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Sunday Times article on Sex.com

Category : Domain names, Internet, Journalism, Sex.com · by May 27th, 2007

This is the article that appeared in The Sunday Times on Sex.com today. As I mentioned earlier, the article appears under my byline but was entirely written by a writer the Times brought in. I’m interested to see what people think of the two versions I wrote and the one that’s appeared. I’ll do a poll, but feel free to stick comments on any of my posts.

I think the broad difference is that I was trying to tell the story, and the final piece has taken the tack about the Internet and domains. Perhaps my versions tried to do too much in a short space and so were too complex for easy comprehension. Anyway, the piece is in, there are a few minor mistakes in it, but then I have just been told it is linked to on the Drudge Report, so that has to be good. I only hope all this translates into people actually reading the book.

Oh, and I should say, Gary Kremen is over from the States for the book launch on Tuesday in Covent Garden. If people want to come along, please do, there’s still space for 30 or so people.


Sex.com and a web of intrigue

Two men’s battle over a domain name shows how far the net has come

In a few weeks’ time a thickset middle-aged man with a ready smile and the gift of the gab will walk into a courtroom in San Jose, capital of California’s “silicon valley” and try to plead poverty before the judge.

The lawyers he will be facing will not believe him, and with good reason: over the past decade Stephen Michael Cohen has made hundreds of millions of dollars as the self-styled king of internet porn, a business worth globally some $57 billion.

It is not the pornography that has landed Cohen in court, but the theft of something with no physical existence. That something was a website, more precisely a domain name that a geeky 31-year-old called Gary Kremen registered back in 1994 simply because he could: sex.com. It turned out to be worth a fortune. Except that it was Cohen who made the fortune, and for more than 10 years Kremen has been fighting to get it back.

The case has cost millions of dollars, involved a trashed mansion, a phantom gunfight between bounty hunters, forgery and disappearing bank accounts and forever altered the development of the internet. Kremen vs Cohen finally established that property in cyberspace can be at least as valuable as in the real world.

It seems like ancient history but it is barely a dozen years since the beginning of “the net” – when it was, in fact, scarcely a net at all, more a series of links between communications companies and university laboratories with computers.

The US military encouraged and developed these multiple links to ensure that in a nuclear strike, communications could be routed through one of many interlinked networks of computers.

This early net was an arid place of computer code with only a few bulletin boards and user groups featuring text, mostly in jargon. The idea that it would one day become a global mar-ketplace for music, movies and above all pornography was unimaginable.

Until, that is, a hyperintelligent nerd with a goatee beard, a degree in computer science and not much of a social life thought he might just have an idea.

Gary Kremen had mixed at Chi-cago and Stanford universities with the men who would go on to run Microsoft. He had built a career reselling software packages but he realised that one day people would advertise on the internet.

With remarkable prescience, in 1994 he set up a company to sell this new commodity: the online ad. Back then there were very few websites, and they were basically handed out free to anyone who asked. Nobody had yet figured out a way to make money from the internet. The answer, Kremen realised, was obvious. What would get people to look at online ads? In the same way old newspaper ads would read “SEX: now that I’ve got your attention . . .”

Kremen contacted Network Solutions and registered sex.com. It may have been free to set up, but he was about to make a very expensive mistake. He failed to set up the website.

So it was pure chance that on browsing the lists of domain names – as people like him did – one morning in September 1995 he discovered the registry for sex.com also included someone called Stephen Cohen.

Over the next four weeks – just as Network Solutions began charging for domains for the first time – all trace of his own connection to the domain name was disappearing. As Network Solutions started selling 10,000 dotcoms a month for $50 each, then 30,000 a month, then 100,000: overnight a billion-dollar industry was born.

Kremen was laughing, until he wondered why he wasn’t making more money from sex.com. His former colleagues had sold match.com for $8m. Slowly it dawned on Kremen that he no longer legally owned it. But the man who did was making a killing.

Cohen was 15 years older than Kremen, and no internet whiz-kid but a genius of a different kind. The child of a broken marriage in a wealthy Los Angeles Jewish family, Cohen flunked out of school and drifted into cheque-book fraud targeting shopkeepers.

On the side he took classes to learn the trades of private investigator and lawyer, not because he wanted to practise them but because he wanted to know the skills of the people he expected would soon be after him.

Obsessed with sex – he married five times while serially sleeping around – he set up a “swingers’ club” in conservative Orange County making $100,000 a year charging for membership. He had also set up a bulletin board called French Connection on this new internet, used by wife-swappers to arrange parties and exchange pornographic pictures.

When the web came along, Cohen too realised sex.com would be a good

thing. These were still the years BG – before Google – when people often typed whatever they were looking for into the address bar and followed it with the best-known suffix: .com.

When Kremen looked into what had happened to his domain he found it had become a membership site charging $25 a month. Banner adverts for other porn sites paid Cohen up to $45,000 a month. It was a licence to print money, on the back of which Cohen had acquired a San Diego mansion and a luxury lifestyle.

Cohen claimed to have had the sex.com “trademark” since 1979, even though the concept of .com was then unknown. In fact he had stolen it by forging a letter of renunciation from Online Classifieds, a separate company Kremen had used to register sex.com.

Kremen launched the most expensive battle in dotcom history: Cohen fought doggedly, obfuscating and prevaricating, forcing Kremen repeatedly to amend the charges against him.

Kremen had become rich through shares in booming dot.com startups. He sold out to pursue his case. The courts meanwhile argued whether a domain was really a property or just a “telephone number”, though they were now routinely changing hands for more than $3m. Cohen and Kremen had realised before the law that domains were the shopfronts for the biggest market the world had ever known.

In 2001, with virtually all his cash used up in the legal battle, Kremen finally won a judgment that awarded him $65m in damages. Cohen refused to pay, and fled to Mexico. He left Kremen with his mansion – an exclusive six-bedroom, eight-bath-room villa with a swimming pool – which he had trashed in spite, then spread the untrue story that Kremen had sent bounty hunters to bring him back. He finally turned himself in by accident in 2005 when he was arrested and handed over to US marshals when he attempted to renew his Mexican visa.

Kremen has sold sex.com for $12m but still owns sex.net and another 4,000 domain names. He still lives in Cohen’s house. With interest Cohen now owes Kremen $82m, but says he has nothing, and cannot explain where it has gone. “Follow the money,” may have been good advice in the 1970s; but in the tangled web of cyberspace, it’s no longer that easy.

Sex.com by Kieren McCarthy is published by Quercus, £12.99

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(8) comments

University Update
8 years ago ·

Sunday Times article on Sex.com…

[…] Unfortunately, that particular domain is so valuable that it has caused a lot of legal woes for its owners. More than the domain was originally sold for—which, paradoxially, makes it all that much more valuable in some twisted way. […]

Armand
8 years ago ·

Kieren – an aside, but Sex.com was featured in today’s London Paper. Hope you managed to see it, afraid I don’t have the paper any more. Congrats on all this, will need to pick up the book soon…

Kieren
8 years ago ·

I saw – my first bad review. Said I had focussed too much on the legal side of the story. I’ll try to find it and post it on this blog.

Kieren

[…] · So who really wrote this article about the saga of Sex.com? More importantly, will anyone pay to read the book about it? (kierenmccarthy.co.uk) […]

Boris
7 years ago ·

Kieren, I would like to talk to you about foreign rights. Pls, contact me by email I entered in this comment. Thanx.

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