By Steve Gilliard

In the end, Silicon Summit II was amusing.

MSNBC's stage show for the Internet unaware was not as bad as it could be, but that was only due to having a mental rolodex about the various crimes of the guilty on stage.

Since it will be airing a few more times, including Thursday, 10 PM (ER is a repeat), I'd like to discuss the highlights and some points you should keep in mind while watching this:

1) American TV's Integrity is Illusory

American TV gives the impression of rigorous questioning without actually doing anything like that. There is a reason they let Tom Brokaw and not MSNBC's Chris Byron as the questions or even have him have any input whatsoever. Byron has been hyper critical of the Internet bubble and predicted the collapse three years ago.

A real show on the Internet would have included Byron, Walter Mossberg of the Wall Street Journal, author John Heilemann, Slashdot columnist Jon Katz and MSNBC Washington bureau chief Brock Meeks. The questions might not have been nearly as friendly, but your education on the subjects at hand would have been immense. Of course, no CEO would ever subject themselves to what would be a team closer to Telford Taylor's crew at Nuremberg than a panel of journalists.

2) Charm Works

A CEO can sit there, lie to your face and unless you know you have just heard a lie, be totally believable. Steve Ballmer may look like your dad, but he is the real architect of Microsoft's rise as an economic power. Gates is, despite the bitter sniping from the Stallman crowd, a programmer by inclination. Ballmer is the businessman and an extremely good one.

Let's go down the list of participants:

Microsoft: facing legal trouble on two fronts, lawsuits over their business practices from the states and federal government. A racial discrimination suit which could harm the company far worse than a Supreme Court ordered split. Gates has worked for years to cultivate a good reputation among minorities, even their ads are multiethnic. If the suit's allegations are proven, the damage could be immense.

Digital Mafia Enterprises:Darien Dash is one of the prime examples of the Urban dotcom bust. A former record executive who started a dotcom with little technical experience he got VC investment and promptly failed to deliver on most of what he promised

SONY:Caught between a rock and a hard place. On one hand, its record companies are under heavy pressure from Napster (more on this later), while MP3 technology could give it new markets bringing in billions. A very tough choice. CEO Howard Stringer, Welsh-born and a Vietnam Vet (drafted while working at CBS) was almost tapped to run the BBC, but his American ties were a major issue at the Beeb. Shoved out of CBS, his longtime employer, in a power play.

AOLTime Warner: Between pedophiles and stiffing community leaders, AOL/TW is the company America loves to use and hate. The same people now bring you Tony Soprano as well as You've Got Mail. A lawsuit in Virginia could force the company to pay millions in back wages and taxes to community leaders who now work for free.

Yahoo:The Stanford Billionaires Boys Club. Jerry Yang and his boys are reputedly hardheaded bastards who have no clue as to how to run their company. Once thought to be the most stable of all dotcom companies, the stock's value has declined 90 percent in the last year.

Why does this matter? Because many, many people who avoided the more volatile tech stocks invested in the thought to be stable Yahoo. Investor anger at the company's management is far more critical than at any other dotcom. If there is a not fail company, it is Yahoo, which has been profitable.

Amazon: Oh, where to being. Mass layoffs, investigated for dumping stock after brutal report. A plan to be bought out by Wal-Mart crashed and burned amid limp denials. Repeated privacy issues. We have yet to write about Amazon in detail because it may take a while, but the betting line is :Bezos shoved out by midyear.

Gateway:Once renowned for making a good mid-range quality machine, their designs are now horrible, their components no better than low-end Koreatown stuff, yet their prices remain high. If there is any one PC maker which may meet next year as a memory, it is Gateway. Pony-tailed CEO Ted Wiatt came back as the company started to flounder in the hardware depression of 2001.

Allen Co: We back losers. Like the whole guilty bunch on Sand Hill Road, they're as contrite as bookkeepers who bet the payroll on black 17, Now they're sitting on their cash as many companies rethink the entire wisdom of getting VC cash because of the strings that come with. The clueless leading the blind.

Barry Diller:The newly-married Diller, who's allegedly gay sex life was gossip fodder throughout the 90's, once was a very powerful man. Now, he is moderately powerful, owner of USA Networks, who's most successful products are lowbrow but make money hand over fist. What are they? Home Shopping Network and the Jerry Springer Show. Why he was there is a mystery to me, but he was.

ETrade: You lost money, don't blame us. One of the pioneers of online trading, it has moved into banking as a way to get into a successful online Internet sector as well as escaping the problems of online trading. Most people who invested on their own didn't exactly make money. What seemed like a good idea in 1999 turns out to have been a very bad idea in the winter of 2000-1.

3) What, Me Worry?

Being a CEO is like high command in two respects: you have to make hard decisions and are well rewarded for such. If Jeff Bezos actually gave 30 seconds thought to the effects of his mismanagement, he would run screaming from the room, waving his resignation in his hands. But Bezos is as clueless about the world as a 14 year old girl proclaiming she can do what she wants. This is a man as divorced from the reality of his actions as Rudy Giuliani is from normal morals and standards. It would be nice to live in his world, but the reality is that he's not going to live there much longer.

Christos Christakos of ETrade was especially cold blooded about the problems investors faced. To understand his issues, you have to understand two things: one, the number of investors in the market has exploded over the last decade. As traditional pension plans have been replaced by 401K's and the shift from banking to mutual funds, the stock market is used by most Americans as their primary investment after home ownership. The fact that his company facilitated brokerless trading, which seemed like a good idea at the time, now clearly isn't. The kind of financial advice most people got came from CNBC, and most of it was bad.The only debate was whether it was criminal.

The second problem is that financial trading isn't trading. Your order goes to a broker and the time lag between your order and his purchase can be hundreds of dollars, if not more. And it's not a store, you buy it, you keep it and you owe the money.

These two things put a real hurt on many new investors. While he was blase about the losses of others, many investors weren't just screwed, they were napalmed. Even savvy investors have lost a fair amount of their wealth.

AOL/TW's Pittman knows his is not a happy lot. He's got a nasty lawsuit in the air, Napster making a charge and the merger of the always prickly fiefdoms of Time Warner. But at the end of the day, his company will survive.

Ballmer, who is probably a great guy to have a beer with, said nothing new.
He's got the DOJ taking notes at every public appearance.

What is remarkable is that the two companies which are clearly in the most trouble, Gateway and Amazon, got off lightly because Brokaw didn't ask the right questions. Gateway is laying people off and is saddled with higher than average prices for machines of dubious quality. They tried to introduce forward looking designs, but unlike SONY, they didn't have the marketing to back them up. Plus the designs blew. The odds are very likely that Gateway will not last the year. As Walt Mossberg says, there is no need to buy a machine faster than 600Mhz. Combine that with the idea that the Pentium 4 is widely regarded as a dog, as well as the flood of machines in the secondary market, someone is going to join Quantex in the great ex-PC companies in the sky. In this market, everyone else has a niche.

Gateway took a very expensive strategy in moving into brick and mortar stores instead of joining the retail lineup at Staples and Office Max. That required them to rent retail space as well as hire staff. This is the kind of decisions which eat up the bottom line. Gateway Country stores are rarely crowded.

Amazon has two kinds of problems: management and strategic. The company needs to drop all non-entertainment items to make a profit. No one orders rakes online. But Bezos is so clueless as to his deficiencies as a manager, he doesn't see the unionization moves as a clear sign of dissatisfaction with his leadership. Wal-Mart clearly backed out of a deal to buy, "strategic alliance" , Amazon. Why should they take on the billion of debt. Why not just buy the name and resources after the company collapses? Scavenger hunting makes far more sense than spending real money on a failing, debt ridden company.

Jay Walker of Priceline was seated in the audience and brought on stage to be bitchslapped by Brokaw. He was asked about the collapse of his company and not about the major lawsuits facing the company.

But the question of the night was a simple one.

4) Napster

While everyone was prattling on about how there was a new economy, it turns out that we are really living in the age of Napster. A teenager got up and asked Stringer the most important question of the night, not so much because he asked it, but because of the answer.

The kid said he'd spent a good 300 on a new Sony product which hooked into his computer and then allowed him to take MP3 files everywhere he went. He then asked Stringer, and the panel, if they had ever used Napster.

No one said no. Not Bezos, not Wiatt. Amazingly both Stringer and Barry Diller of all people admitted using it. At that moment, you could see the wheels spinning in his head. SONY's hardware business is so vast and entrenched that his Japanese bosses see MP3 as the revival of their moribund business. New hardware to play a new format is an exciting thing. On the other hand, his American record companies want to kill the baby, drain the bath water and crush the tub. A trial could be an amusing thing, with Stringer's admission on national television that he, with 59,999,999 million other people joined the Napster bandwagon. Springer-san is thinking hard on who to listen to. I wouldn't bet on the record companies.

Some pissy little clown asked about the copyright thing and how SONY could protect him, and anyone that stupid, looking to SONY, of all companies, for salvation, deserves the beating they deserve. Napster has won. End of story. You can play whack a mole with the servers, you can sue people, but when ten very rich people admit they use Napster, two of whom's companies are suing Napster, the whole thing is going to crash down. A house divided against itself cannot stand. When the guardians of the copyright they are cherishing in court admit to violating it at home, well, that's not a good thing. No scheme they invent will ever stand up in that environment.

Time to get real about digital downloads, folks.

5) The Computer Thing

A kid was profiled and dragged out to the stage where people were amazed to hear that she didn't have a computer at home. Usually, this is a gimmie moment. Everyone offers the kids a machine and everyone smiles. Not this time. In a low moment, only refurb salesman Darien Dash offered a machine. No Gateway, no Vaio, even though this was minutes after Stringer bragged about how good and expensive they were.

Michael Bloomberg, who is going to run for mayor and lose in a landslide to Mark Green, suggested that she didn't really need a computer. Bloomberg, who some folks think may be Rudy Giuliani's heir, not only blew that question, but with his tone, showed he needed a ton of work. Let me put it simply: anyone seeking to be Rudy's heir is going to lose badly. All they have to do is put his picture next to Rudy and distribute it in Central Brooklyn, South Queens and between 96th Street and the City Line. You will think you have been transported back in time to the first free elections in South Africa. Rudy Giuliani is a fundamentally evil man and anyone who has his taint will suffer his curse. If that is what Bloomberg wants, he is welcome to it.

The thing is that computers do not solve the world's problems but having access to them is important. Especially for kids, especially now and here.

6) The Evil Index

The loss of stock value is not a good thing, but so many of these stocks were valued so unrealistically that the witching hour had to arrive one day. But as I sat there, a Greek Orthodox priest asked Yang and Pittman about porn on the Internet.

I'm going to write about my adventures in Yahoo's pron underground, but at that moment, Steve Baldwin turned to me and said "AOL is built on child sex and slave labor." My reply was "what the hell is he running, the Japanese Empire? He doesn't look like Hirohito".

It was really hard to decide who had caused the most harm on that stage. Dash is a small time player with connections and glib tongue. Stringer runs SONY. You can argue about Ballmer and MS all day long. Barry Diller was there for reasons unclear to anyone.

But AOL and Yahoo dwarf Amazon on the evil index for two reasons. Yahoo's incompetent management ran the stock down 90 percent from their high. How this happened was simple: they relied upon income from ads for failed dotcoms. Even their healthy sex ad business didn't help them. Yahoo was supposed to be the can't miss stock of the new economy. With the sea of resignations from their top ranks, it is clear that they now realize that they are clearly over their heads. Too bad that they took investors, mutual funds and pension funds on that downward ride.

A lot of people who would have avoided the obviously volatile Amazon were seduced into investing to what was thought to be a far more stable Yahoo. Well, stability is an elusive thing.

AOL is child porn central. Despite Pittman's weak denials, any pedophile with brains can pick his targets. Boys, girls, pre-teens, 13-14, 15-17, doesn't matter, Scooping them up for a spot of perversion is as easy as a chat group. Every major online child molestation cases started at AOL. It is clearly the most dangerous environment for a child online and no one says this in the media.

Then there is the little matter of them not paying community leaders in contravention of federal and state law.

Maybe it's time for Bob Pittman to take a little visit to the Yakazuni Shrine in Tokyo, where Japan's war dead are commemorated. Hirohito used to pay a little visit there once in a while and if you're to emulate the master.....

In the end, we left angry because we had been hustled. Not by MSNBC but by the lies the American media routinely repeat without question. They lied, Brokaw asked what he could, and they escaped to live another day, leaving the wreckage of lives and fortunes behind them. Be sure of one thing. In America, the rich tend to stay rich.