Phonesex - Past, Present & Future

It’s been around for quite a while now and was the first form of adult e-commerce – good ole’ telephone sex. And whilst the customer now has a vast array of digital titillation to choose from, it is unlikely that phonesex will disappear any time soon. Indeed, it could be argued that the telephone offers a much more immediate and intimate form of communication – and therefore can and should be used to supplement the portfolio of services that you are currently offering. More on that later.

Firstly, I would like to take you back to the beginning. Commercial phonesex has it’s seeds planted (excuse the pun) back in the 1980’s – back then, phone carriers worldwide were beginning to introduce per-per call (1-900) or ‘premium rate’ billing, which would act as the backbone for the huge industry that was about to be born.

The principle behind Premium rate – also known as ‘Audiotex’ – is quite straightforward. The customer is offered a service with a premium attached to it. For this, the caller agreed to pay said premium. This gets collected by the phone company through the subscriber’s monthly phonebill. The phone company keep their share, and pass the balance onto the person or company actually offering the service (also referred to as the IP, or ‘information provider’).

Pre-internet, sure, some people did call for ‘value-added’ information such as Sports results and Weather Information – which is how the carriers used to pitch this business initially - but by far the biggest driver of premium-rate services was and still is telephone erotica.

Then, in the early nineties, the challenges emerged. Whilst premium rate was (and still is) a convenient billing mechanism for vendor and customer alike, countless crooks also woke up to the possibilities of this new cash-machine. And thus the first forms of e-fraud were born.

In Germany in 1994, for example, one particular crook who will remain nameless would rent apartments in Germany and order over a dozen phone lines from the then-state incumbent, Deutsche Telecom. He then place so-called ‘autodiallers’ on each line which, as the name suggests, would automatically dial the premium rate services that he was offering. This resulted in extortionate phone bills being generated which he did not pay – but he still collected the premiums that were generated. He has since paid the price for his crimes by being sent to prison… Who says crime pays?

Another reason that phonesex got off to a shaky start was due to the moral questions it posed. And the fact that children could access the services. To cap it all, the parents of those children would have to pay. As these issues were emerging, some telco’s panicked by call-barring their domestic numbers or forbidding phonesex altogether.

And thus, yet another industry was born – International Premium Rate Services, or IPRS. This way, IP’s could bill for their services by offering International numbers instead. They negotiated revenue-share agreements with Telco’s in far-flung exotic places such as Curaco or the Dominican Republic. These, in turn, received a proportion of the revenues that were generated by the caller for ‘terminating’ the call in their country. This money is known as the settlement rate, which is split with the IP who generated the call by advertising the service in the ‘originating’ country.

For a while, IPRS enjoyed a boom time whilst domestic markets were either non-existent or over-regulated. The Dominican Republic, whose main export up until that point had been rum and bananas, could not believe it’s luck – it was effectively handed a multi-million dollar business overnight on a plate. Huge call centres were set up from which operated a small army of phonesex girls that were flown there from all corners of the globe.

Gradually, the money to be made from phonesex became too big a carrot for the domestic operators to ignore and thus heralded a new dawn of liberalisation. Since the margins on offer to the IP’s relative to the cost of the call were higher, domestic premium rate flourished and IPRS suffered accordingly. However, International Premium Rate still remains a viable billing option for those counties that do not have a domestic premium rate infrastructure. Indeed, IPRS is beginning to experience an upswing thanks to the global nature of the internet. After all, if you want to offer one number to the whole world, then it makes sense to offer a number where you can profit from each call made, right?

Premium rate has now gone mainsteam and is a key revenue generator for many media. Indeed, the huge prize money on offer on shows such as TV’s ‘Who wants to be a Millionaire?’ is all thanks to premium rate since would-be millionaire contestants need to call a premium rate number in order to register their intentions. And the new phenomenon of reality TV ‘voting’ is nothing more than a money machine for the TV networks.

But I digress. Back to the issue at hand. Telephone Erotica always has been and no doubt always will be the most popular application that uses premium rate telephone numbers. As the years have passed, the technology has advanced and many phone-sex companies now utilise acd (automatic call distribution) technology thus allowing the phonesex operators to work from home. They simply tell the system when they are ready to ‘work’, and calls to the premium rate number are then routed to the operator at home and her anonymity is maintained.

In recent years, there has of course been an explosion of new online services allowing the customers to actually see the illusive pussy that hitherto was only spoken about. But nothing can replace the ‘intimacy’ of the telephone. After all, there are still plenty of aural sex fans out there!

To this end, expect to see a growth of phonesex on websites as more and more webmasters wake up to the tried and tested money making capability of phonesex by incorporating into their offerings. Some forward-thinking camsex operators have already done this by allowing customers to call the girls, as well as communicating my means of webcam and keyboard. Two revenue streams from one customer! This is capitalism at its finest!

It is widely assumed that phonesex is always live but this is not the case. A significant proportion of phonesex customers actually do NOT want to speak to someone ‘in the flesh’, so to speak. Rather, they prefer to listen to pre-recorded erotic stories for their kicks. For the phonesex operators this is a pure cash-cow, since after the recordings have been made, there are no salaries to be paid to the girls (or boys, but mainly girls!).

More recently, the phone companies have been making millions by extending the premium rate principal to SMS – or text messages – from cellphones. This is all the more extraordinary given the fact that the first text message was sent ten years ago. It was added as a channel to the then growing GSM network as an added form of communication. In the meantime, a staggering 2.3 billion of the were sent in October of this year in the UK alone! No prizes for guessing what the main revenue generator in the premium sms sector is. You guessed it, SMS sex chat!

Since SMS is far more anonymous than ‘real’ phonesex, customers who think they have been communicating with Sexy Susie have in fact been communicating with Fat Freddie – who might be communicating with multiple customers courtesy of his PC and keyboard. Some operators in this space have even taken the trouble to ‘pre-write’ hundreds of vague messages such as ‘I’m feeling soooo horny at the moment’, or similar. Thus the hapless customer is actually communicating with a decidedly un-sexy computer!

This phenomena is set to be overtaken by the next generation of peer-to-peer cellular technology MMS (Mobile Messaging Services), which supports pictures. The correct handset permitting, the customer can now tell Susie to remove her panties and witness it happening in near real-time on his cellphone. Looks like Fat Freddie’s days might be numbered…

Whilst these emerging technologies are fun and will no doubt make money, phonesex in its classical form will always remain a favourite with its loyal army of consumers.

In summary, if you are a adult webmaster you should consider offering phonesex as part of your portfolio of products. It will not cannibalise your existing business. Quite the opposite. It will enhance it. And make you money in the process.