from www.aolnews.com – Nearly one-third of Craigslist’s revenue comes from advertisements for sex and prostitution, according to an independent report, despite the fact that the company had promised to rein in such ads.

While news organizations and other companies struggle to eke out a profit in the world of new media, Craigslist has found success by relying on an old adage critics say it intimately understands: sex sells.

The company will earn $36 million this year from “thinly disguised advertising for prostitutes,” according to a report by Advanced Interactive Media Group that has many concerned that the popular website has become the destination for online sex exploitation.

AIM Group said Craigslist’s sex ads are highly profitable.

“We’re astonished at the explosive growth Craigslist continues to show, even in a very tough economy,” said Jim Townsend of the AIM Group. “For 2010, its ‘adult services’ revenue will be three times the revenue it generated in that category in 2009.”

The company’s financial success is attracting a new round of scrutiny from law enforcement officials across the country who say Craigslist is profiting from ads that offer illegal activity.

For years, the company has claimed protection under the Communications Decency Act and said it has little or no liability for what its users post. But in November 2008, under pressure from over 40 attorneys general across the country, Craigslist agreed to more closely monitor the ads for human trafficking and child prostitution. It also changed the name of the sex advertisements from “erotic services” to the less-explicit “adult services,” and vowed to give all the money it earned from the ads to charity.

“Human trafficking and child exploitation are despicable crimes,” Craigslist President James Buckmaster said in 2008 at the time of the agreement. “In addition to working diligently to prevent such abuse, we want to do everything we can to raise awareness among Craigslist users so that they will be even more vigilant.”

According to the AIM report, law enforcement agencies and human rights groups, Craigslist has broken that promise and is profiting off the ads.

There is no public record of Craigslist donating any of the money it earned from the sex ads to charity, The New York Times said.

Connecticut Attorney General Richard Blumenthal has been especially critical of the company. In a letter to Craigslist lawyers last week, Blumenthal said the ads “remain blatant solicitations for sex” and suggested that the company had failed to hold up its end of the 2008 agreement in good faith.

“I believe Craigslist acted irresponsibly when it unilaterally decided to keep the profits from these posts, after finally agreeing to change the name of the section of the site from erotic services to adult services,” Blumenthal wrote.

“Craigslist has not given any indication that they are outraged and disturbed that their site is the primary way children are bought in the country,” Rachel Lloyd, executive director of Girls Educational and Mentoring Services, told the Times. “All they have done is made cosmetic changes.”

The company denies any wrongdoing but refuses to disclose the amount of money it receives from the ads, or how much of those earnings has been donated to charity.

“Of the thousands of U.S. venues that carry adult service ads, including venues operated by some of the largest and best known companies in the U.S., Craigslist has done the best and most responsible job of combating child exploitation and human trafficking,” Buckmaster wrote in an e-mail to the Times.

Some think the 2008 agreement actually backfired and allowed the company to profit further off sex ads, by rebranding them as “adult services” and doubling the price from $5 to $10 per post.

It’s clear that the website is being used to sell the sexual services of women and children. Last week, the infamous Gambino family was charged with running a child prostitution ring on Craigslist, in a move a U.S. attorney general called “a new low.”

Craigslist will generate an estimated $122 million in revenue this year, which comes out to about $3 million in profit per employee, AIM Group says.