Why the Enduring Myth of Sex.com Being a Valuable Domain?

The traffic numbers just aren't that good

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For all the fear about the Internet's capacity to spread misinformation, the momentum of a digital hoax is easy to stop. Jeff Goldblum only needs to appear on CNN for 30 seconds to prove he did not, in fact, fall off a cliff and die. Eyewitness accounts and news footage can be used to ascertain whether or not Basra is overrun with man-eating badgers.

So how does one explain the persistent belief that Sex.com is actually worth something? Even the folks at Guinness World Records--purported experts in the field of myth-busting--appear to have been taken in, announcing today Sex.com's recent sale at auction was enough to secure the title of "most expensive Internet address domain name." This distinction says more about what Sex.com isn't than what it--specifically, it's not Facebook, Twitter or any of the other websites that have earned valuations in the stratosphere for providing a service people want or need. It's a bargaining chip that can be bought at auction for $13 million.

Looking at the website's tortured history, its rarely been anything else. Behold, a timeline only a copyright lawyer could love:

Match.com founder Gary Kremen registers the Sex.com domain name. CNN Money's David Lawlor wrote in 2001 that Kremen acquired the domain name "free and without any official contract -- the way things were often done in the early days of the Web." Kremen failed to "develop a Web site to accompany the Sex.com nomenclature immediately after registering it" and the domain name "sat empty" for nearly a year.

Control of the domain name is transferred to Stephen Michael Cohen, fresh out of prison after serving 42 months for bankruptcy fraud. Kremen filed suit to regain control of the site, in what The Guardian's Kieran McCarthy described as "a Trojan war for the digital age" complete "sordid affairs and spectacular break-ups, ruinous lawsuits, the theft of court documents, a nationwide manhunt, a gunfight, illegal offshore accounts, international stock scams, multimillion-dollar court judgements, a trashed mansion in one of the world's most exclusive neighbourhoods."

Kremen is awarded control of the Sex.com domain name and $65 million in damages. Cohen flees to Mexico to avoid paying the judgment. All Kremen received for his years of legal wrangling, writes Wired's Chris O'Brien, was "a derelict house on the US-Mexico border" and a website "decaying beneath an enticing facade." While Cohen was able to use the Sex.com domain name to generate "$500,000 a month selling banner ads to other online porn sites," but by this point the economics had changed. The Internet was "saturated with free porn on peer-to-peer networks like Kazaa" and Sex.com's revenues "dropped by two-thirds."

Suing over the loss of Sex.com proves more lucrative than running Sex.com. Kremen agrees to a settlement "rumored to be in the neighborhood of $20 million" with Verisign, the company that improperly sold the rights to the domain in 1994.

Escom LLC buys Sex.com from Kremen for $14 million. The company strikes a deal with Playboy to serve as a portal for the magazine's digital content. The San Francisco Chronicle's Al Saracevic called the partnership a "perfect end to the Internet's first epic saga," but the partnership did little to help the magazine break into the world of digital porn. Digital ad revenues at the magazine dip 26 percent from 2008 to 2009.

Escom files for bankruptcy. The sex.com domain name is sold at auction to Clover Holdings for $13 million in November. Right now The Atlantic Wire pulls in more traffic, and we only launched in 2009 and covered purely Paul Krugman and Maureen Dowd for a year.

This article is from the archive of our partner The Wire.