Wednesday, October 6, 2010

Digital Entertainment Network

A report on six weird weeks spent at the infamously mismanaged Digital Entertainment Network.

Time in the DEN of Iniquity - May 5th, 2000
By Matt Welch, OJR Staff Writer and Columnist

This column is being written on the theory that Non-Disclosure Agreements can be ignored once the involved company declares its intention to file for bankruptcy and its founder is busy fending off sexual harassment lawsuits from teenage boys.

For six bizarre and lucrative weeks last year I was a consultant for the Digital Entertainment Network (DEN), which during my tenure exemplified and embraced every possible New Economy buzzword then fashionable. It was a "broadband" company right as high-speed Internet access was supposed to take off, it was aimed at "Generation Y" just as that huge demographic's buying power was beginning to attract notice, and it was a cutting-edge "convergence" company blending dot-com trendiness with Hollywood pizzazz.

What this meant in practice was a batch of largely embarrassing original fiction programs. There was the T&A howler "Frat Ratz," and the Mexican-gangbanger soap opera "Tales from the Eastside," where the troubled L.A. barrio teens began every sentence with "Yo! Ese!". All of these were Web-broadcasted within postage-stamp-sized browser boxes, totally unwatchable on 56K modems. Still, Microsoft and Chase Manhattan were among the high-profile investors, Ford pledged "millions" in advertising, and the L.A. Times and USA Today were busy out-gushing each other about the company's prospects.

I was brought in 13 months ago at the suggestion of a good and talented journalist friend of mine, to help out with planning for the news division. Like all visitors to DEN's swanky Santa Monica converted warehouse, I had to sign a lengthy legal contract just to walk in and say hello.

That, and what passes for my sense of common decency, are what has kept me silent about my brief glimpse of an office that has since become synonymous with "New Media" decadence. The full rise-and-fall story has and will continue to be written elsewhere, but my sliver of an experience can hopefully provide a few lessons about what not do with an internet start-up. For instance, it is probably bad form to hire scores of people every month at outrageous salaries for a company that changes its fundamental strategy each week, and it is never -- ever -- a good idea to put your company in the hands of a guy who looks like George Stephanopolous.

The first indication that I didn't exactly belong came even before I set foot in the office. I arrived 20 minutes early for my job interview, so I parked and took a couple of laps around the block to kill time. When I returned, a half-dozen unnervingly confident and well-dressed twentysomethings were gathered around my 1988 K car, pointing and talking as if regarding an alien spacecraft. I glanced around the parking lot for the first time, and realized why: not a single car besides mine dated back later than 1998, convertibles outnumbered SUVs, and easily half the vehicles had sticker prices higher than $50,000.

After signing the complicated legal documents and waiting for a while, I was ushered into an open warehouse room, divided by two shark-fin style curved barriers that separated the young and tattooed "interactive" division from the more sober-looking news and marketing people. One of these introduced me around, took me into a small office, and began talking in vague but exciting language about being "a cross between CNN and MTV for the Internet Generation," and "tearing up all the old rules."

That sounded fine to me, and by the end of the conversation I was the new Managing Editor of NewsDEN. The next day I was offered more money per week than I had ever made in a single month. "We're all taking a pay cut to work here," I was told sympathetically. I tried to look disappointed.

The day after that, I was fired.

Well, not fired, but "unhired," by the boss of the person who hired me. I soon learned that there were literally dozens of shifting political factions, ongoing turf wars, people openly lying to each other about what they were being paid to do and so on, much of it (according to the people there) based on the "management style" of a certain David Neuman, the aforementioned Stephanopolous clone who was president of the company, overseeing the "content" division, of which I was apparently supposed to work. The hiring and unhiring of new employees was like an underhand rag-toss into the cyclone that was thrashing around just under Neuman's unwatchful eye.

So, David Neuman -- think freshly washed jeans, tucked-in button down shirt with the sleeves rolled up, bright new sneakers -- apparently made his fame at Channel One, the controversial "cable-in-the-classroom" company which broadcasts fairly hip yet suitably public-affairs news and information straight into junior and senior high schools, making its money. This version of Yahoo, he said, would be filled with all kinds of travel info, career guidance and job listings, news, record reviews, entertainment fluff, etc. -- every last bit of it produced in-house. "We're going to be just like local TV news, except we don't have a geography! We just go to the places they want us to go, and we bring them the story! We just need to be more, more ... more interactive!"

I pointed out that this much original content would be very expensive, and suggested that one thing kids sometimes like is to be given recommendations about other useful and interesting Web sites. Neuman cut me off with a laugh and condescending sweep of his little hand.

"I don't think we need to be sending people away from our site! I don't think that's how we make money!" "No! Definitely not!" said the chorus, laughing with him at my stupidity. "Look, as soon as we're as big as Macy's, then we'll tell people how to get to Gimble's! I'm concentrating on getting as big as Macy's!"

I almost crashed my car on the way home, intentionally.

Within another week Neuman's idiotic no-links dictum was overruled by founder and then-chairman Marc Collins-Rector, the guy who had resigned after settling a lawsuit alleging he had a sexual relationship with a 13-year-old boy. I probably only saw the guy once, and don't remember much. The general rumor was that he was a rich Internet early-adopter, who made a small fortune with an ISP called Concentric Networks.

According to the various news reports that have picked the meat off DEN's bones the last few weeks, the aptly named Collins-Rector had an unfortunate habit of paying himself, Neuman, various teens and other managers seven-figure salaries, astonishing amounts for a start-up. There was a palpable culture of extravagance inside the warehouse. Six-figure salaries seemed pretty commonplace, and the 23-year-old green-hairs I'd bum cigarettes off of had that slightly fattened look of children who have always known they were put on earth to receive stock options and buy Lexuses. Meanwhile, the whole expensive herd was multiplying at a rate faster than one new employee per day.

Whenever I stepped outside of my extremely narrow working group, meaning me and the guy who brought me in, any spending or hiring number I suggested was almost automatically doubled, followed by comments such as, "Spend the money! It's not yours, after all, and they've got tons of it!" Almost every person I met there, including superiors, talked actively of keeping side-jobs open "if and when this thing goes down in flames." In my infrequent walks across the office floor I'd constantly eavesdrop on discussions about launching competing companies.

I have never worked at a television company, or in a dot-com office, or even in any newsroom larger than 40 people, so it is likely that I am naive about such things. But the atmosphere in DEN's warehouse could only be described as poisonous, or at least soul-killingly cynical. I couldn't even imagine explaining to the DEN crowd about things like, which for two years convinced more than a dozen great reporters around the world to fill up a daily news hole for free. I could never understand, and I soon stopped asking, how such a rancidly political and secretive organization could produce anything like a "New Paradigm" in the delivery of news, let alone in the strategy of content companies.

At the end I did my work, hopefully earned my money, and even co-delivered a presentation to the Maharishi, who loved it and asked when I was starting. I must confess that it was a very difficult 24 hours pondering an annual salary that would top what I have earned, total, in my entire life. But not really.

By the end of the year most of the smart people I knew there had already departed of their own volition, restless from being overpaid yet underempowered to make the kind of changes for which the place screamed. I still run into former employees now and then, and there is a general shaking of heads and sharing of horror stories. Many of them will even tell you that DEN was actually a great idea with some great people, just a bit ahead of its time and plagued by foolish, free-spending managers.

My personal theory, for what it's worth, is that Web sites looking to make real money either need to (a) be Yahoo, (b) sell porn, or (c) start small, and win a damn following. There is a dirty little secret about content companies: popular, scaled-down sites like Suck, CapitolHillBlue, and TheSmokingGun all make money, as in that stuff left over after the bills are paid. Meanwhile, heavily staffed, venture-backed heavyweights like Salon,, and APBNews are bleeding money like hemophiliacs. Internet advertising is quietly tripling every year, providing a perfectly reasonable means for smaller operations to cover their costs. Meanwhile, the funding bubble for money-losing content companies is probably over.

DEN, regardless of its founder's appetites, tried to spend and bluff its way to a huge audience from the top down, hiring a huge staff at exaggerated salaries while inventing strategy on the fly. Yet since going live a year ago, it has never even cracked PC Data's top 1,500 list of most-trafficked sites, unlike, say, The Hamster Dance.

I'm guessing we will look back at DEN 10 years from now as a symbol of an era that will then seem unreal -- when any old teevee idiot could spout New Media cliches at least five years out of date, put together a staff of sycophants and plotters, and be rewarded by investors with $65 million to waste on 12 months of Webcasting, all because people back then placed monster bets on business buzzwords rather than on the people or products pretending to operate by them.

I was fortunate to have the opportunity to see what Rome must have looked like as it burned.