After years of promoting brands like Remy Martin and Nintendo, Vital Marketing is on the other side of the press release: trying to promote its own product line of new back-to-school supplies.
The multicultural experiential firm is putting its Street Science line of binders and notebooks in K-Mart and on Amazon.com in time for the start of the academic year.
"Ad agencies have been staking a deeper position in their client's business in terms of helping with product development," said Joseph Anthony, CEO and founder of Vital Marketing, New York. "Now they are taking it a step further and creating their own products and distributing them through connections they have forged over the years."
A number of other small agencies have developed their own product lines in recent years. Josh Taekman, president of Buzztone, Los Angeles, joined with New York City restaurateur John McDonald to create eBoost, an immunity and energy booster. Malbon Brothers Farms, New York, has Frank 151, a culture magazine distributed in 16 countries. And Cornerstone, New York, has the music and lifestyle magazine Fader.
Anthony said the school supply allows him to better relate to clients who are trying to sell products. It also gives the agency president, who is himself a product of public schools, a chance to give back to the education system. Five percent of all profits from the Street Science school line will go to literacy and other educational programs.
So what happens if Staples comes knocking and a conflict of interest occurs? "I would have to decide which had the bigger upside," Anthony said. "At the same time, creating a product line could have a halo effect on my overall business." Vital Marketing pulled in $20 million in revenue last year, per the company.
Wednesday, July 23, 2008
Google Adsense - How To Make A Real Income From Google Adsense Effortlessly
Google AdSense business can be an excellent source to supplement your income or profits. But, many people make the mistake of using it as their main source of income. The problem here is that Google is pretty harsh on people who try to cheat and will shut out your ads. At times, this can happen even without your knowledge.
Choosing your pick
Monetizing your website need not depend entirely on Google AdSense business. When you provide information value to your content, you can also provide related product reviews or articles on that topic. If these do not engage the visitor, perhaps he will click your AdSense ad.
Affiliate programs
You should do a fair bit of homework before monetizing the topics with AdSense. Searches will reveal niche areas. But, are all the niche areas identified going to work for you and bring in Google AdSense profits or income? Not always, and therefore, identify those niches where advertisers are willing to spend decent sums of money. Don’t get carried away by commission percentages alone. $10×2%x100 = $20, whereas $10×15%x7 =$10.5.
Where do you find the high paying topics?
Well, open a Google AdSense Business account and build a new campaign. Use the estimate traffic button to see what your keywords are worth. Google gives you the cost per click for each keyword. Look for the most expensive keywords in the list and then optimize your own pages for that keyword. Now look at the flow of income and profits from Google AdSense business.
Choosing your pick
Monetizing your website need not depend entirely on Google AdSense business. When you provide information value to your content, you can also provide related product reviews or articles on that topic. If these do not engage the visitor, perhaps he will click your AdSense ad.
Affiliate programs
You should do a fair bit of homework before monetizing the topics with AdSense. Searches will reveal niche areas. But, are all the niche areas identified going to work for you and bring in Google AdSense profits or income? Not always, and therefore, identify those niches where advertisers are willing to spend decent sums of money. Don’t get carried away by commission percentages alone. $10×2%x100 = $20, whereas $10×15%x7 =$10.5.
Where do you find the high paying topics?
Well, open a Google AdSense Business account and build a new campaign. Use the estimate traffic button to see what your keywords are worth. Google gives you the cost per click for each keyword. Look for the most expensive keywords in the list and then optimize your own pages for that keyword. Now look at the flow of income and profits from Google AdSense business.
Search Engine Optimization Secrets Of A #1 Google Ranking
It doesn’t matter how great your product is, what a bargain your price is, or how beautiful your website is - Without traffic none of that matters.
So at its most basic, the biggest determinant of your web businesses success is “getting eyeballs looking at your webpages.”
When looking at where the traffic comes from, it begins with others linking (or pointing the way) to your site. Since most people automatically turn to the search engines when looking for something online, that naturally tells me that the most important links that you can easily get are probably from the search engines.
Since Google is currently the search engine getting the most use online, and therefore the one that generates the most traffic, that also means that you need to focus on getting a front page, or ideally a number 1 listing, at Google.
However, your search engine optimization efforts should involve structuring your site, and your other search engine magnets, so that it bring in BUYERS from Google.
At its most basic, and simplest, getting a number 1 ranking at Google that leads to an endless stream of sales boils down to three parts. They are:
1) Targeting The Correct Keywords
2) Optimizing A Page For Those Keywords
3) Getting Links From Sites That Google Loves
Let’s look at each of these.
First, you absolutely have to target the correct keyword. Your webpages and everything that you do needs to incorporate the keywords that your buying customers are actually typing into the search engines.
You don’t want to target the phrase digital camera, or printer cartridge. Instead you want to target a specific model of digital camera or printer cartridge, and you may even want to target people in a specific location looking for a specific model of printer cartridge.
That kind of targeting means that the people who find you are searching for something very specific, and when they find you by typing in that very specific search term, they click through and buy.
Next, you need to optimize your webpages for those keyword phrases. That generally means that you need the target keyword phrases sprinkled throughout your webpages. It also means that you want to use your target keyword phrases in your title and description “metatags.” You also want to include your keyword phrases in anchor text on your webpages (the blue underlined text in hyperlinks).
You basically want to include your keyword phrases in all of the parts of your webpages that tells the search engines what your webpage is about. This includes places such as italicized or bolded text, your menu items, and even alt image tags.
Finally, you need to get sites that Google thinks are important to link to you. Ideally, these sites include your keyword phrases in the anchor text when they link to you.
Many who study search engine optimization full-time are convinced that the external links pointing to your website are THE part that makes the biggest difference in most cases.
Having an authority site link to you is like having a respected authority in your community give you an endorsement. They are telling the search engines, and the rest of the world, that they recommend you. By using your keywords in the anchor text, authority sites are also telling Google (and other less important search engines) that that is what they consider your site to be about.
This factor is so powerful that I have personally often gotten a number 1 position on Google for my most important keywords by just tapping into one free website optimization tool… one authority site! In fact, I recently did an interview with David Preston, an expert at teaching offline businesses to tap into the web in ways that most of their competitors never even dreamed of. In the interview with David, we discussed in-depth, how I easily get free front-page listings at Google in a day, and how I often get #1 listing for my ideal keywords in just hours.
I mention David and that interview because he taught me another CRITICAL part of effective search engine optimization. He taught
me how to focus my efforts on the buyers with lots of money to spend… customers who have already budgeted that money for what I have to offer.
So there you have my very simple three-part search engine optimization formula for getting a free number one ranking in Google in as little as a few hours. That fourth part, focusing on the buyers actively looking to spend money is a bonus
So at its most basic, the biggest determinant of your web businesses success is “getting eyeballs looking at your webpages.”
When looking at where the traffic comes from, it begins with others linking (or pointing the way) to your site. Since most people automatically turn to the search engines when looking for something online, that naturally tells me that the most important links that you can easily get are probably from the search engines.
Since Google is currently the search engine getting the most use online, and therefore the one that generates the most traffic, that also means that you need to focus on getting a front page, or ideally a number 1 listing, at Google.
However, your search engine optimization efforts should involve structuring your site, and your other search engine magnets, so that it bring in BUYERS from Google.
At its most basic, and simplest, getting a number 1 ranking at Google that leads to an endless stream of sales boils down to three parts. They are:
1) Targeting The Correct Keywords
2) Optimizing A Page For Those Keywords
3) Getting Links From Sites That Google Loves
Let’s look at each of these.
First, you absolutely have to target the correct keyword. Your webpages and everything that you do needs to incorporate the keywords that your buying customers are actually typing into the search engines.
You don’t want to target the phrase digital camera, or printer cartridge. Instead you want to target a specific model of digital camera or printer cartridge, and you may even want to target people in a specific location looking for a specific model of printer cartridge.
That kind of targeting means that the people who find you are searching for something very specific, and when they find you by typing in that very specific search term, they click through and buy.
Next, you need to optimize your webpages for those keyword phrases. That generally means that you need the target keyword phrases sprinkled throughout your webpages. It also means that you want to use your target keyword phrases in your title and description “metatags.” You also want to include your keyword phrases in anchor text on your webpages (the blue underlined text in hyperlinks).
You basically want to include your keyword phrases in all of the parts of your webpages that tells the search engines what your webpage is about. This includes places such as italicized or bolded text, your menu items, and even alt image tags.
Finally, you need to get sites that Google thinks are important to link to you. Ideally, these sites include your keyword phrases in the anchor text when they link to you.
Many who study search engine optimization full-time are convinced that the external links pointing to your website are THE part that makes the biggest difference in most cases.
Having an authority site link to you is like having a respected authority in your community give you an endorsement. They are telling the search engines, and the rest of the world, that they recommend you. By using your keywords in the anchor text, authority sites are also telling Google (and other less important search engines) that that is what they consider your site to be about.
This factor is so powerful that I have personally often gotten a number 1 position on Google for my most important keywords by just tapping into one free website optimization tool… one authority site! In fact, I recently did an interview with David Preston, an expert at teaching offline businesses to tap into the web in ways that most of their competitors never even dreamed of. In the interview with David, we discussed in-depth, how I easily get free front-page listings at Google in a day, and how I often get #1 listing for my ideal keywords in just hours.
I mention David and that interview because he taught me another CRITICAL part of effective search engine optimization. He taught
me how to focus my efforts on the buyers with lots of money to spend… customers who have already budgeted that money for what I have to offer.
So there you have my very simple three-part search engine optimization formula for getting a free number one ranking in Google in as little as a few hours. That fourth part, focusing on the buyers actively looking to spend money is a bonus
How To Find Your Ad In The Search Engines
You’ve set up your ad campaign and now you want to see your ad live. What do you do?
Well, not to be snide, but you do the obvious. Perform a search.
Go down your list of keywords. Start with the keywords that have the highest bids as those are likely to be displayed first. Search for them one by one and see if your ad pops up on the SERPs when you enter those keywords. Go beyond page 1 because your ad may not always appear on the first page. Scroll down several pages to see if you can find your pay per click AD.
After looking through your most expensive keywords, try searching for the most relevant keywords. Those are the keywords that are most often used on your landing page. Pick the top 5. Search for them as well.
After that, go through the rest of the list.
Be sure to conduct a search at different times of the day. Because the search engines spread your ads out across the day so as not to expend your daily budget before noon, you may not see it at certain times. If you chose to show your ads only at a certain time of day then perform a search during those times. Otherwise, try it several times throughout the day to see when your ads may be appearing in the SERPs.
Well, not to be snide, but you do the obvious. Perform a search.
Go down your list of keywords. Start with the keywords that have the highest bids as those are likely to be displayed first. Search for them one by one and see if your ad pops up on the SERPs when you enter those keywords. Go beyond page 1 because your ad may not always appear on the first page. Scroll down several pages to see if you can find your pay per click AD.
After looking through your most expensive keywords, try searching for the most relevant keywords. Those are the keywords that are most often used on your landing page. Pick the top 5. Search for them as well.
After that, go through the rest of the list.
Be sure to conduct a search at different times of the day. Because the search engines spread your ads out across the day so as not to expend your daily budget before noon, you may not see it at certain times. If you chose to show your ads only at a certain time of day then perform a search during those times. Otherwise, try it several times throughout the day to see when your ads may be appearing in the SERPs.
Pay-per-click Advertising: The Top 100 Keyword Phrases How about $51 per click?
Last time I checked, Spyfu.com is reporting that someone is bidding $51.66 per click for phrase “conference calling companies.” Are you bidding on words like this, which is one of the most expensive keyword phrases? Let’s take a look at the most expensive pay-per-click keywords and what you can do to reduce your overall PPC costs.
If you are in a niche that includes “conference calling,” lawyers, insurance, loans, or mortgages, there is a good chance that the keyword prices (what companies are willing to pay per click, what they’re bidding per click and what they’re paying per click) gets pretty expensive. At last check, the “cheapest” of the top 100 most expensive phrases is $43.75 per click. And at those costs, it pays to make sure that you are providing your users the optimal web experience when they come to your web site via those expensive keywords.
Let’s take a look at some of the top 100 most expensive keyword phrases:
Expensive keyword phrases; cost per click
conference calling companies $51.66
purchase structured settlements $51.48
home owner secured loan $50.36
mesothelioma patient $50.23
austin texas dwi lawyer $50.03
phoenix dui lawyers $50.01
insurance auto $50.00
secured loans $50.00
phoenix dui attorney $50.00
car free insurance online quote $49.96
Even if you are not paying $50 a click for a visitor to your website, you need to realize that you are charged for every click. So it pays to make sure that you provide the optimal experience but also convert as many of those visitors as possible. There are several things you can do right now to make every click count.
First, take a look at your web analytics. Make sure that you have the proper conversion tracking in place so that you know exactly which phrases are converting into a lead, a sale, or however else you track a conversion. For example, when someone clicks on your pay-per-click ad, what do you expect the visitor to do? Do you want them to look at your website, add something their shopping cart and purchase something? If that is the case, then perhaps you would set up your web analytics goals so you can track which keywords are driving the most sales. If you have this list, then you can compare that list with the keywords you are bidding on and consider dropping the bids on keyword phrases that bring visitors but do not bring in sales. If your goal is to have a visitor fill out a lead form then that also could be a goal, then put a price on each lead (how much is each lead worth to you?) and start tracking the keywords that are bringing in leads.
An audit of your web analytics should reveal the keyword phrases that are most valuable to you, the phrases that are bringing in conversions. Once you are able to determine this, compare the list with the bid prices and compare that list with your list of negative keywords. Consider adding keywords to your negative keyword list if they do not convert into sales or leads for you.
Consider taking your keyword list of your best performing keywords and testing them on a 2nd tier pay-per-click search engine. (See related article, “2nd Tier Search Engines – Are They Worth It?” Determine which keywords are performing (bringing in sales or leads) and which keywords are not performing. After all, some keywords do better on Yahoo! or Google and some perform better on the 2nd tier search engines. You must test each one by setting up the proper analytics.
It’s all about the bottom line. If you have a good handle on your web analytics and which keywords are converting, then raising your bid prices (even on the 2nd tier search engines) on the keywords that are converting should not be a tough task. Take a look at your “average sale” or the value you have put on each sales lead. How many of those pay-per-click visitors convert into a sale or a lead? How many “clicks” does it take to make a sale or to get a lead? If the numbers work out, then consider raising your bid prices. You just might find yourself bidding on one of the top 100 most expensive keyword phrases.
If you are in a niche that includes “conference calling,” lawyers, insurance, loans, or mortgages, there is a good chance that the keyword prices (what companies are willing to pay per click, what they’re bidding per click and what they’re paying per click) gets pretty expensive. At last check, the “cheapest” of the top 100 most expensive phrases is $43.75 per click. And at those costs, it pays to make sure that you are providing your users the optimal web experience when they come to your web site via those expensive keywords.
Let’s take a look at some of the top 100 most expensive keyword phrases:
Expensive keyword phrases; cost per click
conference calling companies $51.66
purchase structured settlements $51.48
home owner secured loan $50.36
mesothelioma patient $50.23
austin texas dwi lawyer $50.03
phoenix dui lawyers $50.01
insurance auto $50.00
secured loans $50.00
phoenix dui attorney $50.00
car free insurance online quote $49.96
Even if you are not paying $50 a click for a visitor to your website, you need to realize that you are charged for every click. So it pays to make sure that you provide the optimal experience but also convert as many of those visitors as possible. There are several things you can do right now to make every click count.
First, take a look at your web analytics. Make sure that you have the proper conversion tracking in place so that you know exactly which phrases are converting into a lead, a sale, or however else you track a conversion. For example, when someone clicks on your pay-per-click ad, what do you expect the visitor to do? Do you want them to look at your website, add something their shopping cart and purchase something? If that is the case, then perhaps you would set up your web analytics goals so you can track which keywords are driving the most sales. If you have this list, then you can compare that list with the keywords you are bidding on and consider dropping the bids on keyword phrases that bring visitors but do not bring in sales. If your goal is to have a visitor fill out a lead form then that also could be a goal, then put a price on each lead (how much is each lead worth to you?) and start tracking the keywords that are bringing in leads.
An audit of your web analytics should reveal the keyword phrases that are most valuable to you, the phrases that are bringing in conversions. Once you are able to determine this, compare the list with the bid prices and compare that list with your list of negative keywords. Consider adding keywords to your negative keyword list if they do not convert into sales or leads for you.
Consider taking your keyword list of your best performing keywords and testing them on a 2nd tier pay-per-click search engine. (See related article, “2nd Tier Search Engines – Are They Worth It?” Determine which keywords are performing (bringing in sales or leads) and which keywords are not performing. After all, some keywords do better on Yahoo! or Google and some perform better on the 2nd tier search engines. You must test each one by setting up the proper analytics.
It’s all about the bottom line. If you have a good handle on your web analytics and which keywords are converting, then raising your bid prices (even on the 2nd tier search engines) on the keywords that are converting should not be a tough task. Take a look at your “average sale” or the value you have put on each sales lead. How many of those pay-per-click visitors convert into a sale or a lead? How many “clicks” does it take to make a sale or to get a lead? If the numbers work out, then consider raising your bid prices. You just might find yourself bidding on one of the top 100 most expensive keyword phrases.
Sunday, May 25, 2008
iPhone 3G Launch Date Confirmed
We all suspected it, but now it is confirmed: someone very, very close to the 3G iPhone launch has told me that Apple will announce their new model at the WWDC Keynote on June 9th. The second-generation iPhone will be available worldwide right after the launch, and not at year's end, as previously thought. The new model will also herald new sales policies in some countries.
In Spain, for example, the 3G iPhone will be available for sale at the June 18th grand opening of Telefonica's megastore—an Apple Store-like shop located in the company's historical building in Madrid's Gran Vía— with nationwide availability the next day or after a few hours. The other European countries with iPhone availability will have similar launch schedules.
According to another source involved in the launch, the 3G iPhone will no longer be available at a fixed price point—at least in some countries, and its launch will also bring new sales policies, although these have not been completely specified yet.
The move is a logical step, since the iPhone has clearly solidified its position as the cellphone to beat during the last 12 months, and companies in the cutthroat European cellphone market need to use it as an incentive to capture clients aggressively.
This most probably means the new 3G iPhone will be integrated in the usual marketing systems of carriers, with point-based trade-ups, discounts for carrier switchers and other service-based subvention packages.
Indiana Jones and the Kingdom of the Crystal Skull E! Reviews
Review in a Hurry: Oh, like you care. They had you with the opening strains of “Da-da-da-DAH…” Fortunately, a smart script and great set pieces make this tale of Soviet spies, weird artifacts and a lost city a worthy capstone to the series.
The Bigger Picture: It’s been about twenty years since The Last Crusade, on-screen and off, and Dr. Henry Jones Jr.he’s pretty much dropped the nicknameis still searching for ancient mysteries and still fighting bad guys. Only now, he’s traded Nazi spies for Russians, led by Irina Spalko (Cate Blanchett), who wants him to crack the secret of a crystal skull that promises vast power.
Rather than pretend he hasn’t aged a day, the script takes into account Indy’s advancing years. He’s not as quick with a whip as he used to be, and the world has changed, too. Dr. Jones finds himself under suspicion by the FBI as a Commie, despite having saved the world for democracy several times, and his old allies are dead or gone.
Fortunately, he gets a new sidekick, a motorcycle punk named Mutt (Shia LaBeouf) to help pick up the slack. Mutt’s mom used to date Indy, and she’s gone missing while on the trail ofyou guessed itthe same crystal skull.
He might be old, but once he gets out the leather jacket and the fedora, Indy proves he’s still the best there is at dodging bullets, death traps and flesh-devouring ants.
Do Online Reputation Management Services Work?
Google the name of your company right now. See anything you don't like? If you do, at least a dozen services promise they can make it disappear.
An industry of online fixers is sprouting to defend clients against damaging information on the Web. With potential customers increasingly heading online to research products and services, bad reviews or complaints that turn up in a search can mean lost business. Reputation management services promise to highlight positive pages and bury offending sites deep in search results.
Most reputation services work by tracking what's written about a client on the Web, then doing search engine optimization, promoting positive pages, and creating other sites that will push damaging references off the first pages of search results. The services are pitched as another tool companies can use in their PR and marketing efforts.
It's still hard to say how companies are using reputation management services, but industry players say clients fall into two camps. Some want to understand and respond to customer complaints; others often just want negative posts to go away. "The majority of inquiries that I get are from people who are looking to do a cover-up," says Andy Beal, a marketing consultant and co-author of Radically Transparent: Monitoring and Managing Reputations Online. "They're not necessarily interested in trying to fix the problem. They just want to make sure that other people can't find it."
Shouting Voices
Online reputation management evolved in the past two or three years in response to the explosion of social media that amplified the voices of individual Internet users. There are no data on how big the market is. "It's kind of a fast-emerging field as more and more companies become aware of the need to have some sort of tracking," says Michael Greene, an analyst at JupiterResearch who authored a report in January about responding to negative buzz online.
Reputation management companies describe typical small-business clients such as a pet store targeted by animal rights activists or a stockbroker linked to decades-old Securities & Exchange Commission violations. (Two different firms independently volunteered both as examples.) It's almost impossible to get such pages taken down, but placing enough positive references above to push them off the first page or two of Google results is where reputation management comes in.
But altering search results isn't cheap. Several companies said the typical cost for a small business client starts at $1,000 a month. More extensive services marketed to large corporations run into the tens of thousands of dollars. ReputationDefender, a two-year-old Menlo Park (Calif.) company that mainly markets to individuals, plans to introduce a service for companies that would cost a one-time fee of a few hundred dollars, according to founder Michael Fertik.
Fertik and others are establishing a trade group, the Online Reputation Management Assn., to certify members and promote best practices, because no clear standards exist for what is and is not acceptable. "We feel that a lot of ethical shadiness is happening in this business," Fertik says. Most companies set their own boundaries about what's appropriate: Beal says he won't take clients who appear to be a habitual offenders, and Fertik says he won't lie for clients or impersonate customers.
Hired Guns?
But there's little agreement on where the line is drawn. For example, one company, Internet Reputation Management, founded last year by three partners in the New York area, recruits bloggers to write about clients on third-party sites, without necessarily disclosing that they're paid, according to partner Carl Sgro.
"We ask bloggers to be truthful," Sgro says. "We don't want anything to be overembellished." Chris Martin, founder of two-year-old ReputationHawk in Baton Rouge, La., says his company runs blogs that promote his clients, but he doesn't pay bloggers to post on outside sites. Other companies warn against surreptitiously promoting clients on blogs, not least because if it comes to light, the damage is hard to control.
Trying to spin search results is a tough game. For evidence, simply Google ReputationDefender. A recent search turned up in the fourth result a critical post from the Consumerist blog blasting the company for attempting to have a post removed. (Fertik says that taking down negative content, a service ReputationDefender markets to individuals, is not available for businesses.) Other bad press is not hard to find.
Google, for its part, says there is nothing inherently wrong with reputation services, but "if you use spammy and manipulative techniques to get this positive content to rank highly, we may take action on it," a spokeswoman writes in an e-mail. (With two-thirds of U.S. search volume in April, according to Hitwise, Google is clearly reputation companies' biggest target.) The company refers to its Webmaster Guidelines, for violations that can get sites banished, such as using hidden links or creating "cookie-cutter" affiliate pages just to boost page rank.
What should small-business owners make of all this? Beal says tinkering with what comes up when customers search a company's name may be necessary, but it's rarely sufficient to repair a reputation. "You have to take partial ownership in fixing your online reputation," he says. "It's not something that you can simply just provide a credit card number to a company and they can take care of it." While outside firms can help businesses influence results on Google, only the company itself can repair real damage to its reputation.
[Via - BusinessWeek.Com]
An industry of online fixers is sprouting to defend clients against damaging information on the Web. With potential customers increasingly heading online to research products and services, bad reviews or complaints that turn up in a search can mean lost business. Reputation management services promise to highlight positive pages and bury offending sites deep in search results.
Most reputation services work by tracking what's written about a client on the Web, then doing search engine optimization, promoting positive pages, and creating other sites that will push damaging references off the first pages of search results. The services are pitched as another tool companies can use in their PR and marketing efforts.
It's still hard to say how companies are using reputation management services, but industry players say clients fall into two camps. Some want to understand and respond to customer complaints; others often just want negative posts to go away. "The majority of inquiries that I get are from people who are looking to do a cover-up," says Andy Beal, a marketing consultant and co-author of Radically Transparent: Monitoring and Managing Reputations Online. "They're not necessarily interested in trying to fix the problem. They just want to make sure that other people can't find it."
Shouting Voices
Online reputation management evolved in the past two or three years in response to the explosion of social media that amplified the voices of individual Internet users. There are no data on how big the market is. "It's kind of a fast-emerging field as more and more companies become aware of the need to have some sort of tracking," says Michael Greene, an analyst at JupiterResearch who authored a report in January about responding to negative buzz online.
Reputation management companies describe typical small-business clients such as a pet store targeted by animal rights activists or a stockbroker linked to decades-old Securities & Exchange Commission violations. (Two different firms independently volunteered both as examples.) It's almost impossible to get such pages taken down, but placing enough positive references above to push them off the first page or two of Google results is where reputation management comes in.
But altering search results isn't cheap. Several companies said the typical cost for a small business client starts at $1,000 a month. More extensive services marketed to large corporations run into the tens of thousands of dollars. ReputationDefender, a two-year-old Menlo Park (Calif.) company that mainly markets to individuals, plans to introduce a service for companies that would cost a one-time fee of a few hundred dollars, according to founder Michael Fertik.
Fertik and others are establishing a trade group, the Online Reputation Management Assn., to certify members and promote best practices, because no clear standards exist for what is and is not acceptable. "We feel that a lot of ethical shadiness is happening in this business," Fertik says. Most companies set their own boundaries about what's appropriate: Beal says he won't take clients who appear to be a habitual offenders, and Fertik says he won't lie for clients or impersonate customers.
Hired Guns?
But there's little agreement on where the line is drawn. For example, one company, Internet Reputation Management, founded last year by three partners in the New York area, recruits bloggers to write about clients on third-party sites, without necessarily disclosing that they're paid, according to partner Carl Sgro.
"We ask bloggers to be truthful," Sgro says. "We don't want anything to be overembellished." Chris Martin, founder of two-year-old ReputationHawk in Baton Rouge, La., says his company runs blogs that promote his clients, but he doesn't pay bloggers to post on outside sites. Other companies warn against surreptitiously promoting clients on blogs, not least because if it comes to light, the damage is hard to control.
Trying to spin search results is a tough game. For evidence, simply Google ReputationDefender. A recent search turned up in the fourth result a critical post from the Consumerist blog blasting the company for attempting to have a post removed. (Fertik says that taking down negative content, a service ReputationDefender markets to individuals, is not available for businesses.) Other bad press is not hard to find.
Google, for its part, says there is nothing inherently wrong with reputation services, but "if you use spammy and manipulative techniques to get this positive content to rank highly, we may take action on it," a spokeswoman writes in an e-mail. (With two-thirds of U.S. search volume in April, according to Hitwise, Google is clearly reputation companies' biggest target.) The company refers to its Webmaster Guidelines, for violations that can get sites banished, such as using hidden links or creating "cookie-cutter" affiliate pages just to boost page rank.
What should small-business owners make of all this? Beal says tinkering with what comes up when customers search a company's name may be necessary, but it's rarely sufficient to repair a reputation. "You have to take partial ownership in fixing your online reputation," he says. "It's not something that you can simply just provide a credit card number to a company and they can take care of it." While outside firms can help businesses influence results on Google, only the company itself can repair real damage to its reputation.
[Via - BusinessWeek.Com]
An E-Commerce Empire, From Porn to Puppies
TRIBUTES on the Web site of Richard J. Gordon‘s company strike all of the uplifting chords one would expect of a digital maverick. He is described as a “trailblazing businessman” who is “operating in the front ranks of those transforming the Internet into the global marketplace of the future.”
There is an echo of truth in all of this. Though most Internet buffs have probably never heard of him , Mr. Gordon, 62, played a significant role in the birth of electronic commerce. While Amazon.com and eBay were still fledgling enterprises, the companies that Mr. Gordon founded in the early 1990s were already laying the groundwork for electronic transactions conducted with credit cards — a development that opened the doors to the first generation of e-commerce start-ups.
And if the Internet is for porn, as the hit Broadway show “Avenue Q” asserts, perhaps it was only natural that many of Mr. Gordon’s early clients were purveyors of X-rated entertainment.
While riches were being minted and squandered in the dot-com ’90s, Mr. Gordon made a fortune by taking a commission for processing sales on a range of sites from small, mainstream retailers to others like ClubLove, which published the Pamela Anderson-Tommy Lee sex tape. Today, his payment processing company continues to have roots in the world of sexual entertainment. One of the several companies he owns or operates, Processing Solutions, facilitates credit card transactions for the Web sites of DTI, or Dial Talk International, according to current and former employees familiar with the arrangements.
DTI is based on the Caribbean island of Curaçao and runs, from Los Angeles, a vast and profitable network of explicit Web sites for the Japanese market.
As the Web has evolved since the early days of e-commerce, so has Mr. Gordon. Although he fashioned his early career around credit card transactions and helping Internet pornographers, he has more recently adopted an ecumenical approach to business as the shepherd for an altogether different endeavor: a Christian charity.
Until last week, Bold New World, his Los Angeles-based Web design firm, had a lucrative contract to design sites for the American Bible Society — the 192-year-old philanthropy based in Manhattan whose mission is to make a Bible available to every person in the world.
Bold New World has also created the Web site for a charity called SPCA International, which fights animal abuse; it helps members of the armed forces bring dogs home from Iraq. That charity has been stirring controversy in the animal-rights world because it owns no animal shelter and is unaffiliated with older and more established societies for the prevention of cruelty to animals.
Although Mr. Gordon has yoked together disparate endeavors that support pornography, the Bible, and prevention of animal abuse — all by marrying the universal purchasing power of credit cards to the respectability conveyed by slick Web sites — those familiar with his operations say his relationship with DTI remains the nexus of his enterprise.
There are no official numbers on the pornography industry. But those who have studied its operations view DTI as a pivotal player in the world of pornography. “DTI appears to rank in the top 1 percent of adult entertainment companies in the world,” said M. J. McMahon, publisher of AVN Online, an Internet news site covering the industry.
Mr. Gordon’s lawyer, Miles Woodlief, said that “neither Mr. Gordon nor his companies have involvement in” the pornography business. For his part, Mr. Gordon, in a brief e-mail message, describes his career in more elevated terms.
“I have been an inventor, creative genius and pioneer,” he asserted in a statement sent by a spokesman. “I have worked with thousands of people around the world in the last 30 years, countless of whom, including legislators, governors, United States presidents, C.E.O.’s and self-made billionaires, all of whom I personally made aware of earlier mistakes, and would be happy to sing my praises.”
MORE than a dozen current and former employees and business partners of Mr. Gordon say that whatever operations his business now encompasses, processing transactions for pornography sites has long been a central component. Some of them requested anonymity, worried that Mr. Gordon might sue them for speaking publicly about his operations.
These people characterized DTI, which is owned and operated by Wataru Takahashi, a Japanese billionaire who has worked with Mr. Gordon on various enterprises for at least a decade, as one of the most lucrative and enduring clients for Mr. Gordon’s credit card processing business.
DTI is an amalgam of dozens of Web sites, offering paying customers everything from live video sessions with pornographic performers to sexually explicit manga cartoons. The sites bring in revenue of about $15 million a month, according to several current and former DTI employees who have knowledge of its finances. DTI produces the content for many of these sites in Los Angeles, then pipes the material to computer screens in Japan, which has strict laws on explicit performances.
Central to the sales and billing portion of DTI’s business are services provided by Mr. Gordon’s company.
“Gordon processes credit cards for every single Web site owned by Mr. Takahashi,” said Alex Becker, a contractor who was a senior executive of Stickam, a social network based in Los Angeles. “Mr. Takahashi depends on Richard, and they always work together.”
Stickam, a live video chat Web site aimed at teenagers, is financed and operated by DTI, according to Mr. Becker. Scott Flacks, a former senior executive of Stickam who left the company this spring, said that Mr. Gordon and Mr. Takahashi appeared to have a close relationship.
“There’s a loyalty between the two that transcends business,” he said.
One other employee who worked directly for DTI for several years said that Mr. Gordon had helped to set up accounts for DTI with at least two banks in America and one in Germany. The employee says that Mr. Gordon’s company receives regular monthly payments from DTI for facilitating these relationships. He requested anonymity because he signed a confidentiality agreement with DTI.
“Richard is the smoother,” this person said. “He is the relationship between the banks and Takahashi for sure, although you are not going to find it anywhere on paper.”
Mr. Takahashi and Mr. Gordon also appear to help one another hire employees and court business and political contacts. In February 2007, Mr. Takahashi held a lavish weekend birthday party for his wife on Grand Cayman, where he spends part of each year in a condominium at the Ritz-Carlton hotel.
According to accounts from four people who were there, about 100 guests, including Mr. Gordon and several of his colleagues, were flown in from all over the world in private jets. Among the attendees was a representative of a major casino company in Las Vegas — Mr. Takahashi is an avid gambler and a frequent visitor to the city — and Stanton D. Anderson, a longtime Republican activist and a consultant to the American Bible Society. Mr. Anderson did not respond to interview requests.
Guests were treated to a Caribbean cruise and a resplendent dinner on the beach with an orchestra and electric fans that blew multihued sheets into the air. As guests feasted on grilled lobster tail and filet mignon, Mr. Takahashi and the casino representative lavished expensive gifts, like a Tiffany diamond tennis bracelet, on Mr. Takahashi’s wife.
IN 1979, six years after being honorably discharged from the Navy, Mr. Gordon found himself on the bad end of a bust. Federal Bureau of Investigation agents arrested him after finding him hiding in a closet of a friend’s apartment in Washington, D.C. On a living room table were four round-trip Concorde tickets to Paris.
According to a 1981 review of the case by a federal appeals court, New York State authorities had been investigating accusations that Mr. Gordon, who then lived outside Albany and ran insurance and financial planning companies, had dipped into customer funds. When he learned of the investigation, according to the court documents, Mr. Gordon closed his businesses and fled Albany, planning to go to Europe.
He was ultimately convicted in 1980 of mail fraud, interstate transportation of a stolen check and making a false statement to a bank. He served more than two years of a seven-year sentence in federal prison in Danbury, Conn., and Lompoc, Calif.
“Nearly 30 years ago, as a zealous, eager young entrepreneur, I made a mistake. I was convicted and served a sentence,” Mr. Gordon says of this period in his life. “I have diligently and honorably been an entrepreneur, inventor and businessman for almost three decades. I created jobs and career opportunities for thousands of people.”
After moving to Los Angeles in 1983, he worked as a business consultant throughout the ’80s, according to reports in Los Angeles business publications at the time. Mr. Gordon then engineered yet another act in his business career: facilitating credit card transactions over the phone.
According to reports in trade journals at the time, he appears to have started by processing credit cards for 1-900 and other telephone services, mail orders and television infomercials. He also became among the first to process transactions on the Web.
At the time, the credit card industry was aghast at Web transactions since they were not face-to-face dealings. In addition, many of the early Web commerce operators were so-called high-risk merchants, like pornographers and online gambling companies. Banks charge higher rates for these transactions because people tend to contest those items on their bill, perhaps to mollify an angry spouse.
While other payment processors avoided the stigma and high rates, Mr. Gordon saw opportunity. His companies in the ’90s, including Electronic Card Systems, devised ways to mitigate the risk. One method involved creating databases of unreliable customers and then refusing troublesome users when they returned to the Web to make purchases.
Mr. Gordon “was a pioneer,” said Jeffrey D. De Petro, who worked as a risk manager for Electronic Card Systems from 1995 to 1998. “We came up with different ways to monitor e-commerce transactions, and I think it defined the pros and cons of the industry.”
Mr. De Petro and five other former employees from this time say that CryptoLogic, an early Canadian online gambling network, was one large client. They also say that Mr. Gordon processed credit card transactions for ClubLove and other sites owned by the Internet Entertainment Group, now defunct, which offered pornographic photographs and videos for a monthly membership fee.
“He was the house for Internet porn in the early days,” said Steven Peisner, a veteran of the card processing industry who worked for Electronic Card Systems in 1997. “At that time, if you had anything to do with Internet porn, you called Electronic Card Systems.”
Mr. Gordon’s employees from the time remember extravagantly decorated offices on the fifth, sixth and seventh floors of the Luckman Building on Sunset Boulevard in West Hollywood. There was fine art on the walls and a constant supply of fresh flowers in the lobby. Mr. Gordon held sumptuous parties for employees at his home in the Hollywood Hills and drove a Bentley.
He appears to have created and run many companies in the ’90s, though they were all related and shared office space, according to Mr. Peisner and other former employees. In addition to Electronic Card Systems and a related entity, Electronic Authorization Systems, Mr. Gordon was involved with magazine publishing, long-distance telephone service and an interior decorating company, among other pursuits.
In 1999, to take advantage of the dot-com gold rush, Mr. Gordon combined many of these companies into a single entity, CreditCards.com, according to a company press release at the time. But the company was having financial problems. Former employees say they remember paychecks occasionally bouncing and leased furniture being repossessed.
According to documents filed with the bankruptcy appellate panel of the United States Court of Appeals for the Ninth Circuit, Mr. Gordon brought in new partners from Nashville in 1999 and borrowed several million dollars from them, using his stock as collateral.
The documents, filed as part of litigation relating to business disputes at the company, say that when Mr. Gordon could not pay his partners back, they removed him. The company is now called iPayment and is based in Nashville.
“He played so many games that eventually he got played himself,” says Masih Madani, the former chief technology officer of CreditCards.com, referring to Mr. Gordon.
But Mr. Gordon didn’t walk away from the enterprise empty-handed. The new owners paid him $2 million to settle his lawsuit against them, according to court documents. Mr. Gordon also ultimately rescued one other prized asset from this first Internet foray: his relationship with Wataru Takahashi and DTI.
RICHARD GORDON has one other man to thank for helping him land on his feet after the CreditCards.com debacle: Paul Irwin, the head of the American Bible Society, who from 1996 to 2004 was chief executive of the Humane Society of the United States.
In his two decades preaching animal rights, Dr. Irwin, an ordained minister of the United Methodist Church, turned the Humane Society into the largest animal welfare charity in the world. But his tenure was also pockmarked by scandal.
USA Today reported in 1987 that the society spent $85,000 renovating Dr. Irwin’s vacation cabin in Maine. A decade later, a judge ordered the organization to pay $1 million to the Humane Society of Canada for soliciting donations in Canada and then transferring funds to the United States.
It was toward the end of his tenure, in April 2003, that Dr. Irwin first hired Mr. Gordon. Tax returns for the Humane Society show that the organization paid $881,000 to Mr. Gordon’s new venture, Exciting New Technologies.
In May 2003, according to a press release at the time, Mr. Gordon also hired Dr. Irwin’s son, Christopher, as director of business development at Exciting New Technologies. The younger Mr. Irwin could not be reached for comment, and it is not clear how long he worked there.
Dr. Irwin said in an interview that Exciting New Technologies built a “technology platform” that allowed the Humane Society to become the top publicly supported animal charity offering help after Hurricane Katrina in 2005. A spokesman for the Humane Society says that Dr. Irwin canceled the software project in 2004 and that the organization bought the technology from another company.
Nevertheless, when Dr. Irwin left the Humane Society and took the reins of the American Bible Society, he hired Mr. Gordon again. Dr. Irwin said the organization had multiple Web sites — “everyone and his brother had one” — that needed to be streamlined.
BETWEEN July 2005 and June 2007, tax documents indicate, the Christian charity paid Exciting New Technologies more than $5 million. A spokesman for the philanthropy said that the $5 million in payments involved projects other than Web design, including e-mail marketing and digitizing the Bible, that were performed by subcontractors.
Dr. Irwin said those charges were expensive, but that the organization needed to catch up quickly on the Web. “It was so far behind the curve on Internet development that we simply were in the process of rapidly ramping up,” he said. “The tax form will show next year that we spent a lot less, and the year after that will show we will continue to spend a lot less.”
But questions have been raised inside the Bible society about the payments to Mr. Gordon. One employee — who requested anonymity to avoid Dr. Irwin’s ire — said the tax documents disclose what is “fairly widely known within the walls of A.B.S., and yes, the exorbitant costs have been questioned from the start.”
This person also said that “there have been attempts made to determine where the money is going.”
Dr. Irwin said he was unaware of Mr. Gordon’s ties to the pornography industry. “I have absolutely no knowledge of Richard Gordon’s involvement in pornography,” he said. “If anyone can provide me evidence that he is involved in pornography, then I want you to know he will be out of the American Bible Society today.”
On Friday, after being questioned about its dealings with Mr. Gordon, the society said “the American Bible Society and Richard Gordon have mutually agreed to terminate all existing business relationships.” The society added that it was continuing to investigate Mr. Gordon and his business with the organization.
Dr. Irwin and Mr. Gordon have also apparently intersected on other business transactions as well.
In March 2007, the two men considered redeveloping valuable property that the American Bible Society owns at 1865 Broadway, near Columbus Circle in Manhattan, according to two people familiar with the discussions. Dr. Irwin and Mr. Gordon met with executives at Sonnenblick Goldman, the real estate investment banking firm, about the project, according to a person at the bank who was privy to the discussions but didn’t want to be named disclosing details about a confidential business matter.
The discussions ultimately fell through, in part because Mr. Gordon made an unusual request, this person said: he asked the investment bank to pay him a $20 million commission on the deal out of the firm’s own fee. Asked about these talks, Dr. Irwin said only that “there was no agreement whatsoever.”
Mr. Gordon “would be the last person I would have anything to do with on real estate development in New York City,” Dr. Irwin said. “The American Bible Society has access to world-class developers, and he isn’t one of them.”
Twice this past March, more than a hundred activists gathered on Jean-Talon Road in Montreal to protest what they saw as improprieties at the city’s Society for the Prevention of Cruelty to Animals.
The protests came after Canadian press reports of possible financial abuses by the Montreal S.P.C.A.’s executive director, Pierre Barnoti. Among other things, Mr. Barnoti was said to have used S.P.C.A. funds for personal travel while engaging in improper fundraising activities and euthanizing an unnecessarily high number of animals.
In April, the protesters prevailed: Mr. Barnoti stepped down and was placed on “indefinite sick leave,” according to the organization. The Canada Revenue Agency, the country’s counterpart of the Internal Revenue Service, began an investigation, and a majority of the charity’s board of directors resigned.
A new board is now combing through the Montreal S.P.C.A.’s financials, trying to reconstruct how the organization wound up more than $4 million in debt. The board is also trying to solve a little Internet mystery: what happened to the organization’s prized Web address, SPCA.com.
Two years ago, a new United States organization called SPCA International took over the SPCA.com Internet domain and started using it to solicit money for animal rights.
According to public records and a report last November in Animal People, an animal care industry newspaper, Mr. Barnoti registered a company called SPCA International in May 2006 in Delaware. Registering an animal rights organization in the United States allowed Mr. Barnoti to raise money here, and he hired a New York City direct mail company to solicit donations.
In an effort to beef up the group’s Web presence, Mr. Barnoti consulted Paul Irwin. In an interview, Dr. Irwin said that he introduced Mr. Barnoti to Richard Gordon.
Mr. Gordon’s company designed the SPCA.com site, and James D. Winston, a longtime business associate of Mr. Gordon, is listed on tax documents as the organization’s executive director. SPCA International declined to make Mr. Winston available for an interview.
It’s not clear how much Mr. Gordon profits from his work on SPCA International. But the chief executives of petsupplies.com, an e-commerce partner listed on the SPCA.com site, and Pet-Togethers, an advertiser on the site, both say their company’s financial relationship is not with SPCA International but with a separate entity, the SPCA Foundation.
According to California corporate records, the foundation was registered as a for-profit company last August by Mr. Gordon’s lawyer, Mr. Woodlief.
As for SPCA International, Mr. Gordon appears to have no operational role there. Even so, the group is involved in a range of initiatives. Every few weeks, the SPCA International selects a “shelter of the week” from around the world and then asks for money for that shelter.
Four of five shelters that were awarded this distinction over the past two months say that they received a $1,000 check and a plaque for the honor — but not a percentage of any donations. The fifth shelter, Welfare of Our Furry Friends, in West Sacramento, Calif., says it received $48.
SPCA International has also undertaken one other significant project. Last year, it created a program called Operation Baghdad Pups that tries to rescue stray dogs in Iraq on behalf of the American soldiers who have befriended them.
The program is run by Terri Crisp, who is primarily known in animal-care circles as the founder of Noah’s Wish, an animal-rescue charity. Last October, Noah’s Wish settled an investigation with the attorney general of California, agreeing to pay $4 million over allegations that it misappropriated donations it received after Hurricane Katrina.
In an interview, Ms. Crisp declined to discuss the Noah’s Wish troubles. But she said SPCA International was “in its infancy” and was trying to “find something unique to make a difference for animals.”
She said she has traveled to Iraq five times to bring 14 dogs back to the United States for soldiers. The program is now prominently promoted on SPCA.com, alongside an ABC News story about it. Donations are solicited to support Baghdad Pups as well as “to further the mission of the SPCA International to stop euthanizing adoptable and healthy animals.”
SPCA International’s fund-raising is hard to assess. Last week, the group filed for an extension on its tax returns. It has yet to reveal how much money it has raised or earned from sponsorships — a requirement for charitable organizations.
Still, the site comes up first on any Google or Yahoo search for the term “SPCA” — ahead of even the 142-year-old American Society for the Prevention of Cruelty to Animals, which has 420 employees and runs a shelter in New York City.
The A.S.P.C.A. declined to comment on SPCA International. But the SPCA.com Web site has angered other animal rights activists who contend that the new organization is exploiting the goodwill of similarly named, more established charities.
Ms. Crisp acknowledged that the organization’s name might mislead people.
“We have people who are trying to reach us that call the A.S.P.C.A. in New York, and we have people who think they are calling the A.S.P.C.A. or contacting their local S.P.C.A. but who call us. We get a lot of that,” she said. “Nobody owns the name, so yeah there’s confusion.”
Back in Canada, meanwhile, the new board members at the Montreal S.P.C.A. are looking at how to get their domain name back.
“If Pierre Barnoti transferred this domain name to another company, that was not in the best interest of the Montreal S.P.C.A.,” said Wendy Adams, a board member and a law professor at McGill University. “It appears he has used this asset to his own benefit. It’s self-dealing, and it’s a breach of fiduciary duty.”
LAST month, Stickam, the live video social network operated by Mr. Takahashi’s DTI, sent out a press release proclaiming a new partnership: the social network had been selected, the release said, as the exclusive provider of live Web video for the SPCA International’s Operation Baghdad Pups and would broadcast regular updates on the program’s progress.
The announcement was ordinary and easy to overlook: two seemingly disparate organizations unveiling a partnership.
But to people who knew the men behind the two companies and their long and fruitful collaboration, it was clear that Richard Gordon and Wataru Takahashi were still looking for new ways to work together.
[Via - NYTimes.Com]
There is an echo of truth in all of this. Though most Internet buffs have probably never heard of him , Mr. Gordon, 62, played a significant role in the birth of electronic commerce. While Amazon.com and eBay were still fledgling enterprises, the companies that Mr. Gordon founded in the early 1990s were already laying the groundwork for electronic transactions conducted with credit cards — a development that opened the doors to the first generation of e-commerce start-ups.
And if the Internet is for porn, as the hit Broadway show “Avenue Q” asserts, perhaps it was only natural that many of Mr. Gordon’s early clients were purveyors of X-rated entertainment.
While riches were being minted and squandered in the dot-com ’90s, Mr. Gordon made a fortune by taking a commission for processing sales on a range of sites from small, mainstream retailers to others like ClubLove, which published the Pamela Anderson-Tommy Lee sex tape. Today, his payment processing company continues to have roots in the world of sexual entertainment. One of the several companies he owns or operates, Processing Solutions, facilitates credit card transactions for the Web sites of DTI, or Dial Talk International, according to current and former employees familiar with the arrangements.
DTI is based on the Caribbean island of Curaçao and runs, from Los Angeles, a vast and profitable network of explicit Web sites for the Japanese market.
As the Web has evolved since the early days of e-commerce, so has Mr. Gordon. Although he fashioned his early career around credit card transactions and helping Internet pornographers, he has more recently adopted an ecumenical approach to business as the shepherd for an altogether different endeavor: a Christian charity.
Until last week, Bold New World, his Los Angeles-based Web design firm, had a lucrative contract to design sites for the American Bible Society — the 192-year-old philanthropy based in Manhattan whose mission is to make a Bible available to every person in the world.
Bold New World has also created the Web site for a charity called SPCA International, which fights animal abuse; it helps members of the armed forces bring dogs home from Iraq. That charity has been stirring controversy in the animal-rights world because it owns no animal shelter and is unaffiliated with older and more established societies for the prevention of cruelty to animals.
Although Mr. Gordon has yoked together disparate endeavors that support pornography, the Bible, and prevention of animal abuse — all by marrying the universal purchasing power of credit cards to the respectability conveyed by slick Web sites — those familiar with his operations say his relationship with DTI remains the nexus of his enterprise.
There are no official numbers on the pornography industry. But those who have studied its operations view DTI as a pivotal player in the world of pornography. “DTI appears to rank in the top 1 percent of adult entertainment companies in the world,” said M. J. McMahon, publisher of AVN Online, an Internet news site covering the industry.
Mr. Gordon’s lawyer, Miles Woodlief, said that “neither Mr. Gordon nor his companies have involvement in” the pornography business. For his part, Mr. Gordon, in a brief e-mail message, describes his career in more elevated terms.
“I have been an inventor, creative genius and pioneer,” he asserted in a statement sent by a spokesman. “I have worked with thousands of people around the world in the last 30 years, countless of whom, including legislators, governors, United States presidents, C.E.O.’s and self-made billionaires, all of whom I personally made aware of earlier mistakes, and would be happy to sing my praises.”
MORE than a dozen current and former employees and business partners of Mr. Gordon say that whatever operations his business now encompasses, processing transactions for pornography sites has long been a central component. Some of them requested anonymity, worried that Mr. Gordon might sue them for speaking publicly about his operations.
These people characterized DTI, which is owned and operated by Wataru Takahashi, a Japanese billionaire who has worked with Mr. Gordon on various enterprises for at least a decade, as one of the most lucrative and enduring clients for Mr. Gordon’s credit card processing business.
DTI is an amalgam of dozens of Web sites, offering paying customers everything from live video sessions with pornographic performers to sexually explicit manga cartoons. The sites bring in revenue of about $15 million a month, according to several current and former DTI employees who have knowledge of its finances. DTI produces the content for many of these sites in Los Angeles, then pipes the material to computer screens in Japan, which has strict laws on explicit performances.
Central to the sales and billing portion of DTI’s business are services provided by Mr. Gordon’s company.
“Gordon processes credit cards for every single Web site owned by Mr. Takahashi,” said Alex Becker, a contractor who was a senior executive of Stickam, a social network based in Los Angeles. “Mr. Takahashi depends on Richard, and they always work together.”
Stickam, a live video chat Web site aimed at teenagers, is financed and operated by DTI, according to Mr. Becker. Scott Flacks, a former senior executive of Stickam who left the company this spring, said that Mr. Gordon and Mr. Takahashi appeared to have a close relationship.
“There’s a loyalty between the two that transcends business,” he said.
One other employee who worked directly for DTI for several years said that Mr. Gordon had helped to set up accounts for DTI with at least two banks in America and one in Germany. The employee says that Mr. Gordon’s company receives regular monthly payments from DTI for facilitating these relationships. He requested anonymity because he signed a confidentiality agreement with DTI.
“Richard is the smoother,” this person said. “He is the relationship between the banks and Takahashi for sure, although you are not going to find it anywhere on paper.”
Mr. Takahashi and Mr. Gordon also appear to help one another hire employees and court business and political contacts. In February 2007, Mr. Takahashi held a lavish weekend birthday party for his wife on Grand Cayman, where he spends part of each year in a condominium at the Ritz-Carlton hotel.
According to accounts from four people who were there, about 100 guests, including Mr. Gordon and several of his colleagues, were flown in from all over the world in private jets. Among the attendees was a representative of a major casino company in Las Vegas — Mr. Takahashi is an avid gambler and a frequent visitor to the city — and Stanton D. Anderson, a longtime Republican activist and a consultant to the American Bible Society. Mr. Anderson did not respond to interview requests.
Guests were treated to a Caribbean cruise and a resplendent dinner on the beach with an orchestra and electric fans that blew multihued sheets into the air. As guests feasted on grilled lobster tail and filet mignon, Mr. Takahashi and the casino representative lavished expensive gifts, like a Tiffany diamond tennis bracelet, on Mr. Takahashi’s wife.
IN 1979, six years after being honorably discharged from the Navy, Mr. Gordon found himself on the bad end of a bust. Federal Bureau of Investigation agents arrested him after finding him hiding in a closet of a friend’s apartment in Washington, D.C. On a living room table were four round-trip Concorde tickets to Paris.
According to a 1981 review of the case by a federal appeals court, New York State authorities had been investigating accusations that Mr. Gordon, who then lived outside Albany and ran insurance and financial planning companies, had dipped into customer funds. When he learned of the investigation, according to the court documents, Mr. Gordon closed his businesses and fled Albany, planning to go to Europe.
He was ultimately convicted in 1980 of mail fraud, interstate transportation of a stolen check and making a false statement to a bank. He served more than two years of a seven-year sentence in federal prison in Danbury, Conn., and Lompoc, Calif.
“Nearly 30 years ago, as a zealous, eager young entrepreneur, I made a mistake. I was convicted and served a sentence,” Mr. Gordon says of this period in his life. “I have diligently and honorably been an entrepreneur, inventor and businessman for almost three decades. I created jobs and career opportunities for thousands of people.”
After moving to Los Angeles in 1983, he worked as a business consultant throughout the ’80s, according to reports in Los Angeles business publications at the time. Mr. Gordon then engineered yet another act in his business career: facilitating credit card transactions over the phone.
According to reports in trade journals at the time, he appears to have started by processing credit cards for 1-900 and other telephone services, mail orders and television infomercials. He also became among the first to process transactions on the Web.
At the time, the credit card industry was aghast at Web transactions since they were not face-to-face dealings. In addition, many of the early Web commerce operators were so-called high-risk merchants, like pornographers and online gambling companies. Banks charge higher rates for these transactions because people tend to contest those items on their bill, perhaps to mollify an angry spouse.
While other payment processors avoided the stigma and high rates, Mr. Gordon saw opportunity. His companies in the ’90s, including Electronic Card Systems, devised ways to mitigate the risk. One method involved creating databases of unreliable customers and then refusing troublesome users when they returned to the Web to make purchases.
Mr. Gordon “was a pioneer,” said Jeffrey D. De Petro, who worked as a risk manager for Electronic Card Systems from 1995 to 1998. “We came up with different ways to monitor e-commerce transactions, and I think it defined the pros and cons of the industry.”
Mr. De Petro and five other former employees from this time say that CryptoLogic, an early Canadian online gambling network, was one large client. They also say that Mr. Gordon processed credit card transactions for ClubLove and other sites owned by the Internet Entertainment Group, now defunct, which offered pornographic photographs and videos for a monthly membership fee.
“He was the house for Internet porn in the early days,” said Steven Peisner, a veteran of the card processing industry who worked for Electronic Card Systems in 1997. “At that time, if you had anything to do with Internet porn, you called Electronic Card Systems.”
Mr. Gordon’s employees from the time remember extravagantly decorated offices on the fifth, sixth and seventh floors of the Luckman Building on Sunset Boulevard in West Hollywood. There was fine art on the walls and a constant supply of fresh flowers in the lobby. Mr. Gordon held sumptuous parties for employees at his home in the Hollywood Hills and drove a Bentley.
He appears to have created and run many companies in the ’90s, though they were all related and shared office space, according to Mr. Peisner and other former employees. In addition to Electronic Card Systems and a related entity, Electronic Authorization Systems, Mr. Gordon was involved with magazine publishing, long-distance telephone service and an interior decorating company, among other pursuits.
In 1999, to take advantage of the dot-com gold rush, Mr. Gordon combined many of these companies into a single entity, CreditCards.com, according to a company press release at the time. But the company was having financial problems. Former employees say they remember paychecks occasionally bouncing and leased furniture being repossessed.
According to documents filed with the bankruptcy appellate panel of the United States Court of Appeals for the Ninth Circuit, Mr. Gordon brought in new partners from Nashville in 1999 and borrowed several million dollars from them, using his stock as collateral.
The documents, filed as part of litigation relating to business disputes at the company, say that when Mr. Gordon could not pay his partners back, they removed him. The company is now called iPayment and is based in Nashville.
“He played so many games that eventually he got played himself,” says Masih Madani, the former chief technology officer of CreditCards.com, referring to Mr. Gordon.
But Mr. Gordon didn’t walk away from the enterprise empty-handed. The new owners paid him $2 million to settle his lawsuit against them, according to court documents. Mr. Gordon also ultimately rescued one other prized asset from this first Internet foray: his relationship with Wataru Takahashi and DTI.
RICHARD GORDON has one other man to thank for helping him land on his feet after the CreditCards.com debacle: Paul Irwin, the head of the American Bible Society, who from 1996 to 2004 was chief executive of the Humane Society of the United States.
In his two decades preaching animal rights, Dr. Irwin, an ordained minister of the United Methodist Church, turned the Humane Society into the largest animal welfare charity in the world. But his tenure was also pockmarked by scandal.
USA Today reported in 1987 that the society spent $85,000 renovating Dr. Irwin’s vacation cabin in Maine. A decade later, a judge ordered the organization to pay $1 million to the Humane Society of Canada for soliciting donations in Canada and then transferring funds to the United States.
It was toward the end of his tenure, in April 2003, that Dr. Irwin first hired Mr. Gordon. Tax returns for the Humane Society show that the organization paid $881,000 to Mr. Gordon’s new venture, Exciting New Technologies.
In May 2003, according to a press release at the time, Mr. Gordon also hired Dr. Irwin’s son, Christopher, as director of business development at Exciting New Technologies. The younger Mr. Irwin could not be reached for comment, and it is not clear how long he worked there.
Dr. Irwin said in an interview that Exciting New Technologies built a “technology platform” that allowed the Humane Society to become the top publicly supported animal charity offering help after Hurricane Katrina in 2005. A spokesman for the Humane Society says that Dr. Irwin canceled the software project in 2004 and that the organization bought the technology from another company.
Nevertheless, when Dr. Irwin left the Humane Society and took the reins of the American Bible Society, he hired Mr. Gordon again. Dr. Irwin said the organization had multiple Web sites — “everyone and his brother had one” — that needed to be streamlined.
BETWEEN July 2005 and June 2007, tax documents indicate, the Christian charity paid Exciting New Technologies more than $5 million. A spokesman for the philanthropy said that the $5 million in payments involved projects other than Web design, including e-mail marketing and digitizing the Bible, that were performed by subcontractors.
Dr. Irwin said those charges were expensive, but that the organization needed to catch up quickly on the Web. “It was so far behind the curve on Internet development that we simply were in the process of rapidly ramping up,” he said. “The tax form will show next year that we spent a lot less, and the year after that will show we will continue to spend a lot less.”
But questions have been raised inside the Bible society about the payments to Mr. Gordon. One employee — who requested anonymity to avoid Dr. Irwin’s ire — said the tax documents disclose what is “fairly widely known within the walls of A.B.S., and yes, the exorbitant costs have been questioned from the start.”
This person also said that “there have been attempts made to determine where the money is going.”
Dr. Irwin said he was unaware of Mr. Gordon’s ties to the pornography industry. “I have absolutely no knowledge of Richard Gordon’s involvement in pornography,” he said. “If anyone can provide me evidence that he is involved in pornography, then I want you to know he will be out of the American Bible Society today.”
On Friday, after being questioned about its dealings with Mr. Gordon, the society said “the American Bible Society and Richard Gordon have mutually agreed to terminate all existing business relationships.” The society added that it was continuing to investigate Mr. Gordon and his business with the organization.
Dr. Irwin and Mr. Gordon have also apparently intersected on other business transactions as well.
In March 2007, the two men considered redeveloping valuable property that the American Bible Society owns at 1865 Broadway, near Columbus Circle in Manhattan, according to two people familiar with the discussions. Dr. Irwin and Mr. Gordon met with executives at Sonnenblick Goldman, the real estate investment banking firm, about the project, according to a person at the bank who was privy to the discussions but didn’t want to be named disclosing details about a confidential business matter.
The discussions ultimately fell through, in part because Mr. Gordon made an unusual request, this person said: he asked the investment bank to pay him a $20 million commission on the deal out of the firm’s own fee. Asked about these talks, Dr. Irwin said only that “there was no agreement whatsoever.”
Mr. Gordon “would be the last person I would have anything to do with on real estate development in New York City,” Dr. Irwin said. “The American Bible Society has access to world-class developers, and he isn’t one of them.”
Twice this past March, more than a hundred activists gathered on Jean-Talon Road in Montreal to protest what they saw as improprieties at the city’s Society for the Prevention of Cruelty to Animals.
The protests came after Canadian press reports of possible financial abuses by the Montreal S.P.C.A.’s executive director, Pierre Barnoti. Among other things, Mr. Barnoti was said to have used S.P.C.A. funds for personal travel while engaging in improper fundraising activities and euthanizing an unnecessarily high number of animals.
In April, the protesters prevailed: Mr. Barnoti stepped down and was placed on “indefinite sick leave,” according to the organization. The Canada Revenue Agency, the country’s counterpart of the Internal Revenue Service, began an investigation, and a majority of the charity’s board of directors resigned.
A new board is now combing through the Montreal S.P.C.A.’s financials, trying to reconstruct how the organization wound up more than $4 million in debt. The board is also trying to solve a little Internet mystery: what happened to the organization’s prized Web address, SPCA.com.
Two years ago, a new United States organization called SPCA International took over the SPCA.com Internet domain and started using it to solicit money for animal rights.
According to public records and a report last November in Animal People, an animal care industry newspaper, Mr. Barnoti registered a company called SPCA International in May 2006 in Delaware. Registering an animal rights organization in the United States allowed Mr. Barnoti to raise money here, and he hired a New York City direct mail company to solicit donations.
In an effort to beef up the group’s Web presence, Mr. Barnoti consulted Paul Irwin. In an interview, Dr. Irwin said that he introduced Mr. Barnoti to Richard Gordon.
Mr. Gordon’s company designed the SPCA.com site, and James D. Winston, a longtime business associate of Mr. Gordon, is listed on tax documents as the organization’s executive director. SPCA International declined to make Mr. Winston available for an interview.
It’s not clear how much Mr. Gordon profits from his work on SPCA International. But the chief executives of petsupplies.com, an e-commerce partner listed on the SPCA.com site, and Pet-Togethers, an advertiser on the site, both say their company’s financial relationship is not with SPCA International but with a separate entity, the SPCA Foundation.
According to California corporate records, the foundation was registered as a for-profit company last August by Mr. Gordon’s lawyer, Mr. Woodlief.
As for SPCA International, Mr. Gordon appears to have no operational role there. Even so, the group is involved in a range of initiatives. Every few weeks, the SPCA International selects a “shelter of the week” from around the world and then asks for money for that shelter.
Four of five shelters that were awarded this distinction over the past two months say that they received a $1,000 check and a plaque for the honor — but not a percentage of any donations. The fifth shelter, Welfare of Our Furry Friends, in West Sacramento, Calif., says it received $48.
SPCA International has also undertaken one other significant project. Last year, it created a program called Operation Baghdad Pups that tries to rescue stray dogs in Iraq on behalf of the American soldiers who have befriended them.
The program is run by Terri Crisp, who is primarily known in animal-care circles as the founder of Noah’s Wish, an animal-rescue charity. Last October, Noah’s Wish settled an investigation with the attorney general of California, agreeing to pay $4 million over allegations that it misappropriated donations it received after Hurricane Katrina.
In an interview, Ms. Crisp declined to discuss the Noah’s Wish troubles. But she said SPCA International was “in its infancy” and was trying to “find something unique to make a difference for animals.”
She said she has traveled to Iraq five times to bring 14 dogs back to the United States for soldiers. The program is now prominently promoted on SPCA.com, alongside an ABC News story about it. Donations are solicited to support Baghdad Pups as well as “to further the mission of the SPCA International to stop euthanizing adoptable and healthy animals.”
SPCA International’s fund-raising is hard to assess. Last week, the group filed for an extension on its tax returns. It has yet to reveal how much money it has raised or earned from sponsorships — a requirement for charitable organizations.
Still, the site comes up first on any Google or Yahoo search for the term “SPCA” — ahead of even the 142-year-old American Society for the Prevention of Cruelty to Animals, which has 420 employees and runs a shelter in New York City.
The A.S.P.C.A. declined to comment on SPCA International. But the SPCA.com Web site has angered other animal rights activists who contend that the new organization is exploiting the goodwill of similarly named, more established charities.
Ms. Crisp acknowledged that the organization’s name might mislead people.
“We have people who are trying to reach us that call the A.S.P.C.A. in New York, and we have people who think they are calling the A.S.P.C.A. or contacting their local S.P.C.A. but who call us. We get a lot of that,” she said. “Nobody owns the name, so yeah there’s confusion.”
Back in Canada, meanwhile, the new board members at the Montreal S.P.C.A. are looking at how to get their domain name back.
“If Pierre Barnoti transferred this domain name to another company, that was not in the best interest of the Montreal S.P.C.A.,” said Wendy Adams, a board member and a law professor at McGill University. “It appears he has used this asset to his own benefit. It’s self-dealing, and it’s a breach of fiduciary duty.”
LAST month, Stickam, the live video social network operated by Mr. Takahashi’s DTI, sent out a press release proclaiming a new partnership: the social network had been selected, the release said, as the exclusive provider of live Web video for the SPCA International’s Operation Baghdad Pups and would broadcast regular updates on the program’s progress.
The announcement was ordinary and easy to overlook: two seemingly disparate organizations unveiling a partnership.
But to people who knew the men behind the two companies and their long and fruitful collaboration, it was clear that Richard Gordon and Wataru Takahashi were still looking for new ways to work together.
[Via - NYTimes.Com]
Craig (of the List) Looks Beyond the Web
Imagine what it might have been like to be Dr. Kleenex. You invent a modern miracle, the cheap paper handkerchief, and suddenly you become the person blamed for America’s disposable culture, praised for a more convenient life, or both.
There never was a Dr. Kleenex, though — the product was created by a team of researchers at Kimberly-Clark laboratories in the 1920s. But there is a real Craig in Craigslist, and lately he is looking at life beyond his little list that happens to be the seventh-most-popular Web site in the United States.
It is also a site that is deeply tied up with the fate of newspapers — indeed, many in the newspaper industry blame the site’s founder, Craig Newmark, for the downturn in their classified-advertising business.
An ardently no-frills, ad-free, user-sensitive site, Craigslist has, by the estimate of its chief executive, Jim Buckmaster, generated more than 600 million free classified listings. (Though nearly all listings remain free, Craigslist has added modest fees for job listings and real estate brokers in certain big cities, and from those fees the company generates $80 million to $100 million in annual revenue. It has a staff of 25, including Mr. Newmark.)
In the United States and beyond, Craigslist is digging even deeper into the classified-ad markets. Once, an announcement that Craigslist was expanding meant adding cities like Miami, Minneapolis and Philadelphia. These days, it means smaller places like Janesville, Wis., (population: about 60,000) and Farmington, N.M., (roughly 38,000) as well as Cebu in the Philippines and, by Mr. Newmark’s request, a site for Ramallah on the West Bank.
In the face of this expansion, Mr. Newmark is becoming more of a public figure, capitalizing on his success to promote causes that include supporting the Barack Obama campaign and financing investigative journalism — not, he insists, to compensate for any damage Craigslist has done to the newspaper business, which he calls “an urban myth.”
Sitting in a coffee shop in San Francisco a month ago, explaining his plans in neat mathematical style, Mr. Newmark presented an unassuming public presence. He was perched on an ordinary seat, a six-year-old Prius parked nearby, a Kangol beret on his balding head.
He used to spend two-thirds of his time working on customer service issues (including notifying an Internet service provider about a scammer on the site), he said, and the remaining third on “founder issues,” a catchall term he uses for his public-spirited work. That division, he said, would now be half and half.
But before he can extricate himself from customer issues, Mr. Newmark will have to resolve some of the growing business and legal complexities that surround Craigslist, a laid-back operation that is bumping into tough-minded competitors.
A Delaware lawsuit accuses him and Mr. Buckmaster of boardroom chicanery, an assertion they emphatically deny. Their accuser is the online giant eBay, which became a minority shareholder in 2004, with a stake of roughly 28 percent.
And while officials at Craigslist, including Mr. Newmark, maintain that for many years he has not had a significant leadership role there, the eBay lawsuit describes Mr. Newmark, in addition to being a large shareholder, as chairman (the board has two members; it had been three).
The suit was set in motion by eBay’s decision to introduce a rival online-classified site, Kijiji, in the United States last year. Kijiji is already the market leader in Canada, Germany, Italy and Taiwan.
EBay’s complaint contends that after the Kijiji move, Mr. Newmark and Mr. Buckmaster plotted in secret to dilute eBay’s influence in the company, including an effort to deprive it of its board seat. The lawsuit asks the court to reverse those provisions.
Craigslist is expected to respond to the complaint this month, but on its blog it offered an assessment: “Sadly, we have an uncomfortably conflicted shareholder in our midst, one that is obsessed with dominating online classifieds for the purpose of maximizing its own profits.”
The phrase “maximizing its own profits” broadly outlines the fight between the two companies.
Despite its success, Craigslist prides itself on its grass-roots instincts and user-based content — including harnessing its users to identify and block bad actors on the site. Even broad strategic decisions, such as which areas to expand into, are described as reflecting user requests made at online forums at the site.
As the complaint indicated, last year Mr. Buckmaster wrote to Meg Whitman, then the chief executive of eBay, saying, “We are no longer comfortable having eBay as a shareholder, and wish to explore options for our repurchase, or for otherwise finding a new home for these shares.”
In an e-mail message of its own, eBay stressed that the two companies would remain joined. “We would obviously prefer to see this resolved without litigation,” eBay wrote. “With that said, we will only accept a resolution that preserves our rights and the full value of our investment in Craigslist. We will continue to act openly and in good faith as a minority shareholder.”
The competition between the companies is also heating up outside court. EBay has recently sent e-mail messages to its users promoting Kijiji, and Craigslist in the last few weeks has added 120 cities, half of them overseas, where Kijiji has been dominant.
The Web sites’ expansion comes as newspapers are experiencing a steep downturn in classified advertising, magnified by the badly depressed housing market and weaker overall economy. Print classified advertising declined 16 percent last year, to $14.2 billion, according to the Newspaper Association of America, below the 1996 level, even without adjusting for inflation.
In this straitened market, Craigslist becomes shorthand for the threat that online advertising outlets are seen as posing to newspapers.
Mr. Buckmaster responds, saying that Craigslist has no sales force and has not sought to win over newspaper advertisers, in contrast to companies like the job-listing site Monster. “That to me is a direct attack on newspapers,” he said. “We put a service out there.”
“There are bigger things that have been more problematic for newspapers,” he added, including circulation losses and basic mismanagement. “Newspapers have an enormous amount of debt. That is not something that can be laid at our doorstep.”
Clayton Frink is the publisher of The Capital Times in Madison, Wis., where Craigslist arrived in 2005. The newspaper late last month stopped printing daily, adopting a Web strategy and printing weekly.
“They have ads we would have had once upon a time,” he said, but added that his staff did not consider it “No. 1 or No. 2 or 3 of Web sites that hurt our business.” The bigger enemy, he said, is the changing marketplace, noting that large employers used to buy a page and a half for job listings and “now they put in a small ad saying to see their Web site.”
“What Craigslist does well is build a community and a feel of a community,” he said. “Building communities is going to be critical for any online product, whether a newspaper or not.”
Also, Craigslist no longer sneaks up on local newspapers. Sammy Lopez, publisher of The Daily Times in Farmington, said: “We’ve been kind of watching them. You can get on Craigslist and see if people have been requesting a site. I asked someone to look at that four or five months ago, and saw that they had.”
He said the knowledge that Craigslist would be arriving someday led the paper to improve its online presentation of classified ads, creating more categories and clear entry points. He noted that a vibrant classified-ad section was both a revenue source and a reason that people buy the paper and visit the Web site.
Mr. Newmark is a believer in the power of technology to improve life — whether in the blogging he does for Mr. Obama, a visit he recently made to Israel where he argued in favor of microloans and technological innovation to build up the Palestinian economy, or the use of online tools to make government more transparent.
He promotes these projects on his personal blog. As of the last couple of weeks, he has been writing posts on Twitter.com, too.
The list of good-government and good-journalism Web sites Mr. Newmark is involved with — sometimes financially, but more often as adviser and advocate in the Silicon Valley world — speak for themselves: factcheck.org, sunlightfoundation.com, PRWatch.org, NewsTrust.net, publicintegrity.org.
An article in The Observer of London two years ago described him as “readying his armory of cash to invest in citizen journalism projects.” Mr. Newmark says he never donated more than $20,000 to any organization.
But he has not followed the common path to Silicon Valley philanthropy — create a successful Web site, sell the Web site either to a larger company or through an initial public offering, acquire a pile of cash, then give away part of that.
While unwilling to discuss his wealth, he said he could be a lot richer if he wanted to. “We know these guys in Google and the eBay guys,“ he said, “and they are not any happier than anyone else. A lot of money is a burden.”
[Via - NYTimes.com]
There never was a Dr. Kleenex, though — the product was created by a team of researchers at Kimberly-Clark laboratories in the 1920s. But there is a real Craig in Craigslist, and lately he is looking at life beyond his little list that happens to be the seventh-most-popular Web site in the United States.
It is also a site that is deeply tied up with the fate of newspapers — indeed, many in the newspaper industry blame the site’s founder, Craig Newmark, for the downturn in their classified-advertising business.
An ardently no-frills, ad-free, user-sensitive site, Craigslist has, by the estimate of its chief executive, Jim Buckmaster, generated more than 600 million free classified listings. (Though nearly all listings remain free, Craigslist has added modest fees for job listings and real estate brokers in certain big cities, and from those fees the company generates $80 million to $100 million in annual revenue. It has a staff of 25, including Mr. Newmark.)
In the United States and beyond, Craigslist is digging even deeper into the classified-ad markets. Once, an announcement that Craigslist was expanding meant adding cities like Miami, Minneapolis and Philadelphia. These days, it means smaller places like Janesville, Wis., (population: about 60,000) and Farmington, N.M., (roughly 38,000) as well as Cebu in the Philippines and, by Mr. Newmark’s request, a site for Ramallah on the West Bank.
In the face of this expansion, Mr. Newmark is becoming more of a public figure, capitalizing on his success to promote causes that include supporting the Barack Obama campaign and financing investigative journalism — not, he insists, to compensate for any damage Craigslist has done to the newspaper business, which he calls “an urban myth.”
Sitting in a coffee shop in San Francisco a month ago, explaining his plans in neat mathematical style, Mr. Newmark presented an unassuming public presence. He was perched on an ordinary seat, a six-year-old Prius parked nearby, a Kangol beret on his balding head.
He used to spend two-thirds of his time working on customer service issues (including notifying an Internet service provider about a scammer on the site), he said, and the remaining third on “founder issues,” a catchall term he uses for his public-spirited work. That division, he said, would now be half and half.
But before he can extricate himself from customer issues, Mr. Newmark will have to resolve some of the growing business and legal complexities that surround Craigslist, a laid-back operation that is bumping into tough-minded competitors.
A Delaware lawsuit accuses him and Mr. Buckmaster of boardroom chicanery, an assertion they emphatically deny. Their accuser is the online giant eBay, which became a minority shareholder in 2004, with a stake of roughly 28 percent.
And while officials at Craigslist, including Mr. Newmark, maintain that for many years he has not had a significant leadership role there, the eBay lawsuit describes Mr. Newmark, in addition to being a large shareholder, as chairman (the board has two members; it had been three).
The suit was set in motion by eBay’s decision to introduce a rival online-classified site, Kijiji, in the United States last year. Kijiji is already the market leader in Canada, Germany, Italy and Taiwan.
EBay’s complaint contends that after the Kijiji move, Mr. Newmark and Mr. Buckmaster plotted in secret to dilute eBay’s influence in the company, including an effort to deprive it of its board seat. The lawsuit asks the court to reverse those provisions.
Craigslist is expected to respond to the complaint this month, but on its blog it offered an assessment: “Sadly, we have an uncomfortably conflicted shareholder in our midst, one that is obsessed with dominating online classifieds for the purpose of maximizing its own profits.”
The phrase “maximizing its own profits” broadly outlines the fight between the two companies.
Despite its success, Craigslist prides itself on its grass-roots instincts and user-based content — including harnessing its users to identify and block bad actors on the site. Even broad strategic decisions, such as which areas to expand into, are described as reflecting user requests made at online forums at the site.
As the complaint indicated, last year Mr. Buckmaster wrote to Meg Whitman, then the chief executive of eBay, saying, “We are no longer comfortable having eBay as a shareholder, and wish to explore options for our repurchase, or for otherwise finding a new home for these shares.”
In an e-mail message of its own, eBay stressed that the two companies would remain joined. “We would obviously prefer to see this resolved without litigation,” eBay wrote. “With that said, we will only accept a resolution that preserves our rights and the full value of our investment in Craigslist. We will continue to act openly and in good faith as a minority shareholder.”
The competition between the companies is also heating up outside court. EBay has recently sent e-mail messages to its users promoting Kijiji, and Craigslist in the last few weeks has added 120 cities, half of them overseas, where Kijiji has been dominant.
The Web sites’ expansion comes as newspapers are experiencing a steep downturn in classified advertising, magnified by the badly depressed housing market and weaker overall economy. Print classified advertising declined 16 percent last year, to $14.2 billion, according to the Newspaper Association of America, below the 1996 level, even without adjusting for inflation.
In this straitened market, Craigslist becomes shorthand for the threat that online advertising outlets are seen as posing to newspapers.
Mr. Buckmaster responds, saying that Craigslist has no sales force and has not sought to win over newspaper advertisers, in contrast to companies like the job-listing site Monster. “That to me is a direct attack on newspapers,” he said. “We put a service out there.”
“There are bigger things that have been more problematic for newspapers,” he added, including circulation losses and basic mismanagement. “Newspapers have an enormous amount of debt. That is not something that can be laid at our doorstep.”
Clayton Frink is the publisher of The Capital Times in Madison, Wis., where Craigslist arrived in 2005. The newspaper late last month stopped printing daily, adopting a Web strategy and printing weekly.
“They have ads we would have had once upon a time,” he said, but added that his staff did not consider it “No. 1 or No. 2 or 3 of Web sites that hurt our business.” The bigger enemy, he said, is the changing marketplace, noting that large employers used to buy a page and a half for job listings and “now they put in a small ad saying to see their Web site.”
“What Craigslist does well is build a community and a feel of a community,” he said. “Building communities is going to be critical for any online product, whether a newspaper or not.”
Also, Craigslist no longer sneaks up on local newspapers. Sammy Lopez, publisher of The Daily Times in Farmington, said: “We’ve been kind of watching them. You can get on Craigslist and see if people have been requesting a site. I asked someone to look at that four or five months ago, and saw that they had.”
He said the knowledge that Craigslist would be arriving someday led the paper to improve its online presentation of classified ads, creating more categories and clear entry points. He noted that a vibrant classified-ad section was both a revenue source and a reason that people buy the paper and visit the Web site.
Mr. Newmark is a believer in the power of technology to improve life — whether in the blogging he does for Mr. Obama, a visit he recently made to Israel where he argued in favor of microloans and technological innovation to build up the Palestinian economy, or the use of online tools to make government more transparent.
He promotes these projects on his personal blog. As of the last couple of weeks, he has been writing posts on Twitter.com, too.
The list of good-government and good-journalism Web sites Mr. Newmark is involved with — sometimes financially, but more often as adviser and advocate in the Silicon Valley world — speak for themselves: factcheck.org, sunlightfoundation.com, PRWatch.org, NewsTrust.net, publicintegrity.org.
An article in The Observer of London two years ago described him as “readying his armory of cash to invest in citizen journalism projects.” Mr. Newmark says he never donated more than $20,000 to any organization.
But he has not followed the common path to Silicon Valley philanthropy — create a successful Web site, sell the Web site either to a larger company or through an initial public offering, acquire a pile of cash, then give away part of that.
While unwilling to discuss his wealth, he said he could be a lot richer if he wanted to. “We know these guys in Google and the eBay guys,“ he said, “and they are not any happier than anyone else. A lot of money is a burden.”
[Via - NYTimes.com]
What Presidential Candidates Don't talk About
Those were the words that Fed chairman Ben Bernanke used to describe the financial markets (and by extension the economy) these heady spring days when everybody else with a rostrum, it seems, has pronounced the so-called liquidity crisis contained. There's a great wish for American finance to return to business-as-usual -- raking in fantastic fees for innovating new modes of tradable paper, and engineering mergers and buy-outs that generate huge fees plus $100 million kiss-offs for corporate CEOs in the noble struggle to dismantle America's productive capacity -- but apparently events are still out of hand.
The Federal Reserve itself has been instrumental in promoting abnormality by doing everything possible to prevent the work-out of bad debts in the system. Since money is loaned into existence, and loans are debts, the work-out of bad debt suggests the discovery that a lot of money has disappeared -- which is exactly the case. The Fed has postponed the work-out by sucking up truckloads of impaired, untradable securities in exchange for loans to giant banks who don't have enough cash on hand to pay their janitors.
Personally, my theory has been that the specter of peak oil pretty clearly implies the inability of industrial economies to continue producing real wealth in the customary way. In the face of this, either consciously or at a more mystical level, the worker bees in banking recognize that, in order to maintain their villas in the Hamptons, money has to be loaned into existence some other way (than in the service of industrial productivity).
We've tried just about everything else. There was the so-called service economy, an attempt to replace manufacturing with hamburger sales. Then there was the information economy, in which work would be replaced with knowing about stuff. Then there was the tech thing, which was about bringing internet companies that existed only on the back of cocktail napkins to the initial public offering stage of capitalization -- which allowed a few-hundred-or-so thirty-year-old smoothies to retire to vineyards in the Napa Valley, while hundreds of thousands of retirees lost half the value of their investment portfolios. Then there was the housing boom, which was all about the creation of more suburban sprawl under the theory that houses (or "homes" in the jargon of the realtors) represent an obvious sort of wealth, and therefore that using houses as collateral would allow humongous sums of money to be loaned into existence -- along with massive fees for structuring the loans into bundles of bond-like thingies.
This has all failed now because the racket went too far. Every possible candidate for a snookering got snookered. Too much collateral for which there were no takers went into the ground. The insane run-up in house values made a downward price movement inevitable, and as soon as the turnaround happened, it fell into the remorseless algebra of a deflationary death spiral. More importantly, however, this society ran out of tricks for loaning money into existence and instead began to experience the pain of money thought-to-be-in-existence being defaulted into a vapor -- and worse, these defaults led to logarithmic chains of money destruction in its places of origin, the investment banks that had created the racket.
The important part of this is that the money is gone. What makes matters truly eerie is that the "bubble" in suburban houses has occurred at exactly the moment in history when the chief enabling resource for suburban life -- oil -- has entered its scarcity stage.
The logical conclusion of all this is not what the American public wants to hear: we have become a much poorer society and are now faced with the unavoidable task of making major changes in how we live. All the three-card-monte moves at the highest level of finance lately amount to an effort to avoid the unavoidable, acknowledging our losses. Certainly the political fallout of all this will be awesome. But it's not about politics, really. It's about the entire society's inability to form a workable new consensus of reality.
It's hard to predict how long these institutions at the heart of our economic system can linger in the "far from normal" limbo of pretending that money has not been defaulted out of existence. Since the same process is underway in Great Britain and Spain, places beyond the control of Bernanke, Secretary Paulson, and the Boyz on Wall Street, and since actions and reactions there will affect the destiny of money here, its hard to escape the conclusion that we're at most months away from the brutal recognition that Wall Street has managed to bankrupt itself (and, by extension, the United States). This is dark heart of the matter of which no one dares speak.
Meantime, on the ground, every mook and minion in the land sees the gas pumps levitate beyond the $4 hash mark, and notes with bugged-out eyes the double-digit price stickers on common supermarket items, and feels the rush of blood from the extremities when some check-out clerk at the WalMart declares that a certain proffered credit card is maxed out, and some strangers in overalls -- the neighbors say -- managed to hot-wire the GMC Sierra in the driveway, and took it away....
The candidates for president will have a lot to talk about. I wonder if they'll dare to.
The Federal Reserve itself has been instrumental in promoting abnormality by doing everything possible to prevent the work-out of bad debts in the system. Since money is loaned into existence, and loans are debts, the work-out of bad debt suggests the discovery that a lot of money has disappeared -- which is exactly the case. The Fed has postponed the work-out by sucking up truckloads of impaired, untradable securities in exchange for loans to giant banks who don't have enough cash on hand to pay their janitors.
Personally, my theory has been that the specter of peak oil pretty clearly implies the inability of industrial economies to continue producing real wealth in the customary way. In the face of this, either consciously or at a more mystical level, the worker bees in banking recognize that, in order to maintain their villas in the Hamptons, money has to be loaned into existence some other way (than in the service of industrial productivity).
We've tried just about everything else. There was the so-called service economy, an attempt to replace manufacturing with hamburger sales. Then there was the information economy, in which work would be replaced with knowing about stuff. Then there was the tech thing, which was about bringing internet companies that existed only on the back of cocktail napkins to the initial public offering stage of capitalization -- which allowed a few-hundred-or-so thirty-year-old smoothies to retire to vineyards in the Napa Valley, while hundreds of thousands of retirees lost half the value of their investment portfolios. Then there was the housing boom, which was all about the creation of more suburban sprawl under the theory that houses (or "homes" in the jargon of the realtors) represent an obvious sort of wealth, and therefore that using houses as collateral would allow humongous sums of money to be loaned into existence -- along with massive fees for structuring the loans into bundles of bond-like thingies.
This has all failed now because the racket went too far. Every possible candidate for a snookering got snookered. Too much collateral for which there were no takers went into the ground. The insane run-up in house values made a downward price movement inevitable, and as soon as the turnaround happened, it fell into the remorseless algebra of a deflationary death spiral. More importantly, however, this society ran out of tricks for loaning money into existence and instead began to experience the pain of money thought-to-be-in-existence being defaulted into a vapor -- and worse, these defaults led to logarithmic chains of money destruction in its places of origin, the investment banks that had created the racket.
The important part of this is that the money is gone. What makes matters truly eerie is that the "bubble" in suburban houses has occurred at exactly the moment in history when the chief enabling resource for suburban life -- oil -- has entered its scarcity stage.
The logical conclusion of all this is not what the American public wants to hear: we have become a much poorer society and are now faced with the unavoidable task of making major changes in how we live. All the three-card-monte moves at the highest level of finance lately amount to an effort to avoid the unavoidable, acknowledging our losses. Certainly the political fallout of all this will be awesome. But it's not about politics, really. It's about the entire society's inability to form a workable new consensus of reality.
It's hard to predict how long these institutions at the heart of our economic system can linger in the "far from normal" limbo of pretending that money has not been defaulted out of existence. Since the same process is underway in Great Britain and Spain, places beyond the control of Bernanke, Secretary Paulson, and the Boyz on Wall Street, and since actions and reactions there will affect the destiny of money here, its hard to escape the conclusion that we're at most months away from the brutal recognition that Wall Street has managed to bankrupt itself (and, by extension, the United States). This is dark heart of the matter of which no one dares speak.
Meantime, on the ground, every mook and minion in the land sees the gas pumps levitate beyond the $4 hash mark, and notes with bugged-out eyes the double-digit price stickers on common supermarket items, and feels the rush of blood from the extremities when some check-out clerk at the WalMart declares that a certain proffered credit card is maxed out, and some strangers in overalls -- the neighbors say -- managed to hot-wire the GMC Sierra in the driveway, and took it away....
The candidates for president will have a lot to talk about. I wonder if they'll dare to.
Nagging Your Ways To Big Bucks
Anyone who's ever tried to lose weight or improve their fitness knows that it can sometimes be tough to get motivated. For those who need a little extra help getting going, a new service called WeightNags will nag customers mercilessly until they get off the couch and get some exercise.
WeightNags, which was just launched by Texas-based ConnectWorks Media, needs nothing more than a customer's email address to get started. In exchange, it will hound that customer once a week for free in the hopes of motivating him or her to exercise and lose some weight. Of course, we all know that emails can easily be ignored and deleted in the blink of an eye. Customers who don't trust themselves to take WeightNag's emails seriously can also request weekly nags by phone. All they need to provide is their phone number and first name; the cost is USD 4.95 per month.
Without a way to tell WeightNags when you do get some exercise in or have resisted every single calorie-laden temptation—and thereby win a respite from the nagging—it seems to us the effectiveness of the negative feedback could soon wear off. Nevertheless, it's an interesting concept that could be a nice micro-business opportunity for anyone with a Skype account and a talent for nagging.
WeightNags, which was just launched by Texas-based ConnectWorks Media, needs nothing more than a customer's email address to get started. In exchange, it will hound that customer once a week for free in the hopes of motivating him or her to exercise and lose some weight. Of course, we all know that emails can easily be ignored and deleted in the blink of an eye. Customers who don't trust themselves to take WeightNag's emails seriously can also request weekly nags by phone. All they need to provide is their phone number and first name; the cost is USD 4.95 per month.
Without a way to tell WeightNags when you do get some exercise in or have resisted every single calorie-laden temptation—and thereby win a respite from the nagging—it seems to us the effectiveness of the negative feedback could soon wear off. Nevertheless, it's an interesting concept that could be a nice micro-business opportunity for anyone with a Skype account and a talent for nagging.
Profit From Bugs
Seth Prezant and his wife were discussing what to do for their son’s fifth birthday party.
The thought of paying money for birthday clowns, bounce-houses, and cartoon characters were not appealing and there seemed to be few available educational venues that also offered entertainment for children’s parties. Prezant’s son loved animals, especially bugs.
So Prezant decided to put together a “bug show” and be the creepy crawly entertainment. He did a great deal of bug research, caught many bugs (some caught him), and the birthday bug show was a hit!
Prezant then took his show to various schools and a bug business was born. This lead to a web site where you can buy cool bug catchers, bug houses, magnifying lenses, and the latest and greatest bug toys and games.
The thought of paying money for birthday clowns, bounce-houses, and cartoon characters were not appealing and there seemed to be few available educational venues that also offered entertainment for children’s parties. Prezant’s son loved animals, especially bugs.
So Prezant decided to put together a “bug show” and be the creepy crawly entertainment. He did a great deal of bug research, caught many bugs (some caught him), and the birthday bug show was a hit!
Prezant then took his show to various schools and a bug business was born. This lead to a web site where you can buy cool bug catchers, bug houses, magnifying lenses, and the latest and greatest bug toys and games.
CNN-IBN Exit Poll predicts Hung Assembly in Karnataka, NDTV Exit Poll favours BJP
The third and final phase of the Karnataka assembly polls is over. At least 61% voters exercised their franchise for the 69 assembly segments that went to polls on Thursday. The exit poll conducted by the CNN-IBN has predicted a hung assembly in Karnataka again, but the NDTV exit poll has given a narrow mandate to the BJP. The JD(S) may again emerge as a king maker once the results are out even as the main battle is between the Congress and BJP.
The CNN-IBN Exit Poll:
The CNN-IBN, in collaboration with the Deccan Herald and CSS, have conducted the exit poll in various parts of the state. According to their prediction, Congress will get 86 seats, while the BJP will end up with 79 seats. The swing could go either way, as there is a neck-to-neck contest between both parties. The JD(S) is projected to get 45 seats, while the others may get 14 seats. The total number of seats in Karnataka assembly is 224.
According to CNN-IBN exit poll, there is a 4 percent negative swing against the Congress, while the BJP may get a 2 percent positive swing it its favour. Congress is heading for a gain among the Backwards, Dalits, Muslims, Women and Poor. The BJP will gain among the Lingayats, Upper caste people, Urban voters and Youth. Interestingly, BJP leader Yeddyurappa is the most preferred CM among the voters with 27% votes. Kumaraswamy is on second spot with 22%. Congress leader SM Krishna is lying on a poor third with just 16%.
The NDTV Exit Poll:
The NDTV exit poll yet again gave an advantage to BJP in the third phase elections. Out of the 69 seats, it gave BJP 30-40 seats, while the Congress is predicted to get 20-30 seats, while the JD(S) may get 10-12 seats. The overall result is quite encouraging for the BJP. The NDTV exit poll predicted that BJP would get 95-115 seats. That means, it has a chance of getting a simple majority (112 seats).
According to the NDTV exit poll, the Congress is likely to suffer heavy losses, as it may end up with 55-75 seats. Thus, the party may fall way behind the simple majority mark. The JD(S) is expected to get 45-55 seats, while the others will get 10-15 seats. Even if there is a swing of votes, the BJP is likely to emerge as a single largest party in Karnataka assembly with a good number of seats to its credit.
Thursday, March 27, 2008
How To Build A $300 Million Domain Name Empire
Kevin Ham leans forward, sits up tall, closes his eyes, and begins to type -- into the air. He's seated along the rear wall of a packed ballroom in Las Vegas's Venetian Hotel. Up front, an auctioneer is running through a list of Internet domain names, building excitement the same way he might if vintage cars were on the block.
As names come up that interest Ham, he occasionally air-types. It's the ultimate gut check. Is the name one that people might enter directly into their Web browser, bypassing the search engine box entirely, as Ham wants? Is it better in plural or singular form? If it's a typo, is it a mistake a lot of people would make? Or does the name, like a stunning beachfront property, just feel like a winner?
When Ham wants a domain, he leans over and quietly instructs an associate to bid on his behalf. He likes wedding names, so his guy lifts the white paddle and snags Weddingcatering.com for $10,000. Greeting.com is not nearly as good as the plural Greetings.com, but Ham grabs it anyway, for $350,000.
Ham is a devout Christian, and he spends $31,000 to add Christianrock.com to his collection, which already includes God.com and Satan.com. When it's all over, Ham strolls to the table near the exit and writes a check for $650,000. It's a cheap afternoon.
Just a few years ago, most of the guys bidding in this room had never laid eyes on one another. Indeed, they rarely left their home computers. Now they find themselves in a Vegas ballroom surrounded by deep-pocketed bankers, venture-backed startups, and other investors trying to get a piece of the action.
And why not? In the past three years alone, the number of dotcom names has soared more than 130 percent to 66 million. Every two seconds, another joins the list.
But the big money is in the aftermarket, where the most valuable names -- those that draw thousands of pageviews and throw off steady cash from Google's and Yahoo's pay-per-click ads -- are driving prices to dizzying heights. People who had the guts and foresight to sweep up names shed during the dotcom bust are now landlords of some of the most valuable real estate on the Web.
The man at the top of this little-known hierarchy is Kevin Ham -- one of a handful of major-league "domainers" in the world and arguably the shrewdest and most ambitious of the lot. Even in a field filled with unusual career paths, Ham's stands out.
Trained as a family doctor, he put off medicine after discovering the riches of the Web. Since 2000 he has quietly cobbled together a portfolio of some 300,000 domains that, combined with several other ventures, generate an estimated $70 million a year in revenue. (Like all his financial details, Ham would neither confirm nor deny this figure.)
Working mostly as a solo operator, Ham has looked for every opening and exploited every angle -- even inventing a few of his own -- to expand his enterprise. Early on, he wrote software to snag expiring names on the cheap. He was one of the first to take advantage of a loophole that allows people to register a name and return it without cost after a free trial, on occasion grabbing hundreds of thousands of names in one swoop.
And what few people know is that he's also the man behind the domain world's latest scheme: profiting from traffic generated by the millions of people who mistakenly type ".cm" instead of ".com" at the end of a domain name.
Try it with almost any name you can think of -- Beer.cm, Newyorktimes.cm, even Anyname.cm -- and you'll land on a page called Agoga.com, a site filled with ads served up by Yahoo.
Ham makes money every time someone clicks on an ad -- as does his partner in this venture, the West African country of Cameroon. Why Cameroon? It has the unforeseen good fortune of owning .cm as its country code -- just as Germany runs all names that end with .de.
The difference is that hardly any .cm names are registered, and the letters are just one keyboard slip away from .com, the mother lode of all domains. Ham landed connections to the Cameroon government and flew in his people to reroute the traffic. And if he gets his way, Colombia (.co), Oman (.om), Niger (.ne), and Ethiopia (.et) will be his as well.
"It's in the works," Ham says over lunch in his hometown of Vancouver, British Columbia. "That's why I can't talk about it." He's nearly as reluctant to share details about his newest company, called Reinvent Technology, into which he's investing tens of millions of dollars to build a powerhouse of Internet businesses around his most valuable properties.
Given Ham's reach on the Web -- his sites receive 30 million unique visitors a month -- it's remarkable that so few people know about him. Even in the clubby world of domainers, he's a mystery man. Until now Ham has never talked publicly about his business. You won't find his name on any domain registration, nor will you see it on the patent application for the Cameroon trick.
There are practical reasons for the low profile: For one, Ham's success has drawn enemies, many of them rivals. He once used a Vancouver post office box for domain-related mail -- until the day he opened a package that contained a note reading "You are a piece of s**t," accompanied by an actual piece of it.
Bitter domainers are one thing, lawyers another. And at the moment, Ham's biggest concern is that corporate counsels will come after him claiming that the Cameroon typo scheme is an abuse of their trademarks. He may be right, since this is the first time he's been identified as the orchestrator.
When asked about the .cm play, John Berryhill, a top domain attorney who doesn't work for Ham, practically screams into the phone, "You know who did that? Do you have any idea how many people want to know who's behind that?"
Kevin Ham is a boyish-looking 37-year-old, trim from a passion for judo and a commitment to clean living. His drink of choice: grapefruit juice, no ice. His mild demeanor belies the aggressive, work-around-the-clock type that he is. Ham frequently steers conversations about business back to the Bible. Not in a preachy way; it's just who he is.
The son of Korean-born immigrants, Ham grew up on the east side of Vancouver with his three brothers. His father ran dry-cleaning stores; his mother worked graveyard shifts as a nurse. A debilitating illness at the age of 14 led Ham to dream of becoming a doctor. He cruised through high school and then undergraduate work and medical school at the University of British Columbia.
Christianity had long been a mainstay with his family, but as an undergrad, he made the Bible a focal point of his life; he joined the Evangelical Layman's Church and attended regular Bible meetings. Ham recalls that it was about this time -- 1992 or 1993 -- that he was introduced to the Web. A church friend told him about a powerful new medium that could be used to spread the gospel.
"Those words really struck me," Ham says. "It's the reason I'm still working."
After he graduated from med school in 1998, Ham and his new bride took off for London, Ontario, for a two-year residency. By the second year, Ham had become chief resident, and when he wasn't rushing to the emergency room, he indulged his growing fascination with the Net, teaching himself to create websites and to code in Perl.
Information about Web hosting at the time was so scattered that Ham began creating an online directory of providers, complete with reviews and ratings of their services. He called it Hostglobal.com.
From there it was a short step to the business of buying and selling domains. About six months after he launched Hostglobal, Ham was earning around $10,000 per month in ad sales. But when one of his advertisers -- a service that sold domain registrations -- told him that a single ad was generating business worth $1,500 a month, Ham figured he could get in on that too.
It made sense: People shopping for hosting services were often interested in buying a catchy URL, so Ham launched a second directory, called DNSindex.com. Like similar services operating at the time, it gave customers a way to register domain names.
But Ham added the one feature that early domain hunters wanted most: weekly lists of available names, compiled using free sources he found on the Web. Some lists he gave away; others he charged as much as $50 for. In a couple of months, he had more than 5,000 customers.
By the time he finished his residency in June 2000, his two small Web ventures were pulling in more money in a month -- sometimes $40,000 -- than Ham made that year at the hospital. That was enough, he reasoned, to put off starting a medical practice for three more months, maybe six. "It just didn't make sense not to do it," he says.
With a new baby in tow, Ham and his wife moved back to Vancouver, settling into a one-bedroom apartment. Ham's timing, it turned out, was spot-on. Tech stocks were tumbling, dotcoms were folding left and right, and investors were fleeing the Web. More important to him, hundreds of thousands of valuable domain names that were suddenly considered worthless began to expire, or "drop." Ham and a handful of other trailblazers were ready to snap them up.
Figuring out when names would drop was tedious work.
At the time, Network Solutions controlled the best names; it was for a long time the only retail company, or registrar, selling .coms. It didn't say when expiring names would go back on the market, but twice a day it published the master list of all registered names -- the so-called "root zone" file (now managed by VeriSign (Charts)). It was a fat list of well over 5 million names that took hours to download and often crashed the under-powered PCs of the day.
So Ham wrote software scripts that compared one day's list with the next. Then he tracked names that vanished from the root file. Those names would be listed briefly as on hold, and Ham figured out that they would almost always drop five or six days later -- at about 3:30 a.m. on the West Coast. In the dark of night, Ham launched his attacks, firing up five PCs and multiple browsers in each. Typing furiously, he would enter his buy requests and bounce from one keyboard to the next until he snagged the names he wanted.
He missed a lot of them, of course.
Ham had no clue that there were rivals out there who were way ahead him, deploying software that purchased names at a rate that Ham's fingers couldn't match. Through registration data, he eventually traced many of those purchases to one owner: "NoName." Behind the shadowy moniker was another reclusive domain pioneer, a Chinese-born programmer named Yun Ye, who, according to people who know him, operated out of his house in Fremont, Calif.
By day Ye worked as a software developer. At night he unleashed the programs that automated domain purchases. (Ye achieved deity status among domainers in 2004 when he sold a portfolio of 100,000 names to Marchex , a Seattle-based, publicly traded search marketing firm, for $164 million. He then moved to Vancouver.)
Ham went back to the keyboard, writing scripts so that he, too, could pound at the registrars. Ham's track record began to improve, but he still wasn't satisfied. "Yun was just too good," he says.
Then Ham did something brash: He bought his way to the front of the line. Since registrars had direct connections to Network Solutions's servers, Ham's play was to cut out the middleman. He struck deals with several discount registrars, even helping them write software to ensure that they captured the names Ham wanted to buy during the drops. In exchange for the exclusivity, Ham offered to pay as much as $100 for some names that might normally go for as little as $8.
Within weeks Ham had struck so many deals that, according to rivals, he controlled most of the direct connections. "I kept telling them to hit them harder," Ham says in a rare boastful moment. "We brought down the servers many times." During one six-month period starting in late 2000, Ham registered more than 10,000 names.
Rival domainers, locked out of much of the action, didn't appreciate Ham's tactics. It was one of them, most likely, who sent him the turd. "Kevin came in and closed the door for everyone else," says Frank Schilling, a domainer who figured out what Ham had done and sealed similar deals. "There was a ton of professional jealousy."
Ham, in fact, owes a lot to Schilling. Both men lived in Vancouver at the time, and after Ham sought out Schilling in November 2000, the two met at a restaurant to compare notes.
"How much traffic do you have?" Schilling asked. An embarrassed Ham replied that he had no idea. Schilling mentioned that he was experimenting with a new service, GoTo.com, that would populate his domains with ads. Ham spent the next week figuring out how much traffic his sites were generating, and he was amazed by the initial tally: 8,000 unique visitors per day from the 375 names he owned at the time.
"From then on," Ham says, "I knew that what I was building would be very, very valuable." He soon signed up with GoTo (which was later purchased by Yahoo). On his first day, Ham made $1,500.
The system worked then as it does now: People don't always use Google or Yahoo to find something on the Web; they'll often type what they're looking for into a browser's address bar and add ".com."
It's a practice known as "direct navigation," or type-in traffic, and millions do it. Need wedding shoes? Type in "weddingshoes.com" -- a site that Ham happens to own -- and you'll land on what looks like a shoe-shopping portal, filled with links from dozens of retailers.
Click on any one of those links, and the advertiser that placed it pays Yahoo, which in turn pays a cut to Ham. That single site, Ham says, brings in $9,100 a year. Small change, maybe, but the name cost him $8, and his annual overhead for it is about $7. Multiply that model several thousand times over, and you get a quick idea of the kind of cash machine that Ham was creating from his living room.
By early 2002, roughly $1 million a year was pouring into Ham's operation, which he ran with the help of his high school friend and current partner, Colin Yu. But again he felt the tug of his conscience. He occasionally left Vancouver to do medical missionary stints, helping patients in Mexico, the Philippines, and China. He found the experience rewarding, but the development boom he saw taking off in China just reminded him of the virtual real estate boom he was leading back home.
Soon Ham was back working full-time on the Web. "There was just too much more to do," he says.
There was no looking back. The next few years were among Ham's most aggressive. One of his most valuable tricks was one he had experimented with in the early days, a practice called domain "tasting." Tasting takes advantage of a provision that allows domain-name buyers a free five-day trial period. Intended to protect customers who mistakenly purchase the wrong name, it handed aggressive domainers another means with which to expand -- and exploit -- their portfolios.
Ham cobbled together new lists of domain words in every combination, registering hundreds of thousands of new names for free, monitoring the traffic, and then returning the duds. By 2004, Ham had amassed such a deep portfolio that he pulled his names from third-party registrars, launched his own registrar, and then created another company, appropriately named Hitfarm, that could do a better job than Yahoo of matching ads with domain names -- for himself and 100 or so other domainers.
Like any shopping spree, though, Ham's tasting binge didn't last. It brought in so many names -- offbeat strings of letters, names with too many dashes, and other variations that humans would be hard-pressed to think of -- that Ham saw the quality of his portfolio dropping in proportion to its growing size. For every few thousand names he'd register, he'd toss back all but a hundred or so.
Tasting exacerbated another problem too: Ham's software grabbed all kinds of typographical variations of trademarked names. Called typo-squatting, it's a practice now coming under the same intense scrutiny long faced by cybersquatters. Microsoft and Neiman Marcus are just two companies whose lawyers have brought anti-cybersquatting lawsuits, charging domainers with intentionally profiting from variations of their trademarks.
"Tasting changed everything," says Ham, who has since abandoned the practice, though he concedes that Hitfarm still holds some problematic names. "I said, forget it," he says. "Generic names are already too hard to come by. And the legal risks are too great."
The legal risks should diminish, however, if you don't own the domain names at all -- and that's the secret behind the Cameroon play.
The domain confab in Vegas is like any other trade conference: The real intrigue happens at cocktail hour. One subject in the air is Cameroon. Late last summer, domainers began noticing that something odd happens to .cm traffic: It all winds up at a site called Agoga.com. Domainers know, of course, that .cm belongs to Cameroon. And they know that whoever controls Agoga.com has created a potential gold mine.
What they don't know is who's behind it all.
At one of the meet-and-greets, Ham is standing drinkless, as usual, sporting a polo shirt, chatting with a few people he knows and some he's just met. In this crowd, it seems, everyone wants to know Ham. Finally, he is alone.
"I hear you're the guy behind .cm?"
Ham looks surprised by the reporter's question, then flashes a big smile and says, "I had help."
Over a series of conversations a few weeks later in Vancouver, Ham shares some details about a deal that, despite his innate reticence, he's clearly proud of. About a year ago, he says, he worked his contacts to gain connections to government officials in Cameroon. Then he flew several confidantes to Yaound?, the capital, to make their pitch. His key programmer went along to handle the technical details.
"Hey," Ham says, flagging his techie down near the office elevator. "Didn't you meet with the president of Cameroon?"
"Nah," the programmer says. "We met with the prime minister. But we did see the president's compound."
It's an odd scene to picture: a domainer's reps in a sit-down with Ephraim Inoni, the prime minister of Cameroon, to discuss the power of type-in typo traffic and pay-per-click ads. And yet, as with most of the angles Ham has played, the Cameroon scheme is ingeniously straightforward.
Ham's people installed a line of software, called a "wildcard," that reroutes traffic addressed to any .cm domain name that isn't registered. In the case of Cameroon, a country of 18 million with just 167,000 computers connected to the Internet, that means hundreds of millions of names. Type in "paper.cm" and servers owned by Camtel, the state-owned company that runs Cameroon's domain registry, redirect the query to Ham's Agoga.com servers in Vancouver.
The servers fill the page with ads for paper and office-supply merchants. (Officials at Yahoo confirm that the company serves ads for Ham's .cm play.) It all happens in a flash, and since Ham doesn't own or register the names, he's not technically typo-squatting, according to several lawyers who handle Internet issues.
The method is spelled out in a patent application filed by a Vancouver businessman named Robert Seeman, who Ham says is his partner in the venture and who also serves as chief adviser at Reinvent Technology. (Seeman declined to be interviewed for this story.)
Ham won't reveal specifics but says Agoga receives "in the ballpark" of 8 million unique visitors per month. Fellow domainers, naturally, are envious.
"As soon as it started happening, there was a huge sense of 'Why didn't I think of that?'" says attorney Berryhill, who represents Schilling and other domainers.
Still, several companies have already tracked down Ham's attorneys, claiming trademark infringement. Ham argues that his system is legally in the clear because it treats every.cm typo equally and doesn't filter out trademarked names.
Berryhill concurs. "You can't really say that [wildcarding] is targeting trade-marks," he says. "It captures all the traffic, not just trademark traffic." Moreover, the anti-cybersquatting statute applies only to people who register a trademarked domain; using a wildcard doesn't require registering names.
Clever though it may be, .cm is "a very small part of our operations," Ham says. He won't disclose how much he pays to the government of Cameroon, whose officials could not be reached for comment.
The partnership has been a rocky one so far, and the system has sporadically shut down. But .cm is only one of several country domains where the typo play can work. According to Ham, he and his team are working with other governments. The dream typo play -- .co -- belongs to Colombia, to which Ham says Seeman paid several visits long before they began working on Cameroon. (Citing safety concerns, Ham hasn't yet made the trip. "I would only go if the president requests to meet me," he says.)
As for other countries he might soon invade, Oman (.om) is an obvious target. Niger and Ethiopia are out there too, but since they would play off less lucrative .net typos, they might not be worth the trouble.
As for Colombia, Ham says, "we're making progress."
Ham leans over his office PC to check on a domain auction. Steven Sacks, a domainer based in Indianapolis who works for Ham, is telling him about some names up for sale. Ham shoots back an instant message: "I like doctordegree.com ... and rockquarry.com ... sunblinds.com."
The days of figuring out the drop are long over. Everything's open now. Lists are easy to obtain. You can preorder a name before it drops and hope to get it. Or, like Ham, you can shell out five or six figures in online auctions. The only great deals, at least for .com names, tend to happen privately, when a domainer manages to find an eager or naive seller.
Ham still buys 30 to 100 names a day, but he's no longer getting them on the cheap. In fact, he and Schilling, who today maintains a $20 million-a-year portfolio from his home in the Cayman Islands, are often accused of driving up prices.
Take, for example, the $26,250 Ham paid for Fruitgiftbaskets.com, or the $171,250 for Hoteldeals.com. "The amount he will pay is crazy," says Bob Martin, president of Internet REIT, a domain investment firm that has raised more than $125 million from private investors, including Maveron, the venture firm backed by Starbucks founder Howard Schultz.
Nonsense, Ham says. The names are expensive only if you value them the way people like Martin do. The VCs and bankers, who were late to the domain gold rush, assess names by calculating the pay-per-click ad revenue and attaching a multiple based on how long it would take to pay off the investment.
Viewed that way, Ham's personal portfolio alone is worth roughly $300 million. But some of Ham's recent domain purchases would also look silly: They'd take 15 or 20 years just to justify the price, and that assumes continuation of the pay-per-click model.
But Ham is taking a longer view. The Web, he says, is becoming cluttered with parked pages. The model is amazingly efficient -- lots of money for little work --but Ham argues that Internet users will soon grow weary of it all.
He also expects Google, Microsoft, and Yahoo to find ways to effectively combat typo-squatting. Some browsers can already fix typos; Internet Explorer catches unregistered domains and redirects visitors to a Microsoft page -- in effect controlling traffic the same way that Ham is doing with .cm. "The heat is rising," Ham says.
When Ham buys a domain now, he's not doing pay-per-click math but rather sizing it up as a potential business. Reinvent Technology aims to turn his most valuable names into mini media companies, based on hundreds of niche categories.
Among the first he'd like to launch, not surprisingly, is Religion.com. Ham recently leased the entire 27th floor in his Vancouver building and is now hiring more than 150 designers, engineers, salespeople, and editorial folks.
Much of that effort is going into developing search tools based more on meaning and less on keywords. "Google is only so useful," Ham says.
The aim is to apply a meaning-based, or "semantic," system across swaths of sites, luring customers from direct navigation and search engines alike. Religion.com would then become an anchor to which scores of other sites would be tied.
"It's time to build out the virtual real estate," Ham says. "There's so much more value in these names than pay-per-click." Seeman's patent application even mentions the possibility of turning Web traffic from Cameroon and other future foreign partners into full-fledged portals.
It's all part of the master plan, as Ham aims to become the first domainer to move from the ranks of at-home name hunter to Internet titan. Smaller players have been selling out to VC-backed groups, and Ham expects that the best names will eventually be owned by just a handful of companies.
If he bets right, he might very well be one of them. "If you control all the domains," he says, "then you control the Internet."
[Via - The man who owns the Internet]
As names come up that interest Ham, he occasionally air-types. It's the ultimate gut check. Is the name one that people might enter directly into their Web browser, bypassing the search engine box entirely, as Ham wants? Is it better in plural or singular form? If it's a typo, is it a mistake a lot of people would make? Or does the name, like a stunning beachfront property, just feel like a winner?
When Ham wants a domain, he leans over and quietly instructs an associate to bid on his behalf. He likes wedding names, so his guy lifts the white paddle and snags Weddingcatering.com for $10,000. Greeting.com is not nearly as good as the plural Greetings.com, but Ham grabs it anyway, for $350,000.
Ham is a devout Christian, and he spends $31,000 to add Christianrock.com to his collection, which already includes God.com and Satan.com. When it's all over, Ham strolls to the table near the exit and writes a check for $650,000. It's a cheap afternoon.
Just a few years ago, most of the guys bidding in this room had never laid eyes on one another. Indeed, they rarely left their home computers. Now they find themselves in a Vegas ballroom surrounded by deep-pocketed bankers, venture-backed startups, and other investors trying to get a piece of the action.
And why not? In the past three years alone, the number of dotcom names has soared more than 130 percent to 66 million. Every two seconds, another joins the list.
But the big money is in the aftermarket, where the most valuable names -- those that draw thousands of pageviews and throw off steady cash from Google's and Yahoo's pay-per-click ads -- are driving prices to dizzying heights. People who had the guts and foresight to sweep up names shed during the dotcom bust are now landlords of some of the most valuable real estate on the Web.
The man at the top of this little-known hierarchy is Kevin Ham -- one of a handful of major-league "domainers" in the world and arguably the shrewdest and most ambitious of the lot. Even in a field filled with unusual career paths, Ham's stands out.
Trained as a family doctor, he put off medicine after discovering the riches of the Web. Since 2000 he has quietly cobbled together a portfolio of some 300,000 domains that, combined with several other ventures, generate an estimated $70 million a year in revenue. (Like all his financial details, Ham would neither confirm nor deny this figure.)
Working mostly as a solo operator, Ham has looked for every opening and exploited every angle -- even inventing a few of his own -- to expand his enterprise. Early on, he wrote software to snag expiring names on the cheap. He was one of the first to take advantage of a loophole that allows people to register a name and return it without cost after a free trial, on occasion grabbing hundreds of thousands of names in one swoop.
And what few people know is that he's also the man behind the domain world's latest scheme: profiting from traffic generated by the millions of people who mistakenly type ".cm" instead of ".com" at the end of a domain name.
Try it with almost any name you can think of -- Beer.cm, Newyorktimes.cm, even Anyname.cm -- and you'll land on a page called Agoga.com, a site filled with ads served up by Yahoo.
Ham makes money every time someone clicks on an ad -- as does his partner in this venture, the West African country of Cameroon. Why Cameroon? It has the unforeseen good fortune of owning .cm as its country code -- just as Germany runs all names that end with .de.
The difference is that hardly any .cm names are registered, and the letters are just one keyboard slip away from .com, the mother lode of all domains. Ham landed connections to the Cameroon government and flew in his people to reroute the traffic. And if he gets his way, Colombia (.co), Oman (.om), Niger (.ne), and Ethiopia (.et) will be his as well.
"It's in the works," Ham says over lunch in his hometown of Vancouver, British Columbia. "That's why I can't talk about it." He's nearly as reluctant to share details about his newest company, called Reinvent Technology, into which he's investing tens of millions of dollars to build a powerhouse of Internet businesses around his most valuable properties.
Given Ham's reach on the Web -- his sites receive 30 million unique visitors a month -- it's remarkable that so few people know about him. Even in the clubby world of domainers, he's a mystery man. Until now Ham has never talked publicly about his business. You won't find his name on any domain registration, nor will you see it on the patent application for the Cameroon trick.
There are practical reasons for the low profile: For one, Ham's success has drawn enemies, many of them rivals. He once used a Vancouver post office box for domain-related mail -- until the day he opened a package that contained a note reading "You are a piece of s**t," accompanied by an actual piece of it.
Bitter domainers are one thing, lawyers another. And at the moment, Ham's biggest concern is that corporate counsels will come after him claiming that the Cameroon typo scheme is an abuse of their trademarks. He may be right, since this is the first time he's been identified as the orchestrator.
When asked about the .cm play, John Berryhill, a top domain attorney who doesn't work for Ham, practically screams into the phone, "You know who did that? Do you have any idea how many people want to know who's behind that?"
Kevin Ham is a boyish-looking 37-year-old, trim from a passion for judo and a commitment to clean living. His drink of choice: grapefruit juice, no ice. His mild demeanor belies the aggressive, work-around-the-clock type that he is. Ham frequently steers conversations about business back to the Bible. Not in a preachy way; it's just who he is.
The son of Korean-born immigrants, Ham grew up on the east side of Vancouver with his three brothers. His father ran dry-cleaning stores; his mother worked graveyard shifts as a nurse. A debilitating illness at the age of 14 led Ham to dream of becoming a doctor. He cruised through high school and then undergraduate work and medical school at the University of British Columbia.
Christianity had long been a mainstay with his family, but as an undergrad, he made the Bible a focal point of his life; he joined the Evangelical Layman's Church and attended regular Bible meetings. Ham recalls that it was about this time -- 1992 or 1993 -- that he was introduced to the Web. A church friend told him about a powerful new medium that could be used to spread the gospel.
"Those words really struck me," Ham says. "It's the reason I'm still working."
After he graduated from med school in 1998, Ham and his new bride took off for London, Ontario, for a two-year residency. By the second year, Ham had become chief resident, and when he wasn't rushing to the emergency room, he indulged his growing fascination with the Net, teaching himself to create websites and to code in Perl.
Information about Web hosting at the time was so scattered that Ham began creating an online directory of providers, complete with reviews and ratings of their services. He called it Hostglobal.com.
From there it was a short step to the business of buying and selling domains. About six months after he launched Hostglobal, Ham was earning around $10,000 per month in ad sales. But when one of his advertisers -- a service that sold domain registrations -- told him that a single ad was generating business worth $1,500 a month, Ham figured he could get in on that too.
It made sense: People shopping for hosting services were often interested in buying a catchy URL, so Ham launched a second directory, called DNSindex.com. Like similar services operating at the time, it gave customers a way to register domain names.
But Ham added the one feature that early domain hunters wanted most: weekly lists of available names, compiled using free sources he found on the Web. Some lists he gave away; others he charged as much as $50 for. In a couple of months, he had more than 5,000 customers.
By the time he finished his residency in June 2000, his two small Web ventures were pulling in more money in a month -- sometimes $40,000 -- than Ham made that year at the hospital. That was enough, he reasoned, to put off starting a medical practice for three more months, maybe six. "It just didn't make sense not to do it," he says.
With a new baby in tow, Ham and his wife moved back to Vancouver, settling into a one-bedroom apartment. Ham's timing, it turned out, was spot-on. Tech stocks were tumbling, dotcoms were folding left and right, and investors were fleeing the Web. More important to him, hundreds of thousands of valuable domain names that were suddenly considered worthless began to expire, or "drop." Ham and a handful of other trailblazers were ready to snap them up.
Figuring out when names would drop was tedious work.
At the time, Network Solutions controlled the best names; it was for a long time the only retail company, or registrar, selling .coms. It didn't say when expiring names would go back on the market, but twice a day it published the master list of all registered names -- the so-called "root zone" file (now managed by VeriSign (Charts)). It was a fat list of well over 5 million names that took hours to download and often crashed the under-powered PCs of the day.
So Ham wrote software scripts that compared one day's list with the next. Then he tracked names that vanished from the root file. Those names would be listed briefly as on hold, and Ham figured out that they would almost always drop five or six days later -- at about 3:30 a.m. on the West Coast. In the dark of night, Ham launched his attacks, firing up five PCs and multiple browsers in each. Typing furiously, he would enter his buy requests and bounce from one keyboard to the next until he snagged the names he wanted.
He missed a lot of them, of course.
Ham had no clue that there were rivals out there who were way ahead him, deploying software that purchased names at a rate that Ham's fingers couldn't match. Through registration data, he eventually traced many of those purchases to one owner: "NoName." Behind the shadowy moniker was another reclusive domain pioneer, a Chinese-born programmer named Yun Ye, who, according to people who know him, operated out of his house in Fremont, Calif.
By day Ye worked as a software developer. At night he unleashed the programs that automated domain purchases. (Ye achieved deity status among domainers in 2004 when he sold a portfolio of 100,000 names to Marchex , a Seattle-based, publicly traded search marketing firm, for $164 million. He then moved to Vancouver.)
Ham went back to the keyboard, writing scripts so that he, too, could pound at the registrars. Ham's track record began to improve, but he still wasn't satisfied. "Yun was just too good," he says.
Then Ham did something brash: He bought his way to the front of the line. Since registrars had direct connections to Network Solutions's servers, Ham's play was to cut out the middleman. He struck deals with several discount registrars, even helping them write software to ensure that they captured the names Ham wanted to buy during the drops. In exchange for the exclusivity, Ham offered to pay as much as $100 for some names that might normally go for as little as $8.
Within weeks Ham had struck so many deals that, according to rivals, he controlled most of the direct connections. "I kept telling them to hit them harder," Ham says in a rare boastful moment. "We brought down the servers many times." During one six-month period starting in late 2000, Ham registered more than 10,000 names.
Rival domainers, locked out of much of the action, didn't appreciate Ham's tactics. It was one of them, most likely, who sent him the turd. "Kevin came in and closed the door for everyone else," says Frank Schilling, a domainer who figured out what Ham had done and sealed similar deals. "There was a ton of professional jealousy."
Ham, in fact, owes a lot to Schilling. Both men lived in Vancouver at the time, and after Ham sought out Schilling in November 2000, the two met at a restaurant to compare notes.
"How much traffic do you have?" Schilling asked. An embarrassed Ham replied that he had no idea. Schilling mentioned that he was experimenting with a new service, GoTo.com, that would populate his domains with ads. Ham spent the next week figuring out how much traffic his sites were generating, and he was amazed by the initial tally: 8,000 unique visitors per day from the 375 names he owned at the time.
"From then on," Ham says, "I knew that what I was building would be very, very valuable." He soon signed up with GoTo (which was later purchased by Yahoo). On his first day, Ham made $1,500.
The system worked then as it does now: People don't always use Google or Yahoo to find something on the Web; they'll often type what they're looking for into a browser's address bar and add ".com."
It's a practice known as "direct navigation," or type-in traffic, and millions do it. Need wedding shoes? Type in "weddingshoes.com" -- a site that Ham happens to own -- and you'll land on what looks like a shoe-shopping portal, filled with links from dozens of retailers.
Click on any one of those links, and the advertiser that placed it pays Yahoo, which in turn pays a cut to Ham. That single site, Ham says, brings in $9,100 a year. Small change, maybe, but the name cost him $8, and his annual overhead for it is about $7. Multiply that model several thousand times over, and you get a quick idea of the kind of cash machine that Ham was creating from his living room.
By early 2002, roughly $1 million a year was pouring into Ham's operation, which he ran with the help of his high school friend and current partner, Colin Yu. But again he felt the tug of his conscience. He occasionally left Vancouver to do medical missionary stints, helping patients in Mexico, the Philippines, and China. He found the experience rewarding, but the development boom he saw taking off in China just reminded him of the virtual real estate boom he was leading back home.
Soon Ham was back working full-time on the Web. "There was just too much more to do," he says.
There was no looking back. The next few years were among Ham's most aggressive. One of his most valuable tricks was one he had experimented with in the early days, a practice called domain "tasting." Tasting takes advantage of a provision that allows domain-name buyers a free five-day trial period. Intended to protect customers who mistakenly purchase the wrong name, it handed aggressive domainers another means with which to expand -- and exploit -- their portfolios.
Ham cobbled together new lists of domain words in every combination, registering hundreds of thousands of new names for free, monitoring the traffic, and then returning the duds. By 2004, Ham had amassed such a deep portfolio that he pulled his names from third-party registrars, launched his own registrar, and then created another company, appropriately named Hitfarm, that could do a better job than Yahoo of matching ads with domain names -- for himself and 100 or so other domainers.
Like any shopping spree, though, Ham's tasting binge didn't last. It brought in so many names -- offbeat strings of letters, names with too many dashes, and other variations that humans would be hard-pressed to think of -- that Ham saw the quality of his portfolio dropping in proportion to its growing size. For every few thousand names he'd register, he'd toss back all but a hundred or so.
Tasting exacerbated another problem too: Ham's software grabbed all kinds of typographical variations of trademarked names. Called typo-squatting, it's a practice now coming under the same intense scrutiny long faced by cybersquatters. Microsoft and Neiman Marcus are just two companies whose lawyers have brought anti-cybersquatting lawsuits, charging domainers with intentionally profiting from variations of their trademarks.
"Tasting changed everything," says Ham, who has since abandoned the practice, though he concedes that Hitfarm still holds some problematic names. "I said, forget it," he says. "Generic names are already too hard to come by. And the legal risks are too great."
The legal risks should diminish, however, if you don't own the domain names at all -- and that's the secret behind the Cameroon play.
The domain confab in Vegas is like any other trade conference: The real intrigue happens at cocktail hour. One subject in the air is Cameroon. Late last summer, domainers began noticing that something odd happens to .cm traffic: It all winds up at a site called Agoga.com. Domainers know, of course, that .cm belongs to Cameroon. And they know that whoever controls Agoga.com has created a potential gold mine.
What they don't know is who's behind it all.
At one of the meet-and-greets, Ham is standing drinkless, as usual, sporting a polo shirt, chatting with a few people he knows and some he's just met. In this crowd, it seems, everyone wants to know Ham. Finally, he is alone.
"I hear you're the guy behind .cm?"
Ham looks surprised by the reporter's question, then flashes a big smile and says, "I had help."
Over a series of conversations a few weeks later in Vancouver, Ham shares some details about a deal that, despite his innate reticence, he's clearly proud of. About a year ago, he says, he worked his contacts to gain connections to government officials in Cameroon. Then he flew several confidantes to Yaound?, the capital, to make their pitch. His key programmer went along to handle the technical details.
"Hey," Ham says, flagging his techie down near the office elevator. "Didn't you meet with the president of Cameroon?"
"Nah," the programmer says. "We met with the prime minister. But we did see the president's compound."
It's an odd scene to picture: a domainer's reps in a sit-down with Ephraim Inoni, the prime minister of Cameroon, to discuss the power of type-in typo traffic and pay-per-click ads. And yet, as with most of the angles Ham has played, the Cameroon scheme is ingeniously straightforward.
Ham's people installed a line of software, called a "wildcard," that reroutes traffic addressed to any .cm domain name that isn't registered. In the case of Cameroon, a country of 18 million with just 167,000 computers connected to the Internet, that means hundreds of millions of names. Type in "paper.cm" and servers owned by Camtel, the state-owned company that runs Cameroon's domain registry, redirect the query to Ham's Agoga.com servers in Vancouver.
The servers fill the page with ads for paper and office-supply merchants. (Officials at Yahoo confirm that the company serves ads for Ham's .cm play.) It all happens in a flash, and since Ham doesn't own or register the names, he's not technically typo-squatting, according to several lawyers who handle Internet issues.
The method is spelled out in a patent application filed by a Vancouver businessman named Robert Seeman, who Ham says is his partner in the venture and who also serves as chief adviser at Reinvent Technology. (Seeman declined to be interviewed for this story.)
Ham won't reveal specifics but says Agoga receives "in the ballpark" of 8 million unique visitors per month. Fellow domainers, naturally, are envious.
"As soon as it started happening, there was a huge sense of 'Why didn't I think of that?'" says attorney Berryhill, who represents Schilling and other domainers.
Still, several companies have already tracked down Ham's attorneys, claiming trademark infringement. Ham argues that his system is legally in the clear because it treats every.cm typo equally and doesn't filter out trademarked names.
Berryhill concurs. "You can't really say that [wildcarding] is targeting trade-marks," he says. "It captures all the traffic, not just trademark traffic." Moreover, the anti-cybersquatting statute applies only to people who register a trademarked domain; using a wildcard doesn't require registering names.
Clever though it may be, .cm is "a very small part of our operations," Ham says. He won't disclose how much he pays to the government of Cameroon, whose officials could not be reached for comment.
The partnership has been a rocky one so far, and the system has sporadically shut down. But .cm is only one of several country domains where the typo play can work. According to Ham, he and his team are working with other governments. The dream typo play -- .co -- belongs to Colombia, to which Ham says Seeman paid several visits long before they began working on Cameroon. (Citing safety concerns, Ham hasn't yet made the trip. "I would only go if the president requests to meet me," he says.)
As for other countries he might soon invade, Oman (.om) is an obvious target. Niger and Ethiopia are out there too, but since they would play off less lucrative .net typos, they might not be worth the trouble.
As for Colombia, Ham says, "we're making progress."
Ham leans over his office PC to check on a domain auction. Steven Sacks, a domainer based in Indianapolis who works for Ham, is telling him about some names up for sale. Ham shoots back an instant message: "I like doctordegree.com ... and rockquarry.com ... sunblinds.com."
The days of figuring out the drop are long over. Everything's open now. Lists are easy to obtain. You can preorder a name before it drops and hope to get it. Or, like Ham, you can shell out five or six figures in online auctions. The only great deals, at least for .com names, tend to happen privately, when a domainer manages to find an eager or naive seller.
Ham still buys 30 to 100 names a day, but he's no longer getting them on the cheap. In fact, he and Schilling, who today maintains a $20 million-a-year portfolio from his home in the Cayman Islands, are often accused of driving up prices.
Take, for example, the $26,250 Ham paid for Fruitgiftbaskets.com, or the $171,250 for Hoteldeals.com. "The amount he will pay is crazy," says Bob Martin, president of Internet REIT, a domain investment firm that has raised more than $125 million from private investors, including Maveron, the venture firm backed by Starbucks founder Howard Schultz.
Nonsense, Ham says. The names are expensive only if you value them the way people like Martin do. The VCs and bankers, who were late to the domain gold rush, assess names by calculating the pay-per-click ad revenue and attaching a multiple based on how long it would take to pay off the investment.
Viewed that way, Ham's personal portfolio alone is worth roughly $300 million. But some of Ham's recent domain purchases would also look silly: They'd take 15 or 20 years just to justify the price, and that assumes continuation of the pay-per-click model.
But Ham is taking a longer view. The Web, he says, is becoming cluttered with parked pages. The model is amazingly efficient -- lots of money for little work --but Ham argues that Internet users will soon grow weary of it all.
He also expects Google, Microsoft, and Yahoo to find ways to effectively combat typo-squatting. Some browsers can already fix typos; Internet Explorer catches unregistered domains and redirects visitors to a Microsoft page -- in effect controlling traffic the same way that Ham is doing with .cm. "The heat is rising," Ham says.
When Ham buys a domain now, he's not doing pay-per-click math but rather sizing it up as a potential business. Reinvent Technology aims to turn his most valuable names into mini media companies, based on hundreds of niche categories.
Among the first he'd like to launch, not surprisingly, is Religion.com. Ham recently leased the entire 27th floor in his Vancouver building and is now hiring more than 150 designers, engineers, salespeople, and editorial folks.
Much of that effort is going into developing search tools based more on meaning and less on keywords. "Google is only so useful," Ham says.
The aim is to apply a meaning-based, or "semantic," system across swaths of sites, luring customers from direct navigation and search engines alike. Religion.com would then become an anchor to which scores of other sites would be tied.
"It's time to build out the virtual real estate," Ham says. "There's so much more value in these names than pay-per-click." Seeman's patent application even mentions the possibility of turning Web traffic from Cameroon and other future foreign partners into full-fledged portals.
It's all part of the master plan, as Ham aims to become the first domainer to move from the ranks of at-home name hunter to Internet titan. Smaller players have been selling out to VC-backed groups, and Ham expects that the best names will eventually be owned by just a handful of companies.
If he bets right, he might very well be one of them. "If you control all the domains," he says, "then you control the Internet."
[Via - The man who owns the Internet]
Voting for the Worst on ‘American Idol’ Makes Money for an Entrepreneur
There is something about “American Idol” that extracts intense emotions from the audience: devotion for the contestants, perhaps, or passion for the songs. For Dave Della Terza, it elicits utter disgust. But it also turns a profit.
Frustrated by what he called the manipulative nature of the televised singing competition, Mr. Della Terza started encouraging readers of a reality television message board five years ago to vote for the contestants they deemed the worst singers.
The idea spawned a Web site, Vote for the Worst, which received widespread attention last year for supporting the singer Sanjaya Malakar as he advanced in the competition.
For Mr. Della Terza, what started as a hobby has become a business. Last year, the site had revenue of roughly $40,000, Mr. Della Terza said, mostly through Google Ads. While some of the income paid for computer servers and legal fees, the site still made a profit, allowing Mr. Della Terza to take some days off work to maintain the increasingly popular site.
Mr. Della Terza is far from the only person cashing in on the “American Idol” juggernaut. The publisher of the popular “Chicken Soup for the Soul” book series is promoting an Idol-themed edition. Walt Disney World is adding an Idol attraction to its Hollywood Studios theme park. Royal Caribbean International is embarking on Idol cruises.
But Vote for the Worst is unique, not only because it openly mocks the competition but also because it was formed spontaneously by an Internet-connected group of television viewers.
“It didn’t start out as a moneymaking venture; it wasn’t an attempt to leech off the ‘American Idol’ brand,” Mr. Della Terza said. “It started as a joke. But people really enjoyed it.”
The site now routinely breaks “Idol” news. In the first week of March, the site recorded 2.7 million page views as it reported rumors that a contestant, David Hernandez, had a background as a male stripper. Mr. Hernandez was voted off the show last week.
Mr. Della Terza said he did not expect to resemble a gossip columnist anytime soon. Still, the site has unintentionally become a font of “Idol” stories. Reports by Vote for the Worst in January that two “Idol” contestants had professional singing backgrounds subsequently became fodder for the news media. (Any person who is not under contract is eligible to audition.)
“We always post stuff on the site the producers don’t want you to know,” Mr. Della Terza said. “We don’t go out of our way to dig up dirt, but if it falls in our laps, obviously we’ll post it.”
The site’s fame rose last season when the radio personality Howard Stern repeatedly mentioned the site and encouraged listeners to vote to keep Mr. Malakar on the show.
In a conference call with reporters last month, Nigel Lythgoe, the executive producer of “American Idol,” said he did not believe online voting campaigns have any effect. “There are too many people who vote,” he said.
Still, Mr. Lythgoe’s mention of Vote for the Worst testified to the site’s significance, which still seems to surprise Mr. Della Terza, 25, an Illinois resident who works in information technology and teaches part time at a community college. A camera crew from a local television station once walked into his classroom to request an interview, he said, prompting him to conceal some details about his personal life from that point on. A volunteer now handles media requests for the site.
Mr. Della Terza started watching “Idol” in its second season. By season four, the worst-vote effort moved to its own Web site; in season five of “Idol,” the site turned a modest profit; and last year, Mr. Della Terza’s site became a limited liability company to help protect its operators from any potential legal action. The show is now in it’s seventh season.
The production company responsible for “American Idol,” FremantleMedia, has delivered three cease-and-desist letters to the site, most recently in January, accusing the site of using copyrighted content without permission. A lawyer representing the site argued that fair use covered most of the content, but the site agreed to remove the “Idol” logo from its pages.
The site’s success has prompted Mr. Della Terza to ponder the post-“Idol” future of the so-bad-it’s-good brand.
“We have to think long term somehow and try to keep the site going,” he said in an interview last week. Mr. Della Terza, who had a star turn on “The Late Show With David Letterman” last year, has batted around a television show proposal with friends, but he said laughingly that “no one’s come calling about that yet.”
For now, the site is sticking with “Idol.” Mr. Della Terza’s efforts to elicit votes for the worst contestants on other reality shows, including “The Next Great American Band” and “America’s Got Talent,” never held the same appeal.
“It’s never as fun,” Mr. Della Terza said. “I don’t think people take those shows as seriously.”
[Via - NYTimes.Com]
Frustrated by what he called the manipulative nature of the televised singing competition, Mr. Della Terza started encouraging readers of a reality television message board five years ago to vote for the contestants they deemed the worst singers.
The idea spawned a Web site, Vote for the Worst, which received widespread attention last year for supporting the singer Sanjaya Malakar as he advanced in the competition.
For Mr. Della Terza, what started as a hobby has become a business. Last year, the site had revenue of roughly $40,000, Mr. Della Terza said, mostly through Google Ads. While some of the income paid for computer servers and legal fees, the site still made a profit, allowing Mr. Della Terza to take some days off work to maintain the increasingly popular site.
Mr. Della Terza is far from the only person cashing in on the “American Idol” juggernaut. The publisher of the popular “Chicken Soup for the Soul” book series is promoting an Idol-themed edition. Walt Disney World is adding an Idol attraction to its Hollywood Studios theme park. Royal Caribbean International is embarking on Idol cruises.
But Vote for the Worst is unique, not only because it openly mocks the competition but also because it was formed spontaneously by an Internet-connected group of television viewers.
“It didn’t start out as a moneymaking venture; it wasn’t an attempt to leech off the ‘American Idol’ brand,” Mr. Della Terza said. “It started as a joke. But people really enjoyed it.”
The site now routinely breaks “Idol” news. In the first week of March, the site recorded 2.7 million page views as it reported rumors that a contestant, David Hernandez, had a background as a male stripper. Mr. Hernandez was voted off the show last week.
Mr. Della Terza said he did not expect to resemble a gossip columnist anytime soon. Still, the site has unintentionally become a font of “Idol” stories. Reports by Vote for the Worst in January that two “Idol” contestants had professional singing backgrounds subsequently became fodder for the news media. (Any person who is not under contract is eligible to audition.)
“We always post stuff on the site the producers don’t want you to know,” Mr. Della Terza said. “We don’t go out of our way to dig up dirt, but if it falls in our laps, obviously we’ll post it.”
The site’s fame rose last season when the radio personality Howard Stern repeatedly mentioned the site and encouraged listeners to vote to keep Mr. Malakar on the show.
In a conference call with reporters last month, Nigel Lythgoe, the executive producer of “American Idol,” said he did not believe online voting campaigns have any effect. “There are too many people who vote,” he said.
Still, Mr. Lythgoe’s mention of Vote for the Worst testified to the site’s significance, which still seems to surprise Mr. Della Terza, 25, an Illinois resident who works in information technology and teaches part time at a community college. A camera crew from a local television station once walked into his classroom to request an interview, he said, prompting him to conceal some details about his personal life from that point on. A volunteer now handles media requests for the site.
Mr. Della Terza started watching “Idol” in its second season. By season four, the worst-vote effort moved to its own Web site; in season five of “Idol,” the site turned a modest profit; and last year, Mr. Della Terza’s site became a limited liability company to help protect its operators from any potential legal action. The show is now in it’s seventh season.
The production company responsible for “American Idol,” FremantleMedia, has delivered three cease-and-desist letters to the site, most recently in January, accusing the site of using copyrighted content without permission. A lawyer representing the site argued that fair use covered most of the content, but the site agreed to remove the “Idol” logo from its pages.
The site’s success has prompted Mr. Della Terza to ponder the post-“Idol” future of the so-bad-it’s-good brand.
“We have to think long term somehow and try to keep the site going,” he said in an interview last week. Mr. Della Terza, who had a star turn on “The Late Show With David Letterman” last year, has batted around a television show proposal with friends, but he said laughingly that “no one’s come calling about that yet.”
For now, the site is sticking with “Idol.” Mr. Della Terza’s efforts to elicit votes for the worst contestants on other reality shows, including “The Next Great American Band” and “America’s Got Talent,” never held the same appeal.
“It’s never as fun,” Mr. Della Terza said. “I don’t think people take those shows as seriously.”
[Via - NYTimes.Com]
How To Make Money From Baby Posters
Consumers are never too young for a little gravanity, particularly when proud parents are buying it for them. Enter 5starbaby.com, which offers personalized birth announcements fashioned after movie advertisement posters.
Each movie poster birth announcement from 5starbaby is tailor-made for the new arrival, complete with all the critical “stats” about the baby’s birth and the names of loved ones as "supporting cast." Parents are listed as "producers," the doctor is named as "director" and the hospital is listed as the "filmed in" setting, for example. "Critics' quotes" can also be included, as can "catering" by the mother and options for virtually any other special people or ideas the parents want listed. "Ratings" given are "B" for boy, "G" for girl or "T" for twins. Movie poster birth announcements are 5-by-8-inch mini posters; pricing begins at USD 2.50 each with envelopes included. 5starbaby.com also offers large poster formats ranging from USD 25 to USD 120 each, and gift certificates are available for baby showers or other occasions.
Buffalo, NY-based 5starbaby.com will ship orders anywhere in the world, but localized versions in other languages are a natural next step. One to bring to proud parents and gift-givers around the globe!
Each movie poster birth announcement from 5starbaby is tailor-made for the new arrival, complete with all the critical “stats” about the baby’s birth and the names of loved ones as "supporting cast." Parents are listed as "producers," the doctor is named as "director" and the hospital is listed as the "filmed in" setting, for example. "Critics' quotes" can also be included, as can "catering" by the mother and options for virtually any other special people or ideas the parents want listed. "Ratings" given are "B" for boy, "G" for girl or "T" for twins. Movie poster birth announcements are 5-by-8-inch mini posters; pricing begins at USD 2.50 each with envelopes included. 5starbaby.com also offers large poster formats ranging from USD 25 to USD 120 each, and gift certificates are available for baby showers or other occasions.
Buffalo, NY-based 5starbaby.com will ship orders anywhere in the world, but localized versions in other languages are a natural next step. One to bring to proud parents and gift-givers around the globe!
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