Leaving Reality Behind: Inside the Battle for the Soul of the Internet

Adam Wishart and Regula Bochsler

For our friends and family, and for Julian whose delivery date was the same as the manuscript.

Contents

Cover

Title Page

Dedication

Prologue

1 Discovering a New Toy

2 Leaving Reality Behind

3 Kool-Aid Kings and Castles in the Air

4 ‘This is a Digital Hijack’

5 Young, Fun and Full of Creative Juices

6 Go West, Young Men

7 ‘To Infinity … and Beyond’

8 The Phantom Menace

9 A Conviction or Half a Million Dollars

10 Toywar

11 Game Over

Appendix: Share Holdings

Bibliography

Acknowledgements

Index

About the Author

Authors’ Note

Praise

Copyright

About the Publisher

Prologue

At 8.30 a.m. on 29 November 1999, seven lawyers arrived for a hearing on the fifth floor of the Los Angeles County Courthouse. They waited at the back of Department 53, a small, wood-panelled courtroom, for the judge to call the hearing to order. In preparation for this day, these lawyers had spent months submitting hundreds of pages of evidence and arguments to the court. Those on one team had determinedly manœuvred to prevent the hearing taking place at all; those on the other had offered increasing amounts of cash for a speedy resolution of the case. Now their arguments were to be heard in open court.

The plaintiff was a corporation, based ten miles away on the Californian coast in Santa Monica. The firm was personified by the character of its founder, Chief Executive Officer and archly self-described Uncle of the Board, Toby Lenk. This bald, slouch-shouldered thirty-eight-year-old had a fondness for mimicry and silly voices, and such a passion for work that at the time of the hearing he had gone for three years without taking the time off even to buy himself a pair of shoes. He had built his corporation – a toy shop – in less than a thousand days, with the dream to make life easier for parents and relations the world over. Like a fairytale come true, it was now worth $8 billion, and a darling of Wall Street. It was considered to be among the best companies of its kind and Lenk had filled it with only the smartest people, who between them could pack a trophy cabinet with their business diplomas from some of the world’s most prestigious universities. The Monday morning of the hearing followed a gang-busting Thanksgiving weekend during which Lenk’s toy shop had sold record numbers of Barbie Dolls and Star Wars figurines. Toby Lenk, it seemed, could do no wrong. The powerful global brand that he could proudly call his own was eToys.

The defendants had proved tricky to pin down. Indeed, eToys’ lawyers had failed to serve these renegades with all the necessary papers. They were supposedly at large somewhere in Europe; at the time of the hearing one of them, who calls himself agent.ZAI, was in the dank basement of a scruffy townhouse in a run-down neighbourhood in Zürich, Switzerland, eagerly awaiting news.

Physically as well as materially, the opponents were worlds apart. They were never to meet.

Zai was then a slim, diminutive, brown-haired twenty-eight-year-old who over time had nurtured his growing reputation in the arcane world of digital art. Meticulously he had constructed an art project that satirised the dot-com frenzy. Even before Lenk’s toy shop sold its first Mr Potato Head, Zai had described himself as the Chief Executive Officer of a group called etoy and behaved as if he was the leader of a global corporation. But in reality etoy had no employees and little corporate infrastructure. It did have a logo, a brand and a Web site and it sold a series of graphic posters that its members called ‘shares’. There was some seriousness to this apparently comic endeavour; it held up an intriguing mirror, as only art could, to a corporate and financial world that was being seduced by its own cheerleading. The etoy vision had been lent credibility and support beyond that received from the art world – even Austria’s Chancellor Viktor Klima had bought shares.

The legal suit filed by eToys in the Los Angeles Superior Court attacked the entire edifice of etoy’s ludicrous ‘corporate’ venture – its brand, trademark and greatest achievements – in a desperate attempt to shut down the artists’ Web site. Absurdly, the world’s most valuable toy shop had launched an explosive battery against the chimera, accusing etoy of ‘unfair competition’.

Neither Toby Lenk nor Zai made it to the courthouse. Lenk was busy finalising a deal to raise a further $150 million from his investors. Zai had not managed to get a flight to Los Angeles from Zürich over the busy Thanksgiving weekend. In any case, he had been advised that were he to step foot in America he might be arrested for securities fraud, one of the most heinous crimes against capital.

The details of how etoy and eToys built their respective companies and brands say much about the divergent histories of the Internet. On one hand was a new and fragile corporation that Wall Street pushed into the clouds. There eToys perfectly surfed a wave of euphoria about business and the capital markets, inspiring almost devotional loyalty because of the wealth the company created for its investors and employees and because of its customer-pleasing service culture. etoy, on the other hand, was a conceptual-art project that brilliantly summed up the times. It inspired a community that personified the Internet’s alternative history and was uneasy with its eventual corporate colonisation.

Both parties had spent years skilfully positioning themselves to benefit from the Internet goldrush. Now their values – monetary and moral – were clashing.

The conflict not only expressed the divides and fissures that had developed since the formation of the Internet; it also turned on an altogether larger dispute, concerning the very identity of the Internet. The reason for this acrimonious and hard-fought battle was a single, 250-line document now kept in a guarded, bomb-proof room in Herndon, Virginia: the key to the map of the Internet itself, through which domain names – Internet addresses like amazon.com or 4thestate.com – are controlled. The consequences of the domain battle were to play a central and decisive role in the Los Angeles courtroom.

By 10.30 a.m., Judge John P. Shook had stated his judgment. But this was not to be the end of the war …

1 Discovering a New Toy

‘The new artist protests, he no longer paints.’

Dadaist artist Tristan Tzara, Zürich, 1916

On the balmy evening of 1 June 1990, fleets of expensive cars pulled up outside the Zürich Opera House. Stepping out and passing through the pillared porticoes was a Who’s Who of Swiss society – the Head of State, national sports icons, former ministers, and army generals – all of whom had come to celebrate the sixty-fifth birthday of Werner Spross, the owner of a huge horticultural business-empire. As one of Zürich’s wealthiest and best-connected men, it was perhaps fitting that 650 of his ‘close friends’ had been invited to attend the event, a lavish banquet followed by a performance of Romeo and Juliet.

Defiantly welcoming the grandees were 200 demonstrators standing in the square in front of the Opera House. Mostly young with scruffy clothes and punky haircuts, they whistled and booed, angry that the Opera House had been sold out, allowed for the first time to be taken over by a rich patron. They were also chanting slogans about the inequity of Swiss society and the wealth of Spross’s guests. The glittering horde did their very best to ignore the disturbance.

The protest had the added significance of being held on the tenth anniversary and in the same spot as the first spark of the city’s most explosive youth revolt of recent years, The Movement. In 1980 the Opera Riot was started by young people returning from a Bob Marley concert, and ended with barricades on the street, burning cars and police firing teargas and rubber bullets. The television pictures came as a shock to Switzerland’s staid community. In the following months The Movement staged many demonstrations, some of which also resulted in riots, as they made their demands: an end to the country’s ‘oppressive’ drugs policy; the introduction of a cultural policy that did not exclude the young (as the Opera did); and the funding of an ‘autonomous’ youth centre. The anti-consumerist protests were often wrapped in humour. Their chants on demonstrations included the Dadaist ‘Turn the State into a Cucumber Salad’ and ‘Down with the Alps, for a direct view of the Mediterranean!’ The demonstrations climaxed when 200 naked young people marched down Zürich’s Bahnhofstrasse, one of the world’s most exclusive shopping streets. The atmosphere was edgy, the crowd shouting, ‘We are the dead bodies of the cultural life of this city!’

Ten years on, the demonstrators outside Spross’s party lacked the impact of the previous generation but shared their spirit. They hung around in small groups, rousing themselves at the arrival of each new limousine.

One individual stood out from the crowd. Seventeen years old with carefully spiked blond hair, he wore a scruffy black leather jacket emblazoned with the words ‘Nazis Raus’ – Nazis Out – and bright-green Doctor Marten boots he had customised himself. The young man Herbert (though he later adopted the name agent.ZAI) was spotted by a producer from Swiss National Television who was on the talent trail for the youth programme Seismo, which needed reporters and presenters. When approached, Herbert railed against the authorities and talked about his involvement in the Students’ Union that he helped run at his high school. He was invited to a casting, where his fast-talking wit quickly secured him a starring role.

Herbert worked for the production for the next year, gaining special permission from his school to attend recordings and meetings. A two-hour discussion programme for young people, each episode covering a single topic, Seismo involved numerous guests, a live audience and band performances. The shows were brash, arresting spectacles that were always staged in strange locations – on one occasion it was set among the machinery at a water-purifying plant. Herbert gave compelling performances, interviewing guests and presenting recorded segments. The contrast between this spirited, jagged young man and Switzerland’s elder politicians and pundits made particularly engaging television.

Seismo taught Herbert much about the inner workings of the media, of which he was a keen and diligent student. The show also brought him a certain kudos. The press described him and his three fellow youth reporters as ‘lively, competent and cheeky’; they were interviewed and had their pictures published in the media, and occasionally Herbert was recognised in the street. During the course of that year he became more self-regarding than he had been before, and dyed his hair black to show off his good looks and intense eyes all the better on-screen. For the first time in his life he had achieved a kind of recognition. In a world where the old and comfortable truths of youth rebellion – the battles between East and West, between capital and labour – were no longer so easily grasped, the delights of the media and the celebrity that it brought were all the more enticing. It was a seduction that, as the years went on, Herbert found himself unable to resist.

At high school Herbert was not having such a good time. His bristling intelligence together with his rebelliousness annoyed his teachers at the straitlaced and traditional establishment that had a reputation as the proving ground for the Swiss elite. So he left, travelling to Basel to attend the most radical of all Swiss schools, the Anna Göldin-Gymnasium, named after the last Swiss witch to have been burned at the stake. The school was anti-authoritarian, governed for the most part by the students themselves, who democratically set and enforced the rules. But even in this most liberal of environments Herbert soon became embroiled in conflicts with both students and teachers. His free spirit did not flourish: without qualifications he moved back to Zürich.

The move left Herbert at a loose end, and by the spring of 1991 he was keen to find a place where he could feel comfortable and use his estimable skills. With a group of political activists and friends he broke into an old gas-meter factory called Wohlgrot and occupied the site. It was situated right in the centre of town, just behind Zürich’s main railway station, and included a cluster of buildings surrounding a courtyard, and a villa where the factory manager had once lived. The place became a popular and heavily populated squat, the most significant of countercultural happenings in the city since The Movement, and its existence was proclaimed by a huge parody of a station sign. Instead of ‘Zürich’, it read ‘Zureich’ – ‘Too Rich’.

During the coming months Herbert spent much of his time in the squat. With a café, a bar, a cinema and a concert venue, the place quickly took on the character of an underground cultural centre; it was illegal, for a start, but perhaps its most subversive feature was the ‘junkie room’, where heroin addicts could go either to shoot up or to receive medical help. But, as with Herbert’s radical school, amid the anarchy at the squat there was conflict. Late in 1991, when the new dance-beats of techno had arrived in the city, the squat’s first rave was held in a basement. A squatter threw a teargas grenade into the crowd in protest because he considered techno too ‘commercial’ for this fiercely anti-capitalist space. Herbert and his friends and everyone else present were forced to make a speedy exit up a narrow staircase. The event turned him against the puritan spirit of the protestors.

As time wore on, the idyllic utopia that Herbert had envisioned became the venue for more and more rancorous arguments. As he remembers, ‘We wanted the villa to be a special place, a nice place, but the others took over and it became dirty and fucked up.’ And so he began to dream of organising something independent, something over which he could wield more control.

Herbert’s yearning for his own thing resulted in his decision to stage a shocking performance. It was the summer of 1992, and Switzerland’s 156 numbers – the equivalent of America’s 1–900 numbers and Britain’s 0898 numbers – had just appeared and had immediately become synonymous with phone sex and pornographic chatlines. Hungry for this latest sordid, circulation-boosting story, newspaper editors had given the subject acres of newsprint, simultaneously titillating their readers with the details of what the phone services offered and condemning the lucrative schemes’ operators. To Herbert, too, this new phenomenon presented a glimmer of opportunity.

He remembers, ‘I wanted to be a pioneer at any price, because everything else seemed to be too boring.’ What he wanted to do was run his own 156 number, to use this very new technology to challenge the hypocrisy of the media and to pointedly shock the culture of the dull, lifeless and extraordinarily wealthy city of Zürich. He loved The Sex Pistols, the British band who in 1977 had reached Number One in Britain in the week of the Queen’s Silver Jubilee and subsequently shocked the nation with their angry lyrics and by swearing on national television. Perhaps Herbert’s scam could do the same. Zürich, after all, had a history of bizarre events. Dada, the art movement that first shocked polite society by performing nonsense poetry, making collages and championing tomfoolery in the face of the horrors of the First World War, had begun here, and went on to influence almost every aspect of conceptual art in the twentieth century.

Herbert also liked the 156 idea because it made him feel like a grown-up. ‘We wanted our own company, our stickers, our logo, our publicity,’ he recalls. The 156 line might even make some money, and he particularly liked the fact that this partly entrepreneurial venture would irritate the pious protestors, the po-faced squatters and the bickering politically correct alumni of his old school, all of whom were critical of any sort of commerce.

Herbert registered a phone line and set about gathering a team to execute the project. He called on his old friend Juri to handle the technology and set up the equipment. Juri was an apprentice electrician, but hated the dull monotony of a professional life that demanded so little of his skills. He had spent his younger years locked in front of computers, trying to break into computer networks as part of the tiny and highly specialised underground world of phone-phreakers and hackers. As he would later prove, he was extremely talented when armed with a computer, a modem and a few bits of elegantly written code. In person he was shy and rather wordless, and computer technology provided him with a way of communicating with the world. At high school, where Herbert met him, Juri shoplifted-to-order computer accessories for his classmates and ploughed the profits back into his enormous phonebills. He was tall and clumsy, with an unmemorable face; his fearlessness was the key to his successful career as a hacker.

Another friend whom Herbert contacted for help was Alberto. Herbert and Alberto’s families had known each other for ever; by 1992, Alberto, two years older than Herbert, was already committed to a career as a student of architecture at the Zürich Technical University. By contrast to the scruffy punks and slackers squatting the Wohlgrot, he was always neat, his vivid dark eyes framed by delicate black-rimmed glasses. Herbert and his friends had nicknamed him Master Proper, the name of a cleaning product. More distant and ultimately more calculating than his friends, Alberto would in the years to come bring a cold, intellectual grounding, the brains to their sloganeering rebellion.

Thomas was the third of Herbert’s friends to be recruited. Tall, with a rectangular-shaped head, he posed as a violent bruiser and loved what he considered to be the glamorous chic of motorbikes and guns. He would happily spend hours cooking barbecues, drinking beer and watching Formula One. However, this muscled exterior concealed a clever soul; Thomas was a gifted storyteller, and laced his deft observations with a dry and inscrutable humour.

The name that Herbert, Juri, Alberto and Thomas chose for their scam was HIRN-lein, meaning ‘small brain’ but in Swiss-German sounding just like ‘brain line’.

Soon the posters they had painted were pasted all over Zürich. They screamed ‘BLOODBATH’ in large print, alongside an assurance to readers that the words had been splattered with real pigs’ blood. Herbert ascribed the action to a new organisation called Verein der Freunde Monopolistischer Märkte (VFMM) – The Association of the Friends of Monopolistic Markets – a joke at the expense of the anti-capitalist squatters.

Anyone who responded to the gruesome poster and phoned HIRN-lein’s l½-franc-a-minute line (about 50 pence Sterling, or 90 American cents) was greeted by machine-gun fire and the screams of a hysterical woman. This was followed by the moralising and portentous voice of a man: ‘Dear listener, is this what you want to listen to? Is a bloodbath a reason to call us? It is sad if not tragic that you too are part of this pitiable crowd who feels attracted by a bloodbath, a massacre, even misery and death of fellow human beings.’ In the background, symphonic film-music reached a crescendo. The narrator continued in an imploring tone: ‘You have dialled this number; reflect on it, be honest with yourself. Is it worth throwing life away to obscene lust?’ The tape ended with HIRN-lein’s slogan, ‘The Modesty of Truth’.

Hardly anyone but their friends called, and the story was not picked up by the press. Only Marc Ziegler, a prosecutor known as ‘the hunter of the 156 numbers’ for his determined attempt to shut down the more pornographic lines, seemed to notice HIRN-lein at all. When interviewed by a reporter on a local radio station about the 156 phenomenon, he said that someone should take the HIRN-lein boys by the ear and give them a good talking-to.

Still they remained desperate for a reaction to their work, and thus recorded further tasteless stories and produced yet more shocking posters. It was a poster bearing the slogan ‘Somehow we find it completely perverted to fuck in front of a dead body’ that provoked a complaint to another Zürich prosecutor, Lino Esseiva. He then launched a pornography investigation against Alberto, as registrant of the phone number – the boys had discovered that it was illegal for Herbert, as a minor, to have the phone line registered in his name, so had cautiously transferred it into Alberto’s, the only one of the group who was over twenty years old. Alberto was summoned to Esseiva’s office and closely questioned about his intentions; his response was to cleverly explain that HIRN-lein was a media-and-art experiment, rather than a porn line. This seemed to satisfy Lino Esseiva, who accepted that the group’s actions weren’t criminal – even if he thought they were disgusting.

The boys were happy that their oeuvre finally had been noticed. They cheered themselves on with the thought, ‘The more people hate us, the better.’ To up the ante, Herbert asked his friend Nico Wieland to write a letter to Tages-Anzeiger, Switzerland’s most popular broadsheet newspaper. After outlining his puritan disdain of the antics of HIRN-lein, Nico signed off: ‘I rely on the tiny remains of intelligence that are left in our society to fight this and other perversions.’ The letter was published and had the desired effect: the much dreamed-of journalists started calling.

To the boys’ delight, the journalists mostly wrote sanctimonious condemnations. ‘We are the Saddam Husseins of the 156 lines,’ Herbert gloated in response to press questions. When a journalist from Switzerland’s biggest tabloid newspaper called, they told her that they were students who believed in the imminent arrival of extra-terrestrials and wanted to use the line to finance the building of a landing strip in Ethiopia. The credulous journalist agreed to meet them, and under the expert supervision of architecture student Alberto they spent the whole night drawing plans and building a model. The following Sunday the tabloid ran the headline ‘Hallo Ufo, bitte landen!’ (‘Hello UFO, please land!’) accompanied by a picture: Thomas, in jacket and tie, with a map of Africa; Alberto, smiling under his spectacles, with his model of the landing strip; and Herbert, in a baseball cap, holding a poster bearing their 156 number, looking like a geeky high-school student.

Herbert also used his contacts to persuade Swiss National Television to carry a report on their youth show. He dictated his terms. Instead of giving interviews, Alberto pretended to be a phone-line addict; Juri and Thomas, in suits and ties, played the HIRN-lein entrepreneurs; and Herbert acted as the group’s chief ideologist.

The project was a triumph in media manipulation, but after a couple of months Herbert had to wind it down – for all the publicity, it hadn’t made any money.

By the spring of 1993, Herbert again felt under pressure to make his way in the world and find something new to do. More than anything, he hated the idea of getting a job, of joining the plodding masses in their grey offices. He wanted something that combined the adrenaline hit of his TV performances with the thrill of HIRN-lein’s provocation. But most avenues were closed to him because he had not graduated from high school. One hope of an interesting life came in the chance to go to art school in neighbouring Austria, where the entry requirements were less rigorous than those in Switzerland. To bolster his resolve and to prevent his return to Zürich, he gave up his apartment and gave away most of his belongings. After a lavish final HIRN-lein party, Herbert left for Vienna.