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2/9/01

Babenet aka GoHip aka Netbroadcaster and its principles Andy Garoni, Nolan Quan, Robert Gould, Sanger Robinson and Justin Hirsch...

In 1997, Babenet's Rob Gould stole his "rock'n'rollers" payout system from Cybererotica (CE), shortly after going to a long lunch with CE's Ron Levi and learning how Levi ran CE's webmaster program. Babenet's "Rockn'rollers" affiliate program ripped Luke off for about $1500 in late 1997 and I've heard other complaints from webmasters about Babenet's deceptive practices.

Frank writes Luke: Babenet and NetBroadcaster, GoHip, AlchemyFx and others are all the same people. Andy Garoni, Nolan Quan, Robert Gould, Sanger Robinson, Justin Hirsch. Porn guys in their latest attempt in a legitimate company. All porn traffic gets redirected to NetBroadcaster. Please take a look into this. I hope they don't get away with murder again.

Mutt writes on Netpond: what's your point about NetBroadcaster.com Luke? They can do whatever they want with their porn traffic. Lots of porn companies at the end of their attempts to get a surfer to buy porn send them to non-adult sites. Looks like they ripped off the guys from VoyeurDorm's idea though. If they went public or brought in investors based on false claims about where all that traffic came from then they would be looking for trouble.

Nunya writes: The company that owns VoyeurDorm has a very similar web venture to NetBroadcaster.com. I can't remember the name of the site but if you go to VoyeurDorm and then leave eventually it will pop a console [Trafficco.com] with that site in it. Streaming non-adult videos.

Netbroadcaster: An Entertainment Portal with the Eyeballs, But Not the Hype

by Ben Fritz ben.fritz@digitalcoastreporter.com

Netbroadcaster doesn't have any high-profile VC backers, a 310 phone number, or even more employees than a person has fingers. What it does have, though, are numbers most sites, especially those in the entertainment space, would kill for: two million registered users, over 3.6 million unique visitors in December, according to Jupiter Media Metrix, and a balance sheet that has been in the black for nine months.

Sanger P. Robinson started Netbroadcaster with aspirations no loftier than taking advantage of an opportunity to become a Hollywood player. Two years ago, he simply saw the Internet as a way to break into the incredibly insulated Hollywood community-- and jumped on it.

It's that kind of inexpensively acquired content, along with movie and TV clips from the public domain, which made up the bulk of Netbroadcaster's initial content. But with virtually no marketing budget, it was left to what Chief Creative Officer Sean Costello admits was a "stupid film" to give Netbroadcaster a name.

What Is Hip? Not GoHip.com

From Wired.com 2/25/00:

Need a souped-up video browser for your PC? You may not want to download it from GoHip.com. According to Internet security firm Finjan Software, Internet search engine GoHip is distributing an ActiveX control download that automatically modifies several components on a user's PC -- including one that adds a GoHip signature to every piece of outgoing email.

Finjan fingered GoHip in its "malicious code alert" when a user went to the site's free video page. Basically, when a user accepts the terms of the Windows video browser download, an executable file is copied to that user's system and is executed automatically.

All of a sudden, GoHip.com becomes the user's homepage, and his email has a brand new signature that reads: "Click here for Free Video!! http://www.gohip.com/freevideo/."

A close look at the software agreement's fine print reveals that GoHip warns the user of the changes. But duped customers say they don't have time to read the fine print, and say they shouldn't have to.

But according to Finjan marketing director David Kroll, this is the first time a company has used ActiveX to alter personal information on someone's computer.

"I think it's pretty tacky what they did," he said. And what's more, he says, it means that other companies or vandals can do even more dangerous things with ActiveX. "You could download a Trojan that will activate ActiveX and it could deliver Back Orifice or a worm," he said.

And because ActiveX automatically slips a file in the Windows startup folder, the changes are reinstalled each time the system is started. "It would run automatically and you'd never even know it was there," Kroll said.

GoHip does not have a listed telephone number and could not be reached for comment. The Beverly Hills, California-based company fields calls to a customer service line, which directs customers to an email address at videoupdate@gohip.com.

[Editor's note: In the original version of this story published February 25, the email address was identified as "videoupdates@gohip.com," which was invalid. GoHip contacted Wired News about the error on March 14.]

Calls to Justin Hirsch, the site's contact filed with Network Solutions, reached an answering service that does not know the name of Hirsch's company and forwards his calls to a voice mail. Messages left there were not returned.

A public records search discovered that Hirsch is involved with several Internet companies, all registered at the same street address in Chatsworth, California. Among the companies is Babenet, Ltd., and under GoHip's adult category section, Babenet is the first site listed. Other companies associated with Hirsch include BigWebTools, a company that claims to be an Internet marketing firm.

A search for BigWebTools on GoHip calls up links that direct users to hard-core sex sites, many of which are based in Japan and Russia.

At the BigWebTools site, there is testimony from a "Robert Molder" of RMI Networks, who says of BigWebTools, "Calling them was the best business decision we've made since we started our company." But a spokesman from Chicago-based RMI Networks says he's never heard of BigWebTools or Robert Molder.

Babenet and BigWebTools both have the same telephone number that reaches Justin Hirsch's answering service. Calls to Alchemy Communications, the Los Angeles-based company that hosts GoHip's site, were not returned.

Alchemy lists the site at the top of its "featured clients" page. "Discover GoHip!" the site reads, "and change your life on the Web."

Exactly, says Dahl, one of GoHip's dissatisfied users. "I compliment GoHip for a fine marketing effort as I certainly know who they are. I hate them, but I know who they are," he said.

Russ Hampshire's VCA - Babenet Goes Public Through Backdoor?

3/24/00

Mark writes Luke: A publicly-traded company just announced a merger with a company called StreamMagic, with a president named Nolan Quan. Speculation is that Quan's business needed to do a funny reverse-merger deal because they are in the porn business and can't go public any other way.

Luke says: A few months ago, I sent Metro's public trading status on NASDAQ up in flames. My coverage on this story will probably blow up StreamMagic and its attempt to take VCA-Babenet public.

It looks like this fancy merger is a backdoor way for Russ Hampshire's VCA and Babenet operations to become publicly traded.

Rob Spallone phoned me Friday morning Australian time and asked to cut, or at least tone down, this story.

Ulmers writes on Yahoo StreamMagic posting board: It looks pretty solid. I'm only doing research at Network Solutions (www.networksolutions.com) and I'm able to cross reference admin. contacts and company names. It looks like Streammagic.com aka Alchemy Communications has connections with White Sands Communications, Inc. and VCA Interactive. Collectively, they run a bunch of porn sites including- MENWITHANIMALS.COM, TRANNIHARDCORE.COM, TEENCORE.COM, ADULTXXXTV.COM, VCAXPLICIT.COM, WETFACES.COM, FUC-KAVISION.COM, GAYTEENCORE.COM, ADULTNEWSSTAND.COM there's quite a few more that aren't as 'colorful' that I didn't list. People at White Sands have VCA email addresses, and people at VCA have Alchemy email addresses. It's all one big happy PORN family.

VKS writes on Yahoo: Okay, let me summarize the speculation I have been hearing for months, and then give my (long!) analysis of the deal: First, I was told that a group of investors in LA who were heavily invested in (highly profitable) porn-related internet businesses were seeking to use Qsound to leverage their way into a public offering. Apparently, every time the stock dropped near 2, they were buying, and when it rose well above, they would sell out and then use the funds to buy more stock when it dropped. I DO NOT KNOW IF THIS GROUP WAS ASSOCIATED WITH STREAMMAGIC, and I can find no list of clients at the StreamMagic site.

Second, there were rumors flying about for the past 60 days or more, that Qsound's president wanted to "spin off" the internet e-commerce business (Qcommerce) because the market did not seem to value it the same way that the market values other internet e-commerce "business to business" ventures. Now, we see a bizarre merger, in which Qsound will MORE THAN DOUBLE its outstanding shares (there are currently 26.5 million outstanding shares, with an identical quantity of shares being used to fund the "purchase" of StreamMagic, PLUS another 5 million being given as options to StreamMagic's option holders). This is a shift of control to the people who own stock in StreamMagic.

What do Qsound shareholders get? If the plan proceeds as announced, each Qsound shareholder would hold shares in THREE separate "publicly-traded" stocks:

- one is essentially Qsound itself (its non-internet 3D audio business, which was the entire company in 1997), including the license fees from stereo and hearing aid companies;

- second is the Qcommerce (e-commerce) business (including Virtual Spin which was acquired a year ago, plus the AffiliateDirect functions which Qsound's internal development project);

- third is StreamingMagic, combined with Qsound's "internet audio" software. Note that the StreamMagic investors don't get the first two stocks, which are spun off to existing Qsound shareholders only (although I assume that some key StreamMagic investors and perhaps the company itself may already hold substantial shares in Qsound). All they get is ONE-HALF of the equity they previously owned in the StreamMagic business, plus one-half equity in the Qsound "internet audio" software.

The question I have is, why would any StreamMagic shareholder want to do this deal? The only answer I can think of: they want to be a public company, and they don't think they can do it any other way. The only "legitimate" reason I can think of for shedding so much equity to get public, is that the company doesn't think the market would buy into an IPO, which brings me back to my initial suspicion that StreamMagic MIGHT be the "porn" company that was rumored to be seeking to take over Qsound earlier this year.

Historically, the stock market has resisted any effort to take any company public if it makes its money from pornography or sex. If this is the case, then there may be some doubt about the market agreeing to value the StreamMagic/Qsound merged stock at any premium. The StreamMagic site lacks any detail such as a client list, and the private company has (quite reasonably) not yet disclosed any data about its source of revenue that could help clarify the issue,

Bottom line: the idea of spinning off Qcommerce may have some "edge" since it would seem to create an opportunity for a "pure internet play" with appropriate market valuations -- though the spinoff will need to disclose its revenues and expenses, which are not currently separated from Qsound's other business units. Also, bringing back a "pure audio technology" stock for "old-time" Qsound shareholders to hold, may allow that business to focus on its technology without the recent distractions of internet business speculation, which might be a good thing.

(I have never held any shares of Qsound stock, and I do not plan to buy any stock, nor to sell it short nor trade any options. This one is way too volatile and speculative for my tastes.)

Ulmer: Streammagic.com is owned by a company called Alchemy Communications. If you go to the Network Solutions web site, and do a domain name look up for Alchemy Communications, they own a number of domains including- ADULTSEXXXMALL.COM

Luke: Here are my notes about Nolan Quan:

Following the 1986 Meese Commission, federal agents traveled to the Bible Belt to seek obscenity convictions against California pornographers like Carriere. The definition of obscenity since the Supreme Court's 1973 Miller ruling has been whether the average person, applying the standards of his community, finds the work lacks serious value and appeals to prurient interests. Rural areas tend to have more conservative values than urban ones. The feds eventually convicted 20 pornographers, sending many to jail, and collecting millions of dollars in fines.

"It's a holocaust," porn attorney John Weston told the LA Times. He accused the government of seeking to destroy "an entire genre" of entertainment.

In September 1991, a federal grand jury in Oxford, MS, indicted the owner of Vivid Video, Steven Hirsch, for Interstate Transportation of Obscenity and conspiracy to avoid taxes. In a plea bargain, Vivid forfeited $500,000 to the government, and toned down their product.

In late 1991, Russell James Hampshire, along with his company VCA and his employees Nolan Quan and Don Diekman were charged with Interstate Transportation of Obscenity. In a plea bargain, Russ served a year in jail and his company forfeited two million dollars.

In 1992, Carriere and his company agreed to pay $3.5 million in his fines, which his lawyer called a record, after an obscenity conviction in Tallahassee, Florida.

Luke: Here's a March 21st press release:

CALGARY--(BUSINESS WIRE)--March 21, 2000-- QSound Labs, Inc. (NASDAQ:QSND - news), the leading provider of enhanced Internet audio solutions announced today that it has signed a letter of agreement to acquire 100% of Los Angeles based StreamMagic, Inc., a leading provider of Internet video streaming, in a stock-for-stock transaction valued today at approximately $100 million.

The combination of QSound's enhanced audio and StreamMagic's broadband video delivery solutions will enable content publishers to deliver rich media via the Internet in a cost effective manner. With access to high speed Internet connectivity on the rise - T1 lines and home-based DSL - end users are being drawn to sites that offer high quality audio and video streaming on a full time basis. QSound will empower clients to capitalize on the ``impulsive'' nature of the Internet by providing ``on demand'' enhanced audio and video, live Webcasts and high end interactive advertising - leading to increased site traffic, enduser satisfaction and increased revenue.

``The formation of this merger could not be more timely,'' stated Nolan Quan, President of StreamMagic. ``Content providers are constantly seeking better ways to present their media rich content on the Web. When we first met with QSound, we were amazed by the high quality sound they could generate from two computer speakers. With demand for audio and video content on the Internet increasing daily we knew immediately this was the perfect match for our world class video and content delivery service.''

Glory writes on a Yahoo message board about Stream Magic: "Who wants to invest in a company which freely associates itself with questionable characters? As previous posts pointed out, Stream Magic's management have ties (worked) in the porn industry. Maybe it's ok with the hardcore (pun intended) qsnd holders on this board but todays action should tell you what the majority of investors think about this association. I'm done with this board. Have a nice life."

Wmf writes: 3213 In the conference call Nolan was asked the following: 1. Who are SM's customers? His reply was he can't disclose them since a disclosure agreement has been signed but he named Warner Bros. 2. Another question was about who own SM? His answer was approx. 100 persons, Employees, Consultants, and some private investors.

Pete writes that QSND will get killed: It's not the porn issue I have no problem with the porn industry The problem is that QSND is misleading the shareholders If they said yesterday that they are acquiring a porn company, I would have doubled my position instead of liquidating my position The stock would probably be 10-15 dollars right now if they would have said. Hey everybody...we're buying a company that specializes in streaming porn, which I'm sure is the most highly viewed streaming content on the internet

Doodoo: The porn thing is hurting. We're down...and the merger is *supposed* to be good news. Sorry, but it looks like the shareholders are deciding for themselves...

Luke says: When I helped break the story about Noal Quan's porn background, it threatened his stock. A host of people rose up to defend Nolan but Pete writes: I didn't want to believe this crazy statement the first time I heard it I figured, just another basher making up rumors But these guys actually posted real information, real links and real articles THERE IS NO DENYING THOSE ARE TRUE check them out yourself If you just try to discredit this information without checking it out, that shows your ignorance I'm a QSND stockholder for over 1 year , but I just sold everything this morning. When this story gets out the stock will get killed I wish I would have known this before I went on the conference call yesterday Good luck to those still holding.

Vks writes Mar 21: Earlier this evening, several posts detailed evidence suggesting that StreamMagic's entire business is built around internet pornography, and that connection was not disclosed but is only very thinly disguised. As soon as these posts were made, a sudden rush of "rah-rah" posts began to appear, in an apparent effort flood the board and hide the earlier content from view (the PR people call it "Flushing the top 40").

Doodoo writes: From the research posted, it appears as though streammagic.com is owned by Alchemy Communications, a company that runs at least one porn site, and who has close ties with two other companies that are heavily involved with the porn industry. This is bad! Marketing defined is how a company views its customers, and how the customers view the company. How are the customers (and shareholders) going to view Qsound when they have a porn moniker attached to their good name? This is a marketing nightmare.

Mark writes Luke: You mention someone named Nolan Quan (as an employee of a porn internet company charged with interstate obscenity) an an article you posted at http://www.4porn.net/index75.html and http://www.4porn.net/a80.html -- now the same name has just come up in a context that you might find intriguing (and which might create some publicity for you and your book).

A publicly-traded company just announced a merger with a company called StreamMagic, with a president named Nolan Quan. Speculation is that Quan's business needed to do a funny reverse-merger deal because they are in the porn business and can't go public any other way. If this is the same Nolan Quan, and StreamMagic is actually in the porn business, then I think the business/financial media might be interested -- if there was some way to confirm it.

See http://biz.yahoo.com/bw/000321/qsound_lab_1.html (press release) and http://post.messages.yahoo.com/bbs?action=m&board=8729390&tid=qsnd&sid=8729390&mid=3090&n=1 (a pseudonymous Yahoo message board post referring to your article)

See also http://messages.yahoo.com/bbs?action=m&board=8729390&tid=qsnd&sid=8729390&mid=3086 and http://messages.yahoo.com/bbs?action=m&board=8729390&tid=qsnd&sid=8729390&mid=3087 (the latter two are message board posts discussing the merger of Qsound and StreamMagic).

[Late 2000 update - The Qsound - Streammagic merger fell through.]

Hey Babenet, Wanna Call Chad?

From Wired.com 4/14/00:

Now the only company left that will admit to hosting the adult smorgasbord known as Adultbuffet is Flying Crocodile, a Seattle company that hosts 60,000 adult sites. Flying Crocodile CEO Andrew Edmond said Adultbuffet isn't doing anything wrong, and said about 15-20 percent of the adult sites out there are now using dialers as an alternative payment. Dialers, he said, represent anywhere from a $60-110 million business annually. They're a natural solution to the problem of online credit card fraud.

Edmond said the adult sites receive about 80 percent of the revenue generated by the long-distance phone calls to Chad. Chad gets the other 20 percent. "In the early days we were made to look very, very, very bad," Edmond said. "We want to bring value to the industry."

Also doing its bit to bring value to the $1.8 billion industry is Babenet.com, a company based in Beverly Hills, California that owns hundreds of adult websites. Several customers have linked a dialing program, called FreeSex_live.exe, back to Babenet.

Laurie Swenson of Crookston, Minnesota, said she ended up with FreeSex_live.exe by leaving her 13-year-old son alone with the computer. She only discovered that he had downloaded the dialing software when she logged onto the Internet and found that her home page, search engine, and email signature had been hijacked by a site called GoHip.com. Another user who wished to remain anonymous said he "was cruising the curious path, you know, the 'free passwords' sites" when he ended up with GoHip all over his computer and FreeSex_live.exe in his hard drive.

GoHip.com and Babenet.com are both hosted by Alchemy Communications. Alchemy Communications once featured GoHip.com at the top of its "featured clients" page, but has since removed all traces of the company from its site. Calls to Alchemy's president, Nolan Quan, were not returned. But Robert Gould, a spokesman for Alchemy, GoHip, and Babenet, said he had never heard of the freesex_live.exe program, and kept a close eye on Babenet. "I watch what they do and how they do it," he said. "If Babenet was doing that, I would certainly have a problem."

(Editor's Note: In the original publication of this story on April 14, Nolan Quan was incorrectly identified as the president of Babenet. In fact, he is the president of Alchemy Communications. John Gallagher is the president of Babenet, according to documents filed with the California Secretary of State. Wired News regrets the error.)

4/3/01

Skitz writes on Netpond: Just got this spam from the thieving lying sacks of s--- at Babenet.... are they out of business now?

"You are receiving this exclusive promotion from Multinet Communications Worldwide Limited ("MCWL"), successor to the Babenet Webmaster programs."

LOL like all other worthless bulls--- spam, it says "THIS IS NOT AN UNSOLICITED EMAIL!" ... and also says "reply to this email" to have your name removed.... of course, in typical BabeNet fashion, the replied-to email gets kicked back. LOL Babenet... no matter what name you call yourselves, you STILL suck, and always will!

Babenet - the Michael Jordan of scammers
2002-10-25 13:30:54

Mutt writes on Oprano.com: "LegalNudeTeens.com. Babenet are like the Michael Jordan of scammers. Quite brilliant but still scum. Anybody know anything about Babenet? How much of it is owned by VCA Pictures the porn video company?"

John writes: Babenet are scammers. I remember reading stuff on your old site about some shady stock deals they were involved in with some company listed on a Canadian stock exchange. They also owned some mainstream stuff like BigMailBox.com and IHip or GoHip or whatever it was called, they are major spammers. Babenet is based in LA right? The site the spam was promoting - I looked at the domain registration on it and it was in England. Looks like they've set up shop probaby.

I just got some spam from Babenet. It led to a website which followed exactly the formula that the guy Bruce Chew used running Crescent's operation. In fact some of the sites which started loading on exit popup windows looked a helluva lot like the old Crescent stuff. Maybe he's working for them now or maybe they're just taking his scam and running with it. It was the same stuff - the email led to a site that is absolutely free they say - then you are asked to give them your email and name to get completely free access to this great porn site - when you finish doing that you get taken to another page where they go to great lengths to tell you 'YOUR CREDIT CARD WILL NEVER BE BILLED FOR THIS' - but of course there it is, a form box to fill in your credit card number, remember they have already collected your email address a page earlier - so at this point you are on the page telling you that your credit card will never be billed that they need it only for age verification - underneath in small print is a whole deal about another premium site that you are under no obligation to remain a member of that charges i think 39.95 but they don't give you any opportunity before you input your credit card number to opt out of that premium site membership.

I am assuming that your credit card gets nicked unless you cancel the membership yourself and lord knows I am sure they make make cancelling that membership as hard as hell, if not almost impossible. Even funnier is that if u go back and check your email they send you a fake username:password for the original site where they asked for your email, there is no real username:password. When you click the link, you are taken to a page for ExxxtasyMail and are told you have now confirmed that you are double optin mail subscriber. There is no link on the page into the great free porn site the original spam was promoting - just three or four links to more free porn which are in reality links to 'Lifetime Bucks' affiliate program websites. So from one email promising some free porn site offer - they've now got you for 39.95 joined to a paysite the average surfer idiot might think he is getting for free, plus they've got another confirmed optin subscriber to their ExxxtasyMail spam operation, which is sold and resold a hundred times over.

This is nothing new, webmasters and surfers have seen it a thousand times before. On the exit popup window chain sites the same types of sites that were part of Crescent's exit chain - 'Dating Personals' site, a 'Chat' site etc The whole thing really was an almost identical copy of Chew's scam. Cept this one was even better cuz of the trick where they confirm you as a double optin subscriber to their email program. Chew never had that trick plus the 'fake username:pass" trick hadn't been used back when Chew was running Crescent's operation. You don't hear anything from Babenet anymore, I don't think they sell content anymore, if they do nobody is buying it. And I think their affiiate program died a long time ago. Why? Cuz webmasters got burned by them. And frankly when you're running the kind of spam operation they are and probably lots of private traffic trades where they send the same lambs to slaughter to another operator doing the same sh-t why would anybody pay out big money, 30-40 dollars per signup to all us smaller webmasters?

Frank writes: Babenet and NetBroadcaster, GoHip, AlchemyFx and others are all the same people. Andy Garoni, Nolan Quan, Robert Gould, Sanger Robinson, Justin Hirsch. Porn guys in their latest attempt in a legitimate company. All porn traffic gets redirected to NetBroadcaster.

Mutt writes on Netpond: what's your point about NetBroadcaster.com? They can do whatever they want with their porn traffic. Lots of porn companies at the end of their attempts to get a surfer to buy porn send them to non-adult sites. Looks like they ripped off the guys from VoyeurDorm's idea though. If they went public or brought in investors based on false claims about where all that traffic came from then they would be looking for trouble.

Netbroadcaster: An Entertainment Portal with the Eyeballs, But Not the Hype

by Ben Fritz ben.fritz@digitalcoastreporter.com

Netbroadcaster doesn't have any high-profile VC backers, a 310 phone number, or even more employees than a person has fingers. What it does have, though, are numbers most sites, especially those in the entertainment space, would kill for: two million registered users, over 3.6 million unique visitors in December, according to Jupiter Media Metrix, and a balance sheet that has been in the black for nine months.

Sanger P. Robinson started Netbroadcaster with aspirations no loftier than taking advantage of an opportunity to become a Hollywood player. Two years ago, he simply saw the Internet as a way to break into the incredibly insulated Hollywood community-- and jumped on it.

It's that kind of inexpensively acquired content, along with movie and TV clips from the public domain, which made up the bulk of Netbroadcaster's initial content. But with virtually no marketing budget, it was left to what Chief Creative Officer Sean Costello admits was a "stupid film" to give Netbroadcaster a name.

What Is Hip? Not GoHip.com

From Wired.com 2/25/00:

Need a souped-up video browser for your PC? You may not want to download it from GoHip.com. According to Internet security firm Finjan Software, Internet search engine GoHip is distributing an ActiveX control download that automatically modifies several components on a user's PC -- including one that adds a GoHip signature to every piece of outgoing email.

Finjan fingered GoHip in its "malicious code alert" when a user went to the site's free video page. Basically, when a user accepts the terms of the Windows video browser download, an executable file is copied to that user's system and is executed automatically.

All of a sudden, GoHip.com becomes the user's homepage, and his email has a brand new signature that reads: "Click here for Free Video!! http://www.gohip.com/freevideo/."

A close look at the software agreement's fine print reveals that GoHip warns the user of the changes. But duped customers say they don't have time to read the fine print, and say they shouldn't have to.

But according to Finjan marketing director David Kroll, this is the first time a company has used ActiveX to alter personal information on someone's computer.

"I think it's pretty tacky what they did," he said. And what's more, he says, it means that other companies or vandals can do even more dangerous things with ActiveX. "You could download a Trojan that will activate ActiveX and it could deliver Back Orifice or a worm," he said.

And because ActiveX automatically slips a file in the Windows startup folder, the changes are reinstalled each time the system is started. "It would run automatically and you'd never even know it was there," Kroll said.

GoHip does not have a listed telephone number and could not be reached for comment. The Beverly Hills, California-based company fields calls to a customer service line, which directs customers to an email address at videoupdate@gohip.com.

[Editor's note: In the original version of this story published February 25, the email address was identified as "videoupdates@gohip.com," which was invalid. GoHip contacted Wired News about the error on March 14.]

Calls to Justin Hirsch, the site's contact filed with Network Solutions, reached an answering service that does not know the name of Hirsch's company and forwards his calls to a voice mail. Messages left there were not returned.

A public records search discovered that Hirsch is involved with several Internet companies, all registered at the same street address in Chatsworth, California. Among the companies is Babenet, Ltd., and under GoHip's adult category section, Babenet is the first site listed. Other companies associated with Hirsch include BigWebTools, a company that claims to be an Internet marketing firm.

A search for BigWebTools on GoHip calls up links that direct users to hard-core sex sites, many of which are based in Japan and Russia.

At the BigWebTools site, there is testimony from a "Robert Molder" of RMI Networks, who says of BigWebTools, "Calling them was the best business decision we've made since we started our company." But a spokesman from Chicago-based RMI Networks says he's never heard of BigWebTools or Robert Molder.

Babenet and BigWebTools both have the same telephone number that reaches Justin Hirsch's answering service. Calls to Alchemy Communications, the Los Angeles-based company that hosts GoHip's site, were not returned.

Alchemy lists the site at the top of its "featured clients" page. "Discover GoHip!" the site reads, "and change your life on the Web."

Exactly, says Dahl, one of GoHip's dissatisfied users. "I compliment GoHip for a fine marketing effort as I certainly know who they are. I hate them, but I know who they are," he said.

3/24/00

Mark writes: A publicly-traded company just announced a merger with a company called StreamMagic, with a president named Nolan Quan. Speculation is that Quan's business needed to do a funny reverse-merger deal because they are in the porn business and can't go public any other way.

Ulmers writes on Yahoo StreamMagic posting board: It looks pretty solid. I'm only doing research at Network Solutions (www.networksolutions.com) and I'm able to cross reference admin. contacts and company names. It looks like Streammagic.com aka Alchemy Communications has connections with White Sands Communications, Inc. and VCA Interactive. Collectively, they run a bunch of porn sites including- MENWITHANIMALS.COM, TRANNIHARDCORE.COM, TEENCORE.COM, ADULTXXXTV.COM, VCAXPLICIT.COM, WETFACES.COM, FUC-KAVISION.COM, GAYTEENCORE.COM, ADULTNEWSSTAND.COM there's quite a few more that aren't as 'colorful' that I didn't list. People at White Sands have VCA email addresses, and people at VCA have Alchemy email addresses. It's all one big happy PORN family.

VKS writes on Yahoo: Okay, let me summarize the speculation I have been hearing for months, and then give my (long!) analysis of the deal: First, I was told that a group of investors in LA who were heavily invested in (highly profitable) porn-related internet businesses were seeking to use Qsound to leverage their way into a public offering. Apparently, every time the stock dropped near 2, they were buying, and when it rose well above, they would sell out and then use the funds to buy more stock when it dropped. I DO NOT KNOW IF THIS GROUP WAS ASSOCIATED WITH STREAMMAGIC, and I can find no list of clients at the StreamMagic site.

Second, there were rumors flying about for the past 60 days or more, that Qsound's president wanted to "spin off" the internet e-commerce business (Qcommerce) because the market did not seem to value it the same way that the market values other internet e-commerce "business to business" ventures. Now, we see a bizarre merger, in which Qsound will MORE THAN DOUBLE its outstanding shares (there are currently 26.5 million outstanding shares, with an identical quantity of shares being used to fund the "purchase" of StreamMagic, PLUS another 5 million being given as options to StreamMagic's option holders). This is a shift of control to the people who own stock in StreamMagic.

What do Qsound shareholders get? If the plan proceeds as announced, each Qsound shareholder would hold shares in THREE separate "publicly-traded" stocks:

- one is essentially Qsound itself (its non-internet 3D audio business, which was the entire company in 1997), including the license fees from stereo and hearing aid companies;

- second is the Qcommerce (e-commerce) business (including Virtual Spin which was acquired a year ago, plus the AffiliateDirect functions which Qsound's internal development project);

- third is StreamingMagic, combined with Qsound's "internet audio" software. Note that the StreamMagic investors don't get the first two stocks, which are spun off to existing Qsound shareholders only (although I assume that some key StreamMagic investors and perhaps the company itself may already hold substantial shares in Qsound). All they get is ONE-HALF of the equity they previously owned in the StreamMagic business, plus one-half equity in the Qsound "internet audio" software.

The question I have is, why would any StreamMagic shareholder want to do this deal? The only answer I can think of: they want to be a public company, and they don't think they can do it any other way. The only "legitimate" reason I can think of for shedding so much equity to get public, is that the company doesn't think the market would buy into an IPO, which brings me back to my initial suspicion that StreamMagic MIGHT be the "porn" company that was rumored to be seeking to take over Qsound earlier this year.

Historically, the stock market has resisted any effort to take any company public if it makes its money from pornography or sex. If this is the case, then there may be some doubt about the market agreeing to value the StreamMagic/Qsound merged stock at any premium. The StreamMagic site lacks any detail such as a client list, and the private company has (quite reasonably) not yet disclosed any data about its source of revenue that could help clarify the issue,

Bottom line: the idea of spinning off Qcommerce may have some "edge" since it would seem to create an opportunity for a "pure internet play" with appropriate market valuations -- though the spinoff will need to disclose its revenues and expenses, which are not currently separated from Qsound's other business units. Also, bringing back a "pure audio technology" stock for "old-time" Qsound shareholders to hold, may allow that business to focus on its technology without the recent distractions of internet business speculation, which might be a good thing.

(I have never held any shares of Qsound stock, and I do not plan to buy any stock, nor to sell it short nor trade any options. This one is way too volatile and speculative for my tastes.)

Ulmer: Streammagic.com is owned by a company called Alchemy Communications. If you go to the Network Solutions web site, and do a domain name look up for Alchemy Communications, they own a number of domains including- ADULTSEXXXMALL.COM

.........

Following the 1986 Meese Commission, federal agents traveled to the Bible Belt to seek obscenity convictions against California pornographers like Carriere. The definition of obscenity since the Supreme Court's 1973 Miller ruling has been whether the average person, applying the standards of his community, finds the work lacks serious value and appeals to prurient interests. Rural areas tend to have more conservative values than urban ones. The feds eventually convicted 20 pornographers, sending many to jail, and collecting millions of dollars in fines.

"It's a holocaust," porn attorney John Weston told the LA Times. He accused the government of seeking to destroy "an entire genre" of entertainment.

In September 1991, a federal grand jury in Oxford, MS, indicted the owner of Vivid Video, Steven Hirsch, for Interstate Transportation of Obscenity and conspiracy to avoid taxes. In a plea bargain, Vivid forfeited $500,000 to the government, and toned down their product.

In late 1991, Russell James Hampshire, along with his company VCA and his employees Nolan Quan and Don Diekman were charged with Interstate Transportation of Obscenity. In a plea bargain, Russ served a year in jail and his company forfeited two million dollars.

In 1992, Carriere and his company agreed to pay $3.5 million in his fines, which his lawyer called a record, after an obscenity conviction in Tallahassee, Florida.

Here's a March 21st, 1999 press release:

CALGARY--(BUSINESS WIRE)--March 21, 2000-- QSound Labs, Inc. (NASDAQ:QSND - news), the leading provider of enhanced Internet audio solutions announced today that it has signed a letter of agreement to acquire 100% of Los Angeles based StreamMagic, Inc., a leading provider of Internet video streaming, in a stock-for-stock transaction valued today at approximately $100 million.

The combination of QSound's enhanced audio and StreamMagic's broadband video delivery solutions will enable content publishers to deliver rich media via the Internet in a cost effective manner. With access to high speed Internet connectivity on the rise - T1 lines and home-based DSL - end users are being drawn to sites that offer high quality audio and video streaming on a full time basis. QSound will empower clients to capitalize on the ``impulsive'' nature of the Internet by providing ``on demand'' enhanced audio and video, live Webcasts and high end interactive advertising - leading to increased site traffic, enduser satisfaction and increased revenue.

``The formation of this merger could not be more timely,'' stated Nolan Quan, President of StreamMagic. ``Content providers are constantly seeking better ways to present their media rich content on the Web. When we first met with QSound, we were amazed by the high quality sound they could generate from two computer speakers. With demand for audio and video content on the Internet increasing daily we knew immediately this was the perfect match for our world class video and content delivery service.''

Glory writes on a Yahoo message board about Stream Magic: "Who wants to invest in a company which freely associates itself with questionable characters? As previous posts pointed out, Stream Magic's management have ties (worked) in the porn industry. Maybe it's ok with the hardcore (pun intended) qsnd holders on this board but todays action should tell you what the majority of investors think about this association. I'm done with this board. Have a nice life."

Wmf writes: 3213 In the conference call Nolan was asked the following: 1. Who are SM's customers? His reply was he can't disclose them since a disclosure agreement has been signed but he named Warner Bros. 2. Another question was about who own SM? His answer was approx. 100 persons, Employees, Consultants, and some private investors.

Pete writes that QSND will get killed: It's not the porn issue I have no problem with the porn industry The problem is that QSND is misleading the shareholders If they said yesterday that they are acquiring a porn company, I would have doubled my position instead of liquidating my position The stock would probably be 10-15 dollars right now if they would have said. Hey everybody...we're buying a company that specializes in streaming porn, which I'm sure is the most highly viewed streaming content on the internet

Doodoo: The porn thing is hurting. We're down...and the merger is *supposed* to be good news. Sorry, but it looks like the shareholders are deciding for themselves...

XXX says: When I helped break the story about Noal Quan's porn background, it threatened his stock. A host of people rose up to defend Nolan but Pete writes: I didn't want to believe this crazy statement the first time I heard it I figured, just another basher making up rumors But these guys actually posted real information, real links and real articles THERE IS NO DENYING THOSE ARE TRUE check them out yourself If you just try to discredit this information without checking it out, that shows your ignorance I'm a QSND stockholder for over 1 year , but I just sold everything this morning. When this story gets out the stock will get killed I wish I would have known this before I went on the conference call yesterday Good luck to those still holding.

Vks writes Mar 21: Earlier this evening, several posts detailed evidence suggesting that StreamMagic's entire business is built around internet pornography, and that connection was not disclosed but is only very thinly disguised. As soon as these posts were made, a sudden rush of "rah-rah" posts began to appear, in an apparent effort flood the board and hide the earlier content from view (the PR people call it "Flushing the top 40").

Doodoo writes: From the research posted, it appears as though streammagic.com is owned by Alchemy Communications, a company that runs at least one porn site, and who has close ties with two other companies that are heavily involved with the porn industry. This is bad! Marketing defined is how a company views its customers, and how the customers view the company. How are the customers (and shareholders) going to view Qsound when they have a porn moniker attached to their good name? This is a marketing nightmare.

Mark writes: You mention someone named Nolan Quan (as an employee of a porn internet company charged with interstate obscenity) an an article you posted -- now the same name has just come up in a context that you might find intriguing (and which might create some publicity for you and your book).

A publicly-traded company just announced a merger with a company called StreamMagic, with a president named Nolan Quan. Speculation is that Quan's business needed to do a funny reverse-merger deal because they are in the porn business and can't go public any other way. If this is the same Nolan Quan, and StreamMagic is actually in the porn business, then I think the business/financial media might be interested -- if there was some way to confirm it.

[Late 2000 update - The Qsound - Streammagic merger fell through.]

Hey Babenet, Wanna Call Chad?

From Wired.com 4/14/00:

Now the only company left that will admit to hosting the adult smorgasbord known as Adultbuffet is Flying Crocodile, a Seattle company that hosts 60,000 adult sites. Flying Crocodile CEO Andrew Edmond said Adultbuffet isn't doing anything wrong, and said about 15-20 percent of the adult sites out there are now using dialers as an alternative payment. Dialers, he said, represent anywhere from a $60-110 million business annually. They're a natural solution to the problem of online credit card fraud.

Edmond said the adult sites receive about 80 percent of the revenue generated by the long-distance phone calls to Chad. Chad gets the other 20 percent. "In the early days we were made to look very, very, very bad," Edmond said. "We want to bring value to the industry."

Also doing its bit to bring value to the $1.8 billion industry is Babenet.com, a company based in Beverly Hills, California that owns hundreds of adult websites. Several customers have linked a dialing program, called FreeSex_live.exe, back to Babenet.

Laurie Swenson of Crookston, Minnesota, said she ended up with FreeSex_live.exe by leaving her 13-year-old son alone with the computer. She only discovered that he had downloaded the dialing software when she logged onto the Internet and found that her home page, search engine, and email signature had been hijacked by a site called GoHip.com. Another user who wished to remain anonymous said he "was cruising the curious path, you know, the 'free passwords' sites" when he ended up with GoHip all over his computer and FreeSex_live.exe in his hard drive.

GoHip.com and Babenet.com are both hosted by Alchemy Communications. Alchemy Communications once featured GoHip.com at the top of its "featured clients" page, but has since removed all traces of the company from its site. Calls to Alchemy's president, Nolan Quan, were not returned. But Robert Gould, a spokesman for Alchemy, GoHip, and Babenet, said he had never heard of the freesex_live.exe program, and kept a close eye on Babenet. "I watch what they do and how they do it," he said. "If Babenet was doing that, I would certainly have a problem."

(Editor's Note: In the original publication of this story on April 14, Nolan Quan was incorrectly identified as the president of Babenet. In fact, he is the president of Alchemy Communications. John Gallagher is the president of Babenet, according to documents filed with the California Secretary of State. Wired News regrets the error.)