Expert: Dan Pepper - 6/11/2008

Question
ME & MY WIFE WANT TO START & ADULT ONLINE(BIZ)BUT WE DONT KNOW HOW 2 GET THIS UP & PRUNING. WE WANT 2 DO THIS THE RIGHT WAY & MAKE SOME MONEY. WE DON'T LIVE IN LA WE LIVE IN TAMPA FL HRS AWAY FROM MIAMI.I KNOW THAT IF U LIVE IN LA U CAN DO MORE WITH THE ADULT(BIZ)SO IS THERE SOMETHING WE CAN DO ONLINE? & WHAT IS THE MONEY END OF THIS U KNOW LIKE I KNOW U HAVE TO SPEND MONEY TO MAKE MONEY. THANK U FOR YOUR TIME.JR

Answer
There are a number of issues and areas you should address.  If you haven't already done so, you should start by forming a business entity that will protect your personal assets.  The type of entity, and the jurisdiction in which to form it, will depend upon various factors about your personal situation.

Regarding documentation and other requirements, you'd need to consider:

1.  Model release agreements for your talent
2.  Obtaining workers' compensation for your talent, as required under CA law
3.  A content license agreement, if you are licensing your content to affiliates or other third parties.
4.  Compliance with the federal record keeping requirements, commonly referred to as the "2257" requirements.

Depending upon how you plan on recruiting your talent, you'll need to ensure that you do so legally, so as not to violate applicable pandering or solicitation of prostitution laws.

To distribute and hosting your content online, you'll need to consider:

1.  Website terms and conditions, as well as a privacy policy
2.  An age verification system
2.  Traffic referral programs terms for any affiliates
3.  Acceptable use policies for bulk mail for any affiliates
4.  Appropriate 2257 notice(s).

This is just a broad outline - there may be other requirements your particular operation may require.  Other matters like copyright and trademark protection, and other corporate governance matters have not been discussed.

How much does this all cost?  As I've posted before, it's like asking how much does it cost to build a house.  Are you building a shack in West Virginia or a mansion in Beverly Hills?  Something quick and dirty to get you up and running (and something that might not make you much money) would probably cost you about $10K.  I have clients that have spent over $500K to produce, host, and distribute their adult content.  

It would be foolish to enter this business without retaining a qualified lawyer that can assist you with these matters.  Getting it wrong can mean thousands of dollars in fines as well as jail time.