12/29/00
AOL Sues Cyber Entertainment NetworK Over Spam
AOL has filed a $150 million suit against Netvision Audiotext dba Cyber Entertainment Network in the United States district court for the Eastern district of Virginia, Alexandria division. (Civil Action 99-1186-A)
Persons named in the suit include CEN owners John J. Bennett Jr, and Joseph Elkind, as well as Robert L. Atkinson, James Cattanach, Tim Perkins, Tracy Rizzutello, Kyle Vernon and others.
I interviewed CEN part-owner Joe Elkind Thursday afternoon. Listen here.
Luke: What's this about an AOL lawsuit against the Cyber Entertainment Network?
JoeE: I have no idea what you're talking about. I have not been served by anything and that is a fact.
Luke: I will shoot you the URL of a JPG of a civil action supposedly against you by AOL.
JoeE: All I am saying is that I have not been served.
Luke: Do you have any idea what this is about?
JoeE: Yeah, I will tell you real quick what it is about. AOL is going to sue one of the big companies there is in the adult business, which is us, and if we don't squash the lawsuit they're going to sue every other adult affiliate program and every webmaster. We're the ones who are going to have to take it on the head again just like we did with UU.net, and squash this thing. This is unfounded because we never spam.
Webmasters might spam. We cut them off. We terminate them as soon as we find out without pay.
I had the flu. I was puking for two days straight.
[Lee Noga writes on Netpond: Was reading the Luke F-rd site, and I cannot stand misinformation, so let my anal rententive self correct this myth: JoeE may have puked for 2 days but the FLU is respiratory and not stomach inflicted in adults. Nope, there is no such thing as a "Stomach FLU". There are viruses that can cause these symptoms but it ain't the flu....]
Print that Brad Shaw is a dick. Everybody agrees. He wants to see the GIA [Global Internet Alliance] fail because he can't make it in business. He's not as smart as the rest of the guys. He blasts other people because that's his way of getting his name and ego out there instead of being helpful to the industry and working with people. He just wants to blast people. Not share an opinion, he just wants to blast people and talk personally at them. Sharing an opinion and blasting people personally are two different things.
He can go f--- himself. I'm going to punch him in the face at the Vegas show.
Luke: I thought he was a friend of yours.
JoeE: If you can't hit your friends, who can you hit?
Evan from Xpays provides a rejoinder. He says that Shaw's comments have no validity. It appears the two of them will fight this out in court.
Brad Shaw tells Luke: "I saw JoeE posting on Netpond how he has a plan to save our industry. He's trying to make himself look like a superhero and if you still want to be in business in a year, you better get in line and get along with him and go to his little meeting. Originally I wasn't aware he was talking about the GIA because he wasn't putting a name with it. And then I found out he was basically speaking for the GIA. And the problem I had was that he was trying to make himself out like he was trying to save the whole business.
"The truth is he is only out for himself. He's not out to help anyone else. Noone will speak the truth so I figured I had to put my two cents in.
"He's been posting for the past couple of weeks. About a meeting... I just got fed up with it. He's probably not going to fool most people but I wanted to make sure that he didn't threaten anyone. He's out for his own interests. He's trying to make himself look good like he's trying to bring everybody together and save the business.
"JoeE should be spending his time getting his own house in order... That goes to my beef with the GIA. These guys are out for their own interests and they should just get their own houses in order like I have done. I have spent the last three months, especially after the FTC, RJB stuff, making sure my own house is in order."
Luke: "What is the GIA?"
Brad: "That's a good question. As far as I know, they're trying to put together an organization to represent the adult internet. I guess it was founded by eight guys, the bigger guys in our business."
Luke: "Ron Levi, JoeE, RB..."
Brad: "I have some information as to what their goals are and I am not interested. I attended one of their meetings and I looked around the table, and I asked 'Brad, do you want to be associated with all of these people?' There was more than one person there that I would not my name associated with."
Luke: "Have you heard anything about the GIA planning to sue VISA?"
Brad: "I heard about it a couple of months ago but recently I have't learned anything about it. They're trying to launch it [GIA] to webmasters at the show in January... I would encourage anyone to go listen to what they have to say. I feel it is too little too late. With all the unscrupulous billing practices that go on and all the other scams that go on, it is too little too late.
"The government has just started coming into our business... If these guys present themselves as our leaders, they're the ones the government will go after first."
Luke: "What did you think of the FTC crackdown on RJB Telcom?"
Brad: "We all knew that at some point there was going to be a crackdown on someone. But never in a million years I would never guessed it was RJB. If it was any other company, they would've folded. It says a lot for RJB that they've persevered this long and in the end, I think they're going to come out with a clean bill of health. It's obviously a difficult situation for them. I don't feel that they have ever done anything wrong.
"I say there are probably a couple of people in this business that run things 100% legit. They're [RJB] is one of them."
Luke: "What do you think of this AOL civil suit against CEN?"
Brad: "We all knew it was coming. They're not going to be the only one. AOL has been investigating things along that line for a year and a half. And I guess they decided to go after CEN because they are one of the bigger companies... I wouldn't want to be on the other end of a lawsuit from AOL."
Luke: "What is going on between you and XPays.com?"
Brad: "For the past couple of months we've been trying to hammer out a settlement over some images that they used of ours without proper licensing. They took some of our images and put them in a magazine [ads in AVNOnline magazine], which is against the license of the image. They're only for internet use.
"We've played a lot of phone tag. About two months ago, I spoke with Michael at Xpays [the partner of Evan]. And we agreed that during the negotiations, there would be no bad blood between us. That I would keep my mouth shut and he would keep his mouth shut.
"About a month ago, I got an email from them saying: 'Thanks Brad. We're cancelling our party in Las Vegas because we've been told that you narc'd us to the police.' And my response was, 'Narc'd you for what? What are you doing at the party that you are so afraid of?' And I guess they had created in their heads that I had turned them into the authorites for running some drug laced party.
"Then today one of their partners [Evan] goes to the boards and starts running his mouth. I said, screw it. I'm not going to negotiate with them anymore. They're in the wrong. I'm going to turn it over to my attorney and they're going to lose. They used images without proper licensing."
Luke: "What kind of December are adult webmasters having?"
Brad: "As far as traffic, things are good. But as far as the state of business, a lot of people are really dependent on RJB and a lot of people are really nervous about what is going to happen with that. And after looking at who got elected president, especially the Attorney General [John Ashcroft], a lot of people are scared. I think the people who are worried are the people who didn't have their house in order.
"There are a lot of people who did not have good Christmases. The money is not what it was a year ago. A lot of these big programs are not paying what they used to pay. They still tell you that they're paying what they used to pay but they're not. The average webmaster is not making the same amount of money. I know smaller webmasters who were making $10,000 a month who are now making $3000 a month.
"The bigger want to be big, that's why they've all joined together to form this alliance. That's why there will be a bigger gap between the big webmasters and the smaller webmasters and there are going to be very few left in the middle."
Luke: "If webmaster affiliate programs say they're still paying out the same amount of money, how do they get away with paying less?"
Brad: "Some of them are scrubbing their credit card databases harder so it is harder to get a join. There are programs that only pay you on memberships that actually convert to $35 a month memberships. You might get 100 signups, but only 50 of them convert. So you only get paid on 50 signups. And I am sure there is some out-and-out shaving [where joins are not counted] going on someplaces. We send most of our traffic to MaxCash RJB. That's the reason I send it there, because I'm confident there is no funny business going on there. But it is getting harder to get the traffic to convert. Also because the surfers are becoming smarter. And there's so much free s--- out there, it is difficult to charge someone $30 a month.
"I read that quote on your website that JoeE was going to punch me in the face. Yeah. I think that says a lot about JoeE. He talks a big game, but when it comes down to it, he's usually with a 6'8" body guard. So I don't think JoeE's going to be punching anyone in the face. Especially me.
"I seem to really get under his skin. He talks about how I am a failure. At the end of the month, I bet I put more money in my pocket than JoeE puts in his pocket."
Luke: "But his company is huge?"
Brad: "He's a partner. He's got 70 employees, I've got six. He blows a lot more money than I blow. On one trip to Vegas, he can blow $200,000."
Luke: "How can you spend $200,000 in one weekend in Vegas?"
Brad: "Gambling, hookers, drugs... I'm not saying JoeE does drugs. Just talking in general. And feeling the need to impress all of your friends. Take care of all your friends.
"It's not uncommon. I saw something published on your website about the last show in November, about kids spending $13,000 in a strip club. That's nothing. Those are the smalltime webmasters. It's just all to impress each other. They've got to have the $5000 bottle of wine. They've got to have all the strippers and hookers hanging out [with them]. Some of these companies at the show in January will spend upwards of a million dollars.
"We're spending six figures plus. But they're throwing money away. We have a 30 by 30 two story booth. We've got six models. We're flying out Hank the Angry Drunken Dwarf from the Howard Stern show. I'll bring out my staff. There goes $100,000 plus right there. But the difference is that we will sell content at the show to offset our costs. A lot of these guys are selling nothing."
Luke: "I thought you and JoeE were friends?"
Brad: "I would consider JoeE a friend. It's an interesting business that we're in. If I was in South Florida, I would call up JoeE and we would go out to dinner. It's just that we have differing philosophies of business. Outside of business, JoeE is Joe. Inside business he's JoeE Money, where all that matters is how much money he makes. Anything to make a dollar, that's his bottom line."
Luke: "What do you think of his celeb site?"
Brad: "I wouldn't touch one with a ten foot pole but when JoeE evaluates his risk, he feels that the money is worth the risk. Who knows the legality of a celeb site? Is Britney Spears going to sue everyone? And the millions they are making off the sites, obviously they feel the up site is worth more than the down side. I'm not out to make a quick buck.
"There are also the fake bestiality sites."
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Luke: "Even Vivid is promoting that."
Brad: "I think they advertise that... Vivid doesn't run any of those sites. But a few other companies do. Even some that I am friendly with. I wouldn't send traffic to those sites. Babenet has several celebrity sites and several fake bestiality sites."
Luke: "What is a fake bestiality site?"
Brad: "To the surfer, it looks like bestiality. They're really not sure until they join. Then they join and it's a naked chick sitting on the back of a horse. I don't think it is good for our business. I think it fools the surfers. When I first saw the sites, I thought they were bestiality sites. On a couple of them, real small at the bottom, they will say 'This is not a bestiality site.'"
Luke: "I think what our industry needs most is a full hardcore bestiality site with integrity."
Brad: "Plenty of those overseas. I think what our industry needs most is a big shakeout. I think our industry needs people to go out of business. I think our industry needs some people to run into trouble for doing some stupid things. And at the end, there will be some people standing and there will be some people not standing. There are several people who if they went out of business, I could care less. And then there are people like RJB, who if they have problems, I would do anything for those guys.
"You've seen a big trickle down effect from Yishai pulling out from buying all this traffic. And you've only seen the start of it. The free hosts are having financial troubles because he's not there anymore. And there is no one who can take his place because no one can take his place. No one can do what he did, make money off that traffic."
Luke: "He sent it all to Crescent?"
Brad: "I believe so. Obviously he was able to make money off the traffic. And no one else can make money off it. A couple of years ago, we bought some of the free host traffic off one of the larger free hosts and it converted one in 36,000 on our best converting site. That was a couple of hundred dollars per signup."
Luke: "I hear he's got more money than anybody in the industry."
Brad: "That wouldn't surprise me.
"About the GIA, I think our business is too fragmented to ever work towards one common goal."
Luke: "Why is Serge Birbrair still posting on Netpond?"
Brad: "Serge is retired. He has more money in the bank than these guys who are still in business. It's fun for him. That was his home for a couple of years. Now he likes to come back and have fun with people.
"Serge is a very smart guy. Serge is brilliant. And he just likes to play with people. I have a lot of respect for Serge. People think that Serge and I aren't friends. That's the furthest thing from the truth. We're about to take a vacation together."
Evan Horowitz from Xpays.com tells Luke: "Our business is exploding. In the last five days, we're averaging over a thousand joins a day. I have three of the top ten internet portals in the world doing cost acquisition partnerships with us. All of them have kicked off... Sales are through the roof and I've got this putz wasting my time.
"We originally licensed this content... Brad brought Fresh Photos for...$40,000. And the day Brad bought it, I emailed Brad Seychelle (sp?) at Internet Supply [who sold FreshPhotos.com to Brad] and Ron Cohen and Howard Perkins, and I said, guys, this is a big mistake. Everything this guy does turns into litigation or some sort of a war. I wish you hadn't taken Fresh Photos and given it to Brad. It's like putting a silk hat on a pig.
"When we did some big traffic deals and some big domain deals with Internet Supply, they owned Fresh Photos at that time. And they threw in six CDs of Fresh Photos [content] with a five site license, only there's no copy of the license anywhere. Fresh Photos doesn't have it.
"I called Internet Supply and talked to Howard Perkins while he still owned Fresh Photos. I said, dude, I have a webmaster publication, AVN, non-nude, no nipples, no sex, I need girls to put around our logo in AVN. They said, hold on one second. He gets back on the phone and says, Evan, no problem. You can use those [photos] in a webmaster publication like AVN. So for eight months or more, we were using the photos in a webmaster trade publication. I.Supply has no problem...
"Brad takes over the company [FreshPhotos.com] and somewhere in the mix, ISupply didn't provide all of the documentation for all of the licensees. Brad was going to honor any existing contract. When he didn't have a contract, Brad, in my opinion, saw this as an opportunity to take advantage of the situation...
"Fortunately, for XPays and our print ads, Vivid Video let us go through their chrome room and they gave us 30 ultra high resolution pictures of Kobe Tai and Taylor Hayes and Jenteal and all their big stars.
"As soon as Brad said, don't use these [images] in print, we're like, f---, we don't want to use these in print. We can use other images. Why would we want to take other changes on something that costs a pittance? We're not a content company. We don't own any pay sites.
"Today Brad started badmouthing the GIA. JoeE is on the board and he is promoting a meeting where we are going to invite the world's top webmasters who care to come to the GIA and see what our vision is for the GIA and see where the GIA is going and how it benefits them and how it benefits the industry.
"On the boards, Brad is calling every member of the GIA except for one, a scumbag. He's calling our parties drug infested parties. This has nothing to do with the business at hand. He's calling me all kinds of names.
"Basically, anybody who is anybody is at our parties. They're sweet. We've been doing them since Montreal two years ago. Our parties are not cancelled. We only said they were cancelled because Brad keeps trying to get on to the VIP List and instead of telling him no, I keep telling him it's cancelled.
"Brad's trying to interfere with our business. He's definitely defamating me and slandering me personally. He's aggravated almost everybody who matters in the adult internet. Michael and I are good Jewish boys. Xpays is a big company. We run an honest business. We have never failed to pay out on time. We've always had honest reporting. Our network is unique. Xpays has been in the top 100 adult sites for a year.
"The Xpays.com works is that we take a customized version of the best sites on the internet. The best means integrity in the advertising, meaning, that what they say is there is there. It is editorially approved by us. We customize the ads and host them ourselves. The way we customize the ads is to remove any external links. So if there's a Viagra link, we'll brush it out. Everything is to push the user towards a join. If they don't join, they'll get an exit console that rotates through different sites. We're doing a thousand joins a day.
"Brad wrote me an email claiming that his blood relative is a DEA agent in Las Vegas and he was joking in the email about getting his cousin involved. Also, I got a couple of calls from concerned webmasters who'd heard Brad talking about our parties as being "crack infested" when really our parties are just food infested, beverage infested and great people infested.
"We're doing deals with Yahoo-like portals... We are the exclusive pay per performance ad partner for several portals that have been doing everything on clicks and impressions. They came to me. They're local companies.
"They put up our banners like a standard Xpays affiliate and they learned that they made more money on a rent share with us, getting paid like an affiliate, than the money they made on impressions and clicks."
Luke: "Are you part of the GIA?"
Evan: "Yes, and Brad is not. I'm one of the original members. Our bylaws and structure are now in place. The GIA was formed by the top adult companies. It was formed because the adult internet had reached a maturation stage where you need a trade association. We've retained McDermott, Will and Emery as the attorneys. I'm on a subcommittee with JoeE and Frank Panuccio. We're recruiting new members. I do big business with JoeE. I do more than 500 joins a day with him."
Luke: "What do you think of AOL suing CEN?"
Evan: "It is a source of great concern. I think it is very depressing that AOL is going to go after the affiliate programs when it is a well known fact that... any affiliate network, because of the way model works, you can give instant gratification to a scammer. Because anyone can sign up...
"I'm screening everyone on the way in. I'm killing accounts if the phone number doesn't work. I kill it. If the email address is bogus, I kill it. If the Social Security number is bogus, anything that looks suspicious, then we kill the account. But what happens is that these guys sign up, then they spam. We kill the account. It's a big pain in the ass. It requires a great deal of labor to administrate all that...
"The way to get around it is to run a good double opt-in email program. You don't get the complaints.
"The reason that Netpond sucks so bad is that it is an insecure medium. You have people posting under ten different names. It's just fraught with fraud and forgery and bulls---. Actually, a few months ago, we caught Brad Shaw forging an email... He said it was from me and that I had sent it to Greg Enders, one of his employees. I never sent the email. And it was a threat. He was trying to damage my business by making it look like I was threatening him. You don't see me pissing with Brad. You don't see me pissing on Netpond. You go to Netpond every day. It's half your site's content.
"When JoeE is trying to get webmasters excited about the GIA, I support that 100%. And I don't support someone coming in bashing every member of a trade association.
"He did tell me at a party in December that he was shaving webmasters. He was laughing about it. I have witnesses. And that probably made him bitter about us.
"We have no paysites. We have no billing. We have no content. We're an advertising agency in the software business. We have a very hot product in Xpays. It's a hot system. It's a hot reporting model. It's so hot that companies [like Vivid] license our software from us."
Luke: "Why wouldn't people just put up banner ads sending their traffic straight to the different paysites? Why go through your Xpays.com system?"
Evan: "It's difficult for me to give you a concise answer because I don't want to say anything negative about the very folks whose affiliate networks we're promoting through Xpays. We have a unique set up.
"I can see why Brad would resent us. He doesn't have any of our successes."
Evan Horowitz Interview 2 Evan 3 Evan 4
2/16/01
Luke On AdultGossip.com
I was a guest on Evan Horowitz's internet radio show around 1:30 PM PST today on AdultGossip.com. Evan owns Xpays.com along with his buddy Michael.
Read the chat here. Listen to Luke on AdultGossip.com here.
Evan: "For people at the major companies to even respond to you puts them at greater jeopardy. That adds fuel to the fire. That's why the big companies don't respond to you.
"I had a conversation with Ron [Levi] at Cybererotica and the data you have up on your site is false. I've always known Cybererotica to be very open with their business dealings as they pertain to their webmasters. Webmasters have always been able to get answers directly from Cybererotica's reps. And when you post information that comes from a competitor of these companies, you're adding fuel to a fire at a time when you don't have all your ducks in a row."
Luke: "It's rare that you have all your ducks in a row. What you do get is one or two ducks in a row and you go with what you've got. And the story either develops or fizzles out. My site will only get visitors so long as it has a substantial basis in truth.
[Luke asks: What data? Just some anonymous rumors.]
Evan: "I cut all the checks. I see that you get a lot of surfer traffic. That's an example of why the companies can't flat out ignore you.
"I thought it was really in bad taste for you to bash D$ and KB [Darren and Kevin Blatt] right as they had a passing within their inner circle."
Luke: "They're public figures..."
Evan: "Do you smoke pot?"
Evan promotes pot smoking throughout his show.
Luke: "Never. I loathe drugs."
Evan: "That explains a lot. We need to get you high. Sit you down. Instruct you. Teach you. Get you to conform. Get your site to lose all its traffic. Get you to leave all the good companies out of it."
Luke: "I just need some more therapy. It would be in the adult internet's interest to sponsor my therapist so I could get therapy every day. Then I'd be a more gentle and content person. Do you think that if I was basically a happy person I'd be out there ripping everyone on my web site? It is in Vivid Video's, and Cybererotica's and Goalie's best interests to get me into more therapy."
Evan: "I don't those guys even want to mess with you. I think they loathe being on your site. They have every reason to not support you and to try to stop you from posting things on the site that are inaccurate.
"You are not going to have any sponsors left if you post enough negative and false information to put everybody's business backwards. I don't know if you have the power to do that. I don't think that companies with 20,000 webmasters are going to lose loyalty... The webmasters are hopefully not going to be distracted by the false information that they read on your site."
Luke: "False information doesn't do any damage. It's when it contains truth, that it can damage. It's the bewildering mixture [of truth and falsehood] on my web site that makes it so lethal."
Evan: "I think thanks for doing the show. I got a lot of negative feedback... I never really announced the show until an hour to the show... It's scary to listen to you talk a lot of the time Luke because it is so obvious that you don't get the structure of the industry. I don't doubt that there's good reasons why. When you're excluded from everything and you're nobody's friend and you have no friends, how are you supposed to know the difference between doing something that is really damaging to yourself even as somebody in the adult business and then coming out with a story that is legit. But I give you a lot of credit as a hard worker. As a webmaster updating your content, you're certainly on the ball. Hopefully I will never see my company name on there. But I know that you would never hold back and that scares me."
Luke: "No I wouldn't. I like running your banners but if a legitimate story came along, I wouldn't hesitate to rip into somebody who was my sponsor."
Jeff Miller Speaks Out
Jeff Miller from SunupMedia.com writes on YNOTmasters.com chatboard: As some of you may know, before entering the internet business I was with MLPF&S specializing in Business Financial Services. I will never forget the day that I was in a conference with the CEO's of two mid-size companies talking about a pending merger. Company CEO A was already in the room when company CEO B walked in. CEO A stood up and shouted "CEO B IN DA HOUSE, PASS HIM A BIG FAT BLUNT, PARTY!!!!!!!!!!!"
Of course, the above incident never took place. But one very similair took place today, in a public chat room, live during a publicly aired webmaster show. What makes it even more ridiculous is that the person speaking was one of the self appointed industry leaders and members of the GIA, an industry organization that claims to be the messiah for the adult internet business. Not only does this take place over the public internet airways, but later that day, this same industry leader is quoted verbatim on a website not friendly to the adult industry trying to convince the "journalist" (the term journalist used ONLY for a lack of a better word) that he needs to start smoking marijuana as a cure for what ails him, or better yet, a cure for what ails the industry he covers.
Can you picture what is happening in Washington right now? The DOJ, not being able to get a tremendous amount of money to fight obscenity ($5 million to date, enough to buy desks and notepads for a bloated government operation), now sees an opportunity to join forces with the DEA in a jointly funded cooperative task force. Thank god it is not that easy.
I don't care what people do in their private lives. It is none of my business, it is none of anyones business. If you want to smoke pot, that is your right. If you want to snort coke, that is your right. If you want to do E, that is your right. If you want to sit in your office and masturbate all day, that is your right. It is not my business, nor is it anyone else's business. But for industry "leaders" to act like 18 year old children whose daddy just sent the rent check for their first apartment is not only ridiculous, it is industry damaging. There are some that think that because the "wares" we peddle are pornographic, all other social mores don't apply to us. Hell, we are "porners", we are already going to hell, so let's get stoned and make the trip a bit easier. No thanks.
Follow the password trader supporters? Never. Follow the celeb site owners? Never. Follow those who would like the public to believe that the industry is one giant party with doobies, blow and E abundant for all to partake? Never. Not only never, but get out of my way. I am in this business as a business. Yeah, it's a hell of a lot of fun. Yeah, I love what I do, or I would not be doing it. I am here to feed my family. I am here to secure my retirement. YOU bring a negative spotlight on me and every other hard working webmaster in the business. YOU make our jobs harder. You threaten our livelihoods. You threaten our future.
Not only will such people never get my support as industry leaders, I will vehemently support those willing to push you aside. I will vehemently support the true industry leaders who will stand up and say, "You are bad for business. You make my day tougher. You bring publicity to our industry that we do not need and we do not want."
Am I looking for squeaky clean, church going, god fearing saints? Hell no. Let those who are without sin cast the first stone. I have no stones to cast. The leaders I will follow are those that handle their business ethically, in a businesslike manner. Those who understand that in todays environment it is so very important to avoid hypocrisy at all costs. Those who understand that our industry is in one its most potentially turbulent times. Those who understand that it is important to say what you mean and mean what you say. That is who I will support. They are out there. When they step forward, I will be right next to them.