Sex on the Internet: Goldman Sachs Sold Its Village Voice Stake Because of Online Prostitution; How Big a Business Is It?
When the news broke that Goldman Sachs had rid itself of its investment in Village Voice Media due to the company’s connection with backpage.com, a website known mostly for its advertisements for “escorts” and certain kinds of massage, and which one prominent critic had charged with being the “biggest forum for sex trafficking of under-age girls in the United States,” two questions immediately came to mind:
1) How on earth did Goldman Sachs get mixed up in all this?
2) How pervasive is the online sex business anyway?
Let’s leave that first question to the Goldman Sachsers and move on to the second.
Cynics have long held that the secret driving force behind the spread of the Internet, and new technologies in general, has been our insatiable desire for all things sexy. Actually, this wasn’t so much a secret as something close to conventional wisdom in the 1990s, when one expert confidently declared that porn and other so called “adult services” were, as he put it, the “No. 1 income generator on the Internet.”
These days, of course, there are plenty of other “income generators” on the internet, ranging from online shopping to dopey Facebook games, and there is so much free porn so readily available online it’s hard to imagine who exactly is paying for any of it. But porn - and those “adult services” - still generate a boatload of cash.
The “escort” ads that ended up so embarrassing Goldman Sachs are only a small part of the puzzle. According to The AIM Group, which tracks such things, backpage.com is the dominant player in the healthily growing “prostitution advertisement” industry online, generating some $26 million in revenues in the last 12 months. Other players in this market, with names like eros.com and myredbook.com, added another $10.6 million in revenues to the pile. (The former big Kahuna in the field, Craigslist, reluctantly shut down its own adult listings in 2010.)