, a significant portion of which would inevitably come directly from the operational budgets of non-profit organizations globally.

An Unequal Burden: Non-Profits Funding a Non-Profit

The current framework established by ICANN presents an unusual dynamic: one non-profit, ISOC, derives the majority of its funding by effectively taxing other non-profits – the vast community utilizing .org domain names. This structure raises legitimate concerns regarding fairness and equity. Critics argue that it appears “unseemly” for a single non-profit, seemingly well-connected within ICANN’s governance circles, to leverage these connections to extract substantial funds from countless other non-profits worldwide, many of whom are focused on critical missions far removed from the intricate world of domain name policy.

It’s important to recognize that neither ISOC nor PIR performs the core technical operations essential for a functional .org registry. The actual work of running the registry, including infrastructure management and technical support, is outsourced by PIR to specialized third-party providers like Afilias. If ICANN were to subject the .org registry to regular, competitive bidding processes, it is highly probable that entities like Afilias, Neustar, or other reputable registry service providers could operate the registry at a fraction of the current base price of $9.93 that PIR charges. Such a competitive environment could potentially save non-profits across the globe tens of millions of dollars annually, allowing them to redirect these vital resources towards their core programs and services.

From this perspective, ICANN has effectively introduced ISOC and PIR as an intermediary layer, whose primary function, intentionally or not, appears to be to increase the cost of .org domain names for registrants, solely for the financial benefit of PIR and ISOC. The current proposal to remove all price limits on this arrangement amplifies these concerns. Without caps, PIR and ISOC would be free to escalate prices until they reach a “pain threshold” – a point where registrants can no longer afford to renew their .org domains. This threshold would vary significantly; for some, an increase to $50 per year might be manageable, while for others, $250 or even thousands of dollars per year could force them offline, jeopardizing their missions and outreach.

This raises a fundamental policy question: Is it sound policy to grant two non-profits unconstrained power to extract funds from a broader ecosystem of other non-profits? While ISOC and PIR have admittedly prospered under the existing 10% annual increase limitation – and management has not always exercised the option to raise prices every year – leadership can change, and organizational ambitions can grow. Exposing millions of established non-profits to the specter of large, unpredictable price increases, especially when these registrants receive no commensurate benefit, seems ill-advised. ICANN stands at a precipice, potentially destabilizing the online presence of numerous long-standing non-profits for the benefit of a select few. This action would appear to directly undermine ICANN’s fundamental mission to “secure the stable and secure operation” of the domain name system.[7]

The Internet Society (ISOC): A History of Influence

The Internet Society (ISOC) boasts an impressive lineage, co-founded by computing pioneers Vint Cerf and Bob Kahn, often recognized as the “Fathers of the Internet” for their foundational work in shaping its technical architecture.[8] Cerf, in particular, went on to wield significant influence within ICANN, serving on its Board from 1999 and as its Chair from 2000 to 2007. His presence during key decisions, including the .org registry award, is a notable aspect of this narrative.

According to a historical account by Cerf himself, ISOC was conceived primarily as a funding mechanism for the Internet Engineering Task Force (IETF), the body responsible for developing the Internet’s crucial technical standards:

In contemplation of the need for a mechanism for aggregating funding from many sources, it was proposed to form an Internet Society and to use its resources, in part, to provide funds in support of IETF. The plan was for the Society to engage in a variety of activities including conferences, workshops, and raise funds from industry and other institutional sources.[9]

Beyond supporting the IETF, ISOC has historically aimed to advance the beneficial growth of the Internet across four key areas: (1) fostering an open and trusted Internet; (2) expanding global Internet access; (3) improving technical security; and (4) supporting the positive evolution of the Internet.[10] These commendable goals underscore the irony of the current situation, where its funding mechanism might inadvertently jeopardize a significant segment of the Internet community it seeks to serve.

The Controversial .Org Transition of 2002

Prior to 2002, Verisign managed the operations for the .com, .net, and .org registries. A significant restructuring in 2002 saw the .org registry separated from Verisign’s portfolio.[11] ICANN initiated a public solicitation for proposals to identify a new .org registry operator, ultimately receiving eleven submissions for evaluation.[12]

Notably, the proposal from ISOC set a base fee of $6.00 per domain name for registrations and renewals. However, other strong contenders offered more competitive pricing. Neustar, for instance, submitted a highly-rated proposal at $5.00 per domain name, while Global Name Registry’s submission, also well-regarded, offered rates as low as $3.47 per domain name, depending on registration volume.[13]

The ISOC proposal included the creation of the Public Interest Registry (PIR) to manage the .org registry, with ISOC designated as PIR’s sole member. Crucially, PIR was designed explicitly as a funding mechanism for ISOC, with surplus funds generated from .org registry operations intended to be transferred to ISOC to finance its broader activities. Ultimately, the ICANN Board, under the chairmanship of Vint Cerf, made the pivotal decision to award the .org registry to ISOC, operating through its newly formed entity, PIR.[14] This decision, despite the availability of lower-cost alternatives, set the stage for the current financial model.

PIR’s Revenue Generation: A Markup Model

PIR’s core function is to generate revenue from its control over the .org domain space to fund ISOC. Lacking the technical infrastructure to operate a registry independently, PIR outsources these essential functions to a third-party registry services provider, Afilias. The financial model is straightforward: the difference between the price PIR charges .org registrants and the fee Afilias charges PIR for technical services constitutes the funds available to PIR, which are then used to cover its own operational costs and support ISOC.

Since 2007, PIR has possessed the contractual right to increase .org prices by up to 10% annually, though it has not always exercised this option. Consequently, the base price for a .org domain gradually increased from $6.00 in 2002 to its current level of $9.93.[15] For context, under the contract in place during 2016 and 2017, Afilias reportedly charged PIR approximately $3.75 per domain name to run the .org registry.[16] This substantial markup of roughly $5 per domain name, applied across approximately 10 million registrants, generated an estimated $50 million annually for PIR. In 2016, PIR transferred roughly $30 million to ISOC, its sole member. This figure dramatically escalated in 2017, with PIR transferring over $74 million to ISOC.[17]

Each dollar spent by a non-profit on registering or renewing a .org domain name is a dollar that cannot be allocated to its charitable programs. Therefore, ICANN’s current stance effectively suggests that ISOC’s financial needs are more pressing or deserving than those of the countless .org registrants, many of which are non-profits striving to make a tangible difference in the world.

In 2017, PIR put the contract for the technical operations of the .org registry out for competitive bid. Afilias, the incumbent operator, successfully won the bid and secured the right to continue providing these services, with the new contract taking effect in 2018.[18] Industry observers widely anticipated that Afilias offered significantly lower fees to win this renewed contract, a expectation reinforced by the outcomes of similar competitive bidding processes for other registries globally. For example, Neustar recently won the bid to operate India’s more complex, albeit smaller, .in registry with a reported bid of $0.70 per domain name, significantly undercutting Afilias’s reported bid of $1.10.[19]

Considering the inherent economies of scale in operating a domain registry,[20] the per-domain cost of managing the .org registry, with its extensive base of over 10 million registered domain names, is likely even lower than that of the .in registry, which has approximately 2 million registrations.[21] Greater transparency regarding the specific per-domain fees charged by Afilias under the new contract is expected later this year when PIR publicly releases its IRS Form 990, which will disclose the amount paid to Afilias in 2018. While PIR will undoubtedly benefit from these presumably lower operational costs, .org registrants have yet to see any corresponding reduction in the base price, highlighting a significant disparity in the distribution of these cost savings.

The Enduring Significance of the .Org Extension

.Org is not merely another top-level domain; it is one of the initial, foundational TLDs, established alongside .com, .net, .gov, .mil, .edu, and .us. Conceived as the designated online space for non-profits and organizations that did not fit neatly into other categories, .org has unequivocally become the preferred digital home for non-profit entities worldwide. Its profound association with the non-profit community is universally acknowledged: “.ORG’s noncommercial heritage… sets it apart from other TLDs,”[22] and it has served as “a haven for nonprofits and do-good organizations for decades.”[23]

The use of a .org domain has evolved into a vital identifier for non-profits. It instantly conveys credibility and purpose, offering visitors reassurance that they are likely interacting with a mission-driven organization.[24] The prevalence of .org domains among non-profits is evident across various reputable lists. For instance, 16 out of 18 non-profits highlighted by Philanthropia in the National Arts and Culture category utilize a .org domain.[25] Similarly, 17 of the 20 non-profits featured for their well-designed websites[26], and a remarkable 48 out of 50 non-profits on a list of the most influential, including all top 20, use a .org domain.[27]

.Org’s Unique Market Position: Isolated from Pricing Pressure

The .org domain occupies a singularly strong position within the domain name system. It is one of only two legacy extensions (the other being .com) that serves as a powerful signifier of an entity’s nature, enjoys widespread public recognition, is openly accessible, and hosts a vast base of prominent, established organizations. Just as .com dominates the commercial internet, .org reigns supreme in the non-profit sector. Indeed, .org’s dominance within its niche might even surpass .com’s in the for-profit world, where numerous other TLDs like .net, .info, and .biz, while less prevalent, offer alternatives. For non-profits, no comparable legacy alternatives exist. Anecdotal evidence from a sample of 88 non-profits shows that .org’s market share exceeded 90%, with no other extension surpassing 3%.

This deep entrenchment of .org, cultivated over 30 years during which its prices were constrained, combined with its unique public association with non-profits, creates an environment where PIR, as the operator of .org, is largely immune to competitive pricing pressures. The immense disruption and cost involved if an established non-profit were to attempt to migrate its entire web presence to a different domain name in another TLD – including loss of brand recognition, SEO equity, and donor trust – makes such a move practically unfeasible for most. Consequently, PIR would find it most advantageous to maximize its revenues by raising prices on its existing base of 10 million .org registrants. Many of these are long-established non-profits that, by necessity, would be forced to absorb any increases in .org renewal rates.[28] Even at elevated prices, .org would likely continue to attract new non-profit registrations due to the significant branding benefits it confers.

The Peril of Uncapped Prices: A Looming Financial Threat

As detailed in the article “The Spurious Justifications for Eliminating Price Caps on .Org and other Legacy Domains,”[29] the asserted rationale for removing price caps on legacy domain names simply does not withstand rigorous scrutiny. The claim that competition from other domain extensions would naturally restrain pricing for .org domain names is fundamentally flawed in this context. PIR would possess the capability to impose significantly higher prices for .org domain names, leaving registrants – particularly the extensive non-profit community deeply invested in their .org domains – with little recourse but to pay the increased fees.

The additional revenue generated from such price increases could easily eclipse ICANN’s entire annual budget of $140 million.[30] For illustrative purposes, an increase in the registration and renewal fee to just $50 per year would extract over $500 million annually from .org registrants, with the vast majority of these funds ultimately flowing to ISOC. This represents a staggering transfer of wealth from non-profit programs to ISOC, raising serious questions about the ethical implications and long-term sustainability of the non-profit digital ecosystem.

Would PIR Capitalize on Unrestricted Pricing Power?

A crucial question arises: How would PIR reconcile its role as the steward of the vital .org namespace with its explicit mandate to raise funds for ISOC? Historically, PIR has demonstrated a degree of restraint, not always imposing the full 10% annual price increase permitted by its current agreement. However, moving forward, what level of funding would PIR and ISOC deem appropriate for ISOC, derived from PIR’s control over the .org registry? How might ISOC’s funding requirements evolve over time, and would its ambitions naturally expand once the possibility of annual budgets reaching hundreds of millions of dollars becomes a tangible reality?

Since gaining control of the .org registry, ISOC’s budget has expanded fifteen-fold, with a proportional increase in its staffing levels. One indication that ISOC might consider its current funding inadequate is evident in its 2017 financial activities. While ISOC received approximately $30 million from PIR in 2016 and a similar initial contribution in 2017, PIR subsequently made an additional, substantial contribution of $42,967,421 to ISOC later that year. This extraordinary transfer resulted in PIR reporting a net asset deficiency of nearly $30 million by the close of 2017.[31] This financial maneuver suggests that both PIR and ISOC may perceive current funding levels as insufficient and would actively seek increased funds by raising fees on .org registrants, should the price caps be removed.

Conclusion: A Call for Responsible Governance and Protection of the Non-Profit Digital Space

While some industry stakeholders argue that the removal of all price constraints on .org would be naturally tempered by competition from other domain extensions, this perspective often overlooks the unique realities of .org. Alongside .com, .org is a distinctive, three-decade-old legacy extension, boasting an immense base of established users. These users, particularly the vast network of non-profits, are not truly free to switch to an alternative domain name in a different extension due to the enormous disruption, financial cost, and loss of trust and brand equity that such a move would entail.

PIR demonstrably possesses significant market power, enabling it to successfully impose substantial price increases on .org domain names if granted the freedom to do so. The potential outcome is a scenario where the annual funds raised for ISOC – largely at the expense of other non-profits – could soar to $100 million, $250 million, or even more, purely at PIR’s discretion. The ICANN community faces a pivotal decision: is this outcome considered favorable or unfavorable? The integrity and stability of the non-profit sector’s online presence hang in the balance, urging ICANN to prioritize its core mission of stable internet operation over policies that could severely undermine the very communities it is meant to serve.

[1] https://www.icann.org/resources/board-material/prelim-report-2002-10-14-en#SuccessorOperatorfororgRegistry

[2] ‘Finally, the Committee notes that although it has made no commitment to support “good works,” profits from the registry will go to ISOC. On the arguable proposition that support for IAB/IETF standards processes constitutes “good works” we awarded ISOC a “Low” ranking in this category rather than a “None.”’  See: https://archive.icann.org/en/tlds/org/ncdnhc-evaluation-report-19aug02.pdf, page 16.

[3] https://archive.icann.org/en/tlds/org/applications/isoc/section1.html#c7

[4] https://www.internetsociety.org/about-internet-society/team/

[5] https://www.internetsociety.org/action-plan/2019/

[6] https://www.icann.org/public-comments/org-renewal-2019-03-18-en

[7] https://www.icann.org/resources/pages/governance/bylaws-en/#article1

[8] https://internethalloffame.org/inductees/vint-cerf, https://en.wikipedia.org/wiki/Bob_Kahn

[9] https://www.internetsociety.org/internet/history-of-the-internet/ietf-internet-society

[10] https://www.internetsociety.org/key-issues/

[11] https://www.icann.org/news/announcement-2002-10-14-en

[12] https://www.icann.org/resources/board-material/prelim-report-2002-10-14-en#SuccessorOperatorfororgRegistry

[13] “Competitive Pricing (Criterion 7): Global Name Registry has proposed the most aggressive pricing reductions of any of the applicants, with the expectation that at least some of the savings will be passed on to the registrant. Global Name Registry has proposed the largest discount, of up to 42% (US$3.47) based on volume and duration, while ISOC would maintain the US$6 price and NeuStar would charge a flat rate of US$5. Although several Board members made clear at the Ghana meeting that affordability is an important consideration, the Staff report surprisingly did not weigh proposals to reduce the registry price below US$6.”

https://archive.icann.org/en/tlds/org/applicant-comments/gnr-01oct02.pdf

[14] https://www.icann.org/resources/board-material/prelim-report-2002-10-14-en#SuccessorOperatorfororgRegistry

[15] https://blog.cloudflare.com/cloudflare-registrar/

[16] https://domainnamewire.com/2018/10/24/public-interest-registry-org-tax-return-provides-insight-into-registrar-marketing-deals/

[17] https://domainnamewire.com/wp-content/2017-PIR-Form-990-Pub-Insp-Copy.pdf,

https://www.internetsociety.org/wp-content/uploads/2017/07/ISOC-2016-Form-990-Pub-Insp-Copy.pdf

[18] https://domainnamewire.com/2016/11/14/org-sticks-afilias-backend

[19] http://domainincite.com/23976-neustar-completes-in-migration

[20] https://youtu.be/4I9u5nys73U?t=3002

[21] https://research.domaintools.com/statistics/tld-counts/

[22] https://archive.icann.org/en/tlds/org/applications/isoc/section2.html#c11.3

[23] https://pir.org/products/org-domain/

[24] The .org extension is unrestricted such that for-profit entities can register and use .org domain names.  It appears that few for-profit entities operate on .org domains, likely due to the confusion it would create among their customers.

[25] https://www.myphilanthropedia.org/top-nonprofits/national/arts-culture/2014

[26] https://topnonprofits.com/lists/best-nonprofit-websites

[27] https://www.thestreet.com/slideshow/13563458/1/the-50-most-influential-nonprofits.html

[28] https://www.youtube.com/watch?v=4I9u5nys73U&feature=youtu.be&t=2641

[29] http://www.circleid.com/posts/20190423_spurious_justifications_for_eliminating_caps_on_legacy_domains/

[30] https://www.icann.org/en/system/files/files/proposed-opplan-budget-intro-highlights-fy20-17dec18-en.pdf

[31] https://domainnamewire.com/wp-content/2017-PIR-Form-990-Pub-Insp-Copy.pdf