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DarwinAwards and Bla-bla
I run <blush> a great website that I created in 1994. It serve 6 million pages per month to 3-400,000 visitors. Lots of people love the Darwin Awards, a few people loathe them, and almost everyone has heard of them. I have been building the archive and bringing truth to the field of Urban Legends for years. The stories on the website are true, and so is this story about Bla-bla.com. Evolutionary humor since 1994.
In November 1999 I joined Bla-bla, and in August 2000 they attempted to terminate my contract without notice. Because they used the cachet of DarwinAwards in their pitches to VC and to other webmasters, I want to make it clear that I no longer work with or support Bla-bla. My personal factual experiences, which I can back up with documentation, are as follows
Bla-bla was in breach of contract until 20 Oct 2000 and owed me $4582
Bla-bla has a history of underpaying for banner impressions.
Bla-bla has a history of underreporting banner impressions.
Bla-bla terminated my contract without the required notice.
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Bla-bla's Inaccurate Statistics
When I joined Bla-bla they used the Doubleclick ad server. I periodically validated the number of banners they counted. The statistics were accurate until Bla-bla switched to the L90 ad server. On Friday June 9 Bla-bla sent email announcing an abrupt change from Doubleclick to L90. "Update by noon Monday (or you) won't be earning any $."
L90 experienced serious DNS problems from the start. DNS resolution was disabled over large chunks of the Internet. From June 12-13 I worked with the support staff to troubleshoot the problems, then at their suggestion gave up and temporarily reverted to Doubleclick code.
When I finally began serving ads through L90, each page served code for one top and one bottom banner, which should have identical impressions (or almost identical, this being the Internet.) But L90 statistics reported top impressions at 20% the level of bottom impressions. This was clearly wrong. On July 5 I contacted Bla-bla to point out the serious discrepancy. They paid me for June based on setting the number of top impressions equal to the number of bottom impressions.
For the sake of accuracy, from July onwards I served L90 banners through an audited redirect service to validate the number of impressions. (Wouldn't you?) In July audited numbers indicated that L90 underreported by 1/4. In August the audit counted 79% more impressions tha L90. That means for every single impression L90 reported, I actually served four.
Bla-bla.com tried to terminate my contract for spurious reason(s) on August 24. They owed approximately $4600 and didn't respond to my letter of complaint or my invoice. (See addendums.) On October 20, three days after I posted this page, I received a FedEx from Bla-bla with a check for the full amount they had underpaid.
Darwin Awards. No longer with Bla-bla.
Bla-bla's Late and Short Payments
Checks were due on the 25th day of the following month. The April payment (for March impressions) was 22% short. I notified Bla-bla that their payment did not tally with Doubleclick statistics. The shortfall was rectified in 15 days.
June impressions were not paid on time: On July 28 CFO Doug Sages said the checks were late due to problems with L90, and would be mailed in a week. On August 2 he said checks were mailed August 1. But I did not receive my check. I contacted Doug Sages and requested June payment, three times, but received no response to emails sent August 10, 11, and 14.
On August 14 CEO Michael O'Hara (with whom I was negotiating a new contract) received my request for the June payment, now 20 days late. Two days later I got a short payment based on the unfavorable (and unsigned) New Deal contract. It was only 14% of the amount actually due.
That day I emailed Doug Sages a sternly-worded request for the remainder of my June payment, 22 days overdue, and sent Michael O'Hara a polite reminder about the late payment. That afternoon Michael said on the phone that he would have Doug send the rest of my June payment immediately. The check did not arrive.
On August 22 I phoned Doug Sages and again asked for my late June payment, that Michael O'Hara said was due. He said Michael had not told him to send it, and asked me how our contract discussions were going. I told him the next few checks would be based on our old contract. He said he would FedEx the payment tomorrow, and asked me to send him the tentative terms of the new contract Michael was negotiating. I sent him the terms, and reminded him that he was planning to FedEx the overdue June payment immediately. I also emailed Michael a reminder to tell Doug to sent my check.
Maybe I was pushy.
On August 23 Michael O'Hara said that Doug would pay me for July based retroactively on the less favorable terms of the unsigned new contract. I responded that the old contract was valid until the new contract was signed, requested my late June payment again, and also asked for my July payment which was due in two days. Michael then informed me that my six-month notice was "effective in June." I countered that the six-month notice needed to be in writing, per our contract, and that when I received it, I would (if they liked) reduce the number of impressions I was providing them.
Contract negotiations fizzled in the phone call described in "The New Deal" and the CEO said the CFO would call to finalize my balance.
Doug Sages called and said he was sending me a check for June. He made a false claim about the payment due date for July impressions, which I corrected, but he refused to acknowledge. Then he raised several puzzling issues regarding exclusivity and third-party auditing of L90. When I pointed out mistakes in his assessment, he became angry and asked, "Do you want your money or not?" which I interpreted as a threat to not pay.) He was yelling at me when I quietly hung up on him.
Doug Sages finally attempted to terminate my contract without the required six-month notice, claiming I had materially breached the contract by serving Flycast ads. Our final correspondence (his termination and my rebuttal and request for payment) are shown below. There was no response to my requests for payment until October 20, three days after I posted this page, when a FedEx for the full amount was received.
Darwin Awards. No longer with Bla-bla.
The Original Contract
In October: Bla-bla contacted DarwinAwards and urged me to join. During many rounds of negotiation, they offered miniscule "advances" totalling less than a week of revenue, and ignored my oft-stated requirement for a non-exclusive contract. "There really is no risk," they said. "We guarantee to sell 100% of your inventory so even if we don't sell it all we will pay the whole thing anyway." I could only laugh, particularly in retrospect. I would not part with my existing contracts, startups are just too chancy, and I asked for a minimum CPM. After awhile Bla-bla offered me a contract I wanted to sign:
- Non-exclusive (minimum 300,000 impressions, up to my full inventory.)
- Minimum CPM (a bit more than I was getting from Flycast & Doubleclick.)
- Not less than 50% of gross revenue per impression.
- A guarantee to sell 100% of delivered inventory.
This was a generous but fair contract. They added a six-month termination clause, and began using DarwinAwards in their VC pitches and to recruit other websites. Company founder Hagai Yardeny told me his VC talk emphasized the fact that I was a woman and a scientist "This is a humor website run by a woman. She's using it to teach. What does she teach? Evolution. But she teaches it in an unorthodox way..." Bla-bla accepted my Cool Site of the Year award at a NY ceremony and spoke to the press. Bla-bla was happy to have me in their network.
Darwin was Non-Exclusive
The contract was originally structured to provide Bla-bla's impressions through a subdomain at official.DarwinAwards.com but technical glitches at Bla-bla made that impossible. We agreed that I would serve their banners on my main website at www.DarwinAwards.com. Both Howard Mandel, Vice President of Corporate Sales & Development, and the Affiliate Implementation Manager were aware that I was serving other paid ads, and I also discussed it during phone conversations with founder Hagai Yardeny and CEO Michael O'Hara.
The "New Deal" Contract Negotiations
On June 14 the Manager of Network Development sent me email glowingly describing the nostalgically named "New Deal" Contract. But the terms were not as favorable as the existing contract. If I became their exclusive property, they would give me a retainer equal to the revenue my website currently earned. But Bla-bla did not guarantee a minimum CPM, which meant my growing website might not command a corresponding rise in income. I said I did not want the new contract and preferred to keep the old contract.
On July 5 the Manager of Network Development said that Bla-bla could only serve 300,000 impressions per month if I did not accept the new deal. I said that my contract allowed me to send the full inventory of my website, but that I would limit that number as much as possible.
In July founder Hagai Yardeny contacted me by phone to renegotiate my contract. I explained that I would not become exclusive, as it was too risky to put all my eggs in one basket. I reiterated my desire to keep the current contract, which was a fair one. Hagai told me he wanted DarwinAwards in the network because he used it as an example in VC talks, and my stats were important. I told him I would stay with Bla-bla, but not at a lower payment level since I could earn an equivalent amount myself. However I was willing to limit the number of banners served to Bla-bla if that concession would help. Hagai told me he would discuss it with his management team and contact me in a few days. He never did. My emails to him began to bounce.
In August CEO Michael O'Hara contacted me by phone to renegotiate my contract and we began to reach an agreement on terms. On August 14 I sent him a summary of our negotiations, and requested my late June payment. He agreed to most of the terms, with some confusion over the guaranteed retainer. On August 16 we finalized contract negotiations over the phone. The terms included a reduced CPM, limited the number of impressions I would provide Bla-bla, and retained the non-exclusive clause. Michael also said CFO Doug Sages would send my late June payment.
After polarized exchanges regarding the late June payment, detailed elsewhere, my fiancee fielded a final call from Michael, during which both sides expressed their satisfaction with the terms. Then Michael abruptly changed his mind and terminated negotiations, saying, "Let's shake hands and part friends."
He said Doug Sages would call to finalize my payments.
Miscellaneous Gripes
The Bla-bla network was supposed to increase traffic, but their website never sent us many visitors. Our statistics show the top 35 referring sites each day. Bla-bla.com made that list only 23 days in 2000. By comparison, Yahoo! routinely sends me several hundred visitors per day.
02/20 20
02/27 5
02/28 36
02/29 51
03/02 4
03/11 26
03/12 14
03/13 40
03/14 24
03/16 35
03/18 26
03/21 41
03/22 37
03/23 49
03/24 472
03/26 22
03/29 31
04/07 35
07/19 89
07/20 131
07/23 23
07/25 29
07/26 32
In June all affiliates received the same password for the L90 ad server statistics. I could log in and browse the statistics of any site. I warned Bla-bla about the security gap on June 14, and requested a new password, but received an email stating that they could not change the password "for security reasons." The problem was not corrected until August 12.
In December the Bla-bla affiliate communication list was public. We all received private correspondence between affiliates and Bla-bla, plus we began to get spam. It took weeks to correct the problem.
Addendum A: CFO Doug Sages' Final Correspondence.
Date: Thu, 24 Aug 2000 18:27:49 -0400
Terminations Notice:
Notwithstanding any e-mails you may have sent you may not unilaterally amend our Agreement. Our Agreement dated November 12, 1999 states in the Terms and Conditions section 1. "Only Bla-Bla shall serve the Network and Website with Advertisers." and in section 3(a) that we will provide you with the ad tags and in section 3(c) we are to "serve or cause to be served the Advertising" and further in section 4(g) you are "Not to engage, contract with, license or permit any person, firm or entity other that Bla-Bla and its employees or agents to sell or represent Affiliate for the sale of Advertising on the Website.
Regardless of the difficulties we may have in serving Ad's, you may not unilaterally decide upon the remedy. You have replaced our ad tags in direct violation of the contract and are using Flycast. You did not have our written permission. This is a MATERIAL BREACH of our Agreement and we are hereby TERMINATING OUR AGREEMENT effective August 24, 2000. As I explained on the phone we will only pay you for impressions served by Bla-Bla.
Doug Sages VP & CFO
Addendum B: DarwinAwards' Rebuttal.
Douglas,
I have your email of 8/24/00 which I have reviewed with our attorney.
Your claims of contract violation are categorically rejected. DarwinAwards is not in breach, much less in material breach, of the 11/12/99 contract.
The terms of that contract, based on a form that Bla-bla drafted, but then agreed to modify, were clearly structured to provide for a non-exclusive arrangement whereby DarwinAwards was required to serve no more than a stated minimum number of ad impressions per month (300,000) against the far larger known and documented total of impressions served by the DarwinAwards site. This limited, non-exclusive representation was originally to have been structured through the "official.DarwinAwards.com" site but was modified and transformed into the present non-exclusive arrangement with the approval, and indeed at the request of, Bla-bla due to Bla-bla's technical limitations. Finally, DarwinAwards' actions in recent months to assure proper auditing and accounting of ad impressions was necessitated solely by Bla-bla's breach of its contractual obligations to properly account and pay for all impressions served by DarwinAwards up to the stated maximum of the full inventory of the website. In any event, that protective action by DarwinAwards had no effect, much less a material one, on either Bla-bla's ad tags or on DarwinAwards' fulfillment of its obligation to serve a minimum of 300,000 of Bla-bla's ads per month on its web site.
In fact, it is Bla-bla that has been in breach of the contract at least since mid-June by, inter alia: (i) failing to properly and accurately account for ad impressions due to problems with the L90 ad-monitor system; (ii) underpaying in various instances, both before and after mid-June, for impressions served by DarwinAwards; (iii) failing to timely pay for impressions served beginning in mid-July and continuing to the present; (iv) unilaterally demanding modification of the existing contract upon less favorable rates and terms; and (v) underpaying (or not paying) for ad impressions under the existing contract while at the same time demanding retroactive reduction of the CPM payment rate for ads previously served.
Under the foregoing circumstances there is clearly no basis for Bla-bla's unilateral attempt to rescind and terminate the contract nor to purport to effect a unilateral "settlement" to which DarwinAwards has never agreed. Accordingly, DarwinAwards would be well within its rights to insist on maintaining the 11/12/99 contract in effect, at least until proper notice of termination is provided by Bla-bla under the terms of that contract after Bla-bla's breaches have been fully remedied, in which case DarwinAwards would have the right to continue to serve and be paid for a minimum of 300,000 and a maximum of its full ad inventory, currently 6,000,000 impressions per month, for the six months thereafter at the existing contract rate.
Notwithstanding all of the foregoing, under the circumstances of Bla-bla's many failures to live up to its contractual obligations and to deal with DarwinAwards on a fair and business-like basis, DarwinAwards is prepared to waive its right to six-month's notice of termination and to terminate the contract, as Bla-bla has proposed, effective 8/24/00. However, DarwinAwards is only prepared to waive and terminate in return for the balance of payments due from Bla-bla as detailed immediately below.
Upon receipt of the balance of $4582.23 DarwinAwards' waiver will become effective, retroactive to 8/24/00.
Followup: I received no response to this letter or my subsequent invoice, except a brief call from Accounting to ask which website the invoice was for. But three days after I posted this exposition, a FedEx from Bla-bla arrived, with a check for $4582.23.
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