Sex ads generate more revenue and scrutiny for Craigslist

Published 5:00 am Monday, April 26, 2010

Craigslist, one of the most popular websites in the United States, is on track to increase its revenue 22 percent this year, largely from its controversial sex advertisements. That financial success is reviving scrutiny from law enforcement officials who say the ads are still being used for illegal ends.

The ads, many of which blatantly advertise prostitution, are expected to bring in $36 million this year, according to a new projection of Craigslist’s income. That is three times the revenue in last year’s projection.

Law enforcement officials have been fighting a mostly losing battle to get Craigslist to rein in the sex ads. At the same time, officials of organizations that oppose human trafficking say the site remains the biggest online hub for selling women against their will.

Last week, in the latest example, the FBI arrested 14 members of the Gambino crime family on charges of, among other things, selling the sexual services of girls ages 15 to 19 on Craigslist.

The company that provided the revenue projection, the Advanced Interactive Media Group, has been preparing such analyses since 2003. Followers of Craigslist consider AIM’s work to be the most comprehensive estimates of the fiercely private company’s finances. The estimate was calculated based on the number of sex ads counted on Craigslist over the month of February and the fees for posting such ads — $10 initially and $5 for repeat postings.

James Buckmaster, Craigslist’s chief executive, said in an e-mail message that the site would not confirm the figures because it is private and does not discuss its finances.

Craigslist, based in San Francisco, had seemed to put the conflict over its sex ads to rest. Attorneys general in 40 states, including New Jersey, Illinois and Connecticut, investigated the company for facilitating criminal activity, after a wave of publicity about prostitution and violent crimes linked to the site.

Although Craigslist has continually argued that it is legally protected by the Communications Decency Act against liability for what its users post — an analysis that judges and legal experts generally agree with — it promised last May to begin manually monitoring these posts for illegal activity.

But it also decided to stop committing to donate the profits from sex ads to charity, saying it would make no further comment on how that money would be used.

In a private letter sent to Craigslist’s lawyer on Thursday, Richard Blumenthal, attorney general of Connecticut, complained about the continued presence of prostitution ads on the site and asked what additional steps Craigslist was taking to keep such solicitations off the site.

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