In 2010, after a whirlwind of outrage and bad press, Craigslist shut down its lucrative adult services section, largely because it was a haven for sex trafficking and underage prostitution. That proved to be a windfall for Backpage.com, Village Voice Media’s competing community classifieds site. Backpage is already a poor-man’s Craiglist, with extremely questionable deals — how about a $2,000 Nikon camera for $450?. But now it’s at risk of simply being poor: After furor over Backpage’s escort section has reached a fever pitch, the country’s largest advertiser of escort services may be in jeopardy.When Nicholas Kristof first reported that megabank Goldman Sachs had a stake in Backpage.com — by virtue of owning 16 percent of Village Voice Media (VVM) — it looked like Backpage might be doomed. Goldman may be an uncannily-ruthless money-making machine with few, if any, morals, but the bank isn’t stupid. Being involved in a site that helps provide a market for child sex traffickers isn’t exactly good PR, and that aside, all of the scrutiny surrounding VVM makes for a troubling investment, and I initially thought Goldman might try to put the kibosh on the site.Sure, Goldman should have known that they owned part of Backpage, and it’s embarassing that no one at the bank heard prior reports that Backpage is full of filthy, illegal activity, especially after the Craigslist kerfluffle. But with total assets of nearly a trillion dollars, it’s not hard to imagine that Goldman didn’t spend much time dealing with a company producing revenue in the tens of millions of dollars, in which the bank only held a minority stake. What’s surprising is that it took this long for someone like Nicholas Kristof to actually call them on it.As bad as it looks, Goldman claims it had no influence over operations, which is likely true. If the bank did, they might have tried to effect changes at Backpage, rather than dumping its entire $30 million stake (at quite a loss) in VVM. Still, one has to wonder if the bank noticed (or cared) that it was making money off of child prostitutes before now. (Kristof, for one, doesn’t think Goldman execs knew about it.)Yet even if Goldman felt the urge to shake up Backpage, VVM is hellbent on keeping the site viable, especially considering it produced one-seventh of the firm’s revenue last year. It’s not like VVM hasn’t received backlash: An L.A. Times story from November of last year notes that "[s]ince August, protests have included a letter by 51 attorneys general, a full-page ad in the New York Times by religious leaders, and picketing of the VVM offices in New York — all demanding the shuttering of the company’s “adult” online listings."That’s yet to stop the company from operating Backpage’s escort section. VVM says that it stringently monitors ads for anything suspicious, but what that actually means is vague, and it’s not like ads are overtly using pedophile symbols. What’s to say that an escort listed as being 18 isn’t? It’s an argument used by VVM writers who have also penned scathing indictments of sex trafficking studies. And, of course, in this latest round of heat, VVM still refuses to admit that it facilitates prostitution, and has no plans to shutter the site, even after so publicly losing a large investor.So is Backpage, which produced nearly 80 percent of online prostitution revenue in February, going to remain a bastion of the skin trade? That remains to be seen, but if VVM won’t bend to popular pressure, it might have to at least listen to new laws like one just passed in Washington state that requires sites like Backpage to collect documentation that escorts are indeed 18.Now, there’s a huge question of whether those documents are indeed legitimate, but it’s a start. It also seems like the kind of law Craigslist would have loved to have before it shut it down. The law, whether it would actually work or not, also seems like a chance for VVM to legitimatize its seediest revenue stream, right? Well, according to the NY Times, VVM disagrees: A lawyer for the company said “There's going to have to be a challenge” to the law, and that VVM might be the one to do it.Follow Derek Mead on Twitter: @drderekmead.
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