The Pixelon Con

I’m always up for a good story about con men and/or con women. It’s fascinating to see how people get away with the lies and fabrications that keep their con going. It’s equally fascinating to see how the con unravels (because they always do). We may even admire the chutzpah of someone who tries to pull off the big con. For pure chutzpah the story of Michael Fenne and Pixelon is hard to beat. I used it as the inspiration for my fictional company, Eyebitz.com, in the first Rolly Waters mystery Black’s Beach Shuffle. Here’s a screenshot of the Pixelon’s homepage, circa 2000.

Seems legit, right? The promise of streaming video was a big deal in 2000.

The potential for high quality video on the Internet was a kind of holy grail in 1999 (Youtube didn’t happen until 2005). Pixelon claimed they’d invented a faster and more efficient format of video compression and investors forked over millions of dollars to finance this potentially game-changing company. But by June of 2000 Pixelon was bankrupt. It had been a scam from the very start.

In my earlier post, Confessions of a Dot Com Boomer, I talked about my time in the multimedia department of MP3.com. The company’s main revenue source at that time was the advertising we sold on free promotional CDs. One of the first companies to advertise with us was Pixelon. As part of the contract we were required to install Pixelon software on the CD and use it to show videos from the CD.

Not the “Pixelon ENHANCED” at the bottom right. A meaningless designation.

The Pixelon software seemed questionable to our technical staff right from the start. It appeared to be using standard MPEG compression (like on DVDs) packed inside a “wrapper” of programming code. To explain in layman terms it’s like having a shirt, then putting the shirt in a suitcase, closing the suitcase and telling everyone your shirt is now “enhanced.” There was nothing new about Pixelon’s technology.

It was not our place to question such details, however. The marketing department had a $1 million contract on the line. We installed the software (with a great deal of difficulty but that’s another story) and sent out the CDs. Meanwhile Pixelon was spending millions on its product launch party, iBash99, which included The Who, KISS, Faith Hill and any number of other popular music acts. The company would broadcast the event live using their new software. It was a technological disaster and very few people, if any, were able to stream the live video. The company spent $16 million on the event, 80% of their total assets.

As it turned out, Michael Fenne was really David Kim Stanley, a convicted felon who’d moved to California but was wanted by police in Virginia. Both charismatic and terrifying, he’d managed to talk a few early investors into his scheme and soon others had followed. Like many con artists, Stanley kept doubling down, making his scam bigger and bigger. A sharp-eyed creditor spotted Stanley’s photo on a most-wanted website and reported him to the police. Before long Stanley was back in jail and Pixelon was out of business. And MP3.com never got paid for the advertising.

While some of the details of Rolly’s investigation into Eyebitz came from my time working at MP3.com, the deception at the heart of the story was based on the Pixelon scam.

David Kim Stanley “God has blessed me with a unique ability to defy reality”

Pixelon: The True Story of Streaming Video’s Greatest Fraud

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