It is hard not to feel sorry for Japanese Internet entrepreneur Takafumi Horie. Until just recently he was the darling of the Japanese media, universally known as “Horiemon” – a reference to the cuddly manga character Doraemon. Suddenly though, the 33-year-old CEO of the Internet firm Livedoor, finds himself portrayed as a cartoon villain.

On Jan. 16 Tokyo public prosecutors raided Livedoor’s headquarters in the high-rise Roppongi Hills development. The ensuing blanket media coverage detailed alleged misdeeds, including stock market manipulation and falsifying accounts to conceal losses. The Tokyo bourse reacted quickly; the unexpected raid causing a massive sell-off of Livedoor stock, swamping the exchange’s computer system, and forcing the bourse to close 20 minutes early on Jan. 18. Five days later Horie and three top Livedoor executives were arrested and taken into custody.

Livedoor was founded in 1997 by Tokyo University dropout Horie with start-up capital of just $50,000 (6 million yen). The Yahoo-style portal site grew through a series of takeovers into a group of 44 separate companies and five related companies employing 2,500 people. Horie’s audacious but failed attempts to buy one of Japan’s baseball teams and later to takeover the Fujisankei media conglomerate made him probably Japan’s best known businessman. Horie even stood (unsuccessfully) as an independent candidate in the general election last September.

But while Horie has attracted the admiration of many for his self-confidence and success, he has also attracted the enmity of Japan’s old guard. His detractors accuse him of arrogance and greed. One of Horie’s bestselling business books is titled “Who Earns Wins.” He boasted of his ambition to set up a space tourism business and even hinted that he might one day see himself as prime minister. Horie reportedly chose his 38th floor Roppongi Hills headquarters because it was the only place in Tokyo that he could look down on Tokyo Tower.

Yet, is it too soon to write Horie off? The media seem to presume Horie’s guilt, even before a trial that, judging by other high profile cases in Japan, could well last years. Horie has not yet been officially charged, and much of the coverage has relied on anonymous quotes from the Tokyo prosecutors’ office. The media that once lionized Horie are now dragging him down with equal enthusiasm. Aera magazine devoted 11 pages to the scandal – including an interview with Horie’s father. Another weekly tabloid, Friday magazine, ran the headline: “Tokyo prosecutors’ office reveals: ‘Horie [planned] to evade taxes by going into space.'”

What does the future hold in store for Horie? Some already foretell eventual rehabilitation. “It may be difficult to rebuild Livedoor, but Horie may emerge as a wounded hero,” suggested Nihon Keizai Shimbun columnist Yasuhiro Tase, speaking at the Foreign Correspondents’ Club of Japan last month. After their avid coverage of Horie’s downfall, “the mass media will welcome him back with open arms,” predicted TV Asahi political commentator Soichiro Tahara.

Japan Media Review spoke to Internet entrepreneur and Japan Inc. magazine publisher Terrie Lloyd about Horie’s rise and fall. Both an Australian and New Zealand national, Lloyd arrived in Japan 22 years ago. Like Takafumi Horie, he has been involved with online business since well before the Japanese Internet took off at the end of the 1990s.

This is an edited transcript of interviews conducted by telephone and e-mail.

Japan Media Review: When did you first come across Horie?

Terrie Lloyd: It would have been in the mid-1990s. It was just a little two-bit company and he was kind of a weird guy. [The] Internet was still just getting started back then. It is true that the Internet didn’t really take off in Japan until about 1998 or 1999, and that was because of broadband.

I had just started an Internet business. We were in a similar space. As I recall, he started off by doing server hosting and then very quickly got involved in [mergers and acquisitions] and consulting. His rise to fame has been very recent – in the last three years.

JMR: What was he like back then?

TL: He has always had a disdain for authority. He struck me back then as somebody who was a bit airheaded actually, in other words very ambitious and full of all the things he could do, and unaware of some of the restrictions that were around. Of course, that’s exactly what he turned out to be. He was always very smart though.

JMR: Is it true that he bought Livedoor to get the name?

TL: That’s true. That’s what he said when I interviewed him [for Japan Inc.], that business was losing lots of money. But there was another reason, obviously, and that would be 150,000 freeloading subscribers that he could convert to some of his other services.

JMR: Did you have any inkling he would become so big?

TL: No, it wasn’t obvious at all. Not considering his business model, no core to the business. Fundamentally, the business turned out to be smoke and mirrors.

It was his downfall because when there is no core to your business you are only as good as your last deal in terms of profit flow. So you have to do more and more deals — which means you tend to cut corners. If you cut corners, you break the law.

However, I will say that what he does is not particularly different to what I have seen other people do. I think most successful businessmen in this country have probably cut corners somewhere along the way, and if you look hard enough you will find what it was. The authorities know this, so if someone transgresses too much, well they have always got something to find out and have over you.

JMR: So he cut too many corners?

TL: It was sticking his finger up at people that he should have had a little more respect and time for. It is hard to say who is orchestrating this witch-hunt, but it is a witch-hunt because what he has done is not particularly bad. There has to be some political influence behind it, in my opinion.

JMR: Some people have spoken of a conspiracy?

TL: I don’t know if you can call it a conspiracy. I would say that someone has been doing some dedicated digging at least since the Fuji TV affair to find dirt on Horie, and it was only a matter of time before they found it. It’s pretty obvious because they had to dig all the way back to 2003 to find the ValueClick deal in order to get him arrested.

Once the prosecutor’s department knows there’s a problem, they have to go after the person. But, obviously, someone blew the whistle.

JMR: Do you think he will be convicted?

TL: Personally, I think the charges are really trumped up, like the Yomiuri Shimbun saying he bought the company for more than five times the proper value. There are plenty of instances of companies being bought for more than the book value. That activity in itself is not illegal, unless you knew that you were unofficially pumping up the values.

But you have to wonder where exactly the line can be drawn between gray and illegal, because in this country it is not clear at all.

JMR: Were you surprised at the speed of Horie’s downfall? Is Livedoor really a castle built on the sand as some people are saying?

TL: He hasn’t had his downfall necessarily yet. He’s only under interrogation. So he will get out. I assume he is the major shareholder in his company. If that is the case, he can replace the board and the management at any time.

JMR: Is this the Japanese Enron?

TL: No, it’s not comparable at all. The scope is completely different, we are not talking about anywhere near the same amount of money. And there was never the performance that [Enron CEO Kenneth] Lay and the others allegedly did in the [United] States saying everything was dandy, when in fact it wasn’t. Now, it is true that they say Horie covered up the core company’s losses by transferring profits from other companies, but nevertheless as a group the company was profitable. Although that’s not kosher, it’s not outright lying as we saw at Enron.

JMR: Why do you think the media turned against Horie so abruptly?

TL: That’s just the Japanese media; they are always looking for the next hot story. There are no alliances or allegiances, they couldn’t care less. Some lean left, some lean right, so they tend to protect their own. But Horie was a mean little upstart capitalist; he didn’t really fall into any one media’s bailiwick, so of course none of them are going to protect him.

It’s his own fault, he decided that the way he was going to increase his stock was by [promoting] himself in front of the nation, which, needless to say, gave him a lot of exposure. Now he’s got that same exposure working against him.

JMR: When Horie tried to buy the Fujisankei Group he said that he wanted to bring the Japanese media up to date. Do you think his arrest is going to delay the media’s integration with the Internet?

TL: He changed it to a certain extent. He allowed independent media to be more important. He made a great business out of blogging. Has he changed the conservative incumbent media? No. They are being changed by market forces, not by Horie; the defection to computers; the explosion of 3G cell-phones; the prevalence of free papers. There are many, many different attacks taking place on the traditional media.

JMR: What do you think is going to happen to Horie now?

TL: Two weeks ago, I thought that he would get off the hook. Now I think that he will get hit with some charges, but I don’t think the trial will go as smoothly or as clearly as people expect. I think he will be quite uncooperative. And then, who knows, maybe they will throw the book at him because he was a nasty boy, not because he actually broke any laws.

Or, alternatively, they may back down and give him a suspended sentence – get the trial over quickly so that they don’t have to listen to him rant on day after day. It is hard to say whether he is going to do a Saddam [Hussein], or whether he is just going to go quietly.

JMR: Might the media help rehabilitate Horie one day?

TL: The have vilified him beyond all belief. They did the same thing with Yoshiaki Tsutsumi [ex-chief of the Seibu Railways group] who, in my opinion, did worse things than Horie did – and he got a suspended sentence. He committed fraud by using a holding company to manipulate the shares of Seibu railways.

At least it appears Horie wasn’t knowingly padding his own pocket – he was just building his own company. With Tsutsumi it was sneaky thievery over a long period of time. Mind you, [Tsutsumi] did the right thing; as soon they arrested him he apologized, he said it was all his fault. And the result was that he was chastised and let go.

JMR: If convicted, is there a chance he might come out of prison a quieter, humbler Horie?

TL: If he is smart he will. But you have got to wonder about his personality sometimes.

Dan Gillmor is author of “We the Media: Grassroots Journalism by the People, for the People” and founder of the Center for Citizen Media. He is a well-known and vocal proponent of “citizen journalism” – as he puts it: “the democratization of the tools and the distribution [of journalism] – the idea that anyone can do it.”

Japan has a number of its own citizen journalism projects, notably a “public journalism” site, which is part of Internet entrepreneur Horie Takafumi’s Livedoor News Web site. But despite Horie once vowing to “kill Japanese newspapers and TV,” citizen journalism seems to have barely landed a blow as yet. Site traffic is modest, and professional journalists have seemed critical and wary of the new competition. By way of contrast, in neighboring South Korea, citizen journalism Web site OhmyNews has more than 40,000 citizen and full-time reporters and once logged 25 million page views in a single day.

Japan Media Review spoke to Dan Gillmor about citizen journalism in the United States, South Korea and Japan. As well as considering why citizen journalists have had so little success thus far challenging Japan’s “old” media, Gillmor spoke about how citizen journalism has the potential to change media everywhere.

This is an edited transcript of interviews conducted by telephone and e-mail.

Japan Media Review: You have just set up the Center for Citizen Media. What is the project’s aim and would you describe it as “civic journalism”?

Dan Gillmor: Civic journalism was really about news organizations setting public agendas and being more directly involved with community affairs. The public civic journalism that people talked about was exclusively about big organizations or the local equivalent of mass media doing the agenda setting. The thing that I am focused on is bottom up as opposed to top down. I am involved with the citizen media idea – the democratization of the tools and the distribution – the idea that anyone can do it. I’m very anxious that the existing media organizations participate in this themselves and encourage people in their audiences to participate.

JMR: How does that compare to a project like OhmyNews in South Korea that started off in opposition to the mainstream media?

DG: It was exclusively independent of the main media when they set it up. Their whole goal was to be an alternative, and it was under conditions that are not at all like the conditions in the U.S. You had three newspapers that had a substantial majority among them of all the circulation in Seoul and much of the country. That’s a monolithic media quite unlike anything in the U.S. And those three were very much tied to the power structure in a very fundamental way. While the media in the U.S. tend to be kind of corporate, they are not in general locked into the power structure.

JMR: Do you have any idea why Japan hasn’t come up with any citizen journalism project on the scale of OhmyNews?

DG: I don’t think I am an expert enough on Japan, but Japan has had a very different history with the Internet until the last several years. Internet access was very, very expensive. At the same time the Japanese were one of the two or three world leaders in mobile communications, so a lot of what people have done there that is advanced has been in the mobile area. 2 Channel [a popular Internet discussion board], which is probably the most interesting early experiment, was pretty radical for Japan.

JMR: 2 Channel is hugely popular – reportedly the world’s largest Internet discussion board – but it has been heavily criticized by the Japanese media.

DG: I can understand why. A lot of anonymous chatter is not the same as citizen journalism. At a very basic level, if one doesn’t stand behind one’s own words it is possible that it is journalism, but it is likely that it is not.

JMR: How do you progress from an anonymous and chaotic bulletin board like 2 Channel to a citizen journalism movement?

DG: There is a lot of interesting information on that site and a lot of data, but it is not something I would call journalism. You can learn a lot [on 2 Channel] – from what I understand from people who have told me about it. The problem is that if you are wise you start off with the bias that it is likely to be false, and that maybe there is some truth in there, but who knows? At least that’s my bias when I see anonymous [postings].

JMR: Isn’t that also a problem in citizen journalism?

DG: We are going to have to change what we think of as media literacy, among other things. You have to change attitudes on two sides. One is persuading people who are doing citizen journalism, that if they really want to do journalism that it involves more than just writing down their views. It also means more responsibility on the part of the audience to not assume that everything written is going to be true.

JMR: What are your impressions of the civil journalism movement in Japan?

DG: I would say that there is clearly some interest in this in Japan. They published my book [“We the Media. Grassroots Journalism by the People, for the People”] and to my astonishment put me on the cover of Aera [a Japanese weekly magazine]. [Takafumi] Horie endorsed my book, which was really amazing. He has clearly been pushing the envelope on this.

JMR: There are several citizen journalism projects in Japan, but the media seem to be somewhat standoffish.

DG: Ask them what would happen if they did [support citizen journalism]. Would the [press] club throw them out? In a place where access is so dependent on being a member of this club it is easy to see why major media are taking it slowly.

JMR: Are the Japanese media scared of losing their monopoly?

DG: Well, they are scared of it here too. But the bigger issue in America is not the competition journalistically. I think that’s a side issue. The changes here are coming about almost entirely because the business model is unraveling and everyone is scared. News companies, the bosses, are thinking, ‘Oh my God, we are losing all our advertising,’ and the journalists are starting to realize that their jobs are in real jeopardy. People are experimenting, it’s not like anyone has found an answer.

Classified ads in particular are disappearing onto the Web and newspapers are losing their single most profitable revenue. That’s tending to focus their attention: local newspapers in particular, but [also] advertising in general.

JMR: The Japanese media is much more centralized than the U.S. media with few local newspapers reliant on classified ads. Could that help explain why citizen journalism hasn’t taken off here?

DG: So it will take longer for the business questions to become obvious. They will eventually. It’s a big upheaval.

JMR: Why is the involvement of professional journalists in citizen journalism important?

DG: They need to do more listening and conversing and a little less lecturing. That’s because I think news is fundamentally a conversation and not a lecture; and when journalists realize that they do better journalism.

It would certainly help a lot, give it more obvious legitimacy. The failure to participate won’t stop this, but the participation will certainly accelerate it and maybe will help save the media from otherwise major potential catastrophe.

JMR: And that goes for Japan too?

DG: I assume it’s true [for Japan too]. I am confident that this is true everywhere, that journalists will do better journalism if they think of the process more as a conversation than as a lecture. Period. Having said that, these things will develop in different ways in different places.

JMR: What is the connection between citizen journalism and democracy? How about in a country like Japan where the same party has been in power almost uninterruptedly for over half a century?

DG: I think it’s a fairly simple connection. The more engaged someone becomes with current events, the more likely one is to be a well-informed person. And being well informed is the key to being a good citizen.

JMR: Many people have criticized journalistic standards in citizen journalism. How do you respond to people like [South African academic] Vincent Maher who say that “citizen journalism is dead”?

DG: I thought in the end that he and I agreed on more than we disagreed on. What’s going on now is a snapshot in time and it is going to change. I think that if we can do this right, it is just going to get better. [That’s] in terms of journalism. I don’t have any predictions in terms of the journalism business, that’s a much tougher question.

It’s fair to say that a lot of what people have tried to do has failed, but that doesn’t mean that the idea is a bad one, or that the trend is going to stop. Anything that is radically evolutionary is not going to proceed either on a straight path or on an exponential curve. It’s going to have ups and downs on the way. But I think that the overall trajectory is positive.

JMR: What will be the next step for citizen journalism?

DG: I think the next steps will be more acceptance by the major media, a thousand different experiments, a lot of learning and adaptation. When I said evolutionary I really meant that. It’s a process of many different things being tried, many if not most of them failing, and sticking with the ones that work. The newspaper and the broadcasting media and magazines did not become what they are overnight. It was decades and centuries of refinement and trying different things and staying with what works and discarding what didn’t. It would be silly to attach too much meaning to a snapshot.

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There are hundreds of women’s magazines to choose from in Japanese bookstores, not to mention at convenience stores and even subway station kiosks. But none of these magazines can offer what Cafeglobe.com can.

A pioneer Web site targeted at women, Cafeglobe.com, has attracted its reader base with not only fashion and beauty content, but also easy-to-understand political and financial information. The site enjoys as many as 350,000 unique users per month, according to figures from August 2005.

Behind one of the most popular sites in Japan is Yoko Aoki, Cafeglobe.com’s founder and CEO. Born in 1969, Yoko Aoki has been an editor for women’s lifestyle magazine “La Vie de 30ans” and automobile magazine “Navi.” Frustrated with the traditional business structure of the women’s magazine industry, Aoki looked to the Web, where she launched Cafeglobe.com with Kikuko Yano in 1999, intending it as a “medium truly useful for women.”

Aoki, who travels between Tokyo and London every month and a half, corresponded with Japan Media Review about the successful elements behind Cafeglobe.com and her vision for the future of the site.

Japan Media Review: What made you decide to launch Cafeglobe.com? What makes it different?

Yoko Aoki: Both Kikuko Yano, the president, and I were editors at women’s fashion magazines. We were creating different magazines, but we both felt that current women’s magazines cannot meet the needs of women, and we started planning a new medium by ourselves. In other words, I could say, we felt, “There aren’t any magazines I want to read.”

The number of women with careers has increased, and it has become more natural for them to be independent economically and mentally. However, publishers—who possess the most traditional corporate mentality—and their businessmen who make magazines were still fixated on the notion that women were only interested in fashion, beauty, cooking and travel, which no longer fit the realistic needs [of women]. We did not start with the idea of targeting women or differentiating from other [magazines]; I would say we noticed that as a user (reader) there was nothing I wanted to read.

JMR: How did you become interested in the Internet as a medium?

YA: First off, we wanted to have a medium to publish information, such as the women’s magazine we wanted to create. But, we knew too well by being editors of paper magazines that the initial investment is huge. Of course, once you work on a Web site, it will cost quite an amount, but when it comes to the paper, in addition to the cost of reporting and writing, enormous cost will be required, including that of papers, printing, and distributing throughout the country, and storing the leftovers, putting them into a shredder, creating accountd with related companies—which is quite difficult because they are a closed industry. It was around the time that the Internet became popular among the ordinary people, so we naturally thought of the possibility of Web publishing.

JMR: How many users regularly visit your site? Also, what’s their average age?

YA: As of August 2005, 7.3 million page views per month, and 350,000 unique users per month. As for the users’ average age, just under 30 is the largest audience. In a graph, it looks like Mt. Fuji with 30 at the peak.

JMR: Which section is the most popular on Cafeglobe.com?

YA: Ever since the beginning of Cafeglobe, “Gohan Nikki” (Meal Diary) by Hideko Kogure has been always popular. Also, “Nagatacho Kansatsu Nikki” (Journal of Nagatacho Observation) by Angel Atsumi and “Wakariyasui Okane no Shotai no Hanashi” (Easy-to-understand Identity of Money) by Noriko Hama are popular.

JMR: I can see quite a few sections on politics, economics, and social issues like environmental problems. Why did you decide to publish those sections?

YA: It is related to the earlier answer of mine. When women start earning income and managing it by themselves—even if they have partners—they need to know about society. To meet this need, we work hard on those pages. In my humble opinion, we aim at directing those who visit Cafeglobe.com for its fashion and beauty content toward political or social issues, and realize that women, too, should be interested in these subjects.

JMR: Where do you think women at present gain information necessary to them, as you mentioned?

YA: I think there is not much at this moment. Including myself, I think they tried their best to read the political section or finance sections of newspapers. And “AERA,” “Newsweek,” and “Shukan Bunshun,” I think. But those political sections in newspapers or weekly magazines for businessmen are mainly written on the premise that the readers know the basics, so honestly speaking, it is not easy to comprehend.

For example, it is not appealing to learn about Mr. [Seiji] Maehara, a new representative of Minshatou, without any knowledge of him,. But when you read an article in “Nagatacho Kansatsu Nikki” by Angel Atsumi [about his personality], it will help you be more interested in him. We, Cafeglobe, are aiming at building a bridge [between the users and the political sections in newspapers and magazines].

JMR: Which medium do you consider to be a competitor to your site? A magazine, newspaper or another Internet site?

YA: I do not really think of it as a competitor, but if I have to point one out, I would say it is a personal blog. While the amount of information on an individual blog is limited, there are valuable blogs, such as ones with access to information sources, or one that investigates a certain topic. So, I would say each individual blog is our competitor. As for existing magazines and newspapers, because their market share will not be bigger, I do not consider them competitors. Regarding other Web sites, I would rather welcome a competitor. No, I am not saying that we are the best; I mean that there is no site similar to us. This can be applied to magazines, but when several similar media emerge later, the pioneer and the followers will be acknowledged as a new media genre—just like when women’s magazines for 30-year olds appeared. So, I think if we have a company, more advertisers will approach us, and we will gain more potential users.

JMR: In what way do you create an interactive relationship with the readers? How do you promote the interaction?

YA: I cannot think of anything that we pay special attention to. I think it could apply to any Web site, but in a forum, some eccentric opinions or mean opinions tend to leave a strong impression, which we are a little bit concerned about. But we are blessed to have kind and nice users at our site and have not had many [discussion board] quarrels.

JMR: How do you manage your business on Cafeglobe.com? Have you ever considered making Cafeglobe.com a pay site?

YA: One-third of our income comes from advertising, another one-third is from site production (as a production company, we create and maintain other companies’ sites), and the other one-third is from merchandising. Basically, gaining profit all from advertising would be ideal, but the reality is that we have not reached there yet. I believe making the site a pay site is what we wish and what it should be. This is because as a medium depending on advertising fees, we cannot always convey the information that users need. Realistically speaking, however, it is impossible under the current circumstances. I would like to keep checking up on the industry’s trend.

JMR: Ever since its foundation in 1999, your site has been supported by many users. What’s the secret of your popularity?

YA: I think it is all because we have created the site with sincerity. Our editorial policy is that we write any article, even a small one, that will make [the users] feel grateful that they have accessed. The other secret, I believe, is that we show our faces as creators in the anonymous Internet environment.

JMR: What is the toughest thing you have encountered since the site’s foundation?

YA: For the first two years, we worked so hard to create the site that we did not take weekends off or sleep enough. The physical hardship was the hardest thing (laugh). Also, we lacked a common language between editors and writers who created the content and those who made the system and HTML coding, which produced some trouble. In addition—now that we do not have this problem any more—around 1999, the number of savvy Web designers was extremely low, and it was difficult.

JMR: What is the best thing about being the editor-in-chief of Cafeglobe.com?

YA: That definitely lies in not being bothered by an “oyaji jyoushi” (middle-aged male boss) who does not understand current women’s needs, like [I was] in a publishing company (laugh). While I was working there, I proposed an article on social issues for women or on environment, but whatever I proposed was turned down by [the boss] saying “women aren’t interested in those issues, are they?”

JMR: You stepped down as the editor-in-chief on Sept. 1 and became CEO. How are you planning to contribute to Cafeglobe.com in your new position?

YA: I will continue to contribute to the content development and the service improvement of Cafeglobe.com, both as a company executive and as a member of the editorial staff. Since the Web always requires something new, I would like to watch the overseas trends involving the Web and women, so that we could follow [the trend] as soon as possible.

JMR: What is Cafeglobe.com is planning for the future?

YA: We have just opened a new service, “Oshigoto no Chienowa” (Career Insight), in which users can exchange the situation job according to the job category and the wisdom of their work. So, we will develop further the career-related content. Moreover, although I cannot tell you in a concrete way, we are preparing for a new service involving a community that will be launched next year. The quality of the users at Cafeglobe.com is very high, so I believe by making a community more convenient and improved, this will become an invaluable space for women to gain vital information.