Craigslist's adult ads: Should morality affect the bottom line?

It's hard to defend Craigslist when it comes to the criticisms of not doing enough to curb criminal activity on its site, specifically prostitution, human trafficking and child endangerment. Just take a few minutes to cruise through the red-light district of any Craigslist city on the site and you'll find plenty of ads that appear to be solicitations.

What makes it especially hard to defend Craigslist is that it's actually hard to like the site and the company's way of doing business. There is no telephone support system; only an online one. The site leans on users to "flag" offensive ads, as well as those that are miscategorized or spam. And, because it's a private company, it doesn't have to share its financial information the way public companies do every quarter.

And that's where the latest controversy comes in.

Connecticut Attorney General Richard Blumenthal has subpoenaed Craigslist as part of an investigation to find out whether the site is doing enough to curb prostitution. In a statement, Blumenthal said:

The Craigslist brothel business seems booming--belying its promise to fight prostitution. The best evidence is thousands of ads that remain on Craigslist--skimpily and slickly disguised with code words. We are asking Craigslist for specific answers about steps to screen and stop sex-for-money offers--and whether the company is actually profiting from prostitution ads that it promised the states and public that it would try to block.

Craigslist responded by questioning the political motivations of Blumenthal for pushing this agenda, especially with his campaign for a seat in the U.S. Senate kicking into high gear. In its blog post, the company wrote:

As AG Blumenthal knows full well, craigslist has gone beyond fulfilling its legal obligations, far beyond classifieds industry norms, has more than lived up to any promises it made, and working together with its partners is in fact a leader in the fight against human trafficking and exploitation.

As part of his subpoena, Blumenthal also wants to know if craigslist is profiting from these ads.

But there are a couple of problems here. First, Craigslist is a private company, which means it's under no obligation to publicly report its financial performance the way others do every quarter. Second, a federal judge already ruled back in October that Craigslist cannot be held liable for the ads on its site.

So why the big interest in Craigslist's financials? Last month, the Advanced Interactive Media Group - which annually analyzes, calculates and issues estimates of the company's finances - said the site will generate about $122 million in revenue this year, with profits ranging from $88 million to $99 million. It also estimated that about 30 percent of the revenue - or roughly $36 million - comes from "adult services" ads.

That was probably an easier pill to swallow when it was believed that the profits were going to charity - which was the case until recently. But now that Craigslist is reportedly not donating that money to charity, the company is seen as one that profits from these ads. And that's a problem.

But, why?

Is it wrong - from strictly a legal perspective - for a company to profit off of these ads, especially since it's already been determined that there's no liability or responsibility for the contents of them? Doesn't the Village Voice newspaper - the favorite for Craigslist to point out when arguing its case - charge for ads that are pretty blatant?  How about the ad that appeared on the right side of my Google results page when I typed in the query "Craigslist sex ads charity" was a link for Local Sex Ads? Did anyone profit from that?

I'm not saying Craigslist is right or wrong here. Legality has been fighting morality for generations. And, right or wrong, there are laws that place blame - or deflect it, in this case - for society's woes.

Again, it's hard to defend Craigslist here - and I have to admit that I feel a bit dirty for coming to its defense - but politicians can't just go around trying to hold one Internet company responsible for controlling - or curbing - a new-age form of prostitution. Law enforcement has been trying to stop the old school forms of prostitution for generations and, quite frankly, hasn't made much of a dent. It's still a widespread problem, isn't it?

More importantly, politicians can't go around demanding that privately-held companies be forced to reveal their financial information for the sake of proving their points. If you don't like Craigslist's policies or the way it conducts business, you're more than welcome to hit up other sites, such as Geebo, that are working to make a name for themselves in an industry dominated by one.

Like it or not, Craigslist is a successful Internet company that has built a large audience by providing a service and is profiting from that business model in a manner that's within the boundaries of the law.