Ashley Madison: Brilliant Business, Morally Bankrupt, or Scam?

Last Updated May 20, 2010 12:15 PM EDT

Ashley Madison The Monday following Mother's Day, Ashley Madison, a "dating" site for promiscuous married people, said over 31,000 women disappointed with their men "signed up to cheat." That's over 10 times the normal number for a Monday on a service that has almost 6 million members.

That announcement got the Toronto based company a boatload of free PR, including an interview for enterprising CEO Noel Biderman on Sean Hannity's Fox News program. Hannity took Biderman to task for being morally bereft and "pimping" his service. But a tweet from @ashleymadison later thanked Hannity for the service's biggest signup day ever, 42,000 people, after the show.

Indeed, most of the media attention toward Biderman and the site is negative, but so what? Business is booming. In fact, the company offered Phoenix's Sky Harbor Airport $10 million to rename it Ashley Madison Airport. The city rejected the offer.

So, why is The Corner Office taking an interest in business who's tag line is "Life is short. Have an affair?" Three reasons:
First is the ethical question. Biderman, a former lawyer and sports agent, a married man with two children who says he doesn't cheat, has clearly found himself a successful market niche. As he puts it, Ashley Madison is just a "platform." He didn't invent infidelity and his site doesn't cause people to cheat any more than divorce lawyers cause couples to split up.

Second is the business question. You can write it off as an irrelevant company, like dietary supplements and the porn industry, but some of those supplement companies are owned by big pharma and some porn companies are long-standing, successful public businesses. I used to think of multilevel marketer Am Way as a scam, but it's grown into an $8 billion company with 13,000 employees.

Speaking of "scam," that brings us to the third question. Is Ashley Madison a scam? You see, people get to sign up for free, create a profile, and interact with each other by sending free "winks." But before they can actually communicate with each other in a robust way so they can actually chat and get together, they've got to sign up for a paid membership.

Well, as it turns out, at least some of the "winks" that guys get, prompting them to sign up for a paid membership to communicate with the winking hotty, are never returned because, well, they're actually fake. They come from Ashley Madison. And the company states as much in its "legal" and "terms" section which, I'm guessing, most people never read:
From time to time this service may include, offer, or initiate winks, collect messages or instant chat from Market Researchers (Online Hosts) simulating attached or single men or women. These efforts are conducted for market research and/or customer experience and/or quality control and/or compliance purposes. Market research information is used to provide analysis, feedback, trends, patterns, social commentary and information in the aggregate and aides in the process of monitoring our system for compliance of our operating standards and code of conduct. Accordingly, Market Researchers (Online Hosts) will NOT be conspicuously identified.
Now, the U.S. Federal Trade Commission sometimes has a problem with businesses that market themselves one way while the "fine print" contains terms that are materially different from the marketing. They might even call it fraud, but I believe that's a gray area. Moreover, Ashley Madison is a Canadian company.

So, that brings us to the headline question: Is Ashley Madison a brilliant business, morally bankrupt, or a scam? I'm inclined to think it's all three. What do you think?

Image CC 2.0 via Flickr credit www.chromoz.com

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