What software is used in the phone sex business ?

March 15, 2007 10:41 PM

I have one question which has three related parts: Q1. What companies are out there which provide the technology to operate a phone sex business where I can concentrate on marketing and they take care of all the backend processing allowing the individual phone sex operators to dial in from their own home and talk with their clients who are charged per minute ? I do not want to personally keep or maintain the software myself. I want to outsource this. So the sex operators would "clock in" at will and recieve calls at any phone they like. This software should also use some sort of accounting to keep track of time spent for each operator. Q2. Also, how are the phone sex operators paid ? by cashiers checks mailed out to them by Fedex ? This may not be practical especially if there are many operators. Q3. Finally since this business does not involve any pornographic images are there any laws I need to abide by like having to keep records and making sure everyone is over 18 years of age ?
posted by lc037 to computers & internet (9 comments total)

Previously
posted by Roach at 10:46 PM on March 15, 2007

Re Q3:

I dunno about laws specific to the phone sex industry, but at a minimum you'll need records for the payroll service, accountant, and IRS. If you decide to incorporate, the state will require specific records as well.

You'll need to check ages because there are labor laws about employing people under 18 (also because involving minors in sex-related work is bound to bring you trouble no matter which side of the law you're on). I could swear there's also some tax-related form that requires 2 forms of ID for new employees. But maybe I'm misremembering that last one.

Call around to your local Small Business Association or S.C.O.R.E. office. Sounds like you need one of their advisors to walk you through small business setup. Local accountants often give free consults or seminars too, since it's a good chance to show their wares to prospective clients.
posted by nakedcodemonkey at 12:38 AM on March 16, 2007

If you're just interested in marketing a phone sex company and you aren't married to the idea of owning your own company, you should look into becoming an affiliate. You build some websites and do some advertising and receive a percentage of the calls that come in. You would not be responsible for staffing, payroll, tollfree bills or anything of that nature. PSB Associates and Gemini are two very well respected companies with good affiliate programs, but I'm not sure if either of them are currently accepting new affiliates. You might also look into the Niteflirt affiliate program, which can be fairly lucrative. I know another owner who is going to be starting another affiliate program soon, but it isn't live yet, so I'll hold off on pimping it here.

If you are dead set on starting your own company, I wish you luck with it, but it won't be easy. PSOs are usually subcontractors, not employees, but you will need to send out 1099s and collect the ID information to do that. Some companies sent out manual checks, anywhere from every week to once a month. The best companies pay via direct deposit. Adult merchant accounts are very difficult to obtain and very, very easy to lose. You will deal with chargebacks and underage callers.

You will need to hire girls, train them, keep them busy and try to keep them from stealing your customers and taking them elsewhere. I love the industry, honestly I do, but it is jam-packed with drama-drenched wackos. You will want to make sure you have girls available at all times, not so many that it is slow for the girls, but not so few that callers have no variety. You need to make sure your girls can handle weird fetishes that come up and you will need to know who best handle the guy with the boiling-people-alive fetish. How will you make sure that your girls aren't doing callers on the side and having the guys pay them directly? If you aren't part of a good owner's group, you're not going to have access to the Do Not Hire lists or the Do Not Do Calls With lists, but you'll have a hard time getting accepted to an owner's group with no experience in the industry. Will you dispatch calls yourself, hire dispatchers, or have each PSO get her own tollfree number and bill calls herself? If you hire them, are you going to pay them hourly? I could go on, but those are a handful of the major issues you will face and it sounds like you are probably more interested in just being an affiliate so...I'll shut up now.

If you opt to become an affiliate, driving business to any of the established phone sex companies I mentioned, you will need to build some websites. If you want to have naked pictures on those sites, you will come up against the 2257 regulations. If you want to forego the naked pics, as your earlier post seemed to indicate, then you don't need to mess with the 2257 regulations at all.

If you have other questions, feel free to e-mail me.
posted by diamondsky at 4:16 AM on March 16, 2007

My protege is a phone sex operator:

She says it works like this:

Operator gets a toll 900 or credit charge 800 number that the client calls.

Client pays the minute-fee and the client is then connected to the woman (or man, increasingly) through a local number from the operator's desk. The client cannot see the number of the local (or not) phone sex person

The call is metered at the operator's office, though they cannot listen in. The workers get a cut (usually 60%) of each call and once the hang up happens the operator logs the time with rate and charges the clients' credit card.

Workers keep a log of all calls and builds a clientele, so that people who enjoy that person always get that same person. The client can then get a call back at charge from the operator to connect them if the worker is busy when they first call.

My friend, Virgie, talked about her experiences on the Sex With Emily Show on Free FM 106.9 in San Francisco. If you can find it, it is absolutely hilarious.
posted by parmanparman at 11:28 AM on March 16, 2007

I think you're using any phone idea is already being done. The thing you can't do with that system is have it automated. What if the worker's cell phone runs out of batteries.
posted by parmanparman at 11:29 AM on March 16, 2007

I've heard the aforementioned Virgie on that show's podcast and can atest to the weird and wacky ancedotes that she shares.
posted by mmascolino at 2:36 PM on March 16, 2007

Thank you for your comments, they were very informative. However, nobody answered my main question which is: what third party companies/software are out there that will take care of the back end technical processing ? I think maybe you need more details from me to answer what I am after.

Such third party companies would route and dispatch the calls, track the number of minutes per call and create reports informing me of how much and to whom I need to pay.

I know everything cannot be automated but I also know that this is a mature and established industry and I do not think that everybody entering this industry hires programmers to write code from scratch. There must be a secondary market out there which specializes in providing technologies for people like me who want to get into this industry.

I do not want to be an affiliate. I want to brand my own service. I will find the PSO girls who are prepared to talk to their clients on a per minute basis. I am from a marketing background. These PSO girls would dial in to this third party company (that I am searching for) from their homes to let everyone know they are available. Then people would dial in to the company numer and enter the PSO's extension to get through to them so the PSO's tel number is confidential.

So the PSO girls would NOT be my W2 employees. They would be working on their own time schedule from their homes and I would simply be paying them. Can anyone who has direct experience tell me if I need to concern myself with tax related matters if I do NOT set up a LLC company or Corporation ?
posted by lc037 at 2:49 PM on March 16, 2007

You might check out Bill Per Call. I believe the dispatching is all done through an automated system where the callers enter their information using the telephone keypad. I know of at least one owner who lost their adult credit card merchant account when they were using this system, though, as it does not do a very good job of vetting callers to prevent fraud.

Voxeo offers a pretty decent dispatch system that you can use in conjunction with your own database and dispatcher. It's fairly customizable as far as reports go and if you contact them, they can answer more questions. I know dispatch companies that use it, but they can probably set up something where the customers can reach the girls directly by punching in extensions.

You might also talk to 3rd Wave.

If you plan to process credit cards, though, you are going to need an adult merchant account which allows adult audio text. That's going to be pretty difficult to get without an LLC or a Corporation. Adult merchant accounts are much more difficult to acquire than standard merchant accounts and, believe it or not, it's a lot harder to get an adult merchant account for adult audio text than it is to get one for your average porn site. You may have a hard time finding a company that wants to let somebody they don't know use their merchant account. The only major exceptions to this are the Niteflirt platform and the Talksugar platform..

Talksugar does not have a good reputation for paying their contractors, so I won't go into that in too much detail.

If you want to, you can set up a Niteflirt account for each of the PSOs that you are planning on hiring. They would be able to log in and out via the phone or computer and you would be able to see a record of all calls, although you would need to log in to each individual account to do so. You can set it up so payment goes directly to you and then you can pay your contractors however you choose. You will have the advantage of getting some paying customers from Niteflirt's existing client base. When girls are signed out, however, your callls will not be directed over to your other girls. At this time, you cannot set up a minimum call length, but I believe they are adding that option soon. You would have a tollfree number and extensions that you can promote, but be aware that some callers may find other girls on the Niteflirt platform. There is no way to avoid that. You would set your per minute rate. For US calls, Niteflirt keeps a 20 cent connection charge and 30% of what's left over. You get the rest.

I don't know the answer to your tax question, you may want to talk to an accountant for that. A lot of contractors will be unhappy if they do not receive 1099s.
posted by diamondsky at 5:25 AM on March 17, 2007

So the PSO girls would NOT be my W2 employees. They would be working on their own time schedule from their homes and I would simply be paying them.

You're talking about providing and controling the phone and billing systems that are "the means and methods of accomplishing the [work] result." Since that goes right to the core of the IRS's criteria for determining employment status, you really need to hire an accountant to help you resolve their status accurately.

Can anyone who has direct experience tell me if I need to concern myself with tax related matters if I do NOT set up a LLC company or Corporation ?

Maybe you just need to rephrase that question, since this sounds like you're under the impression that only LLCs and Incs deal with the tax man. To be clear: all businesses have to concern themselves with tax related matters. Sole proprietership, partnership, LLC, corp, S-corp -- they all do. You are required to keep certain records, file detailed annual tax returns, submit tax payments throughout the year (4x for business taxes; payroll taxes can be due at frequently as weekly), collect and remit salex tax on anything the state/local tax authorities have decided is taxable, and issue mandatory tax disclosure forms including either W2 or 1099 depending on what your professional accountant determines the operators' employment status to be.
posted by nakedcodemonkey at 9:58 AM on March 17, 2007