Inkwell: Authors and Artists

    
But in a good cause... back to Gary's book...
  

    
"Firehoses of eyeballs!"  Cringingly ugly for the relationship between
writers and readers, but a clear creepy image of what advertisers wish to
buy.
  

    
Well, you know, advertisers are not paying money just to subsidize a
place for writers to vent and blather. They are, actually, in the
business of selling products. People who work for non-profits have as
hard a time understanding that as they do understanding why their
paychecks are so small.
  

    

If you're reponding to my post, you may be misreading me.  I agree that
the mixed metaphor is ugly... I further noted that the image is creepy.  
I meant the mental picture of a flood of bloody eyeballs blasting out of 
a big tube is hideous.  Otherwise it is a clear description of the force
that keeps paychecks coming for an awful lot of writers and artists.  
A mixed metaphor both creepy and clear.  
  

    
That word 'products' is disgustingly material, bos. What we sell is what 
people value. Some of us sell vibes...
  

    
Did any of the secret society stuff make it into the book? (I haven't
had a chance to read it yet).
  

    
Secret society stuff, huh?  
  

    
It's in the book, but it's in code. You have to take first letter of
every sentence (clue: start from the back) and by solving the pun that
emerges you derive an acronym for the - nope, that's all I'm saying. I
don't want to make it too easy.
  

    
You know, the GBN/Tri-Lateral TIA satellite is picking up this entire
conversation. Be careful what you say, or you'll be disappeared,
perhaps winding up underground in The Camp, three miles 'neath the
playa, where you'll be forced to eat ecstasy and memorize Schumpeter
while bass 'n' drum music throbs through the walls of your cell in an
infinite loop.

Of course, The Camp is....only legend.
  

    

'Since I was the host of the wired conference on the WELL at the time that
 memo was leaked, I had a considerable case of agita from it, particularly
 when the Wall Street Journal or whoever it was declared that Louis had
 "posted" the memo "on the Internet."'

Steve, apart from the question of whether the technical details are right,
there is no legal question at all that Louis had no business posting that e-
mail even if his intention was to limit its reach to Wired employees.

That's because a sizeable number of Wired employees were, as the result of
options packages if nothing else, *potential investors in the stock.*  The
SEC has very stern rules about talking to investors in this way during the
quiet period. Rules whose violation gets you sent to jail, as likely as not.

And, of course, as Gary intimates here, and states more expressly in the
book, Wired's TV division was in nowhere near the shape that Louis
characterized it as in the email. Whether there are other disputable facts
stated by Louis in the memo (I've been told there are others) I cannot
testify with any certainty, but I knew with my own eyes that (a) the TV
division was in a shambles, and (b) there was more deceit, backstabbing, and
straight-up ill treatment of people going on at Netizen TV than I
experienced in a whole year of investigating and uncovering the Marty
Rimm/Cyberporn scandal. To be frank, it was one of the most disheartening
experiences I ever had, and I'm one of the few who walked away with any
money (although far less than I had been offered).

Had the IPO gone forward, with investors' being told that a potentially
profitable TV division might bolster the coffers of an otherwise iffy media
company, we know with reasonable certainty that the SEC would have taken
more than the passing interest that it did. So stalling the IPO, oddly
enough, may have cleared the path both for Louis's staying out of jail and
for his and Jane's eventual cash-in.

It is believed by some, I think, that Gerard's leaking of the e-mail created
the fiction that Louis acted illegally by posting it.  As a legal matter,
however, Gerard's reposting of it *made public* the fact that Louis had
*already* acted illegally.

We need not decide whether Louis knew he was doing so, or whether he
thought he was pushing the envelope of legality, or whether he simply had
no clue of how stupid a thing the e-mail was.  We need only consider that
there is enough puffery and falsehood in the e-mail that he sent to give 
even the most sanguine SEC regulator a _frisson_ of surprise.
  

    
Thanks for that perspective, Mike.

While I completely agree with you, I doubt the illusion that "Lou" had 
"posted" his statement to "the Internet" contributed anything to a 
clear-eyed appraisal of Wired's situation -- or Louis' *crime*, if that's 
what you believe.  And the way the memo was leaked certainly maximized 
the illusion.  

But it's all water under a bridge that washed away a long time ago.
  

    
Does that mean I can have some stock options?
  

    

I suppose I actually technically still own some, in the Tom Verlaine sense
-- souvenirs from a dream.

Steve, not all violations of the quiet rule are a crime.  But a violation
that bolstered misapprehensions about the company's worth, that contained
material misstatements on which investors might relay -- well, that's like
asking for three-year vacation in Club Fed.
  

    
I'm missing the material misstatements in that email about the future
profitability of Wired TV, but then I'm not a securities lawyer.
  

    
"-- souvenirs from a dream."


Beautifully put.
  

    

It helps that I think Tom Verlaine plays guitar like Captain Marvel.
  

    

'I'm missing the material misstatements in that email about the future
 profitability of Wired TV, but then I'm not a securities lawyer.'

I believe you will find explicit statements to that effect in the Wired
Ventures prospectus.

But the issue wasn't so much an express statement that Wired TV would soon
be profitable as it was the significance of including Wired TV at all. At
heart, Wired was a media company. Media companies are not wildly profitable
the way, say, certain tech startups are. There is, however, a tried-and-true
method of making your media IPO look like a winner -- it's to include a
TV/broadcasting division and stress that it will be a dynamic component
of the whole enterprise. TV (and to a lesser extent radio) make money hand
over fist in comparison to mere magazine companies.

But all this might have been mere speculation were it not that, to those of
us who were watching the development of "Netizen TV" first hand, it was
apparent that the first episodes at least were being crafted as a glorified
road-show video *right at the time of the second effort at an IPO."
Interviews and guests were heavily scripted and edited so as to say wildly
optimistic things about new media (which, by merest coincidence of course,
happened to be the core business of the recently reconceived Wired
Ventures).

Plus, Louis made no secret of hating television. I've done enough TV to know
that you could love TV immensely and still make bad or unwatchable
television -- to hate it dooms you to to bad TV for sure (which by all
accounts Netizen TV was).  So you had to figure out why it was that the
whole operation was being run so insanely, which so much editing that it
looked like a commercial of testimonials for Wired's vision of the future.
The obvious inference was that the product was aimed not for MSNBC's general
audience but for investors, especially the institutional investors whose
subscription would make Wired Ventures a viable company on its own.

In short: Wired plus Hotwired plus TV = something worth investing in.
In short: the actual first episode of Netizen TV = buy into the digital
revolution (a road-show video, in effect).

In short: If this is what you're doing, you sure as hell don't let network
execs like Andy Lack come and actually *look* at your process and product.
  

    
I'd just like to pop in to say that, having read the first four
chapters this morning, the book is quite splendid. Very good job, Gary.
  

    
Stupid as it was to send the email in the first place, it would have been
even stupider to attempt to "buck up the troops" in the face of external
criticism by praising the efforts of the various groups (magazines, books,
online) while conspicuously leaving out TV. Even if you believed TV only
existed as a commercial for investors (if it was, it was the worst produced
commercial in television history).
  

    
I don't understand what is unusual about the email that it could
potentially result in a jail term.  The employees of most companies are
potential investors in the stock.  And yet it's not uncommon for
management to say misleading things about the company's bright
prospects to employees.
  

    
Thank you, Gerard. 

On the other topic, I think, Mike, that your sense of illegality and
the risk of a 3-year federal prison term is exagerated. But as the case
of Martha Stewart demonstrates, it is not always the big sinners that
get the big punishments, so perhaps Louis would have made an ideal
scapegoat for the bubble, had Wired actually become a public company. 
  

    
I have recently gained a strong admiration for IBM's agressive
attitude to encryption followed by authentication to assert, protect
and ensure confidentiality and defense of property rights as copywrited
and subsequently the defense of the privacy of information in e-mails
especially insofaras controlling the subsequent disposition =/! destiny
of a sent e-mail.

So many have the attitude/claim that e-mail's aren't private!
  

    
+/! (and or)
  

    
As an interesting aside, I note in reading the book that Louis was
employed ghosting the book about Caligula, Ultimate Porno, in Rome at
about the same time I was employed in overseeing postproduction work on
the film in London.
  

    

'Stupid as it was to send the email in the first place, it would have been
 even stupider to attempt to "buck up the troops" in the face of external
 criticism by praising the efforts of the various groups (magazines, books,
 online) while conspicuously leaving out TV.'

The email would have been equally stupid in either case.

'I don't understand what is unusual about the email that it could
 potentially result in a jail term.'

Then you don't understand the terms of the relevant SEC regulations.

'On the other topic, I think, Mike, that your sense of illegality and
 the risk of a 3-year federal prison term is exagerated.'

Perhaps you do, but somehow it seems unlikely that you have given much time
to the subject of Securities Act violation. Me, I took a course in it in law
school and aced the fucker. And that was just for starters.

And what did I learn? Just this:

Much that can get you in trouble under SEC regulations makes no sense. So
you may say to yourself, no way could Louis's innocent little e-mail
constitute the kind of quiet period violation that could earn him jail
time.  Sorry, but the law is not designed to make sense to you.

"Quiet period" doesn't have little exceptions to buck up the troops. It
has few exceptions, period.  For an example of how the period can be
handled properly, see Scott Rosenberg's postings in the runup to the Salon
IPO.  He was careful to steer clear of saying anything about the ongoing
success or likely profitability of the Salon enterprise, even when he
acknowledged that, well, he was still working there and expected to be
working there next week and next month.

Plenty of people have gone to jail fueled by the glib notion that their
well-intended little violations of the rules couldn't *possibly* lead to
time in Club Fed. Hell, they even asked a lawyer or two about it.
Those people often get to spend time in orange jumpsuits.