Wednesday, April 09, 2008

The Internet & (ahem) "escort" services

A month ago, the not so honourable Elliot Spitzer resigned as Governor of New York State. A high profile politician, he had in an earlier stint as the State's Attorney General, adopted a crusading, morally upright stance (against Wall Street and other adversaries) that had earned him the title of "Mr. Clean". He resigned as he was found out to have on several occasions used the Emperors Club, an international call girl ring.


The Emperors Club (website now shut down, see screenshots and reports here , here and here) was essentially an online prostitution ring that had interests in America, England and France. The women were graded with between one and seven diamonds on the website, which determined their fee.The most valued clients were offered "membership" of the "Icon Club" where fees started at $5,500 (£2,750) an hour. The company boasted that it targeted "those accustomed to excellence". This club was subsequently shut by the FBI.

That's not quite our story here, though.

As we shall see below, it would have been quite difficult to run this business as profitably if it were not online. The Web is reportedly a key channel for high class prostitution. For an Internet lover (no pun intended) like me, it is instructive to learn why. Here then are two alternate approaches to identifying why the Net is a great fit for this business.

Perspective A

In the first approach, we identify the "customer value" the Internet provides in this business :

1. The Internet provides anonymity, a key requirement for all those involved in this business. This is somewhat similar to the requirement of those doing music and movies file sharing.

2.Websites allow sex workers to avoid the high risk, police-attracting behaviour of walking the streets.

3.Websites allow the girls to attract (reach) a large number of clients all at the same time. They can even enlist themselves on multiple sites.

4. Data-rich profiles i.e. profiles with photos, videos and the like of above workers - are possible online. A website is also an easy way to list the wide "variety of services" available in this business.

5. The sites have themselves evolved - with Web 2.0 like features - wherein customers rate and review the girls. These features include discussion boards, online chats,etc. Apparently, customers often base their decision of which escort to choose, on these reviews. You can search by name, URL, phone number, etc.

6. The most successful sites actually have an aggregation model, which is to say they are a directory of other ISPs (Internet Sex Providers for the uninitiated). The Erotic Review's site traffic is up to 357,000 unique visitors for Mar '08, up 49.6% from the same period a year ago.

6. A study has shown that the mean billing rate of escort services on the Net is $250-300 per hour, much higher than the rate commanded by girls who work the streets. The higher-priced girls found online are likely to constitute less of a hygiene risk. In effect, the Net is lowering the average HIV and STD infection risk-rate.

Perspective B

Here's another perspective on why the Internet is a great channel for services of the matchmaking kind, whether these be jobs, dating, matrimony, real estate, auto or the service under question viz. escort services :

I'm going to draw from the following article that appeared in HBR in Sep - Oct 1997. Philip B. Evans & Thomas Wurster wrote a paper for the Harvard Business Review titled Strategy and the New Economics of Information. The paper also features in the HBR book Creating Value in the Network Economy edited by Dan Tapscott. Some pertinent extracts :

  • Every business is an information business, said the authors (something which most managers would consider a truism today). Further, the electronic carrying (as opposed to the physical carrying) of information, enables it to be unbundled from the product.
  • What's revolutionary about this is that electronic information simultaneously allows high reach and high richness. Reach means the number of people exchanging the information. Richness of information is a composite of three factors viz. bandwidth, customization and interactivity.

In the case of physically carried information,this is not possible. Thus, in the physical world, it is possible to easily deliver stock quotes (which are narrow bandwidth) to a large number of people but it's not possible to deliver movies (high bandwidth) equally easily. Likewise, TV ads can be easily delivered to a large number of people but it was far more difficult to deliver customized sales pitch for individuals (direct mail). And dialogue was easy between a few individuals but not among a large number, for which all communication had to be monologue (low interactivity).

Electronic information, most importantly the Internet, has changed the above. It is today possible to simultaneously have (i) high reach (ii) bandwidth, (iii) customization and (iv) interactivity.

And matchmaking services - such as escort services - have these following attributes :

  • These are consumed by a large consumer market, in fact have universal application, so require a good reach.
  • Product offerings are very individual (no two options exactly alike) in nature, so a rich description is useful. Video, photo and other descriptive (text) profiles as well as ratings,review & dicsussion boards enable such a rich description (hence the need for high bandwidth).
  • Product preferences vary widely, so multiple service offerings are useful (high customization).
  • Happen - whether it be love, home, a car or a job - to be usually about "high stake" decisions (so multiple interactions are required before trust can ensue and a deal be reached).

This is what a good matchmaking service requires and this is what the Internet delivers well. This is why such services - jobs, dating, matrimony (in India) and yes, the Internet Sex Providers - have to a great degree migrated online.

1 comment:

  1. Hi Rohit,
    Thanks for your comment and an interesting post you wrote..
    Internet is a big source of business and business can be of any kind.

    Mona

    ReplyDelete