Hitting the Jackpot

March/April 2007 Issue: Page 120

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In the online marketing game sometimes you win big and other times it's a total crapshoot.

CPA Empire CEO Scott Richter won $60,000 while in Las Vegas attending the Affiliate Summit. Of course, he had to spend $20,000 to get the $60,000 payout. The windfall came at a good time since Richter was slapped with a hefty lawsuit by MySpace, which claimed Richter promoted websites that sold ringtones, clothing, TMobile Sidekick 3 devices and more with spammed messages sent from one MySpace user to another.

Basically, this practice made it look as though a friend on MySpace was showing you a link to get a ringtone when that friend didn't actually send the information – Richter, the self-proclaimed "spam king" did.

The lawsuit, filed in the Central District of California, claims Richter's companies (OptInRealBig.com, CPA Empire.com and Media Breakaway) arranged for millions of bulletins to be sent through MySpace during the last six months of 2006. MySpace also claims Richter is in breach of contract and unfair competition, specifically saying the defendants violated The Computer Fraud and Abuse Act, The CAN-SPAM act, The Electronic Communications Privacy Act and California's Anti-Spam Statute.

In 2004 OptInRealBig.com and Richter reached a settlement with then- New York Attorney General Eliot Spitzer in another spam-related lawsuit. Richter subsequently filed for Chapter 11 bankruptcy in 2005.

There are others that may also have some issues with the feds. Several folks in the online marketing space received knocks on their doors in early February. It wasn't thugs threatening harm (see Revenue January/February 2007, page 86), but rather, agents working for the Office of the Attorney General for the state of Florida in search of information about shady affiliate marketers. Azoogle and Jon from the WickedFire.com forum reportedly received visits. Jon had two agents from the Florida AG office and two from the New York AG's office.

The feds are looking to bring to justice those involved in questionable marketing efforts related to ringtone offers, including CPA networks. The bad behavior includes cramming (adding charges without consumer's knowledge), manipulation of landing pages and deceptive marketing offers that claim products are free – even when there is a fee charged.

If you know anything at all, contact Robert Schara, a financial investigator for the Office of the Attorney General for the state of Florida, who can be reached at robert_schara@oag.state.fl.us or at 850-414-3300.

And speaking of bad actors…. Overstock CEO Patrick Byrne speaking on last quarter's conference call: "We have been through tough times. '06 was a wipeout year. And there was a lot of pain, but a lot of it – all the pain of tightening the belt and resizing our expense structure, we got our infrastructure fixed, but our expense structure still isn't there. But we have already taken steps at the end of the year and the first part of this year. We have made most of the decisions and made some of the changes. And there is – we just have to carry them out in the next few months." One of the plans for the future is to add social media tools to its site.

Getting social is one of The Spider's favorite pastimes, and the Affiliate Summit was a perfect place for that interaction. With more than 2,000 attendees, I ran into lots of old friends and familiar faces in Vegas. Unlike the neon of Sin City which keeps shining brightly it seems like the star power of some early affiliate-marketing leaders has dimmed a bit. Jeff Molander didn't attend the conference after a bit of a fallout with event co-founder Shawn Collins over emcee duties. And Riya.com's Beth Kirsch, once the self-proclaimed maven of the affiliate space, seemed very low profile. Maybe that's why she hasn't made a blog entry on ReveNews.com since mid-December.

Being in the loop is crucial. If you're not, you might end up caught off guard like TaxBrain.com, which was less than thrilled to see that Commission Junction had brought a couple of other tax-related companies (read: big rivals) including Turbo Tax into the network fold.

Keep me in the loop by sending some hot industry gossip or juicy information my way. I want the real dirt and if I use your tip in the next column, I'll send you a Revenue T-shirt. Email me at TheSpider@RevenueToday.com or call the hotline directly at 415-732-7456.

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