By Hillel Aron
By Joseph Tsidulko
By Patrick Range McDonald
By David Futch
By Hillel Aron
By Dennis Romero
By Jill Stewart
By Dennis Romero
Nothing beside remains. Round the decay Of that colossal wreck, boundless and bare The lone and level sands stretch far away.
--Percy Bysshe Shelley, "Ozymandias"
Brian Massey was working in the art department on the Roger Corman produced Black Scorpion IIwhen he saw what he calls "the coming of a change in media." A storyboard artist and set dresser who has worked on films such as True Liesand Castaway, Massey was starting to realize what it meant when people called the movie industry "the most glamorous drudgery ever created by man." He had seen what could be done with digital special effects and 3-D modeling on Amiga Video Toasters; a little later, he saw what filmmakers were doing with Shockwave's Flash animation software. And so he did what any sensible man in his late 20s would have done at the time: He got some training in digital filmmaking and went to work for a dot-com.
"Two years ago, I got a job at Soundbreak.com," Massey says. "Interactive MTV. Mark Goodman, the first MTV veejay, was our programming director." His official title was "artist," he recalls, but he also took photos of rock stars for the site -- the Sneaker Pimps and Po are prominently displayed in his portfolio. Dressed in wide-legged jeans, a raver-boy jersey and a red Diablos baseball cap, Massey looks like a 13-year-old EverQuest addict stretched out on Silly Putty. Instead, he's a 33-year-old graduate of San Diego State University, a man whose sense of possibility was informed by the cyberpunk fiction of William Gibson and Bruce Sterling. "You know, how everything comes together, how complicated it all is, how it's all accelerating? I got that from Sterling." He looks off into the distance as he speaks, and the excitement rises in his voice; his pitch climbs, his language gets more floridly poetic, and when he comes up with what he thinks is a key notion, he nearly begins to shout.
"When I started at Soundbreak -- man, it was such a wonderful vibe," Massey exclaims. "We were going to have a new generation of MTV with this new technology, and everybody just feltthat. It was going to connect everyone on the planet." And its start was auspicious: "The first half of the year was just go-- just expand!On Memorial Day last year -- we were really cranking back then -- we had a $14 million marketing campaign. We had those billboards, you know, 'Soundbreak drowns out the evil voices in my head.' Remember those? My girlfriend at the time called from New York City; she said, 'You're all over the subways! It's everywhere!' God," Massey laments, "we had a blimp!"
Unfortunately, Soundbreak's was not the only dirigible in town; in 1999, it was a crowded sky. At the height of the e-commerce moment in Los Angeles, it seemed you could have stood outside any local supermarket and interviewed patrons about their startups the way monologist Spalding Gray once asked about screenplays, and elicited "How did youknow?" from just about everybody. People with steady jobs were hoping to turn their Web sites into alternatives to corporate toil; waiters, costume designers, key grips and graphic designers were hanging up their aprons and X-Acto knives for better-paying jobs in new media and digital entertainment. Technology stocks soared, office space filled, old words -- portal, hits, streaming-- gained new meaning.
But did anyone think it could last forever? The parties offering endless platters of sushi and copious cocktails, the exposed-beam offices stocked with Aeron chairs; six-figure salaries right out of college, 19-year-old overnight millionaires; venture capitalists with faith enough to bank on hypotheses about what cool kids want. It was an edifice constructed out of promotional CD-ROMs, and many a dot-com was born out of nothing more substantial than party invitations printed in a groovy font on cyan Mylar, and nothing more sacred than the next hip way to make vague ideas like "digital solutions" work for you and your business. True to the notion of Internet time -- a world that bloomed as if in time-lapse photography -- the flimsy framework of dot-com culture fell in a virtual instant, leaving behind smoking ruins littered with debris: dead slogans ("Content Is King!"), blinking red lights encased in Super Balls, coffee mugs galore, vacated loft space (as much as 1 million square feet on L.A.'s Westside alone) and once-priceless domain names: Voter.com, Games.com, Pets.com, Homebuilder.com, Refer.com.
"The little murmurs kicked in about June or July," Massey remembers. "Everybody in online entertainment was on their way down. DEN went first. Pop never got off the ground." Digital Entertainment Network shut down last June; Pop.com, a proposed entertainment venture backed by Hollywood heavyweights Steven Spielberg and Ron Howard and Microsoft co-founder Paul Allen, was abandoned in September. Others followed: Hollywood.com fired 30 of its 50 employees in September; Scour.com, which would have been to movies what Napster is to music, closed in October, having attracted more attention from the Motion Picture Association of America's lawyers than it ever did from the moviegoing public.
Massey claims he was the 20th employee to be hired by Soundbreak, which is owned by Acacia Research, an investment firm in Pasadena. By the middle of 1999, the staff had grown to 120. But by the start of February 2001, it was down to 35, and Massey, like so many others who had found their niches in the dot-com world, was out of a job. "It was a bent pipe of a year," he says. "You know, straight up, straight down. It's frustrating, and it hurt like hell."
In January, 15,400 Internet jobs were lost; in what's being called a "Valentine's massacre," online companies fired some 4,500 more in the next three weeks. And many of the companies that fired their employees lacked either the resources or the grace to be nice about it. "There are a lot of people who are bitter out there," according to Fiona Ng, a 27-year-old graduate of UC Irvine who was laid off last year from Hollywood.com, an online entertainment and listings site, which relocated its base of operations to Boca Raton, Florida, and cut most of its L.A. staff. "If you look at the message boards under each company on Yahoo!, you see how some people really can't get over it. And I kind of understand that. I mean, the way these companies ask people to pack up overnight -- well, even if you stay, it makes you question your own integrity."
IN LOS ANGELES, MUCH OF THE DOT-COM collapse is the result of entertainment providers' assumption that technology would keep pace with their ambitions. Pop, DEN and Soundbreak all intended to lure consumers to stare into their monitors the way they do their televisions, with the added incentive of interactivity.
"I think they thought that there would be millions of hits, that people would stay at sites longer," Massey says. "But the Web isn't interactive TV yet -- it's not a two-button press-and-play with a million holographic channels." Worse, the average home computer still sputters on streaming video. "The Web," he says, "was just not ready for what we were trying to do."
Still, it's conceivable that these entertainment sites could have waited it out -- that their initial rounds of funding might have been enough to sustain them while more homes got wired with the high-speed cable and DSL service necessary to enjoy streaming content, the equivalent of broadcast on the Internet. Or they could have developed a product while they waited for interest in the Internet, along with high-speed-access penetration, to build. (Internet traffic, up 17 percent in the year 2000, continues to increase. The number of surfers rose by 8 percent, to 56 million, in the last week of January. That same week, Amazon.com sent 1,300 staffers out the door with "nondisparagement gag orders.") Instead, in an effort to establish themselves as the next new, new thing, most young Internet companies blew their money promoting their product.
On March 20, 2000, Barron's ran a cover story titled "Burning Up," in which Jack Willoughby reported on an exclusive study commissioned from Pegasus Research International, an Internet stock evaluation firm. After looking at 207 of the then 371 publicly traded Internet companies, Pegasus concluded that 51 of those firms would "burn through their cash within the next 12 months." In the parlance of the financial world, Willoughby was talking about "burn rate," an inexact bit of math that predicts the number of days it will take for a business to go broke at its current rate of spending. "Among outfits likely to run out of funds soon are CDNow, Secure Computing, drkoop.com, Medscape, Infonautics, Intraware and Peapod," Willoughby reported. But even established Web firms were in trouble. "Perhaps one of the best-known ä companies on our list, Amazon.com, showed up with only 10 months' worth of cash left in the till."
The story spread fear among investors -- the kind who had put their money in Internet-company "incubators," as well as the more traditional kind who play the stock market. Share prices plummeted across the board, and hardest hit were the firms Willoughby mentioned. Yet of those 51 companies, most are still in business today, although some have been acquired by other firms, and others have seen their shares fall so low they're in danger of "delisting" -- being knocked off the stock market altogether. Of the 102 dot-coms to have folded since the story was published, only six were on Willoughby's list at all. But if Willoughby failed to predict which companies would go under, he did report the method by which the others would die: as "burn victims."
On February 15, three days after the courts upheld an injunction ordering Napster to cease facilitating the exchange of copyrighted material, and the day of my last interview with Massey, Soundbreak's vice president of corporate development, Brian Frank, sent out a letter to "Friends, Fans, and Associates" that was posted on a Web log called Fucked Company: "It seems that, as of today," he wrote, "Soundbreak will no longer be around." Massey delivered the news when he returned my call the next day. "Soundbreak went down," he said. "It's all over the news -- right out there, like a gaping, open wound."
Acacia Research spokesperson Pam Tomkinson said Acacia elected not to continue funding Soundbreak when it became clear that there wouldn't be a market for online music in the near future. "We didn't see the ability to raise additional funds in this environment to sustain growth over the long term. Bandwidth is just not at the stage that it needs to be for something like Soundbreak to be feasible in this market," she said. "The penetration of cable into the home is not what we thought it would be two years ago." In the future, Acacia will invest its considerable millions (98.3, to be exact) in biotechnology.
At 1 p.m. today, approximately 35 percent of Razorfish's 1,800-person staff will be laid off . . . you have about 2 hours to burn those CDs and steal shit . . .
WTF is Razorfish?
"Razorfish provides strategic, creative and technology solutions to some of the world's most successful digital businesses. We partner with our clients to plan, design and build products and services that shape the way the world perceives and interacts with your company."
In other words, we'll take your money any way we can 'cause we have no plan.
--Exchange between anonymous posters on FuckedCompany.com
NO DOUBT, MANY OF THE FLOATERS IN THE dot-com dead pool did not deserve to live. The list of flops, reported regularly on the Industry Standard's Web site, TheStandard.com, reveals a glut of businesses attempting to translate to digital space all the conveniences of real life: BroadbandSports.com, PlanetRx.com, GreatEntertaining.com, Greenlight.com (an e-commerce auto seller). They thought they could contain the world in a digital box, the way they tried to condense a city like Los Angeles into a mall in Burbank. But the sudden dot-com crash has confirmed what many of us suspected: The Internet can augment the analog world, but can't replace it. As such, it has room for only one eBay.
"There are dozens and dozens of sites for every niche," complains Rick Muenyong, a self-ordained expert in e-commerce based in Los Angeles. "There are dozens of toy sites, pet sites, music sites, and shopping online is still something people are starting to get used to. The only way these sites can make money is by advertising on television, or in the mainstream print sector." At the age of 18, Muenyong scored his first success in the dot-com world in the one niche that does seem to be able to sustain dozens and dozens -- in fact, hundreds -- of sites: pornography. (According to a recent survey by Alexa Research, the No. 1 term used on search-engine sites is, and has always been, "sex.") Back in 1996, he launched YnotNetwork.com, "a resource site for adult Web sites," essentially a portal for the porn industry. Two years ago, he started ShortDomains.com, which amassed a collection of "premier" domain names -- mad.com, official.com, viplounge.com -- and put them up for sale. ShortDomains has a current list of over 600 names, and has so far brought in more than $300,000 in sales. YnotNetwork.com was sold in January 2000 to a company called Flying Crocodile. Muenyong won't give an exact figure. "But it was in the millions, definitely."
The cash from ShortDomains' sales has allowed Muenyong to "get into the mainstream business," he says, which he'll try to do in the next year with Ranks.com, an index to the best sites on the Internet. Call it hubris, but not a hint of uncertainty creeps into Muenyong's voice. He plans to spend his money on capital and labor, he says, not advertising. And he advises other dot-commers still crazy enough to launch a new idea to do the same: "Start small, and when you do start to spend money on advertising, know exactly what your payoff is," he says. "Search for profits rather than exposure and popularity.
"It's just simple advice," says Muenyong. "After all, I'm not even a businessman. I'm just a computer geek."
The American compulsion to explain away the downturn has itself created a new industry, complete with its own jargon. Dot-bombsand dot-goneshave gone down the dot-commode --"the toilet," according to Keith Dawson's Web log, Tasty Bits From the Technology Front (www.tbtf. com), "down which billions of dot-com stock valuation recently disappeared." TheCompost.com offers up-to-the-minute reports on the industry's troubles and conducts a "dot-com death wish" poll. Online liquidators such as Overstock.com buy up the inventories of the fallen. The recently unemployed can reroute their e-mail to an address at ijustgotfired.com. Yet another site, startupfailures.com, struggles to establish itself as a portal of hope for dot-bomb refugees. In addition to an advice column, it commissions "Lessons Learned From a Startup Failure" from its readers. The first lesson comes courtesy of proprietor (and startup-failure veteran) Nicholas Hall: Don't squander your cash on labor. "Startup Failures is looking for one or two good volunteers to help with the administration of our Web site," reads a line at the bottom of the home page. Interested applicants are invited to contact Hall directly.
FuckedCompany.com's Phil Kaplan, otherwise known as "pud" (always lowercase), compiles a daily Web log of layoffs and shutdowns -- he calls them fucks. Contributors post anonymous commentary in the "Happy Fun Slander Corner," but it's Kaplan's unrepentant frat-boy humor that defines the site. When Women.com asked its readers to vote on the Internet's most eligible bachelors of the year, "Men of the Internet 2001," Kaplan campaigned on his site and won the contest with 14,000 votes. It was a contest as rigged as when Hank the Angry Drunken Dwarf won People's most beautiful person of 1998 with the help of a Howard Stern driven campaign. But without Kaplan, it's not likely that Women.com -- which was recently acquired by iVillage -- would have lured 14,000 votes for anyone.
Kaplan has a new approach to dot-com success. Don't promote yourself at all, and dare the media to write about you anyway. In his newsletter, the FC Sporadic, he boasts about the journalists he's left waiting at Starbucks, and when he does submit to an interview he answers questions with the greatest reluctance. (Q: "Do you see a trend in which dot-coms are failing, which ones are surviving?" A: "Yup. The ones that don't sell anything are failing.") But maybe Kaplan is on to something: Emerging from this era of relentless promotion and packaged cool, a man of the Internet who can't be bothered to return phone calls is irresistible.
WHILE KAPLAN RACKS UP FUCKS, SOME DOT-COMS are still breathing, hoping to show they can turn a profit before their venture capitalists turn their money to cloning. Ifilm.com, a cinema-preview site, just scraped up another $10 million from a united front of Hollywood power brokers, including Sony and Eastman Kodak. Two online ticketing services, Expedia.com and Travelocity. com, rank among the Top 10 travel agencies in the country, and have seen their stocks rise periodically even in recent weeks. And according to the latest figures from the U.S. Census Bureau, online retail sales from the fourth quarter of 2000 accounted for a full 1 percent of all retail sales in the country, up two-tenths of a percent over the year as a whole.
"This is the third wave," says Steffano Korper, co-author with Juanita Ellis of The E-Commerce Book: Building the E-Empire. "The first was when people had an idea and right away found funding and venture capital, and then went immediately public. In the second wave, people started to struggle to get their second rounds of funding, and a lot of ideas were being dismissed because of the stock market. And the third wave, which is coming now, is about solid businesses using the Web to create revenue."
Korper and Ellis are consultants -- a species that has thrived in the Internet years, for fear of times like these. Currently, they conduct a program through UCLA and UC Santa Clara in which, according to Korper, "We teach people to build an e-commerce solution from beginning to end." Tuition is $5,500 for the 12-week course, and students emerge with a certification in "e-commerce architecture." (Korper won't elaborate. You just have to take the class.)
"When I moved here around a year ago, everyone had under one arm a movie script, and under the other an e-commerce plan," says Korper. "If you wanted to pick up a girl, the cool thing would be to say, 'I'm a venture capitalist.' And they'd receive double-digit sums of funding, move into the biggest office and buy the nicest stuff, and never look at their business plan. But the most successful companies now are moving over to a 'clicks-and-mortar' e-commerce solution -- they have a real ä business in the real world first. They don't even want to be known as e-commerce businesses. Southwest Airlines and JC Penney -- they're both e-commerce success stories, but they're not doing anything to publicize it."
"It's important to remember that the Internet created a million jobs," says Korper, "and we've only lost 50,000 of those."
"THE INTERNET NOW HAS A CHANCE to be what it was always meant to be -- not a money-maker, necessarily, but a place where the underground can express itself," says Marco Ferrari, a 38-year-old Italian artist who goes by the name of Ladzarus.
On his Flash-animation-heavy Web site Element Zero (element-zero.com), Ladzarus has for years displayed the work of friends and collaborators: video documentaries of performances, photographs of Burning Man, commentary on political events (I contributed during the Democratic National Convention, after we'd argued about the usefulness of activism). But in three months he plans to re-launch the site as a place where digital artists and animators can exhibit their skills -- and where the out-of-work can still use what they learned on their lost jobs. "The corporate structure will never connect with any community," says Ladzarus. "They hire all these kids to do something they think is good, but when it doesn't work, they have nothing." Thirsty.com, an L.A.-based rave-teen news portal that folded in November, is the perfect example, he says: "They were a Westside-based company with a lot of kids working on it, and they built a huge, beautiful Web site in a few months' time. But they didn't have a community, and no one was interested, so when they ran out of money, everything was lost."
Every three months, Ladzarus plans to bring digital art to living and breathing humans at a festival. And of course, he hopes the event will bring in sponsors. "If you want to make something happen, you have to start with a little thing. I don't think it's possible to make a lot of money right now unless you want to become a corporation. And if you want to touch the core of the underground, you can't be a corporation.
"We are in a city that has collected artists like nowhere before. There is something here about the sense of space, the opportunities, it is so vast and big and welcoming at this time, it's very alive. But the digital-art community, all these kids who were working for these corporations, they're very spread out. There's no tribe that connects them. So a project that connects all these kids together as a big tribe creating things -- it will be like a big production company. One day I'll connect the community to the business world, and the money will come."
Even without money, new ideas proliferate. "I'm really thinking about content," says Brian Massey, still staring off into some distant point on the horizon he apparently thinks of as the future. "I've spent a lot of time optimizing images and shrinking files and trying to keep download low -- that's what I spend a lot of my time doing and thinking about. It's all about getting people there, getting them comfortable with watching a little screen."
Massey isn't just talking about the average 19-inch computer monitor. He's now got his sights on the cell phone. Part of the reason the Web has failed as an entertainment venue is that people don't want to sit in front of their computers, especially when they've come home from a job where they likely spent the better part of the day at one. Put that same content on a device as small as a mobile phone, and it becomes a way of coping with a society of long lines and commutes. "You see it all over Japan," Massey says, "people on the bus, standing on the street, playing games on their little devices."
With that in mind, Massey has cooked up a business plan with his roommate and friend, Mike Reed, currently associate producer at L-squared Entertainment. "The wireless-content business is what I'm really keeping my fingers crossed on," he says. "We want to create 10 content services for Japanese teenagers on i-mode 3g [third generation] cell phones for the NTT DoCoMo network in Japan." In this country, cell-phone technology has been mired at 2g for nearly a decade; Europe and Japan, on the other hand, have nearly advanced to 4g -- fast enough to "zap a DVD in a couple of minutes on a phone." Seventy-two percent of all cell-phone users in Japan connect to the Internet while mobile, compared with only 6 percent in the U.S.
While i-mode technology can read something called "cHTML" (the "c" stands for "compact"), it's currently available only in Japan. Another way of making the Web mobile is to use WAP (Wireless Application Protocol), which has the support of some 500 companies in countries all over the world. But WAP requires transferring the whole Web, all 6 billion pages of it, to WML (Wireless Markup Language), a task that would require millions of hours of labor and hordes of manpower. Massey sees a future for himself here, too. "We have a nice little team if we can pull it off," he says. "It's the phones that people are going nutty over. All these peripheral devices are going to come together with the phones at the center. Just wait."
IN THE MEANTIME, MASSEY IS looking for a job "as a Flash guy with seven years of film-production and storyboarding experience." And he's hopeful. His cell phone plays Für Eliseto alert him there's a call, and he has a hushed conversation. The next day, he calls to tell me what it was about: "This is on the lowdown, man," he says, "but I've got a meeting tonight. A good one."
Massey's former boss at Soundbreak, Brian Frank, is working with an anonymous collaborator to develop a sitcom about the dot-com life. "We're using our experience from working in the new media industry to create a satire for television," he says.
And Fiona Ng is taking a vacation. "I don't think the dot-com industry did me wrong," she says. "It opened up a lot of opportunity for me. It allowed me to experience a culture of work that wasn't corporate, and to get experience in the work force I wouldn't have had. A lot of people are telling me to go offline now. We're all going back to traditional media," even if it takes some time to break into the field. "I have a low overhead," says Ng. "That idea of being a young urban billionaire -- it was never part of my mythology."
Massey isn't worried, either, at least not for himself personally. But he still grieves a little for the dreams he shared with the people he worked for, the people who thought the dot-com would change the habits of consumers forever. "This dot-com era, it was a $1.7 trillion research project in humility," he says. "It's a hard lesson, man. A hard lesson."