Law to Control Online Porn Creates Strange Bedfellows
On a dusty strip of auto body shops and plumbing suppliers in the San Fernando Valley is a little-known company that occupies one of the most embattled, contradictory and profitable corners of the Internet.
For thousands of online porn sites, Cybernet Ventures Inc. is a meal ticket, a source of millions of dollars in revenue. For the government, it is a potential solution to the Internet pornography problem. And for just about everybody else, it is the latest example of how difficult it can be to apply a technological solution to a social problem.
Over the last three years, privately held Cybernet has become the leading age verification system on the Internet. Through its Adult Check system, it uses credit card accounts to guard about 50,000 adult Web sites, purportedly keeping children out while letting more than 3 million paying customers in.
How to shield children from pornography has long been one of the thorniest issues on the Net. The main question is whether the onus should be on parents, as civil liberties groups believe, or on the sites themselves, as Congress proposes.
Cybernet was born during the federal government’s first attempt to outlaw pornography online, the Communications Decency Act of 1996, which was overturned by the U.S. Supreme Court in 1997. And now the company has emerged as a central player in the government’s second attack on online smut.
The Child Online Protection Act, signed by President Clinton last year and now being challenged in a federal court in Philadelphia, is practically an endorsement of Adult Check. The law would require all commercial Web sites--even those not in the pornography business--to use Adult Check or another service like it to protect children from material deemed “harmful to minors.”
Justice Department attorneys have gone so far as to call Laith Alsarraf, the 29-year-old founder and chief executive of Cybernet, as one of the lead witnesses in their efforts to uphold the law.
Alsarraf obliged, partly because he says he believes his system works, but perhaps also because his company stands to reap a windfall if the Child Online Protection Act is upheld.
“If this law were to go through, I think it’s pretty obvious it would help our business,” said Alsarraf, a UCLA dropout who scrapped his struggling Web site design business to launch Cybernet. “I don’t know if the Child Online Protection Act is the right thing or the wrong thing. But something needs to be done, and we provide a valuable service.”
Critics Note Contradictions
To the company’s critics, however, Cybernet contributes more to the problem than the solution.
“The government wants to shut down porn on the Net,” said Ann Beeson, an American Civil Liberties Union attorney leading the effort to overturn the law on the grounds that it is an unconstitutional restraint on free speech. “And yet their main witness is this guy who makes his money urging more and more people to access porn on the Net.”
Justice Department officials said Alsarraf was called as a witness because of his expertise.
Dozens of companies are in the age verification business, but Adult Check is by far the largest. The company sells passwords that enable users to gain entry into any adult site that uses the Adult Check system. A one-year password sells for $19.95, two years for $29.95, and a lifetime membership is $76.95.
To obtain a password, a person needs to fill out an online application that asks for a name and address. A valid credit card number is all it takes for an applicant to show that he or she is an adult.
Critics say that is a dubious means of checking someone’s age. Children can swipe their parents’ cards, they say, or even find Adult Check passwords illegally posted on “free password” sites proliferating on the Net.
Alsarraf acknowledges that the system is imperfect but says watchful parents will spot the charge on their monthly bill. The company has software to root out invalid credit card accounts and bootlegged passwords, he said, but declined to elaborate, saying the systems are proprietary.
In any case, Adult Check is good enough as far as the government is concerned because if the Child Protection Act is upheld, it would only require that firms make a good-faith effort to check the ages of users.
For now, Web sites are under no legal obligation to verify users’ ages. Thousands do because it’s how they get paid.
As part of an elaborate sales commission system, Adult Check passes along about half the revenue it collects to Web sites according to how many new members they refer. Every two weeks, the company sends thousands of checks to Web sites across the country, and even some overseas.
Becoming an affiliate costs nothing. Web site operators simply fill out an online form and place the Adult Check banner on their site. Cybernet handles everything else, including providing the software that keeps users from accessing protected pictures without a password.
Clients say Adult Check has become the dominant player in age verification largely because it is an honest business in a largely dishonest industry.
“A lot of companies in this business rip people off, never pay up and give out false hopes,” said Andy Mills of Phoenix, who operates 10 adult Web sites. “Adult Check always sends out the checks on time.”
Mills said he is collecting about $6,000 a month from Adult Check, and other Web site operators claim to be clearing many times that amount.
Cybernet and Alsarraf--who comes from a family of physicians and attorneys--aren’t doing badly, either. In late 1997, he paid $690,000 for a house in Pasadena, property records show. And last year, he and his 25-year-old business partner, Vardan Sarkisov, bought a pair of Hummers, four-wheel-drive military vehicles that sell for up to $100,000 each.
Alsarraf declined to say what Cybernet’s revenue was last year, but several of his competitors say it probably topped $50 million.
Though the bulk of that money comes from the Net’s burgeoning sex trade, Alsarraf prides himself on running a clean, debt-free company that happens to have business ties to the porn industry.
“Look at our Web site,” he said, “there are no dirty pictures there.”
Nevertheless, operators of non-adult Web sites don’t exactly relish the notion of using Adult Check or any other age verification system. For example, the law could be interpreted to cover sites that give information on safe-sex practices, or even news stories about independent counsel Kenneth Starr’s report.
Non-Adult Sites Fear Barriers
The operators are reluctant to use the verification system partly because of the stigma, they say, but also because they fear any barrier in front of their site would send customers scurrying away.
“For small companies like ours, it would be a disaster,” said Rick Groman, president of West Stock Inc., a stock photography company based in Seattle that could conceivably be affected by the Child Online Protection Act because a few of the thousands of photos posted on its site contain nudity.
Launched several years ago, the Web site has come to account for about one-third of the company’s $3-million annual revenue.
“Were we to put up entry barriers now,” Groman said, “I’m sure we’d see a 30% to 50% reduction in the number of people willing to look through our site.”
Studies show the drop-off could be even more than that, said Donna Hoffman, an Internet researcher at Vanderbilt University. Her own surveys of thousands of Net users, as well as research done by other institutions, show that 75% of people refuse to register to get into non-adult Web sites, much less pay for a password.
Just last week, the online magazine Slate abandoned a yearlong effort to charge users after readership shriveled.
Groman and Hoffman were among the businesspeople and experts who testified against the Child Protection Act in a Philadelphia court several weeks ago. After a four-day hearing, a federal judge blocked enforcement of the law until its constitutionality is determined.
Alsarraf’s success puts him in the contradictory position of profiting handsomely from the porn industry, yet claiming--with some plausibility--to be a protector of children.
ACLU attorney Beeson and others scoff at that semblance of nobility, saying Alsarraf and his company have helped fuel the Internet porn industry’s growth.
Thousands of adult sites might not exist, they say, if Cybernet had not made creating such sites an almost effortless proposition. Adult Check also drives traffic to these sites by listing them on a links page. Many of these offer graphic “teaser” images for free.
Alsarraf has taken steps to move his company away from its dependence on porn, launching a Web hosting service, for instance, that he hopes will appeal to non-adult sites.
But Cybernet has also recently introduced other services, including Adult Check Gold, designed to appeal to larger adult Web companies. So while Alsarraf said he will be watching the courtroom odyssey of the Child Online Protection Act, he says he’s not fretting the outcome.
“I know Adult Check will flourish,” Alsarraf said, “with or without the law.”
*
INTERNET SHOPPING
E-commerce is reshaping retailing, but the challenge is turning traffic into sales. C1
