Craiglist Pulls Adult Services Ads

The popular Web site Craigslist has shut down its controversial adult services section after complaints from 17 states about prostitution.

The section was replaced with the words "censored" and previous ads were removed from the Web site.

The section was removed from the Philadelphia section of Craigslist sometime early Saturday morning.

A marketing report in April claimed the Web site craigslist.com will make $36 million this year from "adult services" ads, which researchers call "thinly disguised advertising for prostitutes."

Highlights of the research report are in a blog from AIMGroup.com, an Internet research firm.

Peter M. Zollman, founder of the AIM Group, says the report is the first detailed look at where craigslist.com makes money - and that the company is incredibly profitable.

And much of the profit growth comes from adult ads.

"We're astonished at the explosive growth Craigslist continues to show, even in a very tough economy," said Jim Townsend, editorial director of Classified Intelligence Report and the AIM Group, in the blog post. "For 2010, its `adult services' revenue will be three times the revenue it generated in that category in 2009."

Zollman says craigslist.com generates more than $4 million in revenue per employee and profits of $2.9 million to $3.2 million per employee.

Zollman says craigslist will generate an estimated $122 million in revenue in 2010, with 30 percent of the money coming from adult services.

Another 17 percent (almost $21 million) of revenue comes from apartment ads in New York City, while the other 50 percent of revenue comes general recruitment ads.

Also in April, an interview with craigslist.com founder Craig Newmark was published on the Web site True/Slant with journalist Jonathan Curiel.

Newmark says activities on the Adult Services section of craigslist.com reflects what happens in a similar large congregation of people.

"We just don’t tolerate (illegal services). I’ve worked with a lot of cops. They point out that (the number of people who use) Craigslist is the equivalent of a major metropolitan area, 50 million people, and that we have a very low crime rate.’

In reaction to a report in the New York Times on the AIM Group research, Jim Buckmaster, Craigslist CEO, told the Times that craiglist is not doing anything wrong.

"Of the thousands of U.S. venues that carry adult service ads," Buckmaster told the New York Times . "Craigslist has done the best and most responsible job of combating child exploitation and human trafficking."

But in August, the attorneys general for 17 states demanded that the Web site end its use of the adult services section.