In the year since Senator Joe Manchin called for the “audacious” drug-selling website Silk Road to be “shut down immediately,” the world’s most high-profile underground pharmacy hasn’t just survived. With $22 million in annual sales and around double the commission for the sites owners compared with just six months ago, its black market business is booming.
In a research paper (PDF here) released earlier this month, Carnegie Mellon computer security professor Nicolas Christin has taken a crack at measuring the sales activity on Silk Road’s underground online marketplace, which runs as a “hidden service” on the Tor network and uses tough-to-trace digital Bitcoins as currency, two measures that have helped to obscure its sellers, buyers and operators from law enforcement.
His findings: the site’s number of sellers, who offer everything from cocaine to ecstasy, has jumped from around 300 in February to more than 550. Its total sales now add up to around $1.9 million a month. And its operators generate more than $6,000 a day in commissions for themselves, compared with around $2,500 in February.
Christin cautions that his study only looks at a six month period of Silk Road’s sales, and that a big part of the site’s measured success comes from appreciation in the highly volatile Bitcoin currency Silk Road trades in, which has itself increased close to 70% in value over the course of Christin’s study. But even accounting for changes in that crypto currency, the site’s numbers point to very real growth. “It’s very bursty and spikey, but overall the numbers are moving up,” says Christin. “It’s a stable marketplace, and overall it’s growing steadily.”
To dig up Silk Road’s sales numbers, Christin ran a program that crawled the site and scraped its content, including sales and pricing information, about once a day for a six month period. He used the feedback reviews posted to sellers’ pages to count sales and calculated the site operators’ revenue based first on their 6.23% commission, and then later using the tiered model with higher commissions that the site switched to in the middle of the period he studied. The results, with both commission models, are shown at right.
What surprised Christin most was the high level of customer satisfaction: 97.8% of customers gave sellers positive reviews, despite the fact that Silk Road’s use of Tor’s IP-masking abilities and Bitcoin makes it nearly impossible for anyone who uses the site to identify anyone else. “On a site like Silk Road, where…most of the goods sold are illicit, one would expect a certain amount of deception to occur. Indeed, a buyer choosing, for instance, to purchase heroin from an anonymous seller would have very little recourse if the goods promised are not delivered,” Christin writes. “Surprisingly, though, most transactions on Silk Road seem to generate excellent feedback from buyers.”
Christin was also struck by the fact that Silk Road has managed to grow steadily despite its complete lack of advertising. Despite requiring visitors to run special software and know a long and impossible-to-remember URL that doesn’t show up in Google results, it now generates roughly as much revenue, comparing with numbers from another recent study, as illegal online pharmacies that drum up sales with spam emails and black hat search engine tricks. The site hasn’t had much of a public profile lately, either: After some early notoriety from a Gawker story on the site last year and some political attention to the site’s criminal activities from Senator Chuck Schumer and others, it’s mostly slipped off the media radar, says Christin
“If you imagine them selling paperclips and buttons, they’re a stable business that’s growing without advertising or being in the news, just by word of mouth,” says Christin. “That was the surprising thing: How normal the whole thing seems.”
The fact that it doesn’t sell paperclips and buttons, however, but rather psilocybin and benzedrine, means that law enforcement likely still has Silk Road in its sights. The business takes significant precautions: Tor masks both the location of its servers and of its users by ricocheting Internet traffic through proxies, and Bitcoin makes its payments difficult to trace by avoiding traditional banks or payment companies. But users on the site have worried in forum conversations recently that its operators may have been infiltrated by law enforcement, and that several of its high-profile sellers have disappeared.
Eight operators of another anonymous drug-sales site, the Farmer’s Market, were indicted in April, possibly after the encrypted email service Hushmail decrypted their communications and gave them to police.
