Originally, per-minute billing was provided by phone companies (in the U. There was, from some services, an attempt to keep the caller aroused but short of orgasm, so he would spend more money.(This attitude still survives among some providers.) When public (mostly female) pressure forced the phone companies to stop providing this service to sex workers, a transition was made to a manual method: pre-paid blocks of time, 10, 30, 60 minutes, whatever the customer would pay for.
The provider provided (say) 10 minutes of service, but got to keep all of the money (say 20 minutes).
When the Internet got relatively mature, sale of any sexual service not involving a minor could be made to anyone not a minor.
Nevertheless, phone sex should not be confused with prostitution wherein money is exchanged for real life sexual services or physical interaction.
The editor of High Society magazine, Gloria Leonard, is credited with being one of the first people to use "976 numbers", then "900 numbers" for promotional purposes and soon as a revenue stream in the adult industry.
The incentives for providers were then reversed; rather than earning money from keeping the customer on the line (orgasm delayed), they earned more from bringing the caller to orgasm quickly, so as to move on rapidly to another call.
Unused minutes were rarely usable on a second call.
Typically the telephone companies would bill callers to chat lines and then remit 45% of the money collected to chat line operators.
The telephone companies placed the chat line charges on a customer's local phone bill.
Leonard convinced magazine owner Carl Ruderman to purchase more of these numbers and the business began to be successful using the magazine to promote the service.
Leonard herself was surprised at the success of these numbers.
In concept they have a lot in common with platforms such as Ebay: the seller provides the picture(s), description, and sets the price, a percentage of which is kept by the platform.