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NEW MEDIA IS HELPING WORLD'S OLDEST PROFESSION

The Internet has become a key component of the prostitution business in the 21st century.

Dingy bordellos in red-light districts are increasingly giving way to professionally run enterprises that rely on the anonymity and marketing power of the Internet, the New York Times reported.

Mae Lee, identified as a madam working out of a Jersey City, N.J., apartment leased in the name of a former boyfriend, said she takes in $20,000 a week tax-free, managing affairs for an estimated 2,200 customers, mostly from suburban New Jersey. She keeps a third of the earnings, and the other women get the balance.

Lee uses the Internet to host Web sites for her employees, process credit-card payments and take advantage of online discounts for hotel reservations.

She told the Times she keeps few written records. "For some reason, I can remember anyone by their e-mail address and phone number," she said.

iTunes downloads drop

A funny thing has happened in the 18 months since Apple Computer launched its iTunes Music Store, offering legal music downloads for 99 cents.

The number of paying customers has fallen. From a peak of 1.3 million people in April, the user base is now about 1 million, according to NPD Group Inc., a sales and marketing research firm.

"At this stage of the business, it's not so much about building share as it is about creating demand for paid downloads," said Russ Crupnick, vice president of NPD. He credited online-music seller promotions, like RealNet-works Inc.'s 49-cent sales push, for building awareness and usage, temporarily.

"Promotion works, but it's had a short-term effect. The trick is in phasing promotions so that there is a cumulative positive effect," Crupnick added. NPD reported nearly 80 percent of folks downloaded between December 2003 and July 2004 were from iTunes; Roxio's Napster had 11 percent, MusicMatch, RealNetworks and Wal-Mart each had 6 percent.

Power of Amazon.com

It must be like a very bad movie for the execs at Netflix -- the morning after they told analysts the company is cutting prices and will not expand internationally because it expects Amazon.com to enter the business soon.

For its part, an Amazon spokesperson said customers have "encouraged us to offer low-priced online DVD rentals."

Ignore for a moment that the rental business is not a core competency at Amazon. However, the company is terrific at sending stuff out. It's also very good handling stuff coming in -- that's called returns.

But if even the rumor Amazon is getting into a business can cause the market leader to change its business strategy, who's next? How about CarMax.com? Or Peapod.com? Or pizza delivery?

Amazon's incredible customer loyalty makes this virtual Wal-Mart a category-killer everywhere.

Buying pills online?

Only 4 percent of Americans have purchased prescription drugs online, according to research by the Pew Internet and American Life Project.

A survey of 2,200 adults found 62 percent of them saying they believe it is less safe to buy pills online than at the corner drugstore. The small number of Americans who have ordered prescription drugs online are likely to cite convenience, time savings and cost savings as the main reason, said Susannah Fox, the report's author. She told reporters she was surprised by her findings, saying there's been a lot of talk about Internet drug sales but relatively little action.

Routing 9-1-1 calls

On the Internet, nobody knows you're a dog -- or where you are, if you're using a Voice Over Internet Protocol telephone service like Vonage.

One of VOIP's features is that your telephone number can have virtually any area code. CEO Jeffrey Vonage explained, "Phone numbers have no geographic meaning,"

That's a problem, if your home is in Boston and you and your Internet telephone are in Montana and you need emergency help. Dialing 9-1-1 would bring the medics to the wrong place. Vonage announced it's developed technology to allow the proper routing of 911 calls and said the state of Rhode Island has adopted it.

The key is for VOIP users to notify the telephone service when they move to a new location. That information is copied to Intrado, a Longmont, Colo., company that helps manage the 9-1-1 national network, to properly route the emergency call.

Citron said another test of the system is planned for King County in the state of Washington.

-- CBS MarketWatch