Is facilitating infidelity legitimate business?

Noel Biderman, president and CEO of Ashley Madison, speaks during an interview at the Peninsula Hotel in Hong Kong, March 26. / Courtesy of Ashley Madison

Online dating site for married people opens in Korea

By Lee Hyo-sik

HONG KONG — There is no shortage of websites that provide online dating services for singles these days. Match.com and other dating websites have been flourishing over the years as more people turn to cyberspace to find their significant others.

But one website based in Toronto, Canada, stands out from the rest of the pack for its unique business model, that is, a dating website for married people.

Ashley Madison, perhaps the world’s most controversial dot.com company, has been offering an online dating service to people who are already in a monogamous relationship under the slogan “Life is short. Have an affair.” Despite widespread criticism that the company fuels infidelity and weakens the institution of marriage, its business has been thriving with its membership reaching nearly 26 million in 36 countries.

On March 21, Korea became the 36th nation in which Ashley Madison operates. To mark the launch of the Korean-language website, the company requested The Korea Times’ Business Focus to interview its president and CEO Noel Biderman in Hong Kong.

When asked why he wanted to be interviewed in China’s special administrative city, Biderman said he is afraid of going to Korea because of its law penalizing married people having an affair.

“My lawyers told me that I can go to Korea because our business does not violate any Korean laws, but I am still not comfortable doing so at the moment because of the nation’s law criminally punishing married people for cheating on their spouse,” the CEO said in the March 26 interview at the Peninsula Hotel in Hong Kong. “This is why we have organized the interview here, not in Korea.” The company operates the Korean website out of a server located in a third country.

He said he will visit Korea when the law is abolished, arguing that the law hasn’t accomplished anything. “I think the Korean government must not have a say on who people can go to bed with.”

The company has successfully launched the Korean-language website, according to Biderman, who said tens of thousands of Koreans have visited the site over the past week and some have become paid members.

A screen capture of Ashley Madison’s Korean-language website, which went into service on March 21

Origin of Ashley Madison

Biderman founded Ashley Madison in 2001 when he worked as a lawyer exclusively for professional athletes in the United States.

“I saw that many of the sports stars were having an affair. They cheated on their spouse because they were unhappy. When they were caught, their life became more miserable,” the CEO said. “So I wanted to create a viable platform for married people to meet their desires and be happy again.”

In 2001, online dating websites began providing dating services for singles but many married men pretended to be single to meet women, according to Biderman “In addition, most affairs take place in workplaces, but when the secret is out, those involved have to bear severe consequences. So I decided to set up an online platform that enables married people to have an affair more discreetly by finding partners outside their workplaces.”

He argued that Ashley Madison does not promote infidelity, stressing that it only provides a platform. “We cannot convince happy people to have an affair. They cheat because they are unhappy. We merely offer a viable means for them to meet their desires.”

Biderman then claimed that his company has helped many people save their marriage. “I think affairs save marriages. Many men and women want to stay in their marriage, but at the same time, they seek new sexual encounters. Besides the thousands of hate emails I receive every day, I also get thank-you messages from many women saying that Ashley Madison saved their marriages.”

Many married women still love their husbands and children, but they desire something new at the same time as their husbands often do not want to be romantically involved any more, the CEO said. “Women want to feel special and young again. So, they want to meet someone new and rekindle their passion for romance. We are helping them do so. This, I think, has helped lower the divorce rates significantly in countries where we operate.”

Biderman said Ashley Madison makes it possible for married women to exercise their rights to sexuality. “Men have always been cheating by going to massage parlors, brothels and strip clubs. In contrast, women used to have an affair mostly at workplaces, which could bring severe consequences for them, but we have leveled the playing field for both genders.”

He claimed humans are not meant to be monogamous, saying that monogamy is a constraint imposed on women by men.

“Men do not want to be monogamous but they tell women to be. Many men regard women as an object to possess, but the Internet has given women the same opportunities to have an affair,” the CEO said. “The institution of marriage will evolve in a way that weakens monogamy.”

How Ashley Madison makes money

Ashley Madison charges male members while letting females use its dating service free of charge because men looking to have an affair outnumber their female counterparts. Biderman said securing a large number of women is the key to his business.

“About 70 percent of our members are men, meaning that we need more women to join our business. This is why men have to pay but women don’t,” Biderman said. “We give men 100 credits for $49. It costs five credits for men to initiate a contact with a woman. With 100 credits, they can contact 20 different women.”

There are also other service packages for male members, including a live chat with female members. Men can also buy gifts from the company’s virtual shop for women they are attracted to.

When asked about whether the dating service is tantamount to brokering prostitution online, the CEO flatly disagreed.

“What we offer is not online prostitution. None of our female members are prostitutes because they don’t get anything for having an affair. They have an affair because they want to,” he said. “Ashley Madison is just a communication platform, and people are responsible for their actions. I believe that people should visit us and have an affair rather than go to a prostitute.”

Female users are mostly in their 30s but male users are older in their 40s, 50s and 60s, Biderman said. “Even men in their 70s want to meet someone via Ashley Madison. So, our ads primarily target middle-aged men. We put ads on golf channels, automobile magazines and other media oriented toward older men. We also run commercials on soap operas and other television programs for the female audience.”

But the bottom line is that the advertisements do not change people, the CEO stressed.

“We cannot convince people to cheat if they are happy. Our ads are designed to let people know that they can have an affair in a more discreet and safer way through our website. They can have a ‘good’ affair with us. They will not get caught and can maintain their marriage if they want to,” he said. “But if people have an affair with their colleagues at workplaces, they could ruin their careers and marriages. That is a ‘bad’ affair.”

Biderman said nearly 26 million people in 36 countries are members of Ashley Madison, making the company the world’s second-largest online dating service provider. “No one else offers what we do. I would like to say the number of singles seeking to marry is the size of an apple, but the number of married people wanting to have an affair is the size of a pumpkin. This will make us outgrow Match.com in the near future.”

When asked about the possible leakage of the personal information of its members, Biderman said the company does not store users’ private information.

“We do not have any personal data concerning our members. They do not give us names or addresses and phone numbers. They can revise their facial photos posted on the website to cover their identities,” he said. “What we have are aggregate data and we don’t know who our users are. They make payments with their credit cards, but we do not collect payment information. Credit card companies deal with it.”

The CEO said there would have been a number of data leakages over the past 14 years if Ashley Madison had private information of its members. “I am positive that hackers want to get the personal information of our members in their hands.”

Will Ashley Madison hit a jackpot in Korea?

Biderman said if uninterrupted by Korean regulators, its Korean-language website will be a big hit.

“We estimate that at least 300,000 Koreans will be using our service by this summer. Prior to the launch of the Korean website, over 120,000 Korean Internet users attempted to access our site, indicating that there is a great deal of interest in us among Korean people,” he said. “We will be successful in Korea if unobstructed. This is what has happened elsewhere.

The CEO expressed concerns over the possibility that his company could face protests from religious and civic groups in Korea, a Confucian society that strongly values the institution of marriage and demonizes infidelity.

“We have been trying to open a platform in Singapore, but the government there has banned Internet users in the country from accessing our website. This is very unfortunate because people should be given choices and be able to pursue what they desire,” Biderman said. “I really hope that the same thing doesn’t happen in Korea.”

Ashley Madison has gone largely unnoticed so far in Korea since it has been in operation for only a week. However, as more people talk about the firm’s online dating service for married people, Korean regulators will likely pay more attention to it in the near future.

Taking Ashley Madison public

Biderman said he wants to take the company public but this will take several more years.

“We have proven that we are a very lucrative business. We earned $125 million in 2013, up 28 percent from 2012. Our net profit reached $40 million last year. Despite our strong fundamentals, no investment bank and securities firm wants to work with us yet because of the nature of our business,” he said. “I think it will take a couple more years for us to file for an initial public offering.”

Biderman holds a 10 percent stake in Ashley Madison, while institutional investors, including hedge funds and investment banks, hold the remaining 90 percent. He said he cannot reveal the names of investors but they are well-known global financial firms based in the United States, Singapore and Switzerland.

“I needed money to expand the business across the globe so I sold my stakes to financial investors. They know that infidelity is a good business, but nobody wants to be in the business. Ashley Madison has a virtual monopoly,” the CEO said.