I consider myself something of an amateur economist when it comes to the North American strip club industry, having conducted extensive field research during the mid-1990s at the Sundowner in Toronto, Mons Venus in Tampa, and various establishments in Houston, Atlanta, and Providence. This was a geographically diverse study spanning multiple markets and regulatory environments, undertaken with considerable enthusiasm and a complete disregard for the principles of retirement planning. While my methodology might not have satisfied the University of Chicago, I remain confident in my conclusions: the mid-1990s represented something close to the golden age of the industry.
The better establishments of that era offered an extraordinary concentration of attractive women, impressive presentation, and what seemed at the time to be a perfectly reasonable exchange of discretionary income for entertainment. Competition was healthy, the talent pool was deep, and customers generally knew what they were getting. It was a remarkably efficient marketplace, albeit one in which most transactions involved cash and very little documentation. Milton Friedman would have appreciated the entrepreneurial spirit, even if he might have questioned my allocation of capital.
Thirty years later, the deterioration is difficult to ignore. The quality of the talent has declined, prices have increased dramatically, and the overall experience at many establishments now resembles a struggling Applebee’s with a more permissive dress code. What was once a thriving entertainment sector appears to have fallen victim to the same economic forces that destroyed Blockbuster, disrupted the taxi industry, and rendered the shopping mall increasingly irrelevant.
The most obvious culprit is technology. The emergence of OnlyFans and similar platforms fundamentally changed the economics of adult entertainment by giving attractive women the ability to monetize their appeal without leaving home. Instead of commuting to a club, sharing revenue with management, and enduring conversations with middle-aged men eager to discuss their golf handicaps, performers can now establish their own prices, control their schedules, and instantly reach customers around the world. From a labor economics perspective, this is a substantial improvement in bargaining power. From the perspective of the traditional strip club patron, it has been something of a disaster.
Friedman spent much of his career explaining how individuals respond to incentives, and the migration of talent away from traditional clubs is a nearly perfect illustration of his argument. When a more profitable, flexible, and less unpleasant employment opportunity becomes available, rational people tend to pursue it. The result is a form of adverse selection in which the most commercially successful performers have increasingly attractive alternatives to working in clubs. I suspect the industry has experienced a significant decline in the quality of its available labor pool, although I concede that the Bureau of Labor Statistics has been remarkably negligent in tracking this particular economic indicator.
Compounding the problem is inflation. Cover charges, drinks, private dances, and VIP experiences have become considerably more expensive, even as the perceived quality of the entertainment has deteriorated. Friedman famously maintained that inflation is always and everywhere a monetary phenomenon, but even he might have struggled to explain the economics of paying forty dollars for admission to an establishment whose principal competitive advantage appears to be ample parking. The industry has managed to combine premium pricing with declining customer satisfaction, a strategy normally reserved for cable television companies and commercial airlines.
There is also the matter of standards. In the 1990s, the premier establishments seemed to understand that appearance, presentation, and stage presence were central to their business model. Today, some clubs appear to have adopted a considerably more inclusive interpretation of the word entertainment. I have nothing against broadening employment opportunities, but there comes a point when the consumer begins to wonder whether management has confused the principles of equal opportunity with the complete abandonment of quality control.
Of course, I recognize that nostalgia may influence my assessment. I was younger in 1995, my judgment was occasionally enhanced by several cocktails, and my understanding of marginal utility was largely theoretical. It is entirely possible that the Sundowner was not quite the economic miracle I remember. Nevertheless, the structural changes are real. Technology has given performers access to more lucrative markets, operating costs have increased, and traditional clubs have struggled to maintain the quality that once justified their prices.
The irony is that none of this represents a failure of capitalism. Quite the opposite. The free market has done exactly what Friedman argued it would do: redirected labor and capital toward more efficient opportunities. Performers have gained greater economic independence, consumers have acquired new choices, and technology has eliminated much of the overhead associated with the traditional business model. The unfortunate consequence is that a once-thriving form of nightlife has become considerably less compelling to those of us who remember its heyday.
I don’t begrudge the performers their improved circumstances. They’re making perfectly rational economic decisions, and I would probably do the same in their position. But I do find it remarkable that an industry built almost entirely around the laws of supply and demand has managed to become so expensive while delivering what appears to be a steadily diminishing supply of its principal attraction.
Perhaps the market will eventually correct itself. Perhaps surviving clubs will rediscover the importance of quality, competition, and delivering genuine value to customers. Or perhaps the entire business model is destined to become another casualty of technological progress, joining video rental stores, travel agencies, and the printed Yellow Pages.
Either way, I suspect Milton Friedman would have understood the economics perfectly. He might even have admired the efficiency of the new arrangement.
But I can’t help thinking that after one visit to the Sundowner in 1995, followed by a comparable evening in 2026, even Friedman would have conceded that not every improvement in economic efficiency represents an improvement in the human experience.
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