Hi, Wesley -- Yeah, that's what some commentators had said the following morning: according to them, the audience was not sure how to react, and was laughing nervously and intermittently -- at first. But when he said, "The creepy stuff [that the extortionist threatened to expose] was that I have had sex with women who work for me on the show" the audience was silent except for a gasp or two. THEN he said, "Now, my response to that is, yes, I have. I have had sex with women who work on this show." THAT is when the audience erupted in laughter and applause. Sorry, Wesley, but that was not nervous laughter or nervous applause, nor was it appreciation of a joke. That was a reward to him from his audience for his bad behavior. (And yes, I consider it to be sexual harrassment/pressure in the workplace and, therefore, bad behavior.)

For my own part, I can't imagine being an audience member and laughing at or applauding what Letterman had said. If I'd been there listening to the people around me laughing and applauding, I would either have bolted from the room or thrown up right there.