The world's oldest profession is adopting a new business model; street-walkers are heading to the information highway.
A first-ever study of the U.S. sex industry shows that many prostitutes prefer to make transactions over the Internet now, where rates are higher and they are less vulnerable to arrest or assault.
"There is still street activity, but on the Internet they do not have to operate in the shadows," said Meredith Dank, senior research associate of the Urban Institute, which carried out the survey for the U.S. Justice Department.
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"The Internet is also more lucrative, there is a higher price point," said Dank, lead author of the study on the economics of the underground sex industry.
The five-year study focused on eight cities—Atlanta, Dallas, Denver, Kansas City, Miami, Seattle, San Diego, and Washington—and was based on interviews with prostitutes and pimps in all venues including massage parlors, brothels and escort services. It did not include the pornographic movie industry, which is legal.
The Justice Department hopes the study, which focused on the business aspects of the sex economy, will help law enforcement better understand the motivations of its participants, and improve the way victims are treated.
The study found the underground sex economy in the eight cities brought in nearly $1 billion per year, ranging from $300 million in 2007 in Atlanta to $40 million in Denver. Pimps said they took home between $5,000 and $32,833 a week—10 percent of them take credit cards—and advertise on social media and sites like Craigslist.com and Backpage.com to attract customers and new workers.
(Read more: China widens its crackdown on drugs and prostitution)
Dank said prices for sex acts were comparable across the country, with the average going rate of $150 per hour, about the same as for a New York therapist. But that is down from the average $250 before the recession.
"Anecdotally, we heard that the downturn in the economy reduced the price point," Dank said.
Indeed, the study said the Great Recession forced some sex workers to offer discounts, with Atlanta law officers reporting prostitutes offering "Veteran's Day Specials."
—By NBC's Steve James