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2 Dec 2000
Windfall is anticipated for winner of Sex.com
Michelle Quinn, San Jose Mercury News

When Gary Kremen bought the domain name sex.com in 1994, he didn't plan on being a purveyor of pornography.

"I thought it might be cool," he said. "Maybe I'd get to meet the Dr. Ruths of the world."

He considered penning an advice column on what women should know about men. But he didn't get around to doing anything with the site. And a year later, it was taken over by a man named Stephen Cohen.

For the past several years, the two men have been locked in a legal battle over the site -- a battle that ended Monday when a San Jose federal judge stripped ownership of the choice Web address from Cohen, ruling that he most likely stole the rights to the domain name from Kremen.

Cohen, who turned the site into a popular portal to scores of X-rated Web sites, also was ordered to place $25 million into a federal court account until the litigation is completed. Kremen argued in court that the name was stolen from him, but Cohen maintained he believed he cut a legitimate deal to buy the domain name for $1,000 and had trademark rights based on an online bulletin board system he had run.

Kremen, 37, a San Francisco entrepreneur, doesn't know if he'll be awarded damages or if he'll ever see any of the $25 million. But he believes sex.com will be transferred to him this coming Monday or Tuesday.

That, say industry experts, could be a windfall.

Cohen, who has declined to discuss the case except to repeat his contention that he is the rightful owner of sex.com, reportedly charged advertisers $1 million per month to splash ads on the Web site and claimed to have 9 million users.

Not many research firms keep track of the online sex industry, and industry experts say it's hard to gauge the market since several thousand sites make millions while many others are run by amateurs making little money.

$4 billion industry

Tom Adams, a media analyst in Carmel, said he believed the online sex industry could be as big as $4 billion annually. ``There is no other content category that is getting anywhere near as much revenue from consumers,'' he said.

That's why a name like sex.com has such potential value.

"That's a prime, prime domain," said Jennifer Leone, a Web site administrator at AVN Online Inc., a Chatsworth online magazine covering the adult video and online industries. "You get your hands on it, you're set."

Even now, Kremen's not sure what he'll do with the site. He says he paid $750,000 in legal expenses, mortgaged his home and ran up credit card bills to finance his legal battle. And since he still owes his lawyer a percentage of the settlement, Kremen says, "I have to get some income."

Being the owner of sex.com is just the latest incarnation for Kremen, who invests in companies for a living and is the kind of entrepreneur who keeps throwing the dice.

Kremen has invested in big winners, such as Web software firm Interwoven Inc. of Sunnyvale and started, and sold, at least two companies, including Match.com, a popular online dating service. That money, he says, is now tied up in other investments.

Non-tech investment

Despite his electrical engineering background and his Stanford MBA, Kremen's investments are often non-tech and easy to understand. He's invested in Pinpoint Golf Marketing, which sells advertising at the end of golf ranges. He is also an investor in Hot Liquid Media Inc., a company with the patent for advertising on cup holders.

At his San Francisco home in an area of the city known as Dogpatch, Kremen on Friday walked among sawdust and ladders as workers remodeled his house. He has a computer server but no kitchen.

He pursued his battle for sex.com, he said, for a simple reason: something that belonged to him was taken away. "It's like your car gets stolen and you have no insurance and you get angry," said Kremen.

As for the future of sex.com, Kremen hopes to change the site into something classier, focusing more on erotica than pornography.

 

 

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