Silicon Alley

The Rise and Fall of a New Media District

Michael Indergaard

• Publisher: Routledge
• Year: 2004
• Topic: Business
• eBook ISBN:
  9781135950750
• Subtopic: Urban Planning & Landscaping
• Index: Business

The 1990s dawned with a belief that the digital revolution would radically transform our traditional notion of cities as places of commerce and industry. Many predicted that digital technology would render cities--or at least their economies--obsolete. Instead, precisely the opposite happened. The IT-intensive firms of the new economy needed to be plugged into a sizeable network of talent, something that established cities like New York and San Francisco provided in abundance. In addition to creating new types of jobs and luring thousands of workers back into the city, new media districts created a new technobohemian urban culture. With vignettes of the high-rollers in New York's new media economy and stories of wild parties in downtown lofts, Michael Indergaard introduces us to the players in this new economy, and explores this intersection of commerce and culture in 1990s New York. He also reveals how the dot-com crash laid bare the hidden connections between the so-called new economy of new media, and the ages old engines of New York wealth: real estate speculators and Wall Street. Chronicling the go-go years and ultimate crash of the new media district, Silicon Alley is a brilliant account of how hype forged a marriage of technology and finance, which in turn generated a new urban culture.

CHAPTER 1
THE NEW MEDIA PEOPLE

Who Were They and Why Did They Believe?

In the early days of the World Wide Web few could match the cool graphics of Jaime Levy, self-professed “East Village chick” and “early true believer” in the power of the net. She also hosted some of the hippest “cyberslacker” parties on the Lower Manhattan circuit. While a DJ spun records web pioneers showed off their latest HTML tricks or performed skateboarding stunts in her roomy East Village loft. Most were liberal arts types rather than programmers—principled slackers, arty punk rockers, and deconstructionists from“good” families (several were grads of Brown's Modern Culture and Media department). Some turned their web pursuits into business ventures. Early Internet start-ups were cool because, like punk bands, they were garage projects. The last cyberslacker affair, held near the end of 1996, was marked by a musical farewell to the garage tradition by Nicholas Butterworth, founder of a promising start-up, SonicNet. Formerly, a bassist in a punk band, he screamed out a fifteen-minute rant via a live mike:

It's the death of the Web as we knew it. It's over! And wasn't it good while it lasted? Who was there, who was there in 1995? Reaping it in—the money, the fame, the parties, all of it flowing in. They came to you— marketing directors, the executive vice-presidents, the general managers, they came to you and said “We don't know what the fuck we're doing.” It was beautiful ! Everyone here, all my friends, doing creative things with a capital C… the dream was to be a media assassin, to be a guerrilla—and to be paid. Well let me tell you something: Now you have a choice. You can be a guerrilla, or you can get paid. You cannot do both.¹

Butterworth found his paycheck (and became a corporate VP) when Sonic-Net was acquired by MTV's parent, Viacom, and transformed into MTV's online unit (MTVi). Other members of Levy's clique have made their mark in disparate ways. Stefanie Syman and Steve Johnson founded Feed, a critically acclaimed“webzine” that never made it commercially. Rufus Griscom and Genvieve Field started up Nerve, a webzine whose commercial success shows that“literate smut” pays. Douglas Rushkoff, a professor of communications at NYU and an up-and-coming media critic, has authored books such as Cyberia and hosted a PBS documentary, “The Merchants of Cool,” on the commercialization of youth culture (by companies such as MTV). Jason McCabe Calacanis created a popular trade magazine for New York's new media industry —the Silicon Alley Reporter. Josh Harris, another impressario on the party circuit, turned his cybergathering into an Internet TV studio— Pseudo.com—and announced on Sixty Minutes II that his goal was to put companies like CBS out of business. But taking on media giants hardly meant that the party was over. On six occasions Pseudo was raided by the NYPD and given citations for running an “illegal nightclub.” Razorfish, a webshop started by Craig Kanarick and Jeff Dachis in 1995, competed with Pseudo to put on the most outrageous spectacles on the party circuit. At the end of 1999 it was a public company worth $1.8 billion and employed two thousand in a dozen offices worldwide. Jamie Levy, who turned down a chance to own one-third of Razorfish in 1995, started Electronic Hollywood, a modest venture that created an award-winning animation short (about an East Village slacker). But like many webshops, Electronic Hollywood “paid the rent” through designing ads, cartoons, and online games for corporate clients such as Tommy Hilfiger and MTV's new unit— SonicNet.

Something strange happened in New York City as the twentieth century drew to a close. Technology became hip. Stranger yet, the city that was the capital of the “old economy,” became a “new economy” hot spot of sorts—a playground for wired entrepreneurs and venture capitalists. The shift in hip sensibilities began in a familiar place, the bohemian environs of Lower Manhattan, but the new trend-setters were “techno bohemians.” These creative types, who had begun experimenting with the Internet in the early 1990s, claimed that the web offered new possibilities for creative expression: anybody could be a publisher and there would be no need to compromise to please corporations. The media would be born anew.

Their visions of how the Internet would change the world inspired new ways of thinking about culture and media. However, in the thoroughly neoliberal 1990s the ability to meld art and technology in the creative process depended on being able to create products and markets—and charm investors.² Despite the rebel rhectoric, it was the corporate establishment, including the media giants and the masters of the financial universe, that stoked the fires lit by the technobohemians. Identities and strategies fluctuated in the white heat fueled by easy money and high-octane hype. The technobohemians were among the first to change. By the end of the decade, many had become full-time entrepreneurs seeking methods to make the new media pay its way. And the vision of new kinds of cultural production had become a vision of new consumer “choices” Moreover, assorted business allies also reinvented themselves, hoping to use the Internet to change the world—or at least a profitable chunk of it: corporations eager to go online, Wall Street expatriates turned venture capitalists, developers of wired real estate, newly minted MBAs and veteran execs itching to try out “new” economy entrepreneurship, and a legion of would-be players hoping to position themselves in the“deal flow.”

Set in motion by a creative impulse and then propelled by financial forces, this wired carnival wound its way back and forth along Broadway for five years— from SoHo's wild parties to the stock market orgies of Wall Street and finally to the corporate spectacle that is Times Square. The corridor became a space where the rules were suspended while participants, intoxicated with the possibilities of a new media, tried on new identities and roles. This carnival took over the wired lofts and office buildings of artists, entrepreneurs, and executives who explored boundaries between the real and virtual worlds, as well as between culture, technology, and business. As they struggled to establish a new media industry— or exploit its image—assorted interests forged new circuits of culture and capital. In the process they created a place named Silicon Alley and formed a particular conception of Internet business opportunity. In order to answer the questions,“Who were these people?” and“Why did they believe?,” we need to place them in a distinctive urban milieu that formed in the 1990s.

A PLACE

The Silicon Alley moniker identified both a place in New York City and a concept about the Internet industry. The terms“place” and“industry” usually imply a durability or continuity in sociocultural arrangements. But in Silicon Alley's brief but dynamic history, place and industry were works in progress. Telling the story of Silicon Alley requires an account of both place-making and industry-building—and nearly as many frames of reference as a postmodern novel. For starters, Silicon Alley's development was boosted by larger economic and political conditions that prevailed in the latter half of the 1990s—the heyday of neoliberal policy. Yet, its development drew on, and reassembled in unique fashion, distinctive elements of Lower Manhattan's physical and sociocultural environment. Moreover, bouts of place-making and industry-building that produced Silicon Alley were anchored in New York's uneasy postindustrial transformation. The aim of this book is to show how these forces came together to create this new space of cultural production.

Originally, the geography of Silicon Alley was rather well defined, the name designating a corridor in Lower Manhattan that followed Broadway south from the Flatiron District through Greenwich Village and SoHo. But over time the enclave's boundaries became ambiguous. Major offshoots sprang up in the Financial District and elsewhere in Manhattan; the city government tried to encourage the formation of new satellites in the other boroughs. And, at the high point, there were nearly as many new media firms and workers in the rest of the metropolitan region as there were in the city. However, there was something about the way that the dense mass in Manhattan marshaled energy that made it the clear center.

The district incorporated many elements of a setting that had long supported the making and mixing of creative culture and commercial enterprise. Segments of Manhattan's best-known cultural and commercial thoroughfares (Broadway and Fifth Avenue) ran through its midst, featuring landmarks such as the Flatiron Building (an elegantly strange, antique skyscraper) and New York University (a major research university that is wide open to its funky surroundings). A tangle of idiosyncratic side streets is endowed with thousands of small specialty shops and creative enterprises—many of them housed in old factory lofts (some with the cast-iron fronts revered as emblems of authenticity by yuppies). The warren of lofts, coffee shops, and restaurants allows the kinds of social encounters, both intended and accidental, that nurture creative subcultures. Of course, this terrain could not serve such a purpose if not for the presence of the various kinds of people that contribute to the cultural creativity and diversity of Lower Manhattan: college students, new immigrants,“old” minorities, gays, yuppie gentrifiers, and assorted creative types ranging from established professionals to burnouts and dropouts, with an army of struggling artists somewhere in between.

Much of this environment was incorporated by the new media with spectacular speed. Digital age imagery and infrastructure (e.g., high-speed Internet lines) seemed to bring a new liquidity to place. In part, the built environment was transformed as it was reimagined and reinterpreted. Two notable examples can be found on opposite ends of the enclave. The Flat-iron Building, formerly a testament to the pioneering age of skyscrapers, was recoded as Silicon Alley's preeminent landmark—its gateway for those approaching from Midtown to the north. The new media's Downtown anchor was a modern office building that formerly housed Drexel, Burnham, and Lambert—the notorious junk bond firm that was an icon of fast capitalism in the 1980s. In 1996, the building was transformed into the New York Information Technology Center—a new media hub and instant landmark signalling that Silicon Alley had reached the Financial District. The physical task of turning large swathes of Lower Manhattan into new media production spaces seemed to be accomplished with similar ease, requiring only the stringing of a bit of wire through buildings—not the large-scale demolition and construction projects that accompanied commercial redevelopment in the past. In reality, powerful social forces underlay this transformation. The rise of the new district was abetted by a larger postindustrial transformation that had left the area's physical and human assets unattached or underutilized as of the early 1990s. More directly, networks of organized interests, singularly and in combination, mustered a new array of power relations that helped Silicon Alley materialize.

In part, Silicon Alley was the latest round in the long struggle to reinvent New York as a postindustrial city—a process that elite property interests began to promote while factories still dominated Lower Manhattan. In fact, the large-scale deindustrialization of Lower Manhattan over the last four decades was not only the result of changes within industrial sectors, but also the product of commercial redevelopment (and related rises in real estate prices) that dislodged manufacturers.³ Consequently, New York, like many cities, has become increasingly dependent on cultural industries and producer services that produce or manipulate symbols. In New York, the traditional media industries (publishing, advertising, broadcasting, motion pictures) accounted for over 137, 000 jobs in 1997; business services and securities employed 245,000 and 150, 000 workers, respectively.⁴ The most important of the producer services is the financial sector, although the real estate industry has a special role in mediating ties between postindustrial sectors and the city. Real estate interests, in alliance with public sector allies, have often tried to repackage and remake Manhattan real estate as a site for high value uses. This has sometimes given rise to grand designs and massive public support for big complexes that help lock-in the city's dependence on the office market. The contested construction of the World Trade Center, which swept away a district of small firms and ethnic neighorhoods, was the preeminent example. More often, ad hoc collaborations have pushed redevelopment through. These endeavors often involve public-private partnerships—institutionalized as the template for development during the crises of the mid-1970s. At a time when the city was in the process of losing 600,000 jobs and in danger of defaulting on its bonds, political and business elites agreed that“the city's survival depended on a shared mission.” ⁵ The new media's rise provided yet another opportunity for making over Lower Manhattan.

However, increasing dependence on the media, advertising, financial, and real estate sectors has made the city more vulnerable to business cycles, accentuated by the boom-bust rhythms of speculation; during downturns the city is burdened with surplus office space, especially in the Financial District. This was the case in the early 1990s when Lower Manhattan was pitted with empty space; in addition to factory lofts abandoned by a shrinking garment industry, the deserted space included downtown office buildings vacated by Wall Street firms in the wake of the 1987 crash and the subsequent recession.⁶ Importantly, the rhythms of postindustrial expansion and retraction have become linked to the formation of creative communities. For some time, abandoned factory lofts had appealed to artists because they provided large, affordable spaces to work (and live). In fact, the colonization of lofts by artists that began in the 1960s and 1970s led landlords to boost rents, which further contributed to the displacement of manufacturers.⁷ This pattern, in part, figured in the rise of the new media enclave. Yet, hundreds of new media firms also ended up in Wall Street office buildings—far outside the traditional terrain of artistic types. To understand this curiosity, and the formation of this new cultural production space more generally, one has to examine how social relationships formed to support the new media—a story that begins with the technobohemian social circuit.

As artists began to experiment with CD-ROMs in the late 1980s and with website design in the early 1990s, a distinctive subculture began to form. Their ranks included college-age young people who felt that opportunities for their generation were limited or mundane (hence, the birth of the cyberslacker). In contrast to the common view that digital technology reduces the need for people to meet face-to-face, many web pioneers sought out such opportunities. The cyberslacker party circuit that convened in the lofts of web notables was one important example. Such gatherings were important both for learning about the latest technical developments in web graphics and for reaffirming the sense that what they were pioneering was of special importance. They also provided spaces for the creation of a special set of sensibilities and ideals.

Initially, the web pioneers were driven by an artistic ethic: Use new digital tools to produce work that was“cool,” that is, work that creatively explored the limits of the medium. But, they soon sought ties with business interests so as to be able to sustain their creative work materially, especially as the computer infrastructure and tools for doing the“coolest” things became more expensive. And in truth, for those who hoped to become known for their creative prowess, it became increasingly clear during the 1990s that fame awaited those who used technology to make money. Many approached corporations with evangelical zeal, spreading the word that a new media age was at hand. At any rate, the web pioneers gained powerful allies who not only helped“wire” the spaces of Lower Manhattan, but also made them accessible to creative types of modest means.

Two sets of organized interests played roles in helping a new media community materialize in Lower Manhattan. The first could be termed“new media industry-builders.” Their ranks included a handful of venture capitalists initially, and then a number of major corporations whom they drew into the new media adventure. These early industry-builders focused on creating spaces— social as well as physical—wherein connections could be woven between the web pioneers and various business interests. Their success in creating a new commercially oriented circuit for the new media, including the formation of the New York New Media Association (NYNMA), shifted the center of gravity in the new media community. NYNMA proved to be a powerful device for linking diverse elements to the new media (and to the core group of venture capitalists). Its membership—over eight thousand individuals from some fou...

Table of contents

• Cover
• Half Title
• Full Title
• Copyright
• Dedication
• CONTENTS
• Illustrations
• Preface
• Chapter 1 The New Media People Who Were They and Why Did They Believe?
• Chapter 2 Making and Selling a New Media District
• Chapter 3 Capital and Credibility Hooking up with Wall Street
• Chapter 4 Taking New York into a“New” Economy?
• Chapter 5 Over the River and through the' Hoods
• Chapter 6 Silicon Alley Unplugged
• Chapter 7 Creativity Unbound (and Reframed?)
• Appendices
• Notes
• Index