The ViewRisk/reward ratio for investors precarious on sex sites like Ashley Madison

Sex sells, and this has been the case for a very long time, not for nothing is prostitution called the world’s oldest profession. However as Avid Media, the owner of the Ashley Madison sex hook up site (other descriptions are available) is demonstrating, selling sex may well be lucrative but also distinctly problematic.

Last week Noel Biderman, Avid’s Chief Executive, was forced to resign in the wake of a hacking attack that threatens to reveal millions of user’s names, this in turn has spurred law suits against the Canadian company and now, surprise, surprise, it is alleged that there was some jiggery pokey about female profiles on this site.

Yet Avid registered sales of US$115 million last year and controversially claimed to have 39 million users. Other sex hook up sites do not reveal their revenues because, unlike Avid, they are not planning to go public.

However there are other ways in which sex sales over the Internet are thriving. The sex toy industry alone is estimated to command annual revenues of $15 billion and their products can be found in mainstream outlets such as Amazon. Then there are all manner of apps and other sites that do good business selling titillation, fantasy and, well, readers can fill in the gaps here.

Rather less transparent in terms of sales are the many pornographic sites that are hauling in cash and can claim to be pioneers of making money out of the net; indeed in the Internet’s early days it was believed that the only people likely to make real money out of cyberspace would be pornographers.

The Internet also caters for other vices; gambling springs to mind as an obvious example and the net is, in some ways, an ideal platform for vice as it is supposed to offer anonymity and has the benefit of vast coverage and easy accessibility.

The fact that Ashley Madison’s problems are a result of hacking, leading to a serious breach of that anonymity, comes as no surprise. Only the naivety of the site’s users should be a cause for wonderment. The basic fact remains that people with vices are vulnerable and the nature of the Internet makes them more, not less, vulnerable.