Sex sells – but sex.com isn't worth $14m, owner of domain name finds
Latest twist in saga of web's costliest address as owner is forced to sell
Saturday 20 February 2010
The rights to one of the most notorious adult sites on the internet are up for sale just four years after they changed hands for a record $14m (£9m), with auctioneers hoping that sex can sell all over again.
Sex.com, the most expensive domain name on the internet and the subject of two books, is set to go under the hammer after its owner Escom was unable to pay its debts. The domain name of the site, which has been described as the "jewel in the internet's crown", is to go under the hammer on 18 March.
Details of the process were posted on the website of auctioneer David R Maltz & Co about a week ago, which has since received a slew of enquiries. The event will be held at law firm Windels Marx Lane & Mittendorf in New York. The domain name will not come cheap. Interested parties will have to bring a certified cheque for $1m just to be allowed to participate. However, a source close to the sale said the site was "unlikely to bring in what it did in 2006, although it really depends on how much someone wants it".
The forced sale came after Escom defaulted on its debts to Dom Partners, according to the notice of foreclosure sale posted by Dom's lawyers. It marks the latest in a series of twists in the site's extraordinary 16-year history. The tale spawned Sex.com: One Domain, Two Men, Twelve Years and the Brutal Battle for the Jewel in the Internet's Crown by journalist Kieren McCarthy in 2007, and The Sex.com Chronicles: A White-Hat Lawyer's Journey to the Dark Side of the Internet by Charles Carreon the following year.
For the first five years, Sex.com had five million hits a day and generated $100m a year. It was, as McCarthy said, the "most valuable piece of virtual real-estate on the planet".
The domain name was registered in 1994 by Gary Kremen, a scholar from Stanford University and the founder of dating site Match.com. Two years later, through an elaborate scam, the ownership was transferred to Stephen Cohen, who was described by McCarthy as "an uneducated con man with a genius IQ and an unnatural gift for persuasion".
A bitter court battle followed, and was still dragging on a decade later. The case was to prove a landmark in how the law views internet domain name ownership. A Californian judge awarded $65m in damages to Mr Kremen and returned him the rights to Sex.com, but the lawsuits continued and Cohen eventually fled the country. He was later jailed after Mexican authorities handed him over at the border.
Mr Kremen put the site on the market in 2006, and according to reports at the time, Escom paid $14m for the rights. Domain Capital, which partly financed the acquisition, said at the time: "It is believed to be among the most significant domain sale transactions in history." The new owners of Sex.com said they planned to revolutionise the online adult industry, and set about signing numerous content deals including a distribution agreement with Playboy. Mr Kremen, who was kept on as an adviser after the deal, said he was "excited to see how the revolutionary new business plan evolves". Sadly for the site's owners, they were to discover that sex does not always sell enough.
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