Friday, February 26, 2010
[MUSIC/MUSIC UP AND UNDER]
BROOKE GLADSTONE: On March 18th, in the Midtown Manhattan law offices of Windels Marx Lane and Wittendorf, a public auction will be held. On the block? Sex.com, one of the most coveted pieces of Internet real estate, ever. Expensive, too. Just to walk through the door, you'll need a bank certified check for the amount of the opening bid, one million dollars. But be warned, Sex.com comes with a long and troubled past. It’s all chronicled by Kieren McCarthy in Sex.com: One Domain, Two Men, Twelve Years and the Brutal Battle for the Jewel in the Internet’s Crown. Kieren, welcome to the show.
KIEREN McCARTHY: Hello, how are you?
BROOKE GLADSTONE: Good. So let's start at the beginning, 1994, when a guy named Gary Kremen registered the Internet address Sex.com. Who was this visionary?
KIEREN McCARTHY: He was a quintessential geek, the guy that starts up the tech company that doesn't have the best social skills but is incredibly bright.
[BROOKE LAUGHS] And he knew about domain names in 1994, which is a long time before most of the rest of us did. And so. he registered Match.com, which is now a big dating site, and Autos.com and somethingelse.com. He just registered a whole bunch of these domain names. And at the time, they were completely free.
BROOKE GLADSTONE: So he grabbed the names. Did he do anything with them?
KIEREN McCARTHY: The irony is he didn't do anything with Sex.com before it was stolen off him because he was working hard on Match.com, and he was always slightly embarrassed about Sex.com.
[BROOKE LAUGHS] You know, lots of people hadn't registered Sex.com because they thought, well, why would I want that?
BROOKE GLADSTONE: So, anyway, as you mentioned, he hadn't used Sex.com before it got stolen out from under him by a con man named Stephen Cohen.
KIEREN McCARTHY: Well, Stephen Cohen is a remarkable character. He has a very poor education but he’s incredibly intelligent. And every time he sees some new form of technology, he sees a way of using it to rip people off. What he actually did was he learnt the systems by which you register domain names and changed the name of the registration from Gary Kremen’s name to his name but kept the address the same, and then applied again and said, oh, I have changed my address. And he produced this letter that he claimed to have come from this company that Gary Kremen set up, called Online Classifieds, saying Gary Kremen no longer works here, and so we have decided to hand over our rights to Sex.com to this other person called Stephen Cohen because he has a preexisting trademark in Sex.com. This entire letter was a fabrication.
BROOKE GLADSTONE: And so, the other guy, Gary Kremen, sued, and it was a decade-long legal battle?
KIEREN McCARTHY: Yes, and it wasn't helped by the fact that Kremen’s lawyers put in lots of different claims for relief. I think they put in something like 13 different claims, and that was 13 different ways in which Stephen Cohen could stall this. And that’s what he did, because every time he delayed, he made more millions of dollars from Sex.com.
BROOKE GLADSTONE: I shudder to ask what kind of a site it was.
KIEREN McCARTHY: It was quite lazy, really. He just charged huge amounts of money for huge amounts of ads on this Sex.com. So I think each ad, which he had dozens of, were something like 45,000 dollars per month, and this was back in 2000.
BROOKE GLADSTONE: Although Kremen eventually did win his case and made repeated efforts to recover some money from Cohen, he never got a dime, right?
KIEREN McCARTHY: Gary Kremen ultimately was awarded 65 million dollars in compensation. And Stephen Cohen at this point shifted all of the money that was here in the U.S. to various offshore accounts, and he jumped across the border into Tijuana. Gary Kremen several times has offered to settle the whole thing for a small sum of money, but he will not do it because as long as he doesn't hand Gary Kremen any money, he feels that he’s still won.
BROOKE GLADSTONE: [LAUGHS] And it turns out that Kremen didn't really want Sex.com once he was back in possession of it.
KIEREN McCARTHY: He’s not a porn baron, Gary Kremen. He doesn't like [LAUGHS] pornography particularly. And so, when he won it, he made an announcement that he was going to make a clean version of Sex.com. And this really annoyed a lot of people in the adult industry, so they pulled a lot of his advertising that was running on the site. So he suddenly found that the money that he was expecting to make plummeted. And I think when he was offered, you know, 14 million dollars to sell it, he jumped at the chance.
BROOKE GLADSTONE: And so. what did that company do with it?
KIEREN McCARTHY: They were a company called Escom that was created in Delaware, and it’s murky. I haven't been able to find out exactly
[BROOKE LAUGHS] - who’s behind it. [LAUGHS]
BROOKE GLADSTONE: [LAUGHS] Somehow the words “Delaware” and “murky” always seem to come together.
KIEREN McCARTHY: [LAUGHS] They specifically set this up so people wouldn't know exactly who was behind it and what was going on exactly. And, from what I understand, there was a lot of in-fighting, and for whatever reason they've gone - bankrupt. And their main asset is this domain name, and so that’s what they're putting up for sale to pay off their creditors.
BROOKE GLADSTONE: Kieren, you know the kind of store that’s in a person’s neighborhood and businesses keep changing, but no matter what goes into that particular spot it always goes bankrupt in a few months?
KIEREN McCARTHY: [LAUGHS] Yeah, I do. I know exactly what you mean. And sometimes they look really good.
BROOKE GLADSTONE: What could look better than Sex.com?
KIEREN McCARTHY: You’re right. I remember talking to one of Gary Kremen’s lawyers, and they told me that Gary, before he won it, would have this kind of crazy zeal in his eye that this was the Holy Grail of the Internet, and that just by possessing it you had some kind of totem-like power. It used to be like that. Before we had search engines it was like that, but these days it’s not. These days it’s just a very, very good domain.
BROOKE GLADSTONE: Kieren, thank you very much.
KIEREN McCARTHY: My pleasure.
BROOKE GLADSTONE: Kieren McCarthy is the author of Sex.com: One Domain, Two Men, Twelve Years and the Brutal Battle for the Jewel in the Internet’s Crown.