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Stickman Readers' Submissions September 2nd, 2006

Evolution Of An Economy

A recurring theme in the submissions is how things have changed in the nightlife industry. The girls are more mercenary. The attitude’s changed. The whole girl friend experience is fading.

While tourists and expats are feeling nostalgic, take a moment to consider how it appears from the girl’s point of view. In the past, they had to spend entire evenings with a customer. They had to be attentive and act like a servant.
The girl had to wipe sweat off the guy’s brow and share meals while serving the guy while trying to eat food they usually didn’t enjoy. When back at the hotel, the girl had to help shower the guy, pick up things like a maid, and
then have sex with the guy. All this for 1,000 baht in what is termed a “Girl Friend Experience”.

He Clinic Bangkok

It’s not. It’s a combination of maid, escort, servant, and end the night as the mistress for which they get a total of less than 1,500 baht (including barfine) for 4 – 10 hours of effort / time.

Today, a bargirl can have a short-time which is usually done in less than 3 hours <MUCH lessStick>. She doesn’t have to work hard at being nice to him. She most definitely doesn’t act like
a maid or a servant. While “on the job”, she could be planning the next one. Over the course of a 4 – 10 hour period, she could take home 2,500 to 4,000 baht with less effort than what someone in her position did 15 years ago.

On both personal and economic levels, the present state of affairs is an improvement for her. For less effort, she’s making more money.

The Thai adult nightlife scene is undergoing market evolution which has been fully described and is well understood academically.

The closest parallel in the regular economy is hotel rooms. Hotel rooms are a commodity limited by time and availability, similar to a bargirl’s time. If you don’t sell the room, you make no money just like how a bargirl makes
no money if she doesn’t find a customer. There’s a finite time when you can charge top rates before the hotel building deteriorates. Intense competition exists, and the product is offered in multiple grades in multiple locations
at multiple prices. The same product can be rented for vastly different prices even though the product is the same.

In the early days of development, there isn’t a well organized pool of data on prices. Each hotel had to make guesses on what kind of facilities would be desirable and what level of prices they can charge. It’s an inefficient
system which favors the smart consumer. When there’s a big convention in town, all the rooms sell out but in other times it’s pretty lean. So prices can be variable and the hotels work hard to be nice to guests during those lean
times because they need the customers.

As the hotels gather information about their customers and the tourism trade matures, it becomes easier to set prices. Hotels start segregating themselves into different levels. The owners have a pretty good idea of how many deep-pocket tourists
will come, how many backpackers, how many tour groups, etc…. Pricing becomes more consistent, but the personal touch is being lost since it’s no longer necessary to compete on service.

Now we introduce the internet. Better communication initially allows the consumer to price arbitrage. Web businesses like Priceline and Orbitz make a bundle of money by finding better prices for hotel rooms. Individuals picked up rates which
were only offered to special customers in the past. This was bad business for the hotels until they realized how to use the internet to their own advantage.

These days, the hotels can easily see the rates their colleagues are charging on a day-to-day basis. They can make rational decisions and can effectively participate in a pricing cartel. The consumer looking for a bargain finds out that there
are no more pricing mistakes which they can exploit. Both the hotel and the guest reach equilibrium in power.

The guest can choose which hotel, but the price / performance ratio is uniform across the board so that being a smart shopper no longer gives any advantage. This, of course, stinks for the shopper who used to get great deals.

I assume the parallel isn’t lost.

Bargirls started out being tied to specific bars, because there’s no other way for repeat customers to find them. 15 years ago, there were a smaller number of possible bars to move to and thus limited options for her. Her primary source
of income was limited to direct services to customers, and she had no way to easily determine the prices being charged elsewhere. A customer knew the going rate if he shopped around, but he wouldn’t volunteer that information.

Then as the nightlife industry grew, it segregated into beer bars, gogos, and massage parlors. That allowed women of different age, level of attractiveness, and skills to slot into what was an appropriate level. That was a far cry from the
earlier days when a girl would be pushed out of the adult industry by age. This was a boon for both customers and girls because it made it easier for everyone to find what they want. The balance of power still favored the customers because information
was limited.

Now we introduce the telecom revolution. Customers started ahead of the curve. Internet boards and chats made Thailand accessible to more people. The sharing of information allowed people to set expectations and fewer people were overpaying
due to ignorance. The disparate level of cell phone usage allowed customers to meet girls outside of bars for the first time which saved on barfines for the customer. Balance of power strongly favored the customer.

But then the telecom revolution came to the bargirl side. The women embraced the cell phone as a way they could be freed from the bar. It made the idea of multiple ST’s more easily arranged. The cell phone and internet access let them
play the long-con of “sponsorship” much more effectively than anyone could have imagined 15 years ago. The free migration of women between various bars creates a de facto price cartel because pretty soon everyone knows how much everyone
else is charging. Instead of the customers setting the level, pricing power shifts to the providers. Doubly true since the wide disbursement of information about Thailand attracted more customers.

People miss the personal touches of a bed-and-breakfast when they check into a massive faceless hotel in the same way that customers miss the personal touches of the Girl Friend Experience as they pick up a bargirl today. In order to get
the same kind of personalized service which used to be the norm, the customer must pay a significant premium by either paying for a 5-star hotel or a boutique. The same can be said about the nightlife industry. If you’ve got the money,
you can still find that attentive girl.

But the days of cheap and attentive service are over. It’s just part and parcel of the evolution of a market economy.

Stickman's thoughts:

That is a nice, analogous way to look at it.