gkremen

BabeNet?s Cone of Silence

Recently I wrote about ?Malicious Affiliates.? They are affiliates that send ?bad? traffic to their program sponsors or competitors, causing them to run over their chargeback limits. As I predicted, interest this topic has increased as payment processors have finally begun enforcing chargeback rules with a vengeance.

I am continuing to investigate bad traffic this month, but from a more orthogonal perspective. This article pertains to a gigantic traffic scandal and the failure of our trade press to investigate and report on it.

Trade publications, both online and offline, exist to serve their readers. Readers deserve information which will help them make money and avoid losing money. Of course publications also need to make money. But in order to best serve their readers, trade publications need to commit to relationships with a healthy collection of honest advertisers. Thousands of trade publications deliver on this seemingly simple mission. However, I strongly believe that our industry trade press completely failed its commitment to readers by failing to report on BabeNet and other scams.

By some estimates, BabeNet perpetrators may have stolen more than $80 million from adult webmasters, payment processing companies, and others in the industry. $80 million is a huge amount of money, and number dwarfs the amount of money involved in the well-publicized Acacia scandal! If the actual size of our industry is $10 Billion in revenue, and Acacia might receive 0.5% of that, Acacia over time will not earn $80 million cumulative for over ten years. So why is there not one story, one paragraph, or even one reference to BabeNet--potentially the biggest Ponzi scam (or scam in general) to hit our industry.

What is a Ponzi scam? It is a swindle in which early participants (webmasters in this case) are paid off by later participants in order to encourage more frequent participants. Promising multi-percent-per-month returns puts huge pressure on such a scam. The early webmasters are "guaranteed" a good reward. Now that you, the runner of the scam, are receiving several percent a month, webmasters are lining up at your door asking to participate in the venture (the right to send traffic to the Babenet sites).

Another definition of a Ponzi scam, also known as a pyramid scheme, is a financial-based crime where the webmasters (especially the early webmasters) are promised an unreasonably high return, usually above market, on their money. Those early webmasters give money to the scammers at the top of the pyramid, and lure new webmasters with stories of their financial success. This game continues until the scammers run out of new webmasters to lure, or simply run away with the remaining money in the pyramid.

There are so many interesting facets of the BabeNet case that they are difficult to describe in the limited amount of space I have been allocated. I could write about how for a short time (one month or so) prices on my site http://www.sex.com were up an average of 15% because BabeNet could pay more than other sites because of their lack of scrubbing and their intent never to pay the bottom people in the pyramid. I personally know five people who got ripped off to the combined tune of over $1 million. I could write about those who lost their life savings those who left the industry, and those who suffered great mental anguish.

In a typical trade publication (such as XBIZ), advertisers are treated well, but are also subject to honest reviews and bake-offs (i.e. ?KaylaKam?s site is great, but needs to be updated.? ?In a test between Epoch, ccBill, IBill and NetPayment ? we found Epoch to be the best.? ?KeyBoardCash does not pay their bills on-time according their according to several webmasters so we signed up under 10 affiliates accounts, testing them and found they do pay on time.?).

Instead, we receive bad advice, waffling on what to do about Acacia (useless to anyone who does not have a spare $500,000 to fight), and endless pictures and canned stories about advertisers. The goal and mission of trade publications should be to promote the truth, irregardless of whether the truth is good or bad. In no case, should the trade magazines over or under praise advertisers. If trade publications are to maintain their editorial integrity, they should treat advertisers like everyone else.

I think much of the avoidance of controversy comes from those not wanting to put a bright light on their own operations. Additionally there is friendships and relationships that people who are considered outcasts by normal society. Also no one wants to be a rat.

One would think that our industry?s trade publications (both online and offline) would serve as advocates of the webmaster. I find it shameful that our industry has failed to report on or launch a full investigation into the BabeNet matter. Instead, the complete radio silence leaves us with more questions than answers.
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©Gary Kremen. 2004. Gary Kremen runs Grant Media, LLC, the licensee of Sex.Com. He was the first to register the domain name in 1994. The name was stolen in 1995 and returned after years of litigation to him in 2001. For more information on Gary Kremen, see http://www.Kremen.Com. For more information on Sex.Com visit http://press.sex.com. To reach Gary Kremen and for comments on this article email [email protected].

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Rich

wow

Rich

I mean I know Babenet stole money, but not 80 million.

detoxed

I see a lot of words about babenet but you didnt mention anything illegal that they have done. How did they steal $80 million?

JOKER

interesting read...

Thanx Gary


Steve - JOKER

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AlienQ - BANNED FOR LIFE

Ground Control to Major Tom
Ground Control to Major Tom
Take your protein pills and put your helmet on

Ground Control to Major Tom
Commencing countdown, engines on
Check ignition and may God?s love be with you

Spoken:
Ten, Nine, Eight, Seven, Six, Five, Four, Three, Two, One, Lift-off

This is Ground Control to Major Tom
You?ve really made the grade
And the papers want to know whose shirts you wear
Now it?s time to leave the capsule if you dare

?This is Major Tom to Ground Control
I?m stepping through the door
And I?m floating in a most peculiar way
And the stars look very different today

For here
Am I sitting in a tin can
Far above the world
Planet Earth is blue
And there?s nothing I can do

Though I?m past one hundred thousand miles
I?m feeling very still
And I think my spaceship knows which way to go
Tell my wife I love her very much she knows?
Ground Control to Major Tom
Your circuit?s dead, there?s something wrong
Can you hear me, Major Tom?
Can you hear me, Major Tom?
Can you hear me, Major Tom?
Can you....

?Here am I floating round my tin can
Far above the Moon
Planet Earth is blue
And there?s nothing I can do.?


I know how you feel Gary.

Anyways I got some business comming your way got a few clients lined up

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fuelcell

KaylaKam needs to update?

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Beat it. Nothing to see here.

Rich

Funny that no one pays attention to a great post like this.

rounders

hahahah help. :D

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BradShaw

Babenet did not steal $80million for webmasters, maybe surfers......


Gary, can I get you to write an article like this on Python and David Van Der Poel?

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Due

2 years ago they pulled a big scam and fucked a lot of their webmasters with their program exxxit.com
I'm owed $3K+ from that time and I know there is a lot of webmasters that is owed a lot more.
If I remember correct there was also something at one point where they redirected traffic from their content lease program.
It is not $80 millions, but I won't be surprised if it add up to a few millions

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DBS.US

In the good old days they had ways to take care of things like this

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BRISK

interesting read...

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Kimmykim

I'd be curious to see where you calculated your findings financially from Gary... and I think if you're going to talk about scams there are a ton more you might mention that have been at least proven true before you turn your 'spotlight' on anyone.

And on that note, what are you doing in Thailand with Seth W?


gkremen
Spam me with dialer programs

Registered: Feb 2003
Location: With Seth W. in Thailand
Posts: 196

rooster

i knew babenet were scumbags back in 97

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Ever notice that pretty much everything added to the Constitution after the original was a mistake.

gin

how do you send "bad" traffic? if i knew how to send bad traffic i could block "bad" traffic from my sites

goBigtime

I bet Gays toughest question from this thread will be "camera or mp3 player?"

Kroyrotica

Interesting article but I'm afraid I missed something. What's the story on BabeNet?
Anybody have a link to an article about this?

Thanks

goBigtime

I think he means "bad traffic" like -- hiring rogue webmasters to join the affiliate programs of your fiercest competitors and use stolen credit cards to rack up sales that will result in chargebacks.

If you have too many chargebacks, I doubt there is much that will save you from getting cut - and shut down.


I brought up the potential dangers of 'rogue affiliates' awhile ago in regards to CAN-SPAM liability.

These days affiliate programs can be as dangerous to your business as they can be profitable.


Definitely talk to them in person before letting them sign up & preferably have them sign a contract and fax over a copy of the ID of the person (or license of the company) who will cash the checks you issue.

You might laugh now... but it will come to screening processes like that.

It's just going to come down to this -
You better KNOW who your affiliates are.

rounders

sex.com rocks

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goBigtime

s/Gays/Garys -- typo, couldn't edit.

davidd

You are being too rough on him, hard numbers are unnecessary when you are on a soap box.

Let him vent his opinions, as you would any newbie.

-dd

baddog

interesting

Mike AI

Great post Gary!

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Mr.Fiction

Aren't there at least two Kremen accounts on GFY? Is this the real one or one of the fake ones?

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Rich

Yes, this is the real one.

Rich

Sure, but you don't realize Bush is one in 2004.

Rich

I'm 90% sure anyway.

johnbosh

thats awfull lot of money

makefuckingmoney

hrmmmmmmmmm

taboo_gal

Interesting information, Gary. But, this type of reporting is not limited to the adult industry. If an advertiser balks at what is reported or shown (especially if it adversely affects them), its pulled or taken care of in some way, prompty, i.e. cbs/janet/outkast. Bottom line is, as was said on another board, business people, businesses and individuals (to an extent) vote with their money (paraphrased). If the money talks, you listen.....

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body

hmm, interesting

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scoreman

Babenet's chargebacks over at iBill created huge crisis. Like wake Garrett up at 3am, the banks are freaking out type of crisis.

Very nice post Gary, too bad you couldnt detail the blow by blow of the many layers of Babenet's scams.

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smokincash

we´ll whatch this case seriously, thanx Gary

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Hooper

I think the writing is interesting, but it seems to be pretty much way off base :-/

babenet and the affiliated companies were lambasted for weeks on end on virtually every message board after the closedown/scandal and as i recall most of the industry publications did report on their closedown.

perhaps you have some information that the rest of us dont have, if so you should share it because it will help to validate your claims that they were running a ponzi scheme.

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Penrod

How is the weather today my friend?

toonces

Do you really need to ask? Who else would know the definition of the word orthogonal, yet alone how to use it in a sentence?

Gary-why not start your own online publication? Perhaps it could be considered your civic duty.

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rounders

make me some money

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Kimmykim

Hey, I have no problem with anyone calling someone else a thief, scammer, whatever... I'd just like to see the facts and figures laid out when hard numbers are used as examples.

If Gary had used Xpics for his example, or anyone else for that matter, I'd still ask for numbers. There was a GREAT article in the River Front Times a couple of years ago detailing Xpics as a matter of fact and they had ALL the numbers from the bank, the receiver (Robb Evans) etc.

Of course that's what made it a great (and long) article.

If Gary had said that third party billers were crap and used DMR as an example, I'd want to see the basis of his calculations.

Raw numbers don't lie. Extrapolated ones can be manipulated to read any way you want to...

AlienQ - BANNED FOR LIFE

"Raw numbers don't lie. Extrapolated ones can be manipulated to read any way you want to..."

Any numbers can be manipulated for desired effects to its beholders.

3.95 3 Day Trial means that its only gonna cost 5 cents an hour!

Thats right full membership at 5 cents an hour!
In contrast you spend more money per hour driving on the highway and with all this porn you won't have time to go anywhere else!

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vffbfdzfbghn

I always knew Stanford was worth every penny...

I was going to spend the time to refute the logical fallacies within this "self-publishing", and point out the lack of evidence and foundation combined with exaggerated statistics (again, read: unfounded) however, then I realized it could all be summed up with one word, or lack thereof.

------------------------------------------------------------ ]

"irregardless"

------------------------------------------------------------ ]

You win the prize!! You're the big winner!!

Kimmykim

Yes but Alien, it's still a 3.95 trial no matter how you slice it.

If you say someone pocketed millions of dollars you should be able to put forth the data you arrived at that claim from, just like the NY state attorneys office has done with someone else recently.

AlienQ - BANNED FOR LIFE

Once again you all under estimate Kremen and sound like "The King" in one of his Political stances with a statement like, "Show me proof"

bla bla bla...
Numbers dont lie blah blah blah...
Show me the number blah blah....

If you did your own research you would find some substance perhaps to his writing...

However its the usual board cry baby's wanting to be spoon fed...

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AlienQ - BANNED FOR LIFE

"NY state attorneys office has done with someone else recently."


Doh! Brutal.

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AlienQ - BANNED FOR LIFE

Kimmy Kim how many millionairs do you know besides the morons that claim to have millions here go out and publish there revenue?

Sure some statements are of public record others are not if you know what I mean. Hell can you do math when over sea's S companies are banking things??

Probably not.

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Kimmykim

In that case Alien how would anyone know numbers they could calculate with?

I don't really care who did what to whom without the facts... and of course I am always curious as to the facts in ANY case.

AlienQ - BANNED FOR LIFE

Well AVN recently stated 10-20 Billion or somthing recently and everyone gave them shit for it asking for proof...

Paul had to claim his statements were near accurate after scrutiny and gave a raw estimate based on his own collective data.

Then he had to add an extrapulative figure for other monies that were beyond his realm of accounting for.

GK clearly says he got a 15% increase in business ya can do some math from that.

But still no matter it all can be made out to read how ever ya want it.

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