2 Jun 2001

EarthLink's 1998 "Get Out of AOL Free" campaign, which targeted AOL members the last time AOL raised its price. (hehe)

http://www.onclave.org/people/children/Steven_Hatch/children/mailing_lists/children/MediaGrok/

EarthLink Co-Founder a Pyramid Schemer?

Can anyone explain the recent rash of white-collar crime expos=E9s? First a Cisco boss got fired and busted for embezzling. Former leaders of Christie's and Sotheby's were indicted for auction price-fixing. Lernout & Hauspie's founders have been languishing in Belgian jails during their investigation for stock manipulation and fraud. Now a co-founder of EarthLink has been tied to a bizarre Ponzi scheme involving day-trading and Scientology.

The Los Angeles Times broke the story that Reed Slatkin, venture capitalist co-founder of the ISP EarthLink, is accused of bilking investors of more than $35 million. Slatkin is not registered with the SEC as an investment advisor, but he still persuaded more than 100 people to invest more than $300 million in a day-trading operation promising annual returns of up to 60 percent. It seems he used money from earlier investors to pay later investors - the same theory behind those chain letters that promise to make you rich if you send five people a dollar. Slatkin, a Scientologist, is also accused of ripping off a group of fellow church members to the tune of $250 million. EarthLink hurried to explain that Slatkin quit the company's board last week, wasn't part of the company's daily operations, and didn't use EarthLink money in the scheme.

Meanwhile, observers continued to ponder EarthLink's rollout of satellite Net access. The NewsFactor Network quizzed an analyst, who said rural customers craving broadband will sign up for the costly service because they can't get cable modems or DSL. (But how many such customers are there?) "EarthLink now offers virtually every kind of consumer Internet access imaginable," said the Motley Fool, but it's still having trouble keeping up with behemoths such as AOL and Microsoft. Well, EarthLink, if you need come quick cash, we know this great day-trading program with 60 percent return ... - Jen Muehlbauer

Co-Founder of EarthLink Is Accused of Investor Fraud http://www.latimes.com/business/20010502/t000036899.html

EarthLink Co-Founder Accused of Fraud (AP) http://news.cnet.com/news/0-1005-200-5804116.html

EarthLink Wants High-Speed Growth (Motley Fool) http://www.msnbc.com/news/567446.asp

Internet by Satellite: Will It Fly? http://www.newsfactor.com/perl/story/9412.html

Lernout Co-Founders in Jail for a Month (Bloomberg) http://news.cnet.com/news/0-1006-200-5792625.html

Former Auction Chiefs Indicted http://washingtonpost.com/wp-dyn/articles/A34700-2001May2.html

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incidentally, here's an interesting phrase used to market Earthlink several years ago found in this current article:

Switch Behemoths, Save $1.95

As of Grok's press time, few writers seemed to remember that ISPs other than AOL and MSN even exist. The AP and the Washington Post did mention third-place provider EarthLink. (The Post's Alec Klein provided further much-needed context by describing the "long-standing rivalry" between Microsoft and AOL.) Nobody seemed to recall EarthLink's 1998 "Get Out of AOL Free" campaign, which targeted AOL members the last time AOL raised its price.

If you have anything to say about the following information, you're doing better than most journalists: Microsoft is launching a $50 million campaign to lure AOL customers to MSN. Maybe reporters were still hung over from Memorial Day barbecues; most of them phoned in this one.

MSN's selling point is AOL's upcoming price increase from $21.95 to $23.90 for a month of unlimited access. Microsoft will offer AOL converts three months of free MSN access and a locked-in $21.95 per month rate until Jan. 1, 2003 - but only if you're a new subscriber. We wonder if that means existing MSN users might see a price hike of their own in 2002, but apparently we're the only ones. It took a confessed Microsoft shareholder, Rex Moore of the Motley Fool, to blow MSN's free media ride. MSN's rate "is no bargain," said Moore, since AT&T's WorldNet service costs the same, EarthLink is cheaper, and "there are ISPs that offer dial-up access in every state for less than $15 a month." Picky, picky. - Jen Muehlbauer

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Feisty