This was no more a prostitution website than Craigslist, before Craigslist struck a deal with attorney generals of several states to shut down its Adult Classifieds section [1]. In fact, given Craigslist scale it had many more prostitution (and probably child prostitution) ads. The question is: why Craig and this CEO were given such disparate treatment? Because the times have changed, or because Craigslist was much bigger and an arrest of Craig would have unleashed a huge wave of rage from free speech supporters as a violation of the principles of Section 230(c) of the Communications Decency Act, since classifieds sites are republishers, rather than publishers of content and should not be responsible for the classifieds content.
1. http://www.nytimes.com/2010/09/16/business/16craigslist.html :
"The sex ads cost $10 and were on track to bring in $44 million in revenue this year, according to the AIM Group, a consulting firm that closely monitors the company. Craigslist also charges for some real estate and job ads, but most listings are free"