To all - something else of possible interest to us "posters"
August 7, 1998
Internet Site to Charge AOL Users
In an Attempt to Stem Stock Hype
By JOHANNA BENNETT
Dow Jones Newswires
NEW YORK -- Ask anyone who's familiar with Internet chat rooms, and
they'll tell you: Stock hyping can cost you money, in more ways than one.
That's certainly proved true for investors who use America Online Inc.'s
Internet access as a pathway to an Internet stock-discussion site called
Daytraders (www.daytraders.org). AOL users will now have to pay $14 a
month to gain entry to the popular Web site, while users who access the site
through other Internet-service providers will not be charged.
Daytraders -- which bills itself as "the Internet's #1 real time professional chat
room for U.S. stock market traders" -- began charging AOL users last month.
The reason: to cover the cost of a new gatekeeping system designed to keep
out individuals who use the site as a forum to hype stocks.
Hyping involves repeatedly encouraging others to buy or sell stocks without
providing any solid information. It is widely considered one of the most
problematic aspects of chat-room and message-board stock discussions.
The move to levy fees on AOL users marks a major shift for Daytraders'
heavily accessed financial-chat room, which counts more than 700 day traders
-- individuals who buy and sell stocks in a single day -- among its members.
Access to Daytraders has been free since the site's inception in 1996; its
operators say it is dedicated to providing an ethical discussion forum for
professional traders.
But the company says it was forced to exclude AOL users from free access
when it discovered that people it had banned for hyping stocks could get back
into Daytraders by logging on through AOL.
"We aren't looking at this as a revenue generator," said David Mason,
co-director of Daytraders. "Rather, it is just a way to solve a problem."
Experienced investors often find the practice of stock hyping annoying,
arguing that it lowers the quality of on-line discussions. And because hyping is
sometimes used in stock manipulation schemes -- especially those involving
micro-cap and OTC Bulletin Board stocks -- the practice is largely frowned
upon by legitimate, on-line discussion sites.
Ken Wolfe, the California-based founder of a chat room for momentum
traders, The Momentum Trader (www.mtrader.com), said members of his site
are banned from announcing their trades until after they've made the
transactions. The rule change stemmed from the discovery that hype artists
were establishing reputations as stock gurus by posting false trades. The
culprits would then invest in a small-volume stock, hype it in the chat room
and then dump their holdings after the stock price rose, Mr. Wolfe said.
"I will not allow my room to be used like this," he added.
Elsewhere, participants on Silicon Investor (www.techstocks.com), a stock
discussion forum that specializes in technology stocks, have set up a handful
of message boards where investors can post warnings about fellow
message-board users they believe to be hype artists and "shills." But the
popular financial Web site also has several threads dedicated exclusively to
hyping stocks.
"This is the place where you can come and post anything you wish about any
company you wish," reads the introduction to "The Hype Zone," found on
Silicon Investor. "Feel free to mention rumors, earnings surprises or just plain
hunches. ... Leave the insults at the door."
For Daytraders, however, the decision to charge AOL users an extra fee was
unavoidable, Mr. Mason said.
The system now in place requires all AOL subscribers accessing the
Daytraders' chat room to use a password. The change makes it harder for
hype artists who already have been banned from the site to cloak their identity
through AOL and sneak back into the chat room.
The only other alternative, Mr. Mason said, was to ban all AOL users from
Daytraders.
"[The monthly fee] is sort of the lesser of two evils," he said.
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